Disqus - Latest Comments for basilpeters

Re: Event: Entrepreneur exits – how to cash in when you’re cashing out

basilpeters — Mon, 09 Nov 2015 16:43:05 -0000

Excellent article, Tommy.

You're correct that the emotional aspect is often under-appreciated by business owners. This is a link to a talk I gave to a few hundred M&A advisors titled: "The Psychology of Exits" http://www.exits.com/blog/t...

I'm also excited about the Business Transitions Forum later this month. I think it will be the largest exit oriented conference ever - there are over 40 speakers.

Re: 300 Angel Companies and Not a Venture Capitalist to Be Found

basilpeters — Tue, 18 Jun 2013 09:58:13 -0000

Hi Anonymous Angel - excellent post. No question that Angel Capital is now much more important to our economic futures than traditional Venture Capital.

I agree that the biggest challenge for Angels, and for entrepreneurs for that matter, is to learn how to increase the number of successful exits.

Most disconcerting to me is that only about 25% of the successful businesses that could be sold, end up exiting: http://www.exits.com/blog/o...

If we could just make that 50% it would double angel portfolio returns and create a lot more wealthy entrepreneurs.

Re: The State of Venture Capital in Canada: An Entrepreneur’s Perspective

basilpeters — Thu, 21 Feb 2013 12:28:46 -0000

Good Post, Andrew. A couple of quick points:

1. There is still more Venture Capital in Canada than there are companies that need Venture Capital (capital letters to be clear that I am referring to traditional, big VCs - not new funds like Boris Wertz's or Mark MacLeod's.)

2. I agree there has never been a better time to start a company or raise capital

3. Except for possibly 1997-99 it has never be so easy for entrepreneurs to raise capital.

4. The smart entrepreneurs looking for capital today ignore the border - the cash does

Good recent thread on this at: http://www.linkedin.com/gro...

Re: BC Startup Goes from Nothing to $500k in 1 Year with No Funding

basilpeters — Wed, 02 May 2012 17:18:49 -0000

Congratulations! More and more often, the startups I admire most have been bootstrapped.

Re: Angel vs. VC: Which Investor Is Best for Your Startup?

basilpeters — Wed, 02 May 2012 15:28:47 -0000

The choice between Angel or VC financing is not an option, or preference. The best choice is determined by the type of company. The video of this talk explains how to decide for your company: http://www.exits.com/blog/e...

Re: RSS Feed

basilpeters — Tue, 24 Apr 2012 12:03:47 -0000

Owen, thank you for an extraordinarily valuable post! It was just what I was looking for.

Re: Facebook Investor DST Seeks $1 Billion for New Tech Fund

basilpeters — Wed, 21 Mar 2012 20:28:47 -0000

Can anyone say: "Bubble?"

Re: Get Funding or Go Lean?

basilpeters — Fri, 23 Sep 2011 14:48:31 -0000

No question that the traditional Venture Capital model is broken. http://www.angelblog.net/Th...

Entrepreneurs: Angels finance 27 times more startups than VCs: http://www.angelblog.net/An...

IMO well under 1% of startups today need traditional Venture Capital. My concern is that more than that number get it.

More and more of the really good exits I see are bootstrapped - very few are VC backed.

Re: Convertible Debt – The Discount

basilpeters — Tue, 20 Sep 2011 20:36:51 -0000

James: Yes - I believe its better for both the entrepreneurs and investors to set a realistic valuation.

Re: Convertible Debt – The Discount

basilpeters — Thu, 15 Sep 2011 21:19:17 -0000

Thanks for your thoughtful reply and thanks for taking on the
project of trying to develop some best practices in this area.

My experience is similar. I didn’t see convertibles in the 1994 – 1999 range.
It wasn’t until the tech bubble burst that angels in my area started thinking
about convertibles. Their motivation then was downside protection.

In the early 2000s a few of us met at workshops and conferences and
said “Hey, what’s all this interest in convertibles? That’s just not a fair way
to invest (as it was being done then). I think I wrote the first version of the
post I referred to above around 2003.

Through working with the Angel Capital Association, and what is now
called the Angel Resource Institute, Bill Payne and others felt we had pretty
much eradicated angel convertibles. I saw very few in 2004 – 2006.

Then, as you say, the idea seemed to pop back into favor again in 2006 –
2007. This was a really big surprise to us. We are all still scratching our
heads about it.

Brad, I think we have an opportunity here to help a lot of people by
shining a light on this.

If you're game, I’d like to start by saying that your reputation is as
a fundamentally fair guy. I think you’d agree that in early-stage investment,
you make the most money if the investment agreement is “fair and equitable” to
both sides. I suggest that be our guiding principle here (and for all early
stage investors).

Second, I think you would agree that to be a competitive asset class,
that an angel portfolio has to deliver something in the range of 25%/year overall to
account for the inherent risk. This is of course, similar to VC numbers because
risk and reward are universal.

I’m sure you are also aware of how the math in VC and angel portfolios
works. In simple terms, all of the returns come from 10 to 20% of the
investments. About 20% go sideways and about 60% crater.

If you spend a while in an Excel spreadsheet, I believe the inescapable
conclusion is that the fair discount on a convertible has to be quite a bit
higher than 50 – 75% per year. And to be clear, I am saying that this is simply
a matter of math – not, in any way, opinion.

Then assuming we agree on the math, let me add that I also agree that almost everyone will concur with your statement: “I believe a 50% - 75% discount is much too aggressive.”

So, IMO what is mathematically “fair and equitable” is not
psychologically acceptable. Or at least market acceptable. As a result, I
continue to believe that convertibles, as they are most often applied, are
fundamentally unfair to the investors and therefore should be avoided.

I agree that caps can, in some rare cases, make convertibles fair. But in my experience, the caps quickly get into the psychologically unacceptible range.

There are also a couple of underlying statistically realities I haven’t
fully described above. I think they are pretty obvious, but if you, or your
readers are really interested, I’d be pleased to dig deeper.

Thanks again for your contributions to the entrepreneurial economy.

Re: Convertible Debt – The Discount

basilpeters — Thu, 15 Sep 2011 18:57:04 -0000

IMO, in almost every situation the convertible ends up not being fair to the angel investors.

Either the discount is too low or the fact that it's not really debt means that the next round investors will most likely reduce the angel's returns below a fair value.

To be fair, the discount has to be higher especially if the conversion is over 90 days.

More at: http://www.angelblog.net/Co...

Re: Waiting for Google - Frank Peters | Insights | socalTECH.com

basilpeters — Sat, 03 Sep 2011 19:07:09 -0000

Excellent article, Frank. Thanks for your kind words about my book. You are making a difference. The Frank Peters show, and writing like this, is the only way I can imagine that entrepreneurs and angels can learn about new ideas and better ways to grow tomorrow's tech companies. Please keep up the great writing and speaking!

Re: Business Valuation � What Will Your Company Sell For?

basilpeters — Sun, 19 Sep 2010 09:22:56 -0000

Shane - glad you found it valuable.

Re: Business Valuation � What Will Your Company Sell For?

basilpeters — Sun, 19 Sep 2010 09:22:39 -0000

Thanks for the positive feedback, Anne. Sorry I don't know of any M&A Advisors in New Zealand, but please keep looking. The situation with a single interested buyer is particularly challenging - you really need an experienced professional working on your side.

Re: Business Valuation � What Will Your Company Sell For?

basilpeters — Thu, 16 Sep 2010 14:13:23 -0000

Great input, Thealzel. I agree that business owners, CEOs and boards always have the best knowledge about their companies. Where they can often benefit from the input of a professional is to help translate their detailed, specific knowledge into a reasonably accurate selling price for their business.

Your comment on the agreement between the seller and buyer is absolutely correct.

Re: Is Angel or VC Financing Best for Your Company

basilpeters — Thu, 16 Sep 2010 07:59:27 -0000

Excellent comment, Thealzel.

I agree that Life Science, and most types of CleanTech, companies are different from traditional tech and IT companies.

Like you, I respect Fred Wilson's writing.

Re: Startups - The Essential To Do List

basilpeters — Thu, 16 Sep 2010 07:45:51 -0000

Excellent comment, Kacey!

Re: Startups - The Essential To Do List

basilpeters — Thu, 16 Sep 2010 07:45:13 -0000

Mr Hatken - you ask an excellent question. And you provide a very good answer. I agree with you.

To me, alignment is achieved when everyone on the team has complete agreement on the goal.

I also agree that there is something fundamental in human psychology that requires that the goal be written and signed off. I also consider it a best practice to refresh that signature annually on important goals, like the exit strategy.

Thanks for contributing your perspective on this important topic.

Re: Early Exits Workshop - Angel Investing in the 21st Century Part 1-1

basilpeters — Thu, 16 Sep 2010 07:37:05 -0000

Glad you found it valuable, Fernando. Thanks for the positive feedback.

Re: Built to Flip Controversy and Early Exits from Startups | Exit Strategy

basilpeters — Thu, 16 Sep 2010 07:33:56 -0000

Interesting perspective, Quantum. There is always debate about whether an IPO is really an "exit". As Ernesto points out, the founders of Google are still there getting a paycheck every two weeks. So in that respect, they haven't "exited". You also have a good point about any liquidity event qualifying. In my view, and IPO *can* be an exit and it *can* be a liquidity event, but if, and when, depends on whether there really is liquidity for the founders and investors, or whether the IPO only created the "illusion of liquidity" - a particularly heartbreaking form of "non-exit".

Re: Built to Flip Controversy and Early Exits from Startups | Exit Strategy

basilpeters — Thu, 16 Sep 2010 07:29:07 -0000

Ernesto - there is nothing at all wrong with building a company to generate cashflow. It's a perfectly valid exit strategy (in other words, the strategy is not to exit.) These companies are often called "lifesytle" companies. The only point I would make is that entrepreneurs should not ask anyone except friends and family to invest in a lifestyle company.

Re: Business Valuation � What Will Your Company Sell For?

basilpeters — Thu, 16 Sep 2010 07:23:33 -0000

John: Glad you liked it. Thanks very much for the positive feedback.

Re: From out of the ashes

basilpeters — Wed, 05 May 2010 22:54:39 -0000

Excellent post David. But I think you are being a little pessimistic!

Yes, the traditional, big, US style VC funds don't work anymore. But the biggest reason is that entrepreneurs don't need them anymore. The world has evolved past them.

I am sitting in a hotel in Silicon Valley working on tomorrow's opening keynote for the national Angel Capital Association meeting. I titled it "It's the Angel's Time". I won't try to summarize it all here, but the video will be on my blog in a couple of weeks.

The good news is that Angels can provide enough capital for 99% of today's startups. And Angels actually IMPROVE the company's chances of success according to research out just last month from the Harvard Business School.

So today there are actually more investors than in the past. Better investors. And their numbers are growing.

The Angels down here are worried that valuations are going UP too fast.

Austin - thanks for mentioning my Book.

Re: Angel Term Sheet Evolution Part 4 | Q&A

basilpeters — Fri, 23 Apr 2010 09:49:33 -0000

I agree, Chris! Both Dan and I are doing what we can to make this happen. Dan's light pref term sheet is online from the link in the middle of this page http://www.angelblog.net/An...

My one page term sheet has always been open source at http://www.angelblog.net/Th...

The angel community is moving quickly in the direction you suggest to facilitate more syndication.

As Dan describes in the video above, surprisingly, most lawyers are on board.

Re: Exchangeable Shares - a Better Way for Angel Investors

basilpeters — Thu, 22 Apr 2010 10:56:31 -0000

Great question, cfravel. The short answer is: no this is not causal.

Most VCs today want to make follow on investments into angel backed companies. Dan Rosen explains this well in part 2 of http://www.angelblog.net/An...

The bigger factor is simply that VCs just aren’t investing in many early stage companies http://www.angelblog.net/An...

The other factor is that more and more entrepreneurs and angels now understand that letting traditional VCs invest is simply not a very good business decision unless the company REALLY needs more than $10 million for more on that: http://www.angelblog.net/Ex...