landmark ventures presentation on midwestern entrepreneurs, deal flow and …
Post on 13-Jan-2015
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Historic Inflection Point
Historic Inflection Point
Web 2.0 was about creating community, content, and focused on B2C (Facebook, Pinterest, Tumblr, LinkedIN
Web 3.0 is taking some of those principles and putting them to work in B2B silos
Where Should You Invest To Increase
Return?
Where Should You Invest To Increase
Return?
“Fish Where the Fish Are”
Data on Midwestern B2B Verticals
Data from Corum Group; Q1 2013, actual exits
Healthcare-3.95x on sales 21.8x on EBITA
Fin Service-3.49x on sales 14.05x on EBITA
A/E/C-2.80x on sales 14.43x on EBITA
HR-2.12x on sales 53.54x on EBITA
CRM-3.83x on sales 18.53x on EBITA
Supply Chain-5.36x on sales 40.56x on EBITA
Money Money Money!
Money Money Money!
1 Trillion waiting to be deployed by Private Equity
Over 300 Billion on Corporate balance sheets
Strategic Acquisition for employees or IP
New ExitsNew ExitsFamily offices buying for cash flow
New entrants to the market from outside the US (Bosch, Shuanghui)
Exit Market is BIGExit Market is BIG
Demand is there
Problem is there are few opportunities
Factors For ExitsFactors For Exits9/10 companies fail
Investors don’t invest enough
Investors investing in round 1, and done
Spray and pray
No information arbitrage
Investing in companies where investor has no experience
Risk takers instead of risk managers
Learning curve effects of angel investing-curve is steep and hard
Pick Jockeys not horses
Passive investors serve on boards-active investors make things happen
Some Problems in the Midwest
Some Problems in the Midwest
Few funds want to lead Series A investment
Few funds dominate one vertical
Developed West Loop Ventures around that thesis
Deal FlowDeal FlowAlways a problem
Need to see lots of deals so there isn’t adverse selection
Need diversity to look at solutions from variety of angles
Even if you don’t invest, you learn something
Remedy For Deal Flow
Remedy For Deal Flow
Join or affiliate with an angel group
Mentor at an accelerator like TechStars
Network with other angels-talk
Attend Meetups where Entrepreneurs are
Work At University Entrepreneur Ctrs (for free) like Polsky Center at Univ Chicago
Invest in a Series A fund
Ensuring SuccessEnsuring Success
Talk to potential exit partners prior to investing
Get management references
Make sure you can fail fast
Cultivate next rounds of investment
Network, Network, Network!
Ways to Grow Without Investing a
Dime
Ways to Grow Without Investing a
DimeMentor companies
Take a meeting, become a customer
Open your Rolodex (for free) make introductions
Talk about Midwest startups with your peers
Download their apps, use, and give feedback
Q and AQ and A• Co-Founder of Hyde Park Angels (www.hydeparkangels.com)
and West Loop Ventures
(www.westloopventures.com)
• Blog at pointsandfigures.com Tweet @pointsnfigures
• Active investments in: KapowEvents.com, YCharts.com, Brilliant.org, Alltuition.com, Desktimeapp.com, UICO.com, Supply-vision.com, Tallgrassbeef.com, Dabble.co
• Trustee at the National World War Two Museum (http://www.nationalww2museum.org) in New Orleans, Louisiana
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