Mon, 31 July 2023
Types of Revenue Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Not all revenue is the same as there are several types of revenue. SaaS companies earn different types of revenue through their product offering. Here’s a list to consider: Software licenses are quite valuable as one can charge recurring fees for them. Maintenance fees can also be valuable as they often recur on an annual basis. Subscriptions are the highest value because they recur every month in many cases. Services can be valuable as they can often be priced high relative to their cost to perform. Hardware is the least valuable as it’s a one-time charge and has limited revenue-generating capacity. Investors view each of these revenue streams differently and will focus on those that recur most often. This comes into play in setting valuations for a fundraise or an exit event. Highlight the recurring revenue and how those streams are increasing over time. The more predictable the revenue, the higher its value.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _________________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Fri, 28 July 2023
On this episode of How to Invest Series Hall, revisit the insights of Dennis Coleman from Life Science Angels, Ipshita Mandal-Johnson from Global Bio Fund, Mark Groper from Orion Biotechnology, Allison Piper Kimball from Wave 27 Ventures, and Neal Vail from Progenerative Medical, Inc. What do they all have in common? The answer to this simple and powerful question: What’s your advice for people investing in startups in this sector? Life Science Angels is a premier healthcare-focused angel investment organization based in Sunnyvale, California. Global BioFund, takes a gender-smart lens when investing in bio sectors, including digital health. While Orion Biotechnology has its own unique scientific approach to developing immunotherapeutics. Wave 27 Ventures is a venture capital firm based in Bellaire, Texas. Progenitive Medical, Inc., offers practical advice for aspiring angel investors. Our guests share the importance of budgeting and diversification, investing in people and diverse teams, and learning from experienced investors. If you are looking to approach startup investments, make sure you have an informed and strategic mindset to maximize your chances of success in this dynamic sector. Links from today's show: For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Fri, 28 July 2023
What Impacts the Quality of Revenue? Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Not all revenue is the same. Investors look at the characteristics of the business which impacts the quality of revenue. Revenue that comes from a source that will sustain longer will have a higher value to investors. Here’s a list of characteristics investors use to assess the value of a revenue stream: Sustainable advantage -- if the business has a sustainable advantage then the revenue will have a high quality because it will reoccur longer. Network effects -- if the business has network effects then the revenue has a higher value because of the competitive advantage that network effects bring. Predictability -- if the business can predict its revenue stream then it will have a higher value as it gives the business visibility on their forecasts. Switching costs -- if the business’s product has high switching costs then its revenue will be valued more as customers will stay longer. Low customer concentration -- if the business has high customer concentration then it will be at greater risk since the revenue relies on a small number of customers. High marketing spend -- if the company has a high marketing spend then it will reduce the value of the revenue as it’s considered costly compared to revenue generated by organic demand.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Thu, 27 July 2023
Solving the Chicken and Egg Problem Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In launching a marketplace platform you must solve the chicken and egg problem. You must have supply to engage buyers and buyers to engage suppliers. In the early days, you’ll need to do things that don’t scale such as recruit supply that is not in the network for a particular buyer and more. Here are some steps to overcome the chicken and egg problem: Build a community out of suppliers and buyers and then connect them for the transaction. Offer free tools that engage buyers and suppliers into the same group. Provide supply in the form of a showcase as a starting point. Start with existing networks such as angel groups, universities, or social groups and then transact the business. Sign up a business that will pay for the supply. This funds the operation while you find other buyers to join the platform. Scrape the website for lists of buyers and sellers. Start small and then expand to a larger supply and number of buyers.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Wed, 26 July 2023
Marketplace Platform Evolution Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Marketplace platforms evolve over time. Platforms start by connecting buyers and sellers. They follow with additional services such as ratings and reviews, background checks on the buyers, and quality control on the suppliers. Over time, the marketplace can evolve further by moving into delivery of the products and services. By controlling the delivery, the platform can control the overall customer experience and obtain additional revenue. The platform could also expand into providing supply. Finally, the platform could evolve into a data analytics platform providing key insights into purchasing trends. It all starts with matching buyers and sellers but that’s only the beginning.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Tue, 25 July 2023
Marketplace Services Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In setting up a marketplace business, the more services you offer will lead to a better customer experience which leads to better retention. Consider adding these services to your marketplace platform: Manage the transaction from discovery to fulfillment of the service. Provide ratings of the buyers and sellers to foster transparency. Review the content on the platform from buyers and sellers to ensure quality and accuracy. Provide customer service to help resolve issues. Continue to expand inventory to provide more choices to the buyers. Design financial transactions into the platform to provide a seamless experience. Install an easy to user interface. Provide success stories from other users both buyers and sellers. Customers expect continual improvement of the platform over time so look for ways to improve the experience.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Mon, 24 July 2023
Metrics for Marketplaces Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In running a marketplace business there are several metrics for measuring the performance of the market and platform. Here are some key metrics to consider: Gross Volume -- this is the total amount of goods and services transacted on the platform. Activity -- the number of times a buyer engages the platform yielding the number of daily and monthly active users. Average transaction value -- the average value of the transaction indicates the size of the market. The concentration of buyers and sellers -- this measures the percent of business that comes from the top five, ten, or twenty buyers or suppliers on the platform highlighting over-concentration. Cost of acquisition of suppliers and buyers -- this calculates the cost of placing inventory on the platform and acquiring buyers. The lifetime value of buyer -- this estimates the value of the purchases over the lifetime of the buyer on the platform. Multitenating -- this calculates the number of sellers and buyers who are also on other platforms. Switching costs -- this calculates the cost of the buyer or seller to move to another platform. Take rate -- the percent of the sale that is taken for the transaction. Measure these key marketplace metrics to better understand your marketplace business.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Fri, 21 July 2023
On this episode of Investor Connect, Hall welcomes Matt Brugner, Founder of Stewardship Partners, LLC. Located in Dallas, Texas, USA, Stewardship Partners, LLC is a traditional search fund seeking to acquire one business and steward it into its next phase of growth. The fund is backed with capital from a handful of committed capital funds, family offices, and entrepreneurs. Stewardship Partners, LLC is looking to acquire a vertical B2B software business (bootstrapped or lightly funded, $2-$10mm of ARR) or vertical B2B tech-enabled services business ($5-$40mm of Revenue) in the US. They are a great fit for founders who care deeply about their culture, values, and people AND are ready to take chips off the table and bring in a new operator. Matt is a passionate, values-driven leader who founded Stewardship Partners to acquire, lead, and grow one exceptional business. His Christian faith drives his passion to serve others as a leader and investor. Matt was proudly born in Texas and grew up in St. Louis, MO. He attended Baylor University, where he majored in entrepreneurship and finance. During school, Matt launched a student housing business, Student Property Group. After Baylor, he joined the Goldman Sachs Private Bank, originating debt for some of the most successful entrepreneurs and private equity funds in the US and Europe. Prior to founding Stewardship Partners, Matt completed his MBA at Northwestern’s Kellogg School of Management with a focus on Entrepreneurship through Acquisition (“ETA”). Matt talks about his unique investment model centered on values informed by his faith. Matt focuses on vertical markets and values-based businesses, looking for B2B SaaS companies emphasizing growth, profitability, and criticality to end-users as key criteria. He highlights the importance of fit and relationships between the entrepreneur and the buyer in the search fund model. Visit Stewardship Partners, LLC at www.stewardship-partners.com, and on www.linkedin.com/company/stewardship-partners-llc. Reach out to Matt at matt@stewardship-partners.com, and on www.linkedin.com/in/mattbrugner
_______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Fri, 21 July 2023
Network Effects in Marketplace Businesses
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
Marketplace businesses derive value from the network effects that come with matching buyers and sellers.
The greater the number of buyers and sellers the more attractive the platform.
One side of the marketplace can attract the other side.
If one side is using the software platform, then the other side will follow.
One side can demand the other use the platform as the financial transaction or the flow of goods and services goes through it.
Marketplace businesses can use network effects to connect more suppliers to the business as well.
By connecting suppliers through the software platform you can decrease costs and increase the size of inventory.
Marketplaces with network effects give the business a moat against competition as the competitor is not competing against one company but rather a network of companies.
Marketplace businesses can use the network effects to create new products and services by bundling together a collection of services from multiple suppliers.
Marketplace businesses can scale faster and cheaper because they are aggregating supply from multiple businesses rather than just their own business.
Finally, marketplace businesses use network effects to retain users as it’s sticky.
Once in place, network effects can bring exponential growth to the business.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound.
Direct download: Network_effects_in_marketplace_businesses.mp3
Category:general -- posted at: 5:00am CDT |
Thu, 20 July 2023
Expanding a Marketplace Business
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
After launching your marketplace business you’ll start work on expanding it.
For the supply side, you want to increase the engagement with the suppliers.
Instead of being one source of many to your suppliers, you want to become their primary source.
You can do so by setting up technical connections with the suppliers making it more difficult for others to gain access.
You can increase support to turn your suppliers from users into advocates promoting your brand.
For the demand side, you want to expand the number of buyers.
This could be done by adding more buyers from other geographies or finding new types of buyers in the same geographic area.
This could also be done by expanding the products offered to the buyers so you have the best or most selection.
Finally, you can expand your marketplace to a larger geographic area such as Europe or Asia connecting both buyers and sellers.
This could eventually lead to a global marketplace.
Expanding your business will require a new set of tactics from those used in launching the marketplace.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Wed, 19 July 2023
Narrow Marketplaces
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
Marketplaces can be built vertically targeting one sector or horizontally targeting multiple sectors.
It’s best to start with a narrow marketplace focused on one vertical.
The cost of starting it is much less than a broad one.
By going narrow, you don’t have to generate a huge amount of supply.
You can start with a limited supply and grow over time.
You can bootstrap the business model by providing services that don’t necessarily scale.
You can provide premium services that build brand loyalty.
With a vertical approach, you can customize the product for the market more so than for a horizontal one.
With such a focus you can build a team that is more specialized to deliver that product.
While the target market may be small initially, over time you can expand into other areas.
Amazon began its business with the motto, ‘We sell books online.’
They later expanded into other areas.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Tue, 18 July 2023
Fintech’s Role in Marketplace Businesses
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
Fintech can play an enabling role in a marketplace business.
In addition to matching suppliers and buyers on a platform, fintech tools enable additional services that provide stickiness to the business.
As the regulatory nature of fintech continues to constrain the growth of businesses, alternative financing becomes more prevalent.
Marketplace businesses can gain an advantage by using fintech-enabled tools.
Adding a fintech solution to the mix can enable a seamless buying experience for the user.
Fintech tools such as payment and loan facilities provide stickiness to the platform and a barrier to entry.
Fintech tools provide another revenue source by charging for the use of the payment facility.
Providing identity checks on suppliers attracts more buyers who want to know who they are buying from.
Offering insurance is another service marketplace businesses can provide.
Fintech tools provide additional revenue and stickiness to a marketplace business.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound.
Direct download: Fintechs_role_in_marketplace_businesses.mp3
Category:general -- posted at: 5:00am CDT |
Mon, 17 July 2023
How To Launch B2B Marketplaces
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
In addition to B2C marketplaces, there are B2B marketplaces that are gaining rapid adoption.
To launch a B2B marketplace consider the following tactics:
Find participants who are not monetizing their value and help them capture it through a marketplace.
Look for disruptions in the marketplace or economy as an opportunity to launch a B2B marketplace.
Start with niche segments to gain traction and awareness before moving to core products.
Look for markets that are highly fragmented as these are easier to install a marketplace business.
Provide no-cost or low-cost access to the marketplace so users can try it out.
Provide cybersecurity and identity checks as businesses care a great deal about who they interact with.
Provide consulting services in addition to the marketplace product.
Design your technology into the B2B business so it’s easy to use and hard to replace.
Focus on new products and services rather than existing ones as it will be easier to set up a flow of business.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Fri, 14 July 2023
On this episode of Investor Connect, Hall welcomes Jeffrey Kamys, CEO of Inherent Wealth Fund. Located in San Francisco, California, USA, Inherent Wealth Fund is a registered investment adviser focused on thematic and sector-specific investing. They implement innovative strategies and wealth management solutions for institutions. Inherent Wealth Fund fully understands how technological advances impact the market and strive to be ahead of the curve with its approach. Jeffrey Kamys has decades of experience working in the technology industry as well as the analytics field. Jeffrey is the Founder, Chief Investment Strategist & Portfolio Manager at Inherent Wealth Fund. Inherent Wealth Fund is the Investment Advisor to the iBET Sports Betting & Gaming ETF, the only actively managed sports betting & gaming ETF. The iBET ETF is a basket of stocks representing the sports betting, casinos, and gambling sector, including but not limited to DraftKings, Penn National Gaming, Caesars, MGM, and Wynn. Jeffrey is the Founder, Creator & Owner of Dr. Stats Fantasy Sports. After an injury sidelined his dream of playing baseball, Jeffrey wanted to remain a part of the sport. He could no longer take the field, but he *could* use his knowledge to create a new business. Dr. Stats Fantasy Sports was officially established in 1996 and was a big pioneer of the fantasy sports industry. Initially starting as a “snail-mail” business, Dr. Stats became an early adopter of the “World Wide Web” and took its business to “the Interwebs.” Jeffrey shares his background as a former athlete and creator of one of the first fantasy sports sites, Dr. Stats. He discusses the evolution of his career from player evaluations to sports betting and stock analysis. Kamys also emphasizes the role of AI in sports betting, including data analysis, odds calculation, and identifying new betting opportunities. Visit Inherent Wealth Fund at www.inherentwealthfund.com/etf/ibet/, and on www.linkedin.com/company/inherent-wealthfund. Reach out to Jeffrey at jeffrey.kamys@inherent.com, and on www.linkedin.com/in/jeffrey-kamys-19159174/
_______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Fri, 14 July 2023
Assessing a Marketplace Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In setting up a marketplace business here are some key points to consider in choosing a potential marketplace. The marketplace business model provides an advantage for the buyer, the seller, or both. The more often the buyers and sellers use the platform -- daily, weekly monthly, or more -- the more valuable it will be. The higher the selling price the easier it will be to scale revenue. The more people who need the platform for either buying or selling, the larger the potential market size. The faster you can build the network, on either the buyer or seller side, the faster your platform can scale. The more fragmented the market, the more buyers and sellers will need the platform. The higher the growth rate of the market the greater the potential business. Look for these factors in selecting a sector for a marketplace business model.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Thu, 13 July 2023
Launching a Marketplace Business Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In launching your marketplace consider starting with a niche. Focus on what your team does best. Choose a niche in the sector that you can easily gain access to the supply side. This could be either by geography or by service offering. Offer above-average service to launch the marketplace. As Paul Graham wrote, in the early days you must do things that don’t scale. Even though the niche may not be a large market, you can expand to other niches later. Amazon began by selling books online but later expanded into other areas. Pick one or two methods for generating supply. This could be direct sales, referral partners, word of mouth fostered by social media, value-add products for the supply side, or events. Once the supply side is in place you can drive demand through marketing, SEO, direct sales, and events.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Wed, 12 July 2023
How To Start a Marketplace Business Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In starting a marketplace business you must consider how to structure it and then how to build the supply and demand sides of it. For the structure, you can target a specific vertical by focusing on one segment or go horizontal and cover the entire space. To go horizontal you need to reach scale quickly. To go vertical you must focus on finding a product/market fit for that segment. The horizontal approach takes a great deal of resources while the vertical approach allows for a lower cost to enter the market. The next step is building out the supply and demand sides of the marketplace. The challenge is building out the supply side in a cost-effective way. Scraping the web for the supply side is one tactic. Providing value-added products to build the supply side is another. Once you have a critical mass of supply you can engage the demand side. Most markets only support a few major players so it’s important to reach critical mass in the sector.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Tue, 11 July 2023
What Is a Marketplace Business Model? Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. The marketplace business model is becoming increasingly popular among startups. A marketplace business connects buyers and sellers through a platform. The platform facilitates the transaction and does not produce or provide the product or service. The platform often handles the payment, facilitates the logistics, and more. Examples of companies using the marketplace model include Uber and Amazon Business. Marketplaces can be business-to-consumer or business-to-business models. Uber is primarily a business-to-consumer model in that it facilitates rides for end users. Amazon Business is an example of a business-to-business marketplace that lets a business sell its services to another business. There are also consumer-to-consumer marketplaces such as eBay when it began in which consumers would sell their garage sale items to other consumers. There are vertical and horizontal marketplaces. Vertical marketplaces focus on a single category or market. Horizontal marketplaces sell across segments. Marketplaces use different monetization models including listing fees, transaction fees, or subscriptions.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Mon, 10 July 2023
Preparing for a Secondary Sale Transaction Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing A secondary sale is important to the founders and employees of a company. It gives them the opportunity to sell their shares to gain liquidity in advance of the company’s exit. Here are some key issues to consider: Founders normally receive common shares when launching the company. There are advantages for founders who have preferred shares. Founders should consider starting with preferred shares instead of common ones. Generate interest in the secondary sale to create demand. A priced fundraise often raises the interest of investors and provides a base price for the shares. Contact funds and investors interested in secondary shares during the fundraise. There are investors who regularly buy secondary shares and should be put on notice about your pending offer. Finally, position the business so it is attractive to investors. Ensure the company’s metrics and market position are aligned with investor's expectations.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound.
Direct download: Preparing_for_a_secondary_sale_transaction.mp3
Category:general -- posted at: 5:00am CDT |
Fri, 7 July 2023
On this episode of Investor Connect, Hall welcomes Nitin Rai, Founder and Managing Partner at Elevate Capital. Located in Hillsboro, OR, USA, Elevate Capital is a Diversity, Equity, and Inclusion focused fund that invests in US-based early-stage startups led by underrepresented entrepreneurs, including women, BIPOC, LGBTQ+, and veterans. Launched in 2016, it is one of the US's first institutional inclusive venture funds. It includes three funds: Capital Fund I and II, and an Inclusive Fund, a pre-seed and seed-stage fund that invests in diverse and underserved entrepreneurs nationwide. Since 2016, Elevate Capital has invested nearly $45 million in 57 startups of which 95% are led by diverse founders. These companies have raised follow-on funding of over $280 Million, with a market cap of more than $1.2 Billion and created more than 1,000 jobs. These companies also report 50% of their employees as diverse. Nitin is a highly successful software technology leader and entrepreneur turned Venture Capitalist. Nitin is the Founder and Managing Partner of Elevate Capital. Nitin serves as a board member on many of Elevate Capital’s portfolio companies. Nitin is also a successful entrepreneur. He started his career in Silicon Valley as an engineer at two startups. In 1994, he founded First Insight Corporation, a highly successful electronic health records (EHR), practice management, and ophthalmic image management software company, and a revenue cycle management service (Fast Pay Health) for eye care professionals based in Hillsboro, Oregon, and Pune, India. First Insight is a leader in the optometry, ophthalmology, and optical software industry with its flagship store, MaximEyes. Nitin shares his background as an immigrant from India and his journey as an entrepreneur before starting Elevate Capital. Nitin highlighted the challenges of starting a VC fund in the current economic climate and the limited availability of institutional capital. He also talked about the opportunity to start a VC fund and Elevate Capital's hands-on approach in supporting portfolio companies through board seats, advisory roles, fundraising assistance, and strategic guidance in strategy and go-to-market plans. Visit Elevate Capital at elevate.vc or follow Elevate Capital on Twitter, Facebook, and LinkedIn. Reach out to Nitin at nitin@elevate.vc, www.linkedin.com/company/elevate-capital-fund/, and on twitter.com/NitinrRai _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Fri, 7 July 2023
What Companies Should Know Before Allowing Secondary Sales? Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Companies who want to give their employees the opportunity to sell their shares should consider the following: Set specific timeframes to allow for stock sales by the employees. This limits the distraction of employees and reduces the amount of disclosure the company must do. Prepare disclosure statements for the employees to use and gain board approval. Many companies set the selling timeframe to come just after a fundraise. The share price has been set and can be used for the secondary transaction. The company should provide standard disclosure information about the company such as risk factors and current financials. Company-made projections are rarely provided as it’s very difficult to make accurate predictions. The price set for the secondary sale will impact the next 409A valuation that sets the price of stock options. The secondary sale price sets a floor for the options price.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound.
Direct download: What_companies_should_know_before_allowing_secondary_sales.mp3
Category:general -- posted at: 5:00am CDT |
Thu, 6 July 2023
Valuation Method for a Secondary Sale Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In pricing a secondary sale here are some valuation techniques: Estimate the value of the equity by multiplying the revenue by the multiple for similar companies. For example, SaaS companies are sold for a multiple of 10X revenues. Reduce the value of any debt the company has. Divide the remaining value by the number of outstanding shares. Use their 409A analysis to compare to the number you calculated. Remember, 4o9A’s tend to push the share price down to provide lower-cost stock options to employees. Other factors to include are time to exit and if the company is a candidate for an IPO or a buyout. Finally, look for any recent secondary share sales as a guide to setting the current price.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound.
Direct download: Valuation_method_for_a_secondary_sale.mp3
Category:general -- posted at: 5:00am CDT |
Wed, 5 July 2023
Types of Buyers of Secondary Shares Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. There are several types of buyers for secondary shares. Each has its own motivation for doing so. Here’s a list to consider: Employees often want more shares of a startup that is doing well. They may also want to sell their shares to pay for expenses such as college tuition for a family member. When an employee leaves the company will oftentimes let the employee sell their shares. Venture capital funds will sell secondary shares to provide liquidity to their limited partners. For companies that are not on track for an exit soon, some venture capital funds sell their shares to wind down the fund. Companies that are maturing often need cash to retain employees or replace an investor that wants to exit the investment. They also can sell company shares to raise new capital for growth objectives. There are several types of buyers each with their own incentive to sell their shares on the secondary market.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Tue, 4 July 2023
Tax Issues With Secondaries Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. There are tax issues associated with a secondary sale. Here’s a list of issues to consider: Gains on secondary sales are taxed based on the holding time of the shares. If less than one year, then ordinary income tax rates apply. If longer than one year then the capital gains tax rate applies. If the purchase is made at a premium price, then additional tax issues arise. If made to an employee then the IRS may treat a portion of the gains as compensation and not as capital gains. If made to a third party investor the IRS may also determine a portion of the sale to be compensation and require the company to apply withholding. The identity of the buyer, the type of sale, and the purpose determine the tax treatment where premium pricing is used. Stock purchases only from employees will be deemed as compensation. If the purpose of the sale is for reducing dilution, gaining control, or addressing a company in need then those sales will not be deemed as compensation.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
Mon, 3 July 2023
Pricing Secondary Shares Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In selling secondary shares a price must be set. Since the shares are in a private firm there’s no market to review for a list price. Here are some factors to consider in pricing a secondary sale: Are the shares preferred stock or common stock? Preferred stock has preferences such as liquidation preference and takes precedence over common stock. Common stock is the equity type issued to founders and employees. It typically has no special rights beyond ownership. Since the stock is not publicly traded it’s considered illiquid. The price reflects illiquidity and is often set at a 10% to 50% discount to the last priced round. Time to exit for the startup is another key factor. Most secondary sales come in the last three years of the startup's life. Finally, the health of the company impacts the price as the stronger the growth rate and metrics the higher the price. Preferred stock, shorter time to exit, and a high growth rate will yield a higher secondary share price.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Please follow, share, and leave a review. Music courtesy of Bensound. |
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