The document discusses how equity is often used as "currency" by start-ups to compensate advisors, mentors, and consultants due to a lack of cash. This poses problems as it leads to over-dilution of company ownership. Start-ups typically fail due to insufficient capitalization and lack of management skills. While entrepreneurs are responsible for unrealistic plans, advisors also share blame for not protecting clients and instead accepting large equity stakes in under-capitalized start-ups. Entrepreneurs should ensure sufficient capital through realistic plans before launching, while advisors should be paid in advance or accept modest equity stakes, reserving larger ownership for growth-stage firms.
Managing an asset management business is unique. Not only is it a professional service business but extraordinary portfolio management and sales talent is critical to the business. Balancing the business and the profession is essential.
An overview of the challenges and options business owners in the graphic arts space are facing with the transformation taking place in today's industry.
Managing an asset management business is unique. Not only is it a professional service business but extraordinary portfolio management and sales talent is critical to the business. Balancing the business and the profession is essential.
An overview of the challenges and options business owners in the graphic arts space are facing with the transformation taking place in today's industry.
This is an abbreviated version of Carl Sheeler's Pulse blog on Linkedin, 'What is your risk vs. opportunity optics?' The purpose of this material on Optics and the presentation about the 'Business Owner Paradox are inter-related.
Deciding to sell the company in which you have labored and invested will be one of the most important business decisions you will make. Understand the process with this straightforward guide from Wilcox, Swartzwelder & Co.
BoyarMiller Breakfast Forum: The Current State of the Capital Markets 2017BoyarMiller
As part of its ongoing Breakfast Forum series, BoyarMiller gathered industry experts for a moderated discussion on the Current State of the Capital Markets. Speakers included Matt Anstead with EV Private Equity, Ali Nasser with AltruVista and Bill Pyle with Texas Capital Bank.
Join us for a LIVE WEBINAR that identifies the key reasons why most business fail and the factors that are found in those that succeed. During the webinar, Growthink's co-founder and CEO Jay Turo will uncover the pitfalls that entrepreneurs and managers just can't seem to avoid, and reveal best practices for successfully growing and exiting your business.
Heated competition to get into top private-equity funds is leaving some investors out in the cold.
Pension funds, endowments and wealthy individuals that invest with private equity are finding it increasingly hard to get into the most sought-after funds, according to data and industry participants.
Private-equity firms, which raise money from such investors and then put it to work in various investment strategies, are generally filling their coffers faster this year from clients. The proportion of private-equity funds that reached or exceeded the maximum amount the firms set out to raise this year is at its highest level since at least 2009, according to a snapshot of funds for which private-equity tracker Preqin has data. Typically, firms put a limit on the size of the fund they are raising, known as a hard cap, at the beginning of the fundraising process. That hard cap generally can’t be exceeded without approval from fund investors.
As of Nov. 13, 55% of roughly 280 funds for which Preqin had hard-cap data reached or surpassed that maximum size. Last year, 43% of funds hit or exceeded those limits.
This is an abbreviated version of Carl Sheeler's Pulse blog on Linkedin, 'What is your risk vs. opportunity optics?' The purpose of this material on Optics and the presentation about the 'Business Owner Paradox are inter-related.
Deciding to sell the company in which you have labored and invested will be one of the most important business decisions you will make. Understand the process with this straightforward guide from Wilcox, Swartzwelder & Co.
BoyarMiller Breakfast Forum: The Current State of the Capital Markets 2017BoyarMiller
As part of its ongoing Breakfast Forum series, BoyarMiller gathered industry experts for a moderated discussion on the Current State of the Capital Markets. Speakers included Matt Anstead with EV Private Equity, Ali Nasser with AltruVista and Bill Pyle with Texas Capital Bank.
Join us for a LIVE WEBINAR that identifies the key reasons why most business fail and the factors that are found in those that succeed. During the webinar, Growthink's co-founder and CEO Jay Turo will uncover the pitfalls that entrepreneurs and managers just can't seem to avoid, and reveal best practices for successfully growing and exiting your business.
Heated competition to get into top private-equity funds is leaving some investors out in the cold.
Pension funds, endowments and wealthy individuals that invest with private equity are finding it increasingly hard to get into the most sought-after funds, according to data and industry participants.
Private-equity firms, which raise money from such investors and then put it to work in various investment strategies, are generally filling their coffers faster this year from clients. The proportion of private-equity funds that reached or exceeded the maximum amount the firms set out to raise this year is at its highest level since at least 2009, according to a snapshot of funds for which private-equity tracker Preqin has data. Typically, firms put a limit on the size of the fund they are raising, known as a hard cap, at the beginning of the fundraising process. That hard cap generally can’t be exceeded without approval from fund investors.
As of Nov. 13, 55% of roughly 280 funds for which Preqin had hard-cap data reached or surpassed that maximum size. Last year, 43% of funds hit or exceeded those limits.
Making big money with venture capitalismSwapnilMekale
Making Big Money With Venture Capitalism. Inside this eBook, you will discover the topics about venture capitalist basics, questions to ask when considering venture capital investment, the venture capital boom and the internet bubble, how to make good money the venture capital way, venture capital and its association with job creations and risks of venture capital investment schemes.
What is a business description? A business description provides an overview of what your company does and what makes it unique. It introduces your brand, offering prospective investors and other interested parties an overview of the company's objectives and scope.
Investing is to grow one's money over time. The expectation of a positive return in the form of income or price appreciation with statistical significance is the core premise of investing. The spectrum of assets in which one can invest and earn a return is a very wide one.
This form of investment can come in the form of one very wealthy
individual or from a group of wealthy individuals, intent on investing
into a venture that has promising prospects.
How one professional firm went from start up to $65 million in 10 years. Organizational design matters when it comes to growing and developing professional staff.
this slide mainly talks about how to get a fund and the resources, the stock market and the basic definition & B2B B2C companies and firmographis how to classify companies and select your segment.
Over 100 decision-makers working directly on corporate innovation in Fortune 1000 (Americas, Europe, Asia) corporations share their learnings. By 500 Startups.
Entrepreneurs are people that notice opportunities and take the initiative to mobilize resources to make new goods and services. Entrepreneurs are people that notice opportunities and take the initiative to mobilize resources to make new goods and services.
Best Crypto Marketing Ideas to Lead Your Project to SuccessIntelisync
In this comprehensive slideshow presentation, we delve into the intricacies of crypto marketing, offering invaluable insights and strategies to propel your project to success in the dynamic cryptocurrency landscape. From understanding market trends to building a robust brand identity, engaging with influencers, and analyzing performance metrics, we cover all aspects essential for effective marketing in the crypto space.
Also Intelisync, our cutting-edge service designed to streamline and optimize your marketing efforts, leveraging data-driven insights and innovative strategies to drive growth and visibility for your project.
With a data-driven approach, transparent communication, and a commitment to excellence, InteliSync is your trusted partner for driving meaningful impact in the fast-paced world of Web3. Contact us today to learn more and embark on a journey to crypto marketing mastery!
Ready to elevate your Web3 project to new heights? Contact InteliSync now and unleash the full potential of your crypto venture!
What You're Going to Learn
- How These 4 Leaks Force You To Work Longer And Harder in order to grow your income… improve just one of these and the impact could be life changing.
- How to SHUT DOWN the revolving door of Income Stagnation… you know, where new sales come into your magazine while at the same time existing sponsors exit.
- How to transform your magazine business by fixing the 4 “DON’Ts”...
#1 LEADS Don’t Book
#2 PROSPECTS Don’t Show
#3 PROSPECTS Don’t Buy
#4 CLIENTS Don’t Stay
- How to identify which leak to fix first so you get the biggest bang for your income.
- Get actionable strategies you can use right away to improve your bookings, sales and retention.
When listening about building new Ventures, Marketplaces ideas are something very frequent. On this session we will discuss reasons why you should stay away from it :P , by sharing real stories and misconceptions around them. If you still insist to go for it however, you will at least get an idea of the important and critical strategies to optimize for success like Product, Business Development & Marketing, Operations :)
Reflect Festival Limassol May 2024.
Michael Economou is an Entrepreneur, with Business & Technology foundations and a passion for Innovation. He is working with his team to launch a new venture – Exyde, an AI powered booking platform for Activities & Experiences, aspiring to revolutionize the way we travel and experience the world. Michael has extensive entrepreneurial experience as the co-founder of Ideas2life, AtYourService as well as Foody, an online delivery platform and one of the most prominent ventures in Cyprus’ digital landscape, acquired by Delivery Hero group in 2019. This journey & experience marks a vast expertise in building and scaling marketplaces, enhancing everyday life through technology and making meaningful impact on local communities, which is what Michael and his team are pursuing doing once more with Exyde www.goExyde.com
Textile Chemical Brochure - Tradeasia (1).pdfjeffmilton96
Explore Tradeasia’s brochure for eco-friendly textile chemicals. Enhance your textile production with high-quality, sustainable solutions for superior fabric quality.
Salma Karina Hayat is Conscious Digital Transformation Leader at Kudos | Empowering SMEs via CRM & Digital Automation | Award-Winning Entrepreneur & Philanthropist | Education & Homelessness Advocate
How to Build a Diversified Investment Portfolio.pdfTrims Creators
Building a diversified investment portfolio is a fundamental strategy to manage risk and optimize returns. For both novice and experienced investors, diversification offers a pathway to a more stable and resilient financial future. Here’s an in-depth guide on how to create and maintain a well-diversified investment portfolio.
Explore Sarasota Collection's exquisite and long-lasting dining table sets and chairs in Sarasota. Elevate your dining experience with our high-quality collection!
Dining Tables and Chairs | Furniture Store in Sarasota, Florida
Hidden Cost of Equity Used as Currency
1. THE "CURRENCY" OF EQUITY IS
THE HIDDEN COST FOR START-UPS
Published on October 28, 2019 By Theodore Sprink, CEO of Integrated Growth Strategies
An important element of achieving business success, is gaining the respect and recognition of
your employer’s management team, co-workers, customers, competitors, trade
groups, influencers, subject matter experts and market leaders throughout your industry.
Respect and recognition often result in promotions, and in many cases, offers of employment
with those who have witnessed and perhaps benefitted from your honesty, integrity, character,
work ethic, experience, knowledge, IQ and EQ.
But for many of us, respect and recognition have for years been associated with requests for us to
serve as Mentors and Consultants, contributing our time and reputation to Advisory Boards of
start-up businesses.
Changes in Corporate America
Evolution of corporate America is evidenced with a changed landscape whereby more than
anytime in American history, it is not just “small businesses” providing the foundation for
employment. As firms have downsized, or mergers have led to right-sizing of duplicate functions
2. at all levels in the newly constituted company, millions of men and women have been released
into the vast new world of “start-ups”.
This ”American dream” of owning one’s own company, or working in an innovative, agile new
entrepreneurial start-up has created two new constructs. The first, as we all recognize, is that
traditional long-term careers with one employer, providing security, a pension and gold watch at
retirement are over. According to the U.S Bureau of Statistics men and women will have 10 jobs
by the time they reach 40 years of age, Forrester Research projects that most of us will have 12-
15 jobs with 6-8 different companies in 3-5 different industries during our careers.
The second is that entrepreneurial start-ups have changed, perhaps because of the sheer number
driven by technology, innovation and a mobile work force. One change is that many start-ups are
established by entrepreneurs willing to perform as independent 1099 contractors while working
for several companies simultaneously. The other change is that most start-ups intend to disrupt a
well-established business or industry…with insufficient capital and without a full understanding
of what it takes to disrupt the status quo.
Capitalization of the Start-Up
Very few start-ups have sufficient capitalization by which the company can fully develop a
realistic, investor-worthy business plan that can be implemented in the form of a functioning
business, capable of raising capital, perfecting its products and services, building the appropriate
infrastructure, crafting a marketing plan, creating brand equity and launching effective sales
initiatives.
And, start-ups often lack professional management and leadership skills, contributing to the
problem of credibility to raise capital from investors, obtain customers and recruit, hire and
retain key employees.
According to the U.S. Small Business nearly 66% of “small businesses” fail within 5
years. But, the failure rate of “start-ups” is 90%.
There are a number of reasons for small business failures, such as market demand for products,
cost miscalculations, competitive factors, poor planning, weak management, workflow, supply
chain and the like. The leading reason for start-up failure is generally attributed to insufficient
capital.
Thus, a conundrum for those accepting readily available equity. The equity is typically in an
under-capitalized firm with a negative net worth, no product, no customers and no cash
flow.This raises the issue of “chicken or egg”. Does the firm raise sufficient capital and then start
up...or does it start up in order to raise capital?
In either event, entrepreneurs, investors, advisors and service providers, all competing for equity,
need to have their eyes wide open with respect to achieving the 10% success rate versus
suffering the consequences of the 90% failure rate.
3. Equity Mis-Used as Currency
Enter the concept of Advisory Board Members, Mentors, Consultants and the use of
“Equity” rather than cash with which to operate the fledgling company. In my
experience, today’s entrepreneurs have oftentimes tapped themselves, friends and
family members out of the cash that was intended to lead to a commercial loan,
venture capital or angel investor. A sale of the company or an IPO has become a pipe
dream.
As a result, there is no working capital…which leads to the use of equity as the only “currency”
available to keep the doors open, hopefully nurturing the firm into a niche that will lead to its
products or services being attractive to lenders or investors. This is a very slippery slope for the
entrepreneur in that so-called “Vulture Investors" will require an enormous percent of equity for
a fraction of what was anticipated to be dollar valuation and business potential.
My perspective is that while entrepreneurs are ultimately responsible for the development of an
unrealistic or under-capitalized business plan, in many cases Advisory Board Members, Mentors
and Consultants fail to protect the client from themselves.
In a sense, this is to be expected. Indeed, professional talent should be properly
compensated. However, the “Cap Tables” prepared by start-ups, shifting equity to Advisors,
Mentors and Consultants, with further dilution to cover product development, operating costs,
payroll and third party vendor invoices, is considered by many to be a modern form of bait and
switch.
Advisory Board Members, Mentors and Consultants should either be paid in advance, or
recognize and accept that their time and expertise is being volunteered…perhaps subject to a
modest and appropriate equity stake. Growth-stage firms, with marketable products, customers
and cash flow are more appropriate clients in order to earn professional fees, plus a reasonable
slice of equity in the form of a “success fee”.
Entrepreneurs should line up sufficient capital pursuant to a realistic business plan, before
attempting to be the next Bill Gates. They should be acutely aware that personal and family
fortunes are likely to be lost to hungry, willing and well-practiced third party “advisors” who,
given a modicum of business success, are likely to own the lion’s share of the business as a result
of equity being used as currency.
The Dynamics of Entrepreneurs and Third-Party Professionals
One thing that has not changed: Let the buyer beware. What has changed is who the buyers
are. On one hand they are the entrepreneurs, excited to pursue the American Dream. On the other
hand, the third-party professionals may see an opportunity to obtain value with limited
contribution. With that said, in some cases the entrepreneurs, particularly when desperate for
new cash to protect the old cash, may assume the characteristics of less-than-honest con men,
opportunists or simply naive dreamers.
4. Theodore Sprink is the Managing Director of the advisory firm Integrated Growth
Strategies. The firm specializes in developing business plans and investor
presentations that establish operational and marketing strategies that generate
revenue, enhance brand equity and lead to value that justifies the original dream of the
start-up. Ted’s belief is that equity interests are appropriate for individuals assisting
“growth stage” businesses, not under-capitalized start-ups.
Ted can be contacted at tsprink@integrated-growth.com or 866-494-
3727. The firm’s web site is www.IntegratedGrowthStrategies.com.
www.linkedin.com/in/theodoreSprink