Market cap and/or up-round "valuations" really don't mean shit unless somebody is buying an entire company. Otherwise, that "unicorn" status might simply mean that some bit player paid way too much for their latest tiny % equity holding. (Unless all shareholders can liquidate at a given price simultaneously, it's basically fiction, as increased supply would eat through the bid stack, devaluing subsequent shares transacted.) Even setting aside discounts and premiums, selling 10% for $10M is not the same as selling 100% for $100M. The guy with $10M might be looking for (or might be) the greater fool.
Finding good deals is hard these days. It's much easier to stick with an old-school, dumpster-diving approach. Here’s the formula:
Pick a random company. Find recent EBITDA. Adjust at will. Choose an anemic multiple, usually 5X. Calculate EV. Subtract debt.
Then, have a junior analyst type said rudimentary math into a massive proprietary spreadsheet template gratuitously slathered in graduate-school vocabulary, and bless with a Managing Director's holy water. It is now imperative that one refers back to this XLS analysis obsessively, no matter the context – for this is the winning formula for negotiation, honed through decades of past practice...
Ignore excess working capital, assets in all forms, and everything else not labeled “debt” on the balance sheet; especially if liquidation value far exceeds the proposed equity offer.
Ignore favorable backlog and pending contracts, regardless of DD validation. Same with evident growth rates, industry trends, and mitigating expense adjustments characteristic among closely held companies.
Ignore shifting risk versus reward correlations in financial markets. (Risk might get you fired, but management fees have always offered sufficient reward.)
Ignore the industry's $1T+ in idle capital, and the fact that nobody is doing worthwhile deals at low multiples anymore. Valuations are opinions, while transactions are facts. Accordingly, one must also ignore the glaring absence of any recent transactions necessary to prove one’s low-ball valuation assertions “right”.
Now, structure the aforementioned 5X beyond recognition, further leveraged in the firm's favor, and tell the seller how hard the firm has tried to make this deal work.
Deposit generous paycheck.
(Disclaimer: There are certainly exceptions, but firms with a rational perspective on value can be rather hard to find.)
BEND, OR – October 19, 2018 – Economic Development for Central Oregon (EDCO) hosted the 15th Annual Bend Venture Conference (BVC) to a sold-out crowd at the Tower Theatre in Downtown Bend. Over the past two days, 14 companies presented their ideas to 600 attendees in hopes of gaining investments from prominent funds. Of those 14 finalists, half of them walked away with funding totaling $1,807,500 in both investments and cash prizes. Side investment deals are still being finalized...
Cascadian Group's Principal, Jason M. Moyer, manages BVC's growth-stage investment process.
Read more here: bendvc.edcoinfo.com
Odds of founding a unicorn:
Lifetime odds of dying from local meteorite, asteroid, or comet impact:
You are 24.18 X more likely to be killed by an asteroid.
Cascadian Group has sponsored and volunteered with the Bend Venture Conference since 2007. BVC's 2016 growth-stage fund, managed by Cascadian principal Jason M. Moyer, recently cashed out of RFPIO, adding to BVC's collective returns. Read more here:
Bend Bulletin Article
Cascadian Group has been supporting the Bend Venture Conference since 2007, as it has grown to become one of the more notable events in the country. BVC 2018 is open for companies to apply through August 8th.
A related article includes current perspectives on venture investment, as quoted in the Bulletin.
General information for October's conference appears here.
First, quintessential bay bro hatches unicorn taxi app (all the while emphatically assuring everyone that it isn't a taxi app), thereby securing multi-billion-dollar valuation.
Next, a cloned Uber-spawn launches his scooter-sharing app, "here to disrupt — by any means necessary". A last-mile land grab to blow your VC mind (or, at least your nine-figure investment).
Now, I'm thinking ahead of the curve on last-yard transportation. That's right — Uber can get you across town, Bird can get you around the block, but who will deliver your ass from the front porch right to your couch?
Bunny, the fuzzy slipper-sharing app, is officially coming out of stealth mode. This Olympic-tier problem solving should fetch at least $100M pre-money.
"You keep using that word. I do not think it means what you think it means." — Inigo Montoya, The Princess Bride
TRENT BANGERTER JOINS CASCADIAN GROUP AS MANAGING DIRECTOR
To lead new Boulder, CO office through expansion into Rocky Mountain States
Bend, OR – March 5, 2018 – Cascadian Group, LLC has selected Trent Bangerter to lead its expansion into the Rocky Mountain States. Trent will join venture development, executive consulting, and M&A engagements across the Western US, with particular emphasis on Colorado and Utah.
Trent is a proven cross-industry executive, further traversing general management, M&A, business development, finance, and consulting. His past roles have included serving on the Board of Directors for Rocky Mountain Care; CEO of Matrix Medical Technologies; Vice President, Acquisitions & Development with Canyon Creek Development; Director with Sierra Consulting Group; and Executive Vice President of Sales & Marketing with NexTrust, LLC. Most recently, he’s led his own asset management group, 3B Enterprises, pursuing healthcare investment strategies.
Trent earned his BA through the honors program at Brigham Young University in Provo, Utah, majoring in International Business. He is an Eagle Scout, multi-engine private pilot, world traveler, and business adventurer.
ABOUT CASCADIAN GROUP, LLC
Cascadian Group, LLC (“Cascadian”) is a private firm dedicated to venture development, executive management consulting, and M&A support. We are on a mission to help build better businesses, and believe in reaching beyond incremental improvements to seek crucial opportunities that can substantially enhance a company’s performance and value. Our clients are typically early-stage to mid-cap companies in transition, facing significant challenges and events.
ALEXIS J. MARTIN JOINS CASCADIAN GROUP AS DIRECTOR, SALES & BUSINESS DEVELOPMENT
Addition enhances advisory services provided by the region’s foremost executive consulting group
Bend, OR – January 8, 2018 – Alexis Martin has joined Cascadian Group, LLC, as Director of Sales & Business Development, to augment the firm’s diverse capabilities in executive management. Alexis will join new venture, executive consulting, and M&A engagements across the Western US, and will be focused primarily on strategies to accelerate revenue growth for client companies.
Alexis is an accomplished business development professional who has worked across diverse industries, products, and countries. Her early career included three years with a research sales division at Goldman Sachs in New York City, subsequently supporting more than one hundred NYSE-listed firms as a corporate relations analyst at LaBranche & Co. She later gained advisory experience in startups, turnarounds, and acquisitions. Most recently, Alexis served seven years as Senior Director of Global Business Development at MDF Instruments USA, based in Los Angeles, driving international growth in excess of 40% annually. She earned her Bachelor’s degree, magna cum laude, from Boston University, and her MBA from Pepperdine University.
ABOUT CASCADIAN GROUP, LLC
Cascadian Group, LLC (“Cascadian”) is a private firm dedicated to venture development, executive management consulting, and M&A support. We are on a mission to help build better businesses, and believe in reaching beyond incremental improvements to seek crucial opportunities that can substantially enhance a company’s performance and value. Clients are typically early-stage to mid-cap companies in transition, facing significant challenges and events.
"The first annual Central Oregon Fastest 20 Awards, presented by Cascade Business News (CBN), celebrated the most rapidly rising stars of the increasingly diverse local business scene..."
Cascadian Group came in at #5.
Read more here.
We think about business a lot. Sometimes, late at night, we even write a few things down...