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August, 2019
 
This article was published by Steven R. Gerbsman and Robert Tillman in May, 2007.
 
Please read, review any similarities to today and “be prepared”.
“The more things change, the more they remain the same”
 

San Francisco, May, 2007The Black Swan Pushes Events to the Tipping Point-Maximizing Enterprise Value in the  upcoming Crisis

We are currently in one of the best economic times in our country’s history. The stock market is at all time highs, unemployment is at all-time lows, interest rates are low, money is plentiful and deal valuations are high and getting higher. There are, of course, many worrisome trends: terrorism, excessive government spending, trade deficits, potential high oil prices, immigration and over the longer term, such issues as an aging population and (possibly) global warming. Although problems and worries always exist, in historical terms, times are very good indeed.
The big questions for us as specialists in maximizing enterprise value are:Will it end?

Yes. Of course. Even fundamentally healthy economies experience frequent and often violent corrections. The current world economy has evolved in many ways over the past decade. All large businesses are international. The primary economies of the world are very tightly linked together. Money is far more liquid and moves around the world with far less “friction” than it did in the past. The pace of technical change continues to increase. Nevertheless, we do not believe that the laws of history, and especially, the laws of human nature, have been repealed.As always, “The more things change, the more that they remain the same.”When will it end?

Unfortunately, no one knows the answer to this question. In historical terms, the current economic expansion has continued for a very long time and has survived numerous shocks, including war, a doubling of energy prices, natural disasters and localized economic downturns , such as the bursting of the sub-prime mortgage bubble. It appears to be “ripe” for a downturn. On the other hand, inherently unstable situations often persist for far longer than anyone could believe possible. During the 2000 Internet bubble, it seemed to us for quite some that the old rules of business no longer applied and that 25 year-old CEOs knew something us old guys did not know. When the crash occurred, we were relieved to find out that we were not so obsolete after all.

We did, however, underestimate the staying power of technically insolvent companies with broken or non-existent business models. Many of these companies had significant cash on the balance sheet (offset, of course, by significant liabilities) and investors who continued to infuse more cash far beyond the point of reason. Today, there exist immense pools of uncommitted cash, much of it in the hands of entities, such as private equity funds and hedge funds that are subject to minim al regulatory scrutiny and whose operations are obscured from the public view. In addition, the weakness of the dollar against both the Euro and the Pound Sterling makes U.S. assets a relative bargain. These factors tend to mitigate against an economic downturn. For how much longer they will continue to do so we do not know (and if we did know, we would certainly would not tell).

How will it end?

Fast, hard and unexpectedly. Two books shed a great deal of light on the process:

The first book, The Tipping Point by Malcolm Gladwell describes how human behavior causes events to cascade rapidly once a certain critical mass (the “Tipping Point”) has been achieved. Examples in the business world include periodic economic “panics” and the spread of certain technologies and products, such as personal computers, iPods, cell phones, etc. It is very difficult to predict in advance when the “tipping point” in any situation will be reached, but history has shown that, once it has been reached, events proceed very quickly.

The second book, The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb describes how highly improbable, and hence unpredictable, events periodically create massive change. The title of the book derives from the observation that the existence of even a single black swan disproves the assertion that all swans are white. Historical examples include the Fall of France at the beginning of World War II, the rise of the Internet and 9/11.

There are many obvious candidates for a “black swan” event that pushes the world economy over “the tipping point” into a downturn – a war with Iran, a nuclear terrorist attack or a worldwide bird flu or small pox epidemic, but generally, it is what you do not see that gets you. We are fundamentally optimists about the long-term prospects of the world economy. In many highly measurable ways, the wor ld really is improving, driven by technological innovation, a lowering of barriers to trade and increasing economic integration. Nevertheless, we are old enough to have lived through many “bumps” along the road and know that such discontinuities will always occur. We believe that we will see a significant economic event sometime over the next 12-18 months, either localized to a particular sector or geographic region or globally.

Our Advice?

Before such an event occurs:

As a board member, investor or stakeholder:

1.    Implement tight cash flow, receivables and inventory reporting so that you are alerted to problems early.

2.    Focus on the control, preservation and forecasting of CASH on a weekly, monthly and quarterly basis.

3.    Require “bottoms up” forecasting for all aspects of revenue and expense. Have the CEO and CFO defend ALL numbers.

4.    Hold the CEO responsible and accountable for Performance. If you are off the business plan/forecast, re-forecast based on the reality of “what is” today.

5.    Communicate frequently with all parties at interest. Check that the CEO is providing leadership, motivation and morale to the management team and employees.

6.    Review all companies in your portfolio. Identify and define action plans to fix weaknesses now.

7.    Utilize professional resources to assist in maximizing enterprise value, when appropriate.

When such an event occurs:

1.    Face up to reality and act quickly. When things are going bad, waiting seldom improves them. We have never seen a board of directors act too quickly when faced with a crisis. We have all too frequently seen a board act slowly or not at all.

2.    Call for assistance early. The earlier professionals can get involv ed in the process, the better the potential outcome in maximizing enterprise value. Many times boards request assistance only after a company has run out of cash. Many more options exist to maximize enterprise value if a company has some running room.

About Gerbsman Partners

 

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property.  Since 2001, Gerbsman Partners has been involved in maximizing value for 107 technology, medical device, life science, digital marketing/social commerce, cyber security and solar companies and their Intellectual Property and has restructured/terminated over $810 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $ 2.3 billion of financings, restructurings and M&A transactions.Gerbsman Partners has offices and strategic alliances in San Francisco, New York, Boston, Orange County, VA/DC, Europe and Israel.

 

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Technology M&A in Q2 2019 was driven by consolidation in the market with deal value totaling $113b across 823 acquisitions. Major deals in Q2 focused on mature industries rather than high-growth verticals that have led deal volume in recent quarters. Habitual acquirers Google and Salesforce each announced major deals, with Salesforce announcing its largest acquisition to date with its $15b all-stock purchase of Tableau and Google announcing its own $2.6b acquisition of Tableau competitor Looker. Strategic acquirers are paying premiums for synergistic deals with the top 50 largest disclosed corporate deals having a median revenue multiple of 5.7x through Q2 2019, the second highest median multiple since 2012.
Q2 2019 ViewPoint Released
Our Quarterly ViewPoint for the quarter ended June 30, 2019 has been released. The ViewPoint is a summary of trends, stock index performances, public valuation multiples, and relevant M&A activity in the services, software, and communications sectors.
Doug Ellis
Managing Partner
DecisionPoint
(704) 916-9070
DecisionPoint Advisors | 704-248-1111 | DecisionPointInt.com

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IMG
Silicon Valley Venture Capital Survey – Second Quarter 2019
First Look
By Cynthia Clarfield Hess, Mark A. Leahy and Khang Tran

View the full report.

Background
We analyzed the terms of 215 venture financings closed in the second quarter of 2019 by companies headquartered in Silicon Valley. The quarter showed the highest percentage of up rounds since 2004, when we first started publishing this report, and the strongest rise in median price increases since mid-2015.

Key Findings

  • Strong Valuation Results Improved Moderately
  • Series B and C Financings Valuations Were Stronger Compared to the Prior Quarter
  • Software Industry Showed Strongest Valuations
Full Report

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The first-time founder’s ultimate guide to pitching a VC

VC Pitches 1
Pitching a venture capitalist is both an art and a science.
Hollis Johnson/Business Insider
  • Entrepreneurship can feel like an uphill battle.
  • This guide for first-time company founders pitching venture capitalists will make it a little easier.
  • We asked experts — entrepreneurs and investors — to share their most practical and least obvious tips for pitching a VC.
  • For example, have two versions of your deck and communicate how you’re different from your direct competitors.

It’s National Small Business Week, a chance to celebrate the millions of small businesses in the US.

Every small business is different, and not every entrepreneur will want to grow their company by raising capital. But if it’s something you’re considering, you should go in prepared.

Just because you’ve binge-watched “Shark Tank” doesn’t mean you know what it takes to deliver a successful pitch to investors.

Persuading a venture capitalist to support your business is both an art and a science — and few first-time founders get it exactly right. Still, you’ll want to avoid the most common mistakes and most egregious turnoffs.

To that end, we asked experts in entrepreneurship to distill their years of experience into concrete advice.

Read more: Top VCs reveal what they want to hear in a startup pitch — and what you should avoid saying

David Rose runs Gust, a digital platform for early-stage entrepreneurs and investors, and Rose Tech Ventures, an angel investment fund and incubator. Liz Wessel is the cofounder and CEO of WayUp, a jobs platform for early-career professionals. And Patrick McGinnis is the managing director of the investment and advisory firm Dirigo Advisors.

Read on for a series of practical (and nonobvious) tips on pitching a VC.

Before you pitch

VC Pitches 2 Hollis Johnson/Business Insider

Determine whether the business is appropriate for investment in the first place

If you’re bringing in a maximum of $1 million a year in revenue, “it may be a great, wonderful, much-needed business,” Rose said. “You may enjoy it and support your family.” But he emphasized, “the economics are just such that there is no way that you can get an investment from me at any reasonable number for that to make economic sense.”

This is because outside investors expect outsize returns on their money, often a large multiple of what they put in. And if there’s a low-millions ceiling on the revenue your startup can generate or eventual exit price, there’s not much incentive for a venture capitalist to write you a check.

In other words, your company may be a “lifestyle startup,” which doesn’t require venture capital and probably won’t ever be worth $1 billion.

Raise capital as late as possible, after you’ve gotten proof of concept

An entrepreneur’s pitch is a “combination of science and faith,” said McGinnis — but you want to stay more on the side of science than faith.

McGinnis often sees founders who don’t have any proof their idea is viable. You’d be wise to keep your day job and acquire customers and data before you ask a VC for money.

Read more: A former Googler who left after 2 years to build her own startup explains how to know it’s time to quit your job

Remember that the VC wants to invest

VCs wouldn’t be hearing your pitch if they didn’t want to invest in your business, Rose said. They’re just hoping you’ll give them a compelling argument for why they should partner with you.

Have two versions of your deck

One version is for your presentation, and the other is the one you send via email, Wessel said. The difference is how much detail you go into in each slide.

The version that you’re presenting shouldn’t be able to be understood without narration, meaning it should have as little text as possible. Otherwise investors may spend all their time focused on trying to read the screen, rather than on listening to your vision.

Have a high-quality deck

There should be a detail-heavy version, though, which you can use for follow-up discussions. According to McGinnis, “If you can’t make a decent-looking pitch deck” (without typos and with correct info), “how can I believe that you can build an app or a product that will be excellent?”

Making a solid first impression is important, McGinnis added, because even if the investor doesn’t want to invest in this particular company, the investor may be able to introduce you to other people. Or, the person may invest in your company in the future.

Never meet the investors you’re really targeting first

Start with the “B team,” McGinnis said, i.e., the VCs who would be nice to have but aren’t your first choice. Get feedback from them so you’re more than prepared when you meet the VCs you’re really targeting.

During the pitch

VC Pitches 3 Hollis Johnson/Business Insider

Don’t ask for a valuation that’s absurdly high

Unless you’ve already founded a company that has sold for millions of dollars, “it’s hard to prove that you alone are worth that much,” Wessel said. What it does show is that you’re neither self-aware nor realistic.

Know your numbers

Simply put, show that you’ve done your research, Wessel said.

Show that you are the best person in the world to solve this problem

Wessel advised demonstrating to the VCs what you’ve already done to understand your customers or to take a stab at solving the problem.

McGinnis recommended flaunting your industry expertise. “Loving something is necessary but not sufficient” for starting a company, he said.

Above all, Rose said, remember that you’re pitching yourself — not just your business plan. “You bet on the jockey, not the horse.”

Read more: A former Y Combinator partner realized the most successful founders don’t always look good on paper — there’s a much more reliable sign they’re destined for greatness

Know and communicate how you’re different from your direct competitors

If the VC knows something you don’t about the competitors in this space, “you’re in real trouble,” Rose said. (Also remember that if there are no competitors, that’s a bad sign, suggesting that no one else has thought this idea was worth pursuing.)

Convey enthusiasm and passion

Investors want to know that you’ll stick with this business through the ups and downs, Wessel said.

Read more: At the start of every semester, a business-school professor asks his students a question, and most everyone gets the answer dead wrong

After the pitch

VC Pitches 4 Hollis Johnson/Business Insider

Write down VCs’ questions

See if there are any trends, Wessel said, and then figure out how to address those gaps in your pitch.

Suggest an action plan in a thank-you note

Always follow up with a thank-you note, McGinnis said. “Try to offer new positive information” that you may not have mentioned during the pitch.

Wessel recommended reminding the investors of specific topics you enjoyed discussing with them.

Just as important, McGinnis added, “propose concrete next steps for them to react to — amorphous communication conveys amorphous management.” Reiterate specifically what you’re asking for, and ask whether there are other people you should meet who the investors can introduce you to.

Create FOMO

Once you’ve gotten an offer from one VC, don’t hesitate to let the others know. The idea, McGinnis said, is to communicate urgency: “The train is leaving the station. Are you in or are you out?”

Ready to make your first pitch deck? Here’s a great template to follow, from an entrepreneur who raised a $6 million seed round from all-star founders behind Dropbox, Yammer, and Yelp.

SEE ALSO:The first-time founder’s ultimate guide to building a winning pitch deck

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Top VCs reveal what they want to hear in a startup pitch — and what you should avoid saying

entrepreneurship pitch
The secrets are out.
Hiraman/Getty Images
  • Successful entrepreneurship often starts with a compelling investor pitch.
  • We compiled insights from venture capitalists on what they’re hoping to hear from you.
  • For example: Hold your ground on important issues and demonstrate your path to execution.
  • Visit BusinessInsider.com for more stories.=

Venture capitalists want to be convinced.

Ask David Rose, and he’ll tell you VCs wouldn’t be hearing your pitch in the first place if they weren’t interested in investing. Rose runs Gust, a digital platform for early-stage entrepreneurs and investors, and Rose Tech Ventures, an angel investment fund and incubator.

He said investors are just hoping you’ll give them a compelling argument for why they should partner with you.

We asked Rose, plus a series of other successful investors (listed below), what persuades them to sign on — and what leaves them skeptical. Below, we’ve compiled their best advice, on everything from building a pitch deck to writing a thank-you note.

Show how your product will benefit people

Estes previously told Business Insider’s Lydia Ramsey that biotech investors want to know how a new tool will fit into the current standard of care. “The biggest mistake I see is when someone spends more time talking about how a product would affect the market than they do talking about how it would affect the disease it’s designed to treat,” Estes said.

The same is true for any investor, who wants to know how your business will make people’s lives easier.

Don’t be cocky

In an interview with Business Insider’s Becky Peterson, Munichiello pointed to Stewart Butterfield, founder and CEO of Slack, as an example of an entrepreneur who didn’t pretend he had all the answers. (GV invested in Slack in 2014 as part of a $120 million round that valued the company at $1.12 billion, Peterson reported.)

“Stewart’s conversation with me wasn’t about all of the reasons why Slack was awesome,” Munichiello said. “It was, ‘Here’s how I think about the business. And you may think about it in a different way.’ And ‘Here are the metrics that I use to measure the business. How do you think about the business?'”

Hold your ground on the issues that matter most

“Entrepreneurs can, and should, articulate deal breakers to their prospective investors,” Selverian wrote on Business Insider. “If there’s something that’s important to you and your business, don’t compromise. As long as the entrepreneur’s reasoning is justified, many investors will be impressed by the vision and leadership conveyed through deal breakers.”

Read more: A CEO who launched her company 14 years ago says too many founders have it all backward

Ashton Kutcher
Ashton Kutcher.
Steve Jennings/Getty Images for TechCrunch

Show that you can sell your idea

“One of the critical tests that I try to run when I’m sitting across from a founder is: Can you sell me your idea?” Kutcher said at TechCrunch Disrupt in 2018. If not, he worries about the company’s future.

“If you can’t sell me, how are you going to sell your first hire, your second hire, your third hire?” Kutcher said.

Demonstrate your path to execution

At Business Insider’s Startup 2012 conference, Sachar said she needs to believe the entrepreneur can turn their idea into a successful business.

“If you can’t execute, you don’t have a company,” she said. “A lot of people have ideas.”

Read more: The glitz of ‘entrepreneurship porn’ leads startup founders to make fatal business mistakes. Here’s how to avoid them

Tell investors how you plan to expand

Duggal previously told Business Insider every pitch deck should include a five-year growth plan.

Duggal added that she wants to see the costs of building your product or service, the potential profit “on a unit basis,” and how that changes at scale. In other words, she said, “As your business grows, do the margins get better?”

Prepare a detailed appendix in addition to the deck

Your deck should be simple and straightforward. During the pitch meeting, Selverian recommends having a detailed appendix that will answer any questions that come up.

Anu Duggal
Anu Duggal.
Getty/Noam Galai

Address the potential competition

One common mistake Duggal sees in pitch decks is “not addressing competition or figuring out the market landscape.”

She added, “When we think about investing in a company, we want to understand — that’s great that you have an interesting idea or you spotted something that has the potential to be an exciting business — but we also want to understand what is already in the market.”

Propose an action plan in a thank-you note

In your follow-up note after the pitch meeting, McGinnis said, “propose concrete next steps for them to react to — amorphous communication conveys amorphous management.” Reiterate specifically what you’re asking for, and ask whether there are other people you should meet who the investors can introduce you to.

You can also create FOMO by letting them know when another VC has already agreed to invest.

Determine whether you need to raise capital in the first place

If you’re bringing in a maximum of $1 million a year in revenue, “it may be a great, wonderful, much-needed business,” Rose said. “You may enjoy it and support your family.” But he emphasized, “the economics are just such that there is no way that you can get an investment from me at any reasonable number for that to make economic sense.”

This is because outside investors expect outsize returns on their money, often a large multiple of what they put in. And if there’s a low-millions ceiling on the revenue your startup can generate or eventual exit price, there’s not much incentive for a venture capitalist to write you a check.

In other words, your company may be a “lifestyle startup,” which doesn’t require venture capital and probably won’t ever be worth $1 billion.

david rose
David Rose.
Fortier Public Relations

Wait to raise capital until you have proof of concept

An entrepreneur’s pitch is a “combination of science and faith,” said McGinnis — but you want to stay more on the side of science than faith.

McGinnis often sees founders who don’t have any proof their idea is viable. You’d be wise to keep your day job and acquire customers and data before you ask a VC for money.

Read more: Keep your day job, move slowly, and don’t worry about building a unicorn: A New York ‘startup school’ eschews everything Silicon Valley ever preached

Meet your ‘B list’ investors first

Start with the “B team,” McGinnis said, i.e., the VCs who would be nice to have but aren’t your first choice. Get feedback from them so you’re more than prepared when you meet the VCs you’re really targeting.

Show why you — not just your business — are worth investing in

Remember that you’re pitching yourself, Rose said — not just your business plan. “You bet on the jockey, not the horse.”

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JOHN WAYNE — A MUST WATCH
You may have to play this a couple of times in order to identify everyone. Don t miss Ricky and David Nelson (Ricky on right) ..This is one I think you will really enjoy. Its probably only so special because so many of them are gone now and the younger gen-kids probably won’t even appreciate all that talent in one place.
Enjoy http://biggeekdad.com/2014/ 09/john-wayne-1970/#. VCHJXVfNNJ8.email

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Happy July 4th- Marine Sings Fourth Verse of National Anthem – You MUST watch this

Happy July 4th weekend

Please watch, listen an be Proud.

As we are going through challenging times as a country, may we never forget that “America is the land of the Free and the Home of the Brave”- We are a Judeo Christian nation with values handed down by our ‘Founding Fathers’.  Men like  George Washington, John Adams, Thomas Jefferson, James Madison, Alexander Hamilton, James Monroe and, of course, Benjamin Franklin

May God Bless America, our Troops and on this day – always remember

“Freedom is NOT Free

Be healthy, travel safe and enjoy family

 

th

WATCH: Former Marine Stuns Crowd  

As he sings the fourth verse of  “The Star-Spangled Banner” is the national anthem of the United States of America. The lyrics come from “Defence of Fort McHenry”,[1] a poem written in 1814 by the 35-year-old lawyer and amateur poet, Francis Scott Key, after witnessing the bombardment of Fort McHenry by the British Royal Navy ships in Chesapeake Bay during the Battle of Fort McHenry in the War of 1812.

Lyrics

Cover of sheet music for “The Star-Spangled Banner”, transcribed for piano by Ch. Voss, Philadelphia: G. Andre & Co., 1862

O! say can you see by the dawn’s early light,
What so proudly we hailed at the twilight’s last gleaming,
Whose broad stripes and bright stars through the perilous fight,
O’er the ramparts we watched, were so gallantly streaming?
And the rockets’ red glare, the bombs bursting in air,
Gave proof through the night that our flag was still there;
O! say does that star-spangled banner yet wave,
O’er the land of the free and the home of the brave?

On the shore dimly seen through the mists of the deep,
Where the foe’s haughty host in dread silence reposes,
What is that which the breeze, o’er the towering steep,
As it fitfully blows, half conceals, half discloses?
Now it catches the gleam of the morning’s first beam,
In full glory reflected now shines in the stream:
’Tis the star-spangled banner, O! long may it wave
O’er the land of the free and the home of the brave.

And where is that band who so vauntingly swore
That the havoc of war and the battle’s confusion,
A home and a country, should leave us no more?
Their blood has washed out their foul footsteps’ pollution.
No refuge could save the hireling and slave
From the terror of flight, or the gloom of the grave:
And the star-spangled banner in triumph doth wave,
O’er the land of the free and the home of the brave.

O! thus be it ever, when freemen shall stand
Between their loved home and the war’s desolation.
Blest with vict’ry and peace, may the Heav’n rescued land
Praise the Power that hath made and preserved us a nation!
Then conquer we must, when our cause it is just,
And this be our motto: “In God is our trust;”
And the star-spangled banner in triumph shall wave
O’er the land of the free and the home of the brave!

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