Business Plan-Valuation Method: Discounted Cash Flows

Watch this video now: http://capitalmatchpoint.com/content/business-plan-valuation-method-discounted-cash-flows

Hosted by Mark Bass, MBA, The Capital MatchPoint, 941-462-2728, http://capitalmatchpoint.com

I got a call from an entrepreneur the other day that was having trouble determining the value of their company. Specifically, the problem was that this entrepreneur's company participated in a market space that there's not a lot of publicly traded companies and, quite honestly, just not a lot of history out there. So, they were having problems finding enough information to perform some of the typical valuation analyses such as price to earnings or price to sales. What I recommend in this case is that you lean more heavily on the discounted-cash-flows method. Ideally, you'd like to have to have as many methods as possible and come back to a value, but sometimes you just can't, and you have to lean more heavily on the others.

What the discounted-cash-flow method does is it takes the cash flows that your company's expected to generate over a period and, by the way, this information should be contained in your business plan, discounts them back to the present, and you're usually looking at five years out, minimum of three, sum them all up, and arrive at a value of your company. This method is mathematically a little more difficult than the price-to-earnings or price-to-sales ratio methods. So, if you're having some problems or need some help, give us a call at the Capital Match Point. What we ultimately want to do is make sure that our entrepreneurs are as prepared as possible for when the time for negotiation comes.

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Find Investors-Deliver the perfect investor pitch

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Hosted by Dave Dambro, http://capitalmatchpoint.com, 770.433.8250

Most of our capital seekers are going to find themselves in a position to make a verbal presentation or "pitch" to our investors. Now, I get a lot of questions as to what is the most effective way to communicate their message and sell their company to the investor and I've come up with three points in particular that I tell all capital seekers to pay attention to. First, you want to pick your most skilled communicator in the group. Typically most capital seekers have a board or several partners and one of them is a better communicator or better speaker than the others. It doesn't necessarily have to be the majority holder of the company or the guy that came up with the idea, get the guy that's the best communicator and put him in front. Second, put yourself in the investor's mindset before you deliver your presentation. Ask yourself, "What is he thinking?" and try to tailor the answers to the investor's mindset. And third, and this is my favorite, I want you to deliver the answer to the questions you receive in thirty seconds plus or minus. And there's a reason for this, please pay careful attention to it. You don't want to invite conversations or really open the door to topics that are not pertinent to the question that was asked. And I invite capital seekers that are trying to
strategize their presentation and have questions about it to give us a call at the Capital MatchPoint, that's what we're her for. We'll put our skills to work for you and give you a few tips in that area if you need them.
www.capitalmatchpoint.com, 770.433.8250.
The Capital MatchPoint, www.capitalmatchpoint.com , 770.433.8250

Raise money-About The Capital MatchPoint Investors

By Ken Honeyman, The Capital MatchPoint, www.capitalmatchpoint.com, 770-433-8250.
One of the reasons why I started Capital MatchPoint is probably the obvious. I was an investor or capital seeker for 30 years. What was happening in the meantime is I would be on one side of the fence as an investor, and I would have people coming in to our office, they would sit in the chair, and they were looking for capital. They were for five-million, ten-million, one-million dollars, whatever, and they were very ill prepared to accept any money or have someone give it to them. What I did is, over time, assumed that the investor was really the golden goose. They were the people that really needed to have an investor-centric site built for them. So, we did. It's taken some time to get it built, but now it works like a charm, and the reason why it does is because the investors are one side. We know what their investment criteria is: if they are looking to invest 20-million dollars, ten-million, one-million dollars, whatever they're interested in, they're going to find it from the other side. The entrepreneurs, in turn, are on the other side. They put in their datasheet that tells the investor exactly what their parameters for investment are as well. We bring the two together right in the middle, and the results are a capital "matchpoint". And thus far, it's been a tremendously great tool for the investor, and the entrepreneur has gravitated towards it because they don't have to waste their time looking for deals, deal flow, and capital providers that just don't want to see their deal.
Click here to watch this video by Ken Honeyman:
http://capitalmatchpoint.com/content/raise-money-about-capital-matchpoint-investors

Raise Money-When Seeking Capital, How Much Money Should Be Raised?

I think it's instructive to answer your question by trying to get in the investor's head and find out how much an entrepreneur really needs to raise, and I want to talk about the actual amount of capital that's considered being raised and what our investors really look for.
First of all, the amount of money being raised is a pretty good indicator of how much the entrepreneur thinks the company is really worth. The thing I find most interesting is how the company arrived at that number. What our funding sources want to know is where they're going to spend the money. Can they do it for less? What would they do if they had more money?
Secondly, the question is, I think the right question is, how much money should be raised? The right amount of money to bring into a company is enough to reach sufficient milestones, if they raise more money to a higher price at a future date. If all goes well, the money invested will be used to drive all sorts of risks out of the business. Will it be used to take the company to cash flow positive? Will it be used to pay down debt? If they don't know exactly what they're capital needs are or they raise too much money early on, they could be selling off too much of the company for too little capital.
Third, if too little money is raised, the company may run out before the business is proven enough sufficiently to raise additional capital. In other words, raising too little money can be fatal.
Fourth, companies should leverage early stage venture money to drive up the value of the company, so the next time the company fundraises. they'll be able to bring in larger amounts of money while suffering smaller amounts of dilution, which is very important for management teams.
Unfortunately, the perfect amount of money to be raised is not always obvious, and the question of why is the company raising the amount of money it's raising is really important. So, when the entrepreneur is going out to raise money, they have to be prepared to know the answer to how much they're hoping to raise and why.
We welcome questions from our investors and entrepreneur when they're preparing to engage. They can call us at the Capital Match Point because ultimately we're interested in funding successes with our investors. Watch this video: http://capitalmatchpoint.com/content/raise-money-when-seeking-capital-how-much-money-should-be-raised

Find Investors-What Criteria Do Investors Look for When Making a Funding Decision?

Watch this video now: http://capitalmatchpoint.com/content/find-investors-what-criteria-do-investors-look-when-making-funding-decision
Hosted by Dave Dambro, The Capital MatchPoint, 941-462-2728, www.capitalmatchpoint.com...Capital seekers are often asking me how it is that we derive the criteria that we are asking for them to provide on their data sheets. I’ll tell you, it goes back about 25 years for me in the business. There is something that we call the three-minute review. And this is a situation, if you can picture, capital providers are sitting there looking at deal after deal after deal. Eventually, you develop a strategy. You’re looking for key points in a business plan to decide if its going in the trash or if its going in the pile to take another look at later. And here’s how it works.
Basically, and not in this particular order, but were looking at these things. The number or amount of money needed. One of the primary concerns. can we provide that amount of money? Is it within our pervue? Is that the amount we typically invest in?
Secondly, what stage is the company in? A lot of companies, right now especially in this economy, are taking preference if they are in a later stage versus a start-up, although there are plenty of good ideas getting funded out there.
The industry is very, very important. There are shifts in the industry from time to time. High tech may be in favor at one point, medical may be in favor at another point, and you may find right now that just plain bread and butter industries, like consumer products and manufacturing, are in favor. And look at the business description as well. What’s this business about in general? Then, I’m looking at the company background. Where did this concept come from? How is it developed? How did it end up in the space that they’re in?
Probably one of the most important things, and I think Ken Honeyman would agree with me, and Mark Bass, as well the management team, I cant tell you how many of our investors go straight to the management team once they've determine what business they’re looking at.
Now, the product or service that you're providing is another key factor. Then, we look at the market data that goes with that. And remember, these are quick looks, so were scanning this. Technology and the viability of that technology, have we been hearing about this technology? Is it a buzz word? Is it something we see a lot of coming into the office on the horizon?
Next, were going to look at competition. Remember, there’s always competition. If there’s not, there will be.
And finally, were looking at commercialization, and that’s the question of how are you going to monetize this concept and turn it into a business and generate profits?
And that’s a three-minute review. Those are the fields of data that you’re going want to fill out and be ready to answer to. But that’s how typically an investors looking at your deal. So, be aware. Now you know what’s going on inside the investor's mind when he’s looking at your data.

Find Investors-The Capital MatchPoint-matching Entrepreneurs with Investors

Watch this video now: http://capitalmatchpoint.com/content/find-investors-matching-entrepreneurs-and-investors , Hosted by Dave Dambro, The Capital MatchPoint, www.capitalmatchpoint.com, 770-433-8250. If I were asked to describe the Capital Match Point, I would have to say that it is a boutique community in which capital seekers are able to meet directly with our investors, [who] are interested in providing capital to their specific type of company.
Now, the capital seekers are treated with hands on care. They do not just up load their data and deposit it there. We actually take the time to review the data with our capital seekers. It is part of our [Capital] Match Point mentor program. We know ultimately what our investors expect to see. The goal is to present a clear and concise picture of your company, and to do so with the perspective of our investors in mind.
It is our job to make sure that your company is reflected in the best possible light.

Raise Money-When Seeking Capital, How Much Money Should Be Raised?

Watch this video now:
http://capitalmatchpoint.com/content/raise-money-when-seeking-capital-how-much-money-should-be-raised
Hosted by Ken Honeyman, The Capital MatchPoint, www.capitalmatchpoint.com, 770-433-8250I think it's instructive to answer your question by trying to get in the investor's head and find out how much an entrepreneur really needs to raise, and I want to talk about the actual amount of capital that's considered being raised and what our investors really look for.First of all, the amount of money being raised is a pretty good indicator of how much the entrepreneur thinks the company is really worth. The thing I find most interesting is how the company arrived at that number. What our funding sources want to know is where they're going to spend the money. Can they do it for less? What would they do if they had more money?Secondly, the question is, I think the right question is, how much money should be raised? The right amount of money to bring into a company is enough to reach sufficient milestones, if they raise more money to a higher price at a future date. If all goes well, the money invested will be used to drive all sorts of risks out of the business. Will it be used to take the company to cash flow positive? Will it be used to pay down debt? If they don't know exactly what they're capital needs are or they raise too much money early on, they could be selling off too much of the company for too little capital.Third, if too little money is raised, the company may run out before the business is proven enough sufficiently to raise additional capital. In other words, raising too little money can be fatal.Fourth, companies should leverage early stage venture money to drive up the value of the company, so the next time the company fund raises. they'll be able to bring in larger amounts of money while suffering smaller amounts of dilution, which is very important for management teams.Unfortunately, the perfect amount of money to be raised is not always obvious, and the question of why is the company raising the amount of money it's raising is really important. So, when the entrepreneur is going out to raise money, they have to be prepared to know the answer to how much they're hoping to raise and why.We welcome questions from our investors and entrepreneur when they're preparing to engage. They can call us at the Capital Match Point because ultimately we're interested in funding successes with our investors.

Business Plan-Valuation Method: Discounted Cash Flows

Watch this video now: http://capitalmatchpoint.com/content/business-plan-valuation-method-discounted-cash-flows
Hosted by Mark Bass, MBA, The Capital MatchPoint, 770-433-8250, www.capitalmatchpoint.com, I got a call from an entrepreneur the other day that was having trouble determining the value of their company. Specifically, the problem was that this entrepreneur's company participated in a market space that there's not a lot of publicly traded companies and, quite honestly, just not a lot of history out there. So, they were having problems finding enough information to perform some of the typical valuation analyses such as price to earnings or price to sales. What I recommend in this case is that you lean more heavily on the discounted-cash-flows method. Ideally, you'd like to have to have as many methods as possible and come back to a value, but sometimes you just can't, and you have to lean more heavily on the others.
What the discounted-cash-flow method does is it takes the cash flows that your company's expected to generate over a period and, by the way, this information should be contained in your business plan, discounts them back to the present, and you're usually looking at five years out, minimum of three, sum them all up, and arrive at a value of your company. This method is mathematically a little more difficult than the price-to-earnings or price-to-sales ratio methods. So, if you're having some problems or need some help, give us a call at the Capital Match Point. What we ultimately want to do is make sure that our entrepreneurs are as prepared as possible for when the time for negotiation comes.

Find Investors-How do I raise capital in this economy?

Watch this video now: http://capitalmatchpoint.com/content/find-investors-how-do-i-raise-capital-economy
Hosted by Dave Dambro, The Capital MatchPoint, 941-462-2728, www.capitalmatchpoint.com...
I'm frequently asked this question from our entrepreneurs, “How do I raise capital given this economy?” And it’s a good question. There’s a lot of anxiety surrounding it, so I think you want to be aware that its true. IPOs were down 85% through the years 2007 and 2008. And now, in 2009, it appears that the well has dried up completely. But don’t despair. There are options. Even though the banks have pretty much cut back their lending, and investment bankers are sitting on the sidelines, there will always be entrepreneurs. And in fact, there are more entrepreneurs created in times of economic crisis than usual.
I'll give you a perfect example. Top-level executive loses his job. Highly skilled position…got some savings. He’s got a great idea, and he’s always wanted to be in business for himself. There, you’ve got an entrepreneur being born. On the other side of the coin, there are always investors. There are professional investors that run just like any other company, and they are in the business of providing capital.
Now, the disconnect is occurring in the deal flow. So, how do you access the deal flow as an investor? And as an entrepreneur or a capital seeker, how do you get in front of the investor directly? Well, if you don’t have a strategy, its like shooting an elephant with a BB gun. You’re going to have a tough time. What you need to do is develop a strategy. You need to be able to package and provide your deal criteria and capital requirements, convey those to a targeted audience of capital providers, and one of the ways that you can do that really efficiently now is through a capital network website. Capital Match Point is a perfect example.
One of the benefits in going that route is that you’ve got a captive audience of investors that are professional investors. They are interested in your industry, your stage of business where ever it might be: start-up, early stage, later stage. And they’ve got the capital level that you’re looking for.
One other secret here: cut out the middle man. You don’t want to be working through a broker in times like this. Everybody is looking to save money and cut costs. So, remember, capital is always going to have a cost associated with it. What I recommend to all entrepreneurs and capital seekers alike, at any stage, be efficient with your capital costs, take the most direct route to funding you can.