Cut to the Chase – Tacoma's Tech Column – Fridays in the IndexWeb 101: A lesson in understanding high-tech web funding

“Deciphering the confusing jargon of the web industry can be a difficult task, especially to newcomers. For those of you, like myself, who are new to the web industry, I have compiled a few basic points essential to understanding the language of high-tech web funding.First, let me prelude my knowledge with a small commentary of my experience to date in the web industry.I had yet to delve into the cyber world prior to my current job, with the exception of designing a website for a local artist in my last year as a Lute at Pacific Lutheran University. That is not to say that I was clueless on this subject but in the past few weeks, I have ventured full force into the wonderful world of high-tech web financing and its complex terminology.With the understanding that I am a pubic relations and marketing specialist, with a background in television media, view my observations as merely a fresh perspective.One particularly unclear aspect of high-tech web financing is the gray line between venture catalyst, venture capitalist and incubators. Venture catalysts are the intermediary hired by a company to seek and find venture capitalists. Venture capitalists are the investors in a company that financially back a company in return for stock and other options. Incubators are parent companies that act as hosts for small start up companies and house them until they have the funding to survive on their own. Navigating the ins and outs of unstable Internet start-up companies can be tricky, but with a little help from the experts, reaching clear conclusions is obtainable.Many entrepreneurs attempting to start their own businesses lack the funding necessary to even get their foot in the door. This is where the venture catalysts enter the picture. Venture catalysts are sought by small businesses as an intermediary seeking venture capital funding. Venture catalysts charge a fee for their services in finding the capital necessary to fund start-up companies. Once a suitable venture capitalist is found, the process has just begun. It is then up to the venture capitalist (VC) to evaluate the stability, and viability of the start-up company. Companies are evaluated both quantitatively and qualitatively. The venture capitalist reviews the management team of the company from a qualitative perspective to discern if the company has the character and integrity to accomplish what they have set out to embark upon.From a quantitative standpoint, the company is evaluated to see if it has done enough research, and has a sound business plan that makes sense.Jeff Von Schmauder, President of Capital Connection, a commercial leasing and finance company for a variety of businesses, describes the above process like raising a family. You’ve got to have nutrients and when your kids are growing up you don’t tell them what you’re going to feed them, you provide meals for them, Von Schmauder said. It’s the same thing with a lot of start-up companies. They may have great ideas but they need an environment to be successful, so you’ve got to have a habitat or physical location. Combine the physical space with seasoned management that you can bounce ideas off of, and you have the infrastructure for a start-up company.That sounds easy enough but when 12 Internet companies bite the dust every day, success is much more daunting.Technology is ever dynamic, and constantly changing, often leaving small high-tech businesses in a game of catch up with companies such as Microsoft and Intel. Entrepreneurs in Tacoma however, should not be acts as one of the few incubators in Tacoma, and Atomic Tangerine, a well-known venture catalyst company, has recently located an office in Tacoma. Scott Bourne Consulting Group offers high-tech venture consulting, and newly-formed BigGarden Ventures brings seed-stage funding and assistance for tech start-ups in the greater Tacoma area. BigGarden has already participated in the launch of two Tacoma area firms – LoudVox, and Loan Tek.Von Schmauder points out that You’d be really surprised at the amount of investment dollars that are available in Tacoma, and there is a major group of Angel investors that are willing to put money into companies that are real and that have potential.To clarify Angel investors, they are investors that take a leap of faith, and put money into a company knowing that they may or may not get their investment back. These investors are crucial to the success of small high-tech businesses in Tacoma, and globally, because every company has to begin somewhere, and Angel investors help companies make the first financial step.Now that I have shared my newfound knowledge, I hope that it has enlightened those who may not have known the basics of high-tech web funding, as it has truly opened my eyes.Email questions and comments on this column to Send ideas for topics and issues to be covered in Cut to the Chase to Jamie Chase at Fielding is a Public Relations and Marketing Specialist for ContractQuest. Sara has received national attention for her Public Service Announcements and specializes in broadcast journalism and media.”