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Model Behavior

Abstract number sorcery won't cut it anymore. Investors want to know exactly how you're going to make money.

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This story appears in the March 2002 issue of Entrepreneur. Subscribe »

It was just two short years ago that a profound wake-up call hitthe capital markets. The numbers game of raising money had beenreluctantly redefined during the 60 months that spanned from thefirst quarter of 1994 to the peak of the Nasdaq in first quarter of2000. Fundamental valuations had given way to customer-drivenmetrics such as industry share, volume and first-to-marketpresence. Many on Wall Street hailed the arrival of the new"new math." Peter Henig, writing in Red Herring, said,"As long as there's dynamic growth, there are dynamicstock prices." And the recommendation that came down fromCharles Crane of investment research firm Key Asset Management was,"If you believe in these new statistics, then you have to buythese stocks."

But today, huge opportunity and market share are no longerenough to secure a funding deal for your growing firm. Raisingmoney has taken a turn back to the basics. And as company earningshave come back in line with the mainstream, the real numbers gamefor your deal is now focused on the most elementary component inyour enterprise: your business model.

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