Gdynia Business Week 2012 Presentation
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This was a presentation I delivered to the Gdynia Business Week program in August 2012. GBW teaches high school students critical business, teamwork and leadership skills at an early age.
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Gdynia Business Week 2012 Presentation
- 1. GLOBAL GROUP V E N T U R E S Venture Consulting / Private Equity Services Understanding Financials Show Me the Money!!! Presentation to Gdynia Business Week August 23, 2012 http://www.youtube.com/watch?v=ZTFJocQBLyE
- 2. Gdynia Business Week 2011 Company B-Better! 2
- 3. Presentation Will be Available on Slideshare.com 3
- 5. Show Me the MONEY! Raising the MONEY Makin’ mo’ MONEY Measuring the MONEY Time Value of MONEY 5
- 6. Raising the MONEY! 6
- 7. Debt Capital Public Equity Institutional Follow-on 7 Investors § Income / Dividend Typical Investment Continuum producing § Mature / Stable Private Equity § Conservative Public Exit Buyout (IPO) § Growth slowing & maturing § Cash Flow (EBITDA) positive § May be Profitable Venture Cap Early Private B/C Round Equity § Rev. generating § More rocket fuel required !!! § Often still not Profitable A Round Venture Capital § Usually Revenue Producing § Typically Cash Flow Negative § Not Profitable Seed Fund § Company/ Angel or Prototype formed § Maybe Revenue Producing Friends & Family “Bootstrapping” Incubators § Projects and “Ideas” Stage
- 8. Raising The MONEY The Investment Cycle Money Fund Raised from Managed by LP GP Fund Investors Manager Invest: Exit: Sale/ Portfolio IPO, Fund Companies Liquidated Acquired 8
- 9. The Investor vs. The Entrepreneur Summary Points Takeaways, from the Standpoint of Takeaways, from the Standpoint of the Investor the Entrepreneur } Are we prepared to give up part of our Company? } Do we need financing? How much? What for? } Do we need help with our project? } Are we Committed? } Time horizon: (usually) Infinite 9
- 10. Makin’ mo’ MONEY! 10
- 11. Makin’ mo’ MONEY! (A) TAHITI! (B) RELAX! (C) EXECUTE! 11
- 12. Makin’ mo’ MONEY! “Cash is King!” • RE-INVESTMENT • Investment in People • Market Share • Owner Contributions • New Projects • Brand Awareness • Investors/Lenders • Raw Materials • Reputation • Grants/Subsidies • R&D / Product Dev. • Sales Revenue/Profit • Donations • Value Creation • CASH CASH CASH 12
- 13. “A good business is one that can turn $1.00 into (at least) $1.01” - Ronald Globerman 13
- 14. Measuring the MONEY! 14
- 15. Measuring the MONEY! Accounting Isn’t Simply Bean Counting u Accounting vocabulary is used to communicate a firm’s financial status and performance to all constituents Financial Tax Markets Authorities Lenders Consumers Regulators Firm Suppliers Chief Executive Officer & Management Board Managers Managers Managers Managers 15
- 16. The Fundamental Accounting Identity } Business Activities can be classified into three broad categories: Assets, Liabilities and Owners Equity Assets Liabilities Owners Equity 16
- 17. Fundamental Accounting Identity Illustration “Situation: I just bought a house for 1 million zl, using 300,000 zl of my own money and borrowing 700,000 zl from the bank” Assets Liabilities Owners Equity 17
- 18. 3 Financial Statements Balance Sheet u Income Statement u Statement of Cash Flows u 18
- 19. “But Ken, Why Should We Care???” 19
- 20. Time Value of MONEY! 20
- 21. Cash now vs. Cash later Global Group – All Rights Reserved 21
- 22. How do we apply the Time Value of MONEY concept in life & business? u Choosing banks, retirement funds, stocks, mutual funds, etc. u Assessing one investment opportunity versus another u Business planning and capital budgeting Global Group – All Rights Reserved 22
- 23. Time Value of MONEY! Positive! Cash Dividend Dividend Sale / Divest Flows! 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Negative! Invest Invest 1 st Round 2 nd Round Cash Flows! 23
- 24. Cash Flow Projection Typical Pattern in Start-ups Company.pl Projected Cash Flow 1200 1000 800 600 400 200 0 -200 -400 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 …… 24
- 25. And What About Stock Price? (A) PAST (B) CURRENT (C) FUTURE PERFORMANCE PERFORMANCE PERFORMANCE Company Value is calculated from FUTURE EXPECTED CASH FLOWS Stock Price is calculated from the estimated Company Value, MINUS all future liabilities the Company is OBLIGED to pay 25
- 26. Investment Case Study Łukasz Foltyn Portable Version Naspers tenders writes code for of the 100% of equity communicator Communicator and Gadu Gadu is de-listed Warsaw Equity Gadu Gadu first Holdings buys lists on Warsaw 45% stake Stock Exchange 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 WEH increases equity stake Naspers begins Gadu Gadu from 45 to 80% to buy shares of Premieres Gadu Gadu Source: Publically available data 26
- 27. Recommended Literature u http://theleanstartup.com/ u Also Author of “Good To Great” u http://www.amazon.com/Great-Choice- Uncertainty-Luck-Why-Despite/dp/0062120999 27
- 28. Final Thoughts 28
- 29. Bardzo Dziękuję! For More Information: (e) ken.globerman@globalgroupventures.com www.facebook.com/ken.globerman LinkedIn: Ken Globerman