Monday, May 7, 2012

Reuters: Small Business News: Teenage exec raises $7 million for start-up payments company

Reuters: Small Business News
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Teenage exec raises $7 million for start-up payments company
May 7th 2012, 18:55

By Sarah McBride

SAN FRANCISCO | Mon May 7, 2012 2:55pm EDT

SAN FRANCISCO (Reuters) - Gumroad, a start-up payments company run by 19-year-old entrepreneur Sahil Lavingia, has raised $7 million in a funding round led by Kleiner Perkins Caufield & Byers, Lavingia said in a blog post. <gumroad.com/next-steps >

Lavingia represents the increasingly youthful face of Silicon Valley, where entrepreneurs in the consumer-Internet sector are quickly building companies with relatively little experience.

Last month, twenty-somethings Kevin Systrom and Mike Krieger sold their photo-sharing company Instagram to social-network Facebook for $1 billion.

His company is taking on others such as eBay's PayPal in trying to make it easy for small-scale entrepreneurs to earn money. Gumroad's twist is in using link-based payments, requiring fewer steps for the consumer.

The funding round marks the first investment for Mike Abbott since he joined Kleiner late last year. Previously, Abbott ran engineering at Google and briefly worked as an entrepreneur-in-residence at Benchmark Capital.

Lavingia dropped out of the University of Southern California to work for Pinterest, the online bulletin-board company that has attracted more than 19 million users and raised $37.5 million in funding from firms such as Andreessen Horowitz.

He founded Gumroad late last year.

(Reporting by Sarah McBride; Editing by Maureen Bavdek)

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Sunday, May 6, 2012

Reuters: Small Business News: Payday loan firm Wonga to lend to small businesses

Reuters: Small Business News
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Payday loan firm Wonga to lend to small businesses
May 7th 2012, 06:04

By Georgina Prodhan

LONDON | Mon May 7, 2012 2:04am EDT

LONDON (Reuters) - British online payday loans provider Wonga.com launched a credit service for small businesses on Monday, aiming to fill a gap in the market left by banks who have been hamstrung by tight lending conditions imposed since the credit crunch.

Wonga, which has made 4 million short-term loans to consumers since its launch in 2007, will offer small businesses loans of 3,000 to 10,000 pounds ($4,800 to $16,200) for periods of between one and 52 weeks.

Interest rates will be fixed at between 0.3 and 2 percent per week, depending on how risky the loan is judged to be.

Wonga uses automated risk-processing technology to give near-instant answers to online applicants, and turns down about two-thirds of applications.

It now aims to export its more popular features, including the simple application screen featuring sliders that can be dragged to the desired amount to be borrowed and repayment period, to the business world.

"We wanted it to have all the characteristics that people positively associate with Wonga in terms of transparency, simplicity, ease of use, speed ... and we wanted to bring that to small business," said Chief Executive Errol Damelin.

Wonga's business has boomed during the downturn as cash-strapped consumers who found it hard to obtain short-term credit elsewhere turned to it for loans of up to 1,000 pounds to tide them over for up to a month.

The company has been criticized for charging too much interest - it charges simple interest to consumers of just under 1 percent per day - and for targeting the vulnerable.

But Wonga says its transparency, strict acceptance criteria and low default rates, which are in the mid-single digits, show it is a responsible lender.

Because it does not take deposits, Wonga operates under a consumer-credit license, not a banking license, meaning it is not subject to the capital requirements that are currently preventing banks from lending more.

"What became crystal clear to us a year or so ago was that small businesses had maybe even more need than individuals for solving short-term cash-flow problems," Damelin, who is also one of the company's two founders, told Reuters in an interview.

"For owner-operated businesses, capital is their oxygen. That's what they live and breathe and that's what's gives them the opportunity to stay in business and grow their businesses and employ people and help the economy recover."

Unlike the consumer-loan application process, which instantly displays the total cost of borrowing, Wonga for Business will have no instant decisions or predetermined interest rates because of the larger sums at stake and variety of risk factors.

Applicants must provide information about their company and its directors, who personally guarantee the loan. Wonga says the application process can be completed in 12 minutes, and money can be transferred to the business in as little as half an hour.

Wonga is the market leader for short-term, unsecured loans that can only be obtained online. It currently operates in Britain but is considering entering other markets such as Canada and South Africa in time.

Wonga's backers include Accel Partners, Balderton Capital, Greylock Partners, Oak Investment Partners and the Wellcome Trust. The company raised 73 million pounds in fresh capital a year ago.

($1 = 0.6189 British pounds)

(Reporting by Georgina Prodhan; Editing by Hans-Juergen Peters)

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Thursday, May 3, 2012

Reuters: Small Business News: Small business hiring slows in April: NFIB

Reuters: Small Business News
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Small business hiring slows in April: NFIB
May 3rd 2012, 22:23

WASHINGTON | Thu May 3, 2012 6:23pm EDT

WASHINGTON (Reuters) - Hiring by small businesses slowed in April, but there was an increase in the number of employers planning to create new jobs and those reporting they could not find qualified workers to fill job openings.

The National Federation of Independent Business said its survey of 1,817 small businesses found that the average number of net employment slipped to 0.1 worker per firm from 0.2 in March.

However, their employment survey showed the share of businesses planning to create new jobs rebounded five points after plunging in March. In addition, the share of owners reporting hard to fill opening rose two points, just below January's three-year high.

"April was another tenuous month for small businesses, sending mixed signals about what the future holds," the NFIB said in a statement.

The survey was published ahead of the release of the government's more comprehensive payroll count on Friday. Nonfarm payrolls likely increased 170,000 in April, according to a Reuters poll, after rising 120,000 in March. The unemployment rate is seen steady at 8.2 percent.

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Wednesday, May 2, 2012

Reuters: Small Business News: U.S. business startups rate at record low,

Reuters: Small Business News
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U.S. business startups rate at record low,
May 2nd 2012, 16:51

WASHINGTON | Wed May 2, 2012 12:51pm EDT

WASHINGTON (Reuters) - The pace at which new businesses are created in the United States dropped to a record low in 2010, a troubling development for an economy that is struggling to achieve higher growth rates necessary to reduce high unemployment.

The latest Census Bureau data, published on Wednesday, showed the startup rate fell to an all-time low of 7.87 percent from 8.10 in 2009.

The figures are based on a survey conducted by the Census Bureau's Center for Economic Studies and the Ewing Marion Kauffman Foundation, a nonprofit organization that focuses on entrepreneurship.

The startup rate peaked at 13.02 percent in 1987. Startups are critical contributors to job creation, and the declining trend could help explain the economy's sluggish recovery from the 2007-09 recession.

"There are a lot of questions as to why the economy has been slow coming out of the recession, and it is possible that some of that could be explained by the decline in the trend of startups and new firms in the U.S. economy," Javier Mirada, principal economist at the Center for Economic Studies, told Reuters.

According to the survey, about 394,000 new businesses were formed in 2010, creating 2.3 million jobs. In contrast, total private-sector employment fell by 1.8 million between March 2009 and March 2010.

Although the economy has now been growing for 11 straight quarters, the pace has been insufficient to bring down the unemployment rate, which remains above 8 percent.

"Without the new jobs created by business startups, the Great Recession would have been even deeper, with many more jobs lost," said Robert Litan, vice president of research and policy at the Kauffman Foundation.

"If we are to achieve and sustain a hearty recovery, policymakers, educators and organizations that help entrepreneurs commercialize their technologies must be willing to address every obstacle that stands in the way of new business formation," Litan said.

Only 35 percent of all companies are "young" -- in business five or fewer years -- down from nearly 50 percent in the early 1980s.

At the same time, entrepreneurial companies accounted for only 12 percent of U.S. employment in 2010, compared with 20 percent in the 1980s.

The entrepreneurs' share of job creation also has fallen, to about 30 percent in recent years from more than 40 percent in the 1980s.

(Reporting By Lucia Mutikani; Editing by Lisa Von Ahn)

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Reuters: Small Business News: Jobs Act floats European firms' IPO boats

Reuters: Small Business News
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Jobs Act floats European firms' IPO boats
May 2nd 2012, 15:10

By Kylie MacLellan and Olivia Oran

LONDON/NEW YORK | Wed May 2, 2012 11:10am EDT

LONDON/NEW YORK (Reuters) - A new U.S. law to help small firms raise capital is boosting the number of European companies looking to list in the United States after a decade deterred by tougher regulation in the wake of scandals such as the Enron fraud.

With stockmarkets in Europe buffeted by the euro zone debt crisis and seeing few initial public offerings of note over the last nine months, some Europeans were already beginning to look across the Atlantic, but the Jobs Act is providing extra pull.

"We may see an unexpectedly large flow of European companies going to the U.S. in the second half of 2012 and early next year," Reinout Koopmans, co-head of European Equity Capital Markets at Jefferies, told Reuters.

"It is rare to have a discussion about a listing now where the U.S. question is not raised. Everyone is at least asking the question, because the Jobs Act has made it more attractive."

European interest in floating in the United States had slowed after the Sarbanes-Oxley Act of 2002, which introduced rigorous disclosure and audit requirements to combat corporate scandals like those at Enron, Tyco International and WorldCom, which cost investors billions of dollars.

The Sarbanes-Oxley regulations were among the most burdensome rules in the world for would-be issuers due to the high costs of compliance and the potential restatement of financial reports.

Under the Jobs Act, so-called emerging growth companies - those with less than $1 billion in annual revenue - are exempt from an outside audit of internal controls for up to five years.

The act, signed into law by President Barack Obama last month, also allows such companies, including foreign issuers, to present just two years of audited financial statements rather than the three years required previously.

They can also now engage in "testing the waters", which allows them to gauge investor interest in a potential offering before a registration statement has been filed with the U.S. Securities and Exchange Commission (SEC). This practice, also known as pilot-fishing, is already common in Europe, but had been limited in the United States.

OUT OF SIGHT

Another key change enticing European companies is that the Jobs Act gives emerging growth companies the ability to file their listing documents with the SEC confidentially.

Confidential filing enables a company to resolve any regulatory issues out of the public eye. It also means a company can more easily pull an offering, if need be, without the stigma attached to a withdrawal.

"Foreign issuers are probably more excited about the Jobs Act than U.S. issuers are, particularly because of the confidential filing," said Anna Pinedo, a New York-based attorney with Morrison Foerster.

"A lot of them just aren't sure whether or not there's a U.S. market for their securities and whether they'll be received well."

Traditionally the trickle of European companies to the United States has been dominated by those from the tech sector, which in 2011 accounted for around 60 percent of the funds raised by Europeans floating on U.S. exchanges, according to Thomson Reuters data.

This is driven by New York's reputation as a listings hub for tech companies, with companies wanting to float where their peers are trading and investors in the United States seen as having a better grasp on the sector, potentially boosting valuations.

Last year just eight companies in the high-technology sector floated on European exchanges, raising a total of $133.6 million, compared with more than $11 billion raised from 40 high-tech listings on U.S. exchanges.

The Jobs Act is set to add to this trend. British vacuum technology firm Edwards Group, which pulled a planned London listing last year, is due to price its Nasdaq IPO next week.

German high-tech lighting company Novaled and Portuguese mobile payment business TIMWE have also filed with U.S. regulators to list on Nasdaq, while UK-based companies rumored to be looking at U.S. bourses include online marketing services company Emailvision and online content network Adconion Media Group.

Emailvision declined to comment on the company's IPO plans. Adconion Media Group could not be reached for comment.

Lawyers and bankers preparing IPOs say that post-Jobs Act they are also seeing much broader interest, with non-tech companies in Benelux, the Nordics, Spain and Italy among those considering the United States. Any company with material business there and a strong growth profile could list in New York, bankers said.

Karen Dempsey, a San Francisco-based partner at Orrick, Herrington & Sutcliffe LLP, said the number of companies exploring a U.S. IPO since the Jobs Act was passed had come from a wider geographical range than previously.

"We are starting to see increased interest from emerging companies in certain parts of Eastern Europe as well," she said.

Eastern European companies raised a third of all IPO proceeds in Europe, the Middle East and Africa in 2010, and a quarter in 2011, so European bourses angling to land more business from the region - principally the London and Warsaw exchanges - might need to improve their bait.

(Reporting by Kylie MacLellan and Olivia Oran; Editing by Will Waterman)

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Tuesday, May 1, 2012

Reuters: Small Business News: These British-made brogues were made for walking

Reuters: Small Business News
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These British-made brogues were made for walking
May 1st 2012, 14:32

Director Barry Jones poses at Tricker's shoe factory in Northampton, central England, April 25, 2012.The small wooden door of Tricker's shoe factory unexpectedly leads to a smartly polished showroom, its dark wooden shelves home to some of the world's finest handmade shoes, as a collection of workers visible through clear glass windows go about their daily tasks. Photograph taken April 25, 2012. REUTERS/Darren Staples

1 of 12. Director Barry Jones poses at Tricker's shoe factory in Northampton, central England, April 25, 2012.The small wooden door of Tricker's shoe factory unexpectedly leads to a smartly polished showroom, its dark wooden shelves home to some of the world's finest handmade shoes, as a collection of workers visible through clear glass windows go about their daily tasks. Photograph taken April 25, 2012.

Credit: Reuters/Darren Staples

By Li-mei Hoang

NORTHAMPTON | Tue May 1, 2012 10:32am EDT

NORTHAMPTON (Reuters) - The small wooden door of Tricker's shoe factory unexpectedly leads to a smartly polished showroom, its dark wooden shelves home to some of the world's finest handmade shoes, as a collection of workers visible through clear glass windows go about their daily tasks.

Rows of shiny leather shoes are lined up, toe first, ready for visitors to inspect and possibly purchase straight from one of England's oldest shoe-making firms which supplies its footwear to Prince Charles, a historic lineage that many tourists are keen to buy into.

Britain's shoe manufacturing industry is experiencing a revival, as sales of traditional footwear brands like Tricker's, Church's and Crockett & Jones have increased year-on-year at luxury department stores like Selfridge's.

"These are brands which stand for quality and craftsmanship. The leather and stitching quality is consistently outstanding," said Selfridge's Buying Manager for Men's Shoes Richard Sanderson, who has seen a rise in demand for British-made products.

"The use of traditional design methods is really appealing to international visitors, who feel like they're buying into a piece of British culture."

"We see markets such as China, Nigeria and our closer-to-home European shoppers ask specifically for this type of brand when they visit our stores," Sanderson added.

The demand for gentlemen's brogues, often seen on the feet of wealthy bankers, has seen business flourish at Tricker's, one of the last remaining shoe factories in the middle English market town of Northampton. Tricker's was founded in 1829 and makes 1,400 pairs of shoes a week, 1,300 of which are brogues.

GOOD FEELING

Around the factory, workers carefully tend to each of the 250 individual processes that go into making one shoe. Hand laster Scott McKee holds one bespoke shoe he is making steady as he manually stitches the leather to part of the sole.

McKee has worked in shoe manufacturing for 18 years, 10 of which he spent training, after following his father into the industry.

"I didn't really want to get into it, to be honest. I was working in a sports shop at the time, and then my dad got me a job but everybody got made redundant so I went to another shoe factory, but eventually came to Tricker's."

He enjoys his job as a bespoke shoemaker as well as finding solutions to more unusual requests like building four toes inside of a shoe for a client who had lost his own.

"I'm hand-making shoes which I enjoy doing, so I get a good feeling out of it because I'm making a pair of shoes for somebody who can't buy shoes from a shop. These are specially made, so that's a good feeling."

The factory is a small operation based in the centre of Northampton, employing around 90 workers, many of whom are local to the area.

Tricker's Director Barry Jones attributes the company's long success to its high standards of quality craftsmanship.

"People all over the world now realize that quality is very important. You buy something and it lasts, does the job. People will come back," Jones told Reuters.

The company's strongest growth comes from exports, which accounts for 70 percent of production to countries like Italy and Japan, but UK trade has picked up over the past year.

Jones said the company has yet to venture into China because of concerns over its counterfeit market.

"We've not really gone into China, like a lot of companies have, because they tend to take the styles and they do tend to copy them. So we're treading a little bit carefully there," he said.

"We have enough work...at the moment not to rush into anything yet. But it will our focus at some point, maybe in the future."

International expansion plans aside, Tricker's is suffering from a shortage of young skilled workers willing to fill the places of its ageing workforce, like many other British manufacturing operations.

McKee thinks the government should do more to get younger people involved in the industry but admits this is a hard task.

"They (young people) don't want to do it. They're more interested in playing computers or doing IT or whatever, so it's a shame really," he said.

Jones agrees and says the skills are just not around anymore and it's very expensive to train people up.

"There's not the colleges around like there used to be, to train people in footwear so obviously we have to do a lot of in-house training, which is expensive and time-consuming. Skills is the biggest threat to the footwear manufacturing industry around here."

However McKee wouldn't encourage his own son to follow in his family's long tradition of working in shoe manufacturing.

"The money's not all that great, to be honest."

(Reporting by Li-mei Hoang, Editing by Paul Casciato)

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Reuters: Small Business News: Small business lending slips in March

Reuters: Small Business News
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Small business lending slips in March
May 1st 2012, 09:16

By Ann Saphir

Tue May 1, 2012 5:16am EDT

(Reuters) - Lending to small businesses in the United States sagged in March, supporting the view that economic growth is headed for a further slowdown in coming months.

The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to U.S. small businesses, sank to 98.5 in March from 101.8 a month earlier, PayNet said on Tuesday.

Borrowing rose 10 percent from a year earlier, the lowest 12-month growth rate since January 2011. The lending index is correlated with changes in overall economic growth several months in advance.

"Every indicator on the risk dashboard is positive, and yet smaller business owners are holding back," PayNet founder Bill Phelan said in an interview, noting that interest rates and inflation are low. "They are seeing something in their businesses that is not inspiring confidence and their best instincts are telling them that now is not the time to invest."

The Fed last week said it would likely need to keep interest rates near zero through late 2014 to support an economy that is still trying to pull free of the after-effects of the Great Recession, including 8.2 percent unemployment and continued sluggish growth.

The U.S. economy, which slowed to 2.2 percent in the first quarter from 3 percent in the final quarter of last year, appeared to downshift further as entered the second quarter.

Consumers increased their spending only modestly in March and a gauge of business activity in the Midwest United States fell sharply in April, separate reports on Monday showed.

PayNet tracks borrowing by millions of small U.S. businesses.

DEBTS PAID

Separate PayNet data suggested small businesses are paying back their debts with relative ease.

Accounts in moderate delinquency, or those behind by 30 days or more, fell to 1.39 percent in March from 1.47 percent in February. That's far below the high of 4.42 percent reached in May 2009.

Accounts 90 days or more behind in payments, or in severe delinquency, fell to 0.34 percent in March, a record low, from 0.36 percent in February.

Accounts behind 180 days or more, or in default and unlikely ever to be paid, fell to 0.48 percent in March from 0.50 percent in January.

PayNet collects real-time loan information, such as originations and delinquencies, from more than 250 leading U.S. capital equipment lenders.

(More on Thomson Reuters/PayNet Small Business Lending Index is available here)

(Editing by Chizu Nomiyama)

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