3X in 3 Terms

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

I analyzed the results of several angel networks and found that 65% of the investments after three years were still in business but were no longer on the venture track. 

In most cases, they were growing businesses but were not going to be bought out for a significant return to the investor as the market conditions had changed, competition had taken over, or the founder was no longer interested in keeping pace to achieve a venture exit.

The best-case scenario was the entrepreneur would sell the business for 2-3X after 10 years, in which case the investor would get a minimal return on investment.

In my investing experience, three years into the investment, it becomes clear if the company will continue on the venture path or not.  

I often saw the entrepreneur signal their departure from the venture path by taking above-market rate salaries. 

I called this taking the “payroll exit”, in which case they no longer needed an “equity exit”.  

This left the investor stranded on the equity plan with no way out.

I set up a deal structure that would allow the investor to go on the payroll exit in the event the startup chose that path.

In this structure, the investor receives 3 times their investment 3 years from the date of investment.  So $100K in, yields $300K out.

If the company continues on the equity exit, then the investor may choose to stay in the investment. 


Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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On this episode of Investor Connect, Hall welcomes Craig Martin, Founder, and President at The Family Wealth Consulting Group.

The Family Wealth Consulting Group is a family-owned and operated fee-only financial planning firm that has been a fiduciary with clients in Silicon Valley, California, for over 35 years. This family-centric team focuses on helping families maximize financial resources for today, as well as for generations to come. FWCG’s unique expertise is building portfolios including alternative investments that give clients more money during their retirement years, as well as helping families manage the tax and estate planning issues that are top of mind for many clients who have a net worth.

Craig has been coordinating estate and income tax planning with investments and cash flow for high-net-worth clients of Silicon Valley since 1976.  He was an early adopter in 1990 when he converted his firm to fee-only because of his conviction to being a fiduciary so he could remain agnostic to which product or ideas he was advising, only with a dedication to helping clients make informed decisions. 

Because Craig is dedicated to continuous education in an evolving financial industry, he is convinced of the importance of building risk-managed portfolios using dissimilar price movement asset classes. He considers alternatives as some of the most efficient risk-management tools, so he offers alternative investments to his clients now using two different funds, where he is now co-investing with clients as an angel investor in start-up businesses. He has extensive experience in performing due diligence on start-up businesses because he has participated in dozens of due diligence teams along with other members of Keiretsu Forum, the largest angel investment group in the world. He teaches due diligence to entrepreneurs and other angel investors in the Keiretsu Academy as well as leading focused academies on this topic for the angel investment community of both angels and entrepreneurs. 

Craig earned the Master of Science in Financial Services (MSFS) in 1989 from The American College out of Bryn Mawr, PA, the largest and oldest institution exclusively dedicated to the financial industry. He also has qualified for several undergraduate level designations from that same college, including the Chartered Financial Consultant (ChFC) and Chartered Life Underwriter (CLU), and then earned the mark of Certified Financial Planner (CFP) from the CFP Board of Standards.  He has taught financial planning classes at the University of California at Berkeley. 

Craig speaks about the state of angel investing and the biggest change he thinks we will see in the next year or two. He also discusses some of the challenges startups and investors face. 

You can visit The Family Wealth Consulting Group at www.fwcg.net and www.fwcgfunds.net, and via LinkedIn at www.linkedin.com/company/family-wealth-consulting-group. 

Craig can be contacted via email at craig@fwcg.net, and via LinkedIn at www.linkedin.com/in/fwcgcraigmartin/.  

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For more episodes from Investor Connect, please visit the site at: http://investorconnect.org  

Check out our other podcasts here: https://investorconnect.org/ 
For Investors check out: https://tencapital.group/investor-landing/ 
For Startups check out: https://tencapital.group/company-landing/ 
For eGuides check out: https://tencapital.group/education/ 
For upcoming Events, check out https://tencapital.group/events/  

For Feedback please contact info@tencapital.group   

Please follow, share, and leave a review.

Music courtesy of Bensound.