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Money Buzz 08/05

New access to VC funding, foreign real estate and more
August 1, 2005
URL: http://www.entrepreneur.com/article/78914

Need to get a foot in the funding door? A new screening system by The Venture Alliance in Newport Beach, California, aims to help early stage and pre-IPO companies gain access to VCs, angel investors and investment banks by scoring their "fundability."

TVA employs a proprietary point system that scores companies on key measurements, such as market opportunity, corporate structure, and management and ownership. Companies with strong scores are passed on to TVA funding partners, who perform their own due diligence to make funding decisions. "Out of the 34 companies that scored 1,000 or more points last year, 17 were funded, for a total of $76 million," says founder and CEO Jim Casparie, who reports that fees for the application process range from $1,000 to $2,500.

Lower-scoring companies also benefit from the process. Companies that TVA determines are not ready for financing are given feedback and resources to help them get there, says Casparie, who notes that the first re-scoring is free. "If you give a VC a bad first impression, you're dead," he says. "It's a bit like a first date--and we're making sure you meet for the first time when you're looking your very best."

Foreign Soil

Think you missed the U.S. real estate boom? Well, thanks to the emergence of American-style real estate investment trusts, or REITs, overseas, you now have a chance at similar investment options for foreign property.

Over the past five years, France, Hong Kong and Japan have begun allowing real estate companies to operate like American REITs, which typically invest in commercial properties, such as office and apartment buildings or shopping malls. The real estate companies are required to pay out all profits--less the usual management fees--to shareholders.

In addition, more countries are expected to adopt REIT structures in the very near future, says Arthur Oduma, an equity analyst at Morningstar who covers REITs. Germany and the United Kingdom, for example, are expected to pass REIT legislation in the next year or two.

For U.S. investors, these overseas REITs can provide access "to the much larger European real estate market, as well as diversification through international exposure," says Oduma. "Also, the U.S. REIT market has been rather frothy in the last few years. Better values might be gained in Europe."

However, there can be a downside. "Watch out for the tax implications," warns Oduma. "There is still no uniform European Union tax regime governing all investments, so you want to look at the tax differences among the various countries before you invest."


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Jennifer Pellet is a New York City freelance writer specializing in business and finance.