Tuesday, August 30, 2016

How do Angel investors value a business with no revenues ?

There are 5 methods for establishing the pre-money valuation of pre-revenue companies, specifically:

  1. The Scorecard Method (Bill Payne) -most widely used: takes into account  6 to 7 factors  and assigns them a weighted factor based on the strength/weakness (+/-) percentage of norm: 

  • Strength of the Management Team                              0-30%
  • Size of the Opportunity                                                 0-25%
  • Product/Technology                                                      0-15%
  • Competitive Environment                                              0-10%
  • Marketing/Sales Channels/Partnerships                       0-10%
  • Need for Additional Investment                                     0 –5%
  • Other                                                                             0 –5%

    2.The Venture Capital Method -based on an exit price and exit timeline (let's assume 3 to 7 years), the current value is an NPV calculation.

    3. The Dave Berkus Method developed by Dr Dave Berkus of Tech Coast Angels.

    4. The Cayenne Valuation Calculator uses 25 questions answered convervatively to determine the progress of the venture

    5. The Risk Factor Summation Method

     For Biopharma industry visit   Dr. Aitana Peire and Dr. Patrik Frei have published an article “What is the value of a deal? in the biopharmadealmakers supplement June 2016 edition of nature biotechnology and Nature Reviews Drug Discovery.

Why Do Celebrities Invest in Start-ups and Venture Capital

Saturday, August 27, 2016

Vator Splash L.A. Conference October 2016

"Mingle and learn from blue-ribbon VCs, angels, legendary founders and the hottest SoCal-based startups." -See more

Books I am reading

1. Forbes Book of Quotations: 10,000 Thoughts on the Business of Life, by T. Goodman

2. Masters of Corporate Venture Capital, by A. Romans 

Vator Splash LA 2015

Wednesday, August 24, 2016

Opinion on Private Equity monitoring or accelerating fees enforcement

The talk of the town this week is the $52.7 MM settlement paid by Apollo Global Management.

This came on the heels of a biased study designed to malign the industry from CEPR (Center for Economic and Policy Research) published in May 2016 (Link to pdf)

The "accelerated services and evergreen" fees are stipulated in the Management Services Agreement (MSA) which the authors of the study Eileen Appelbaum and Rosemary Batt call "egregious" and "money for nothing". To begin with, the authors blatantly disregard that MSAs are different from company to company and unit to unit. The authors blames private equity for cashing in the evergreen fees if they sell the company before the 10-year end of an MSA. The authors are likely to have a poor grasp of the concept of unrealized gains and losses. If indeed the MSA allowed for a retroactive payment of monitoring fees as non-refundable, then they were a "better than expected" provision signaling a faster, unexpected outcome for the portfolio company. You pay extra for an early success.
"Whatever they're paying you, I'll double it" -we heard it  thousand of times: the extra is for working ahead of schedule.

Those same authors take up the false logic that GP "may be motivated to carry out transactions that generate substantial fee income" in disregard to the PE Fund and LP interests. That is a prima facie ridiculous conclusion, since how can LPs make more that GPs when they share profits ? "Ex ante financing can alleviate some of these problems. By tying the compensation of the GP to the collective performance of a fund, the GP has less of an incentive to invest in bad deals, since bad deals will contaminate his stake in the good deals." [Why are Buyouts Leveraged? - The financial structure of private equity funds, by Ulf Axelson, Per Stromberg, and Michael S. Weisbach, December 14, 2007. ]

Saturday, August 20, 2016

CIT Aerospace expected to be sold to Chinese Buyers

The headline these days are that the Chinese HNA Group are bidding for CIT Aerospace for an estimated $4 Bn. WSJ Link
Does that include the Business Aircraft unit ? No, apparently.

Sample of CIT Business Aircraft financings, 2015

Saturday, August 13, 2016

How much money can you make selling private aircraft ?

I asked myself that question, and started asking successful aircraft brokers.

Aircraft brokers, on average take a 1 % commission (realistically), depending on the size and marketability of the aircraft.

So suppose that you're selling this aircraft for example,

a Dassault Falcon 50, Year 1994, TTAF(Total Time Airframe) 6,855 hrs. -it was listed last year at $2.5 MM. Full details here. Comission: $25,000.

Note: Video below may be a different aircraft.

For most important considerations to aircraft purchases,  I recommend reading NetJets Buyers Guide

Arguably the most qualified and reputable brokers  are NARA (National Aircraft Resale Association) certified and adhere to NARA's Code of Ethics.

Sunday, August 7, 2016

Crowdfunding: Raising Funds for a Personal Cause or Creative Project (blog, film, adventure theme)

Crowdfunding campaigns are closer to the reach of practically anyone with the ease of a legible screenshot and consistent storytelling. Folks are raising funds for things like medical treatment for loved ones, taking volunteer trips abroad to pursuing creative passions they could not afford otherwise.

Amongst the crowdfunding platforms GoGetFunding stands out compared with other rewards based platforms (i.e. Kickstarter) :

GoGetFunding has a 4% site fee while Kickstarter's 5%, and gives you:

Paypal support, ✔                                                          ✘
Personal Fundraising Coach✔                                     ✘
Customized Page Theme ✔                                          ✘
Instant Page Approval ✔                                              ✘
Timed/Ongoing Campaign ✔                                       ✘

Also, all campaigns are allowed while Kickstarter allows creative only (no personal causes). On GoGet Funding you can raise funds in 21 currencies, You get to keep what you've raised even if you haven't met your target.

  Fundraising ideas

To START a campaign : Click here

Discover Fundraisers

Saturday, August 6, 2016

Aircraft Bluebook Market Values Roundtable, Los Angeles, Ca

Aircraft Bluebook Market Values Roundtable

"Aircraft Bluebook, the premier resource for aircraft values, is convening its first Aircraft Bluebook Market Values Roundtable in Los Angeles on October 5, 2016, in conjunction with SpeedNews' 21st Annual Business & General Aviation Industry Suppliers Conference.

At this year's event, intended to benefit aircraft OEMs, suppliers, financial institutions, dealers, brokers and consultants, Aircraft Bluebook editors and industry experts will weigh the elements that factor into business aircraft market values -- especially the pressure points that affect residual values of business aircraft.

The roundtable should increase understanding of how the market values different factors and improve asset planning and portfolio management."

Register here