By Francis Moran
One of the more thought-provoking presentations at last week’s International Startup Festival was by Randy Smerik, a serial entrepreneur who has lived through more than one startup, venture capital investment and eventual acquisition. His personal experience added a significant note of authenticity to his session, “Build 2B Bought,” but it was the statistics he presented that really got me thinking.
Let me summarise Smerik’s narrative.
- There is a 90 percent chance that the eventual liquidity event for a startup will be its acquisition by another company.
- The average merger-and-acquisition (M&A) exit is worth $20 million.
- A VC investing only $2 million into a company and acquiring 20 percent of its equity based on a $10-million post-money valuation will need to earn $20 million on that investment to get the minimum 10x return that VCs target from each investment. (Admittedly, Smerik did acknowledge that most funds get a 20x to 30x return from two out of every 10 investments they make, with the other eight returning little or nothing.)
- At a 20 percent ownership level by the VC, that means the company must sell for $100 million.
- But the average M&A deal is only $20 million.
As Smerik said, “Yikes! This is a problem.”
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By Hailley Griffis
Last month’s content lineup featured great posts that shattered common myths about listening to feedback from investors, the future of the tech-world for entrepreneurs and how far a little cleverness can take you in your marketing strategy. We also looked at the International Startup Festival being held in Montreal this month for the third year in a row and the astounding importance that neurons play in our day-to-day lives.
In case you missed any of it, here is a handy recap of our posts, as ranked by the enthusiasm of our readers:
June 18 : The art of ignoring feedback, by Anil Dilawri
June 04: Where do the next opportunities lie for savvy tech entrepreneurs?, by Denzil Doyle
June 26: International Startup Festival hits Montreal for third edition, by Francis Moran
June 17: A little cleverness goes a long, long way, by Leo Valiquette
June 19: You are what you think, by Bob Bailly
June 12: Why my pony tail ain’t my brand, by Francis Moran
June 06: House renos and the art of customer service, by Francis Moran
June 05: Your local newspaper may be your hardest to crack, and least relevant, media outlet, by Leo Valiquette
June 24: Why confidentiality, by David French
June 27: Running faster is not the solution to Canada’s productivity challenge, by Denzil Doyle
June 10: 4 reasons why you need a mobile website, by Debra Kaye
June 11: With clients, you must sometimes be cruel to be kind, by Leo Valiquette
June 20: Are developers responsible for how their products are used?, by Francis Moran
June 25: Summer is no time to slack off, by Leo Valiquette
June 13: Customer surveys are great. Unless you ask the wrong questions, by Francis Moran
Image: June 2013 Calendar Printable
By Hailley Griffis
As per our usual Friday schedule, we have rounded up some of the best articles we’ve come across in the past week to share with our readers. Front and centre this time around are Startup Professionals, Financial Post and the Huffington Post.
Many entrepreneurs over-think or under-think issues
Martin Zwilling, CEO and founder of Startup Professionals, Inc. assesses the overload of information that today’s entrepreneurs are swimming in, causing them to either over-think or under-think very crucial issues. He bases his points on Daniel Patrick Forrester ‘s book and offers key areas for reflective thinking.
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By Anil Dilawri
I see a lot of presentations every week. Many of these presentations are investor pitches from small technology companies. Most of these investor pitches are bad … really, really bad. They’re poorly prepared, not well structured, confusing and riddled with jargon.
Following these investor pitches the entrepreneur presenters often say, “It was a good experience, we got some really good feedback on how to improve our pitch.”
There are two main problems with this statement:
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By Leo Valiquette
Every Friday, we round up some of the best articles we’ve come across in the past week and share them with our readers. Front and centre this time around are MarketingProfs, Ventureburn, Search Engine Journal, Fast Company and Convince and Convert.
Make content marketing authentic: The case of customer stories
Although many see content marketing as just that — marketing — smart marketers know that what they’re delivering is a great story. At the heart of that is truth, education, and personality — however imperfect it all may be. Jay Pinkert talks about the power of the customer story.
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