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  • Confidential - Here’s how our phases relate to financing and revenue - We have completed the design phase including the business logic and a comprehensive technical feasibility. - We are raising $3 million to build out an Alpha version that can generate revenue, host stored value accounts, showcase inter-device transactions, provide scalable content acquisition, offer third party affiliate tools and hook into popular social networks A Series A financing will follow for the launch and scaling phase

Avoid The High Valuation Trap To Bcit Nov 09 Beta Draft Presentation Transcript

  • 1. Entrepreneurship & Strategy Class
  • 2. My Bio
    • Entrepreneur – 3 meaningful startups
    • Corporate Finance – negotiated over 100 transactions, CIBC Investment Banking
    • Boards
      • Chair of a pre-revenue start-up
      • Founding director of MetroBridge, recent IPO
      • Director of award-winning local VC, BCAF
  • 3. About Stirling Mercantile Divestitures M&A Advisory Expansion Capital Fairness Opinions Early-Stage Finance FAIRNESS OPINIONS Director comfort & legal protection from independent, expert valuation EXPANSION CAPITAL Multiple industry experience Seasoned corporate financiers EARLY-STAGE FINANCING Full-service approach throughout process Aligned interests likely to secure funding DIVESTITURES Corporate financier involvement can improve price, simplify process M&A ADVISORY Sage advice in times of need or growth opportunity .
  • 4. About Stirling Mercantile Divestitures M&A Advisory Expansion Capital Fairness Opinions Early-Stage Finance FAIRNESS OPINIONS Director comfort & legal protection from independent, expert valuation EXPANSION CAPITAL Multiple industry experience Seasoned corporate financiers EARLY-STAGE FINANCING Full-service approach throughout process Aligned interests likely to secure funding DIVESTITURES Corporate financier involvement can improve price, simplify process . M&A ADVISORY Sage advice in times of need or growth opportunity
  • 5. Experience
  • 6.  
  • 7. www.stirlingmercantile.com
  • 8.  
  • 9.  
  • 10.  
  • 11. Diverse Portfolio - Successful Exits 7 Technology IRR 342% 23x Cash 5x Cash 3x Cash Life Science
  • 12. Perspectives Advisor Investor Exit Transactions . Founder
  • 13. Funding Road Map Confidential F, F & E Seed, Angel Series A Series B Year 1 2 3 4 5 Early Adopters Crossing the Chasm Mainstream Growth Develop Scale Expand Phases Funding Roadmap Investor Exit Revenue today Launch .
  • 14. What happens when you bring in equity investors?
    • Dilution
    • More governance and oversight
    • Additional management
    • Capital to accelerate development
    • Access to broader network
    • Added business insight
    Background .
  • 15. What Do VCs Need?
    • Strong team, with integrity
    • Clear, lucrative and sustainable value proposition
    • Large market opportunity and the ability to scale into it
    • Realistic valuation and deal terms
    .
  • 16. What Do VCs Want?
    • Traction from the target market
    • 2 or 3 independent board candidates
    • Appropriate deal size for their fund
    • Appropriate market sector for their fund
    • Transaction ready due diligence binder/site
    • Close proximity
    .
  • 17. What Should You Look For in a VC?
    • More than money
    • Strong team, with integrity
    • “Been there, done that” management
    • Exit strategies
    .
  • 18. What Should You Look For in a VC?
    • More than money
    • Contacts
      • for additional management
      • for customers
      • for partnerships
    .
  • 19. Why VCs Need ‘Home Runs’
    • 40% return on a fund, which lasts about 7 to 10 years
  • 20. One in Ten
    • Some make a break-even or make a modest gain. Others die.
    $40m $100m
  • 21. Objectives
  • 22. Murphy’s Law
  • 23. High Valuation Trap
    • Problem:
    • Follow-on investors value lower than last
    • Forced to “cram down” last investors or no deal
    • Solution:
    • Understand downstream valuations
    .
  • 24. Valuation
    • Consider the post $ cap table for the next round
    • And subsequent rounds to the exit
    .
  • 25. Exit Valuations
    • Multiple of
      • Revenue (eg. $10m x 2 = $20m)
      • Profit or EBITDA (eg. $3m x 6 = $18m)
    • Discounted Cash Flow (can be lame)
    • All are better when company is growing
      • (Importance of timing)
    .
  • 26. Relative Valuations
    • Big Co
    • Experienced management, board
    • Large revenues
    • Diversified customer base
    • Scaled Infrastructure
    • Worth 3 x Revenues
    • Small Co
    • Great founder, some holes on team
    • Small growing revenues
    • Concentrated customer base
    • Scalable infrastructure
    • Worth 1.5 x Revenues
    .
  • 27. Deal Drivers
    • Accretive acquisitions
      • You must add to buyer’s valuation
      • For example:
        • Buyer: $100m Revenues x 3 = $300m market cap
        • Buys $10m Revenues x 1.5 = $15m
        • Adds $10m x 3 to valuation or $30m
          • Accretive value is 2x cost
    .
  • 28. Deal Drivers
    • Strategic
      • Add value to other products or assets
      • Adds customers
      • Keep away from competitors
      • Product or geographic expansion
    .
  • 29. Marketing the Exit
    • Plan the exit from the outset
    • Get to know your potential buyers early
    • Get to know your service providers early
    .
  • 30. Think Like A Buyer
    • Strategic
      • Market share, keep away from competitor
    • Financial
      • Earnings, valuation multiples, accretive value to a stock price
    • Entrepreneur
      • Lifestyle
    .
  • 31. Think Like A Buyer
    • Spend money to…
    • … make money, or
    • … save money
    .
  • 32. Reading
    • Fred Wilson www.avc.com
    • Brad Feld www.feld.com
    • Chris Dixon www.cdixon.org
    • Mark Suster www.bothsidesofthetable.com
    • Legal www.startupcompanylawyer.com
    • Bootup Labs http://blog.bootuplabs.com/
    • News www.techcrunch.com
    .
  • 33. Thank you
    • A copy of this presentation is available at:
    • www.stirlingmercantile.com/ speakers.htm
    [email_address] [email_address] davidshore