INVESTOR’S BUSINESS DAILY
New Venture Fund Idea
gives ultimate safeguard:
BY JED GRAHAM
Could the answer to the cash crunch of Silicon Valley
start-ups reside in Lima, Ohio?
Maybe not. But a new method of financing risky ventures
that carries a money-back guarantee might have saved some
of the billions in venture capital thrown away on dotcoms.
And now, despite the risk-averse funding climate, the
InvestorProtector program, recently launched by Lima-based
Investor Life Services Inc., is already helping start-up firms
"I don't think there's anybody who invested money in a dot-
com who doesn't wish they had the InvestorProtector
guarantee," said Harry Green, CEO of Investor Life Services.
The tech wreck has made a lot of people appreciate the
wisdom of Will Rogers, Green says, paraphrasing one of the
humorist's quotes: "It's not the return on my money, but the
return of my money that concerns me."
With InvestorProtector, if the venture goes belly up, "the
only loss to the investor is opportunity," Green said.
That, and the loss of value to inflation over the 10 to 15-year
period it takes to get back the investment. Here's how the
Say an investor is willing to put $100,000 into a new venture.
Half of that money goes into a start-up's coffers. The other
$50,000 goes into an InvestorProtector Trust as a hedge
against the failure of the investment. It's used to purchase a
guaranteed contract of insurance." The trust provides bene-
fits to the investor with respect to protecting their principal,"
Green said. Even if the start-up goes bankrupt and its
creditors are circling to get paid back, the $50,000 in the trust
will be protected, he says.
In addition, the trust lets the investor "take advantage of tax-
deferred accumulation" so interest can pile up faster, Green
said. That way the entire $100,000 can be returned in 10 to
15 years, depending on the interest rate.
"Initially, it didn't interest me," said Walter Miller, CEO
of Capital Growth Re