Year: 2015

Taking the Long View

Anyone who is familiar with the basics of corporate finance theory will be conversant with the fact that the theoretical value of a business is Net Present Value (NPV) of future cash flows from the business discounted at the cost of capital applicable to the company – or its perceived …

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Valuing Early-stage Ventures

Agreeing to a valuation of a young and growing business between the existing shareholders and the potential investor can be one of the most difficult issues in an equity investment deal. Valuing a company of any size is never easy but it is especially onerous if that company happens to …

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The Power of 3

After nearly a quarter of a century in business, and a career built on being a “strategist” I now maintain that “Strategy” is for amateurs and “Logistics” is for professionals. In business it’s the little things that matter most. The visionary 5  year strategic plans are usually pipe dreams. When …

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The Golden Rule

Raising venture funding and investing for equity has been called “the great financing game”. It’s a game whose rules of engagement, playing conditions and plan of attack – and usually the final score – are dictated by the money. As an early investor of mine said to me as he …

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Team Sheets or Death Warrants

The Terms Sheet is perhaps the most important document the entrepreneur can get right. All else fall – or hangs – from it. The Terms Sheet sets out the basic framework for the deal. It can be a excruciatingly boring document to develop and read – particularly as the language …

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Key Players in the Venture Capital Game

THE ANGEL INVESTORS The first set of equity investors a rising entrepreneurial venture typically encounters are the Angel Investors – the informal network of the high net-worth individuals who invest their own money into ventures where they usually have domain knowledge, first-hand commercial experience and where they can add value …

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Stepping into the ring with investors

Stepping into the ring with equity investors is a challenge fraught with danger for any entrepreneur – and especially if they have never experienced a capital raising before. Here are a few insights to key concepts in the business of equity investing: Pre-money vs. Post-money Any serious equity investor – …

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The endless variety of startup value

Start-up companies come in all forms, including those that are driven by “solopreneurs” – such as an innovative professional service provider, and more “lifestyle” companies – for example, an exotic plant nursery or organic bakery. The term “start-up” however is traditionally associated with “venturepreneurs” – entrepreneurs at the helm of …

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Bringing the Deal Together

Assuming the Due Diligence process has not uncovered major issues relating to the prospects or current management of the business, the parties will then prepare and sign formal documentation which sets out the detailed mechanics for the issues set out in the Terms Sheet. In most cases the legal documentation …

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