Landmark Ventures Presentation on Midwestern Entrepreneurs, Deal Flow and …
Historic Inflection PointWeb 2.0 was about creating community,content, and focused on B2C (Facebook,Pinterest, Tumblr, LinkedINWeb 3.0 is taking some of those principlesand putting them to work in B2B silos
Where Should YouInvest To IncreaseReturn?“Fish Where the FishAre”Data on MidwesternB2B Verticals
Data from Corum Group; Q1 2013, actual exitsHealthcare-3.95x on sales 21.8x on EBITAFin Service-3.49x on sales 14.05x on EBITAA/E/C-2.80x on sales 14.43x on EBITAHR-2.12x on sales 53.54x on EBITACRM-3.83x on sales 18.53x on EBITASupply Chain-5.36x on sales 40.56x on EBITA
Money Money Money!1 Trillion waiting to bedeployed by Private EquityOver 300 Billion onCorporate balance sheetsStrategic Acquisition foremployees or IP
New ExitsFamily offices buying for cash flowNew entrants to the market from outsidethe US (Bosch, Shuanghui)
Exit Market is BIGDemand is thereProblem is there arefew opportunities
Factors For Exits9/10 companies failInvestors don’t invest enoughInvestors investing in round 1, and doneSpray and prayNo information arbitrageInvesting in companies where investor has no experienceRisk takers instead of risk managersLearning curve effects of angel investing-curve is steep and hardPick Jockeys not horsesPassive investors serve on boards-active investors make things happen
Some Problems in theMidwestFew funds want to leadSeries A investmentFew funds dominate oneverticalDeveloped West LoopVentures around thatthesis
Deal FlowAlways a problemNeed to see lots of deals so there isn’t adverseselectionNeed diversity to look at solutions from varietyof anglesEven if you don’t invest, you learn something
Remedy For Deal FlowJoin or affiliate with an angel groupMentor at an accelerator like TechStarsNetwork with other angels-talkAttend Meetups where EntrepreneursareWork At University Entrepreneur Ctrs(for free) like Polsky Center at UnivChicagoInvest in a Series A fund
Ensuring SuccessTalk to potential exit partners prior to investingGet management referencesMake sure you can fail fastCultivate next rounds of investmentNetwork, Network, Network!
Ways to Grow WithoutInvesting a DimeMentor companiesTake a meeting, become a customerOpen your Rolodex (for free) makeintroductionsTalk about Midwest startups with your peersDownload their apps, use, and give feedback
Q and A• Co-Founder of Hyde Park Angels (www.hydeparkangels.com) andWest 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
gave a short lunchtime presentation on finding deal flow and derisking it.