washingtonpost.com
Business Rx: As start-up seeks more capital, it gropes for ways to grow

By Special to Capital Business
Monday, August 2, 2010; 23

The Entrepreneurs

Daniel Horowitz, Sam Winter and Brian Peisach are on a mission to dispel the negative perceptions regarding the quality of items produced in China. The trio, as undergraduates at the University of Maryland's Hinman CEOs entrepreneurship program, hatched a business idea last fall specifically geared toward small to mid-size U.S. companies, such as those in the electronics industry. They would offer a one-stop shop for companies to get their products manufactured in China.

Their company, Trade Assurance International (TAI), officially launched in January, after a two-week visit to the Far East as the only undergraduate competitors in the 2010 China MBA Business Plan Competition, organized by the Dingman Center for Entrepreneurship at the University of Maryland's Robert H. Smith School of Business. On their trip, Horowitz and Winter were able to firm up partnerships with key manufacturers, financiers, quality-control firms and shippers. A recent month-long trip to Hong Kong and China allowed them to further establish their rapidly expanding network of strategic alliances. Now they are building a Web platform designed to set TAI Group apart from its peers.

The Pitch

Horowitz

"We're in the process of creating a centralized online platform for the simplification of outsourcing manufacturing production to more cost-competitive areas of the world -- initially China. We manage the entire process A to Z, taking out the complexity by isolating and attacking risk, thereby allowing our clients to focus on their core competence of growing business with operational efficiency during the most difficult economic times."

Peisach

"It's all the main elements that go into sourcing production in other countries, but we simplify the process for clients in an online platform and take care of the details. We're focused on mitigating risk for clients as much as possible."

Winter

"Our target clients are companies that don't have the ability to set up their own production oversight in Hong Kong or China and eventually other emerging industrial economic regions. We're starting out by focusing our efforts on building the business in China through the partnerships and contacts we've forged. For companies that want to outsource production but don't know where to start, we can help make sure the whole process is managed properly. The partners we're working with in China all have extensive experience working with international clients and, most importantly, an appreciation for Western business ethics. We're scaling slowly to test partnerships. Thus far, we're very pleased with the cooperation shown from strong strategic alliances in China and Hong Kong."

The Problem

Horowitz

"Right now, we're meeting with potential angel investors -- especially those with relevant experience and industry connections. We're closely monitoring our burn rate and preparing our initial push to generate sustained and scalable revenues. How do we make it through this phase -- in between the uncertainty of minimal seed funding and self-financing, and proper capitalization -- and what should we focus on while we're in this phase?"

The Advice

Harry Geller, visiting entrepreneur in residence, Dingman Center for Entrepreneurship; founder, Global Mail (now DHL) and serial entrepreneur

"This is certainly a viable business model -- there's no question about that -- but the initial challenges are building credibility, finding clients and operating in between pre-/early-stage financing. Without the investment, focus on the pieces you can undertake now. Build a client list that fits your initial profile. Figure out a way to 'hit singles' and make money with the smaller orders that you can easily handle. That will allow you to validate your business model and establish your track record.

"While starting a business takes relatively little capital, growing it is another story. Adding in a killer business plan with some operating experience will really show potential investors the value you provide.

"More specifically, I think it's a good idea to focus on China and the electronics industry as you have defined. It would be smart to come up with a must-have checklist before you initiate relationships with partners in China. If they don't pass, then they're not a trusted vender."

Reaction and next steps

Horowitz

"The core theme of our experience so far is really based on building the foundations for strong, trusted and lasting relationships -- 'guanxi' -- with our alliances in the Asia Pacific region. At the moment, we're planning additional trips to appealing emerging markets to continue developing and nurturing these mutually beneficial relationships. We don't want any of the relationships we've made to go cold in our transition phase from starting up to scaling the business. Our focus right now is to obtain proper funding while building up traction with our company, one satisfied client at a time."

Post a Comment


Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.

© 2010 The Washington Post Company