Category: IPO

How to ‘Pitch’ workshop

Posted on by Steve Sammartino

Below is an elevator pitch ‘workshop’ I gave for the ‘Agents of change‘ entrepreneurs club of  Melbourne University. The video below is the one of 6 x 10 minute videos. The first (the one below) includes an ‘example’ pitch I did for rentoid – then has ‘alot’ of questions and answers. The last of the videos, workshop 6 – all of which are here has some ideas on great pitcing practice.

It’s kind of long, but the largely due to the discussion afterwards!

[youtube=http://au.youtube.com/watch?v=oREzd_UWfI8]

What do investors invest in?

Posted on by Steve Sammartino

While dropping into Startup Camp in Melbourne last week I started chatting with Jonathon from Melbourne Angel Investors. I asked him just one question:

What is more important in their investments, the team or the concept / product?

His reply was a simple one and here it is:

We’d invest in an A Grade team with a B Grade product, but we wouldn’t invest in an A Grade product with a B Grade team.

Startup blog agrees. Though I did here that he was pretty ‘anti-tech’ as far as their investments go…

But the first piece of advice is worth adhearing  to. Above all things build an A Grade team, be an A Grade entrepreneur.

And so again we hear that the people in your startup are way more important than the secret sauce. It is without irony that A Grade teams more often than not find A Grade ideas too.

Business bubbles, history & startups

Posted on by Steve Sammartino

Here’s a list of business bubbles you may / may not have heard of:

 

Tulip bubble – 1630’s tulip’s sold for more than houses!

South Sea Bubble – 1720

Bull market of 1920’s – resulted in the great depression

Japanese asset price bubble – Commercial real estate selling for US$1.5m per square meter!

Real estate bubble every 10 years or so… You’ve just lived through one!

Tech wreck (dot com)– Companies with negative cash flow valued over 1 billion!

Sub prime / hedge fund bubble 2008 – We’re yet to see all of this…

Green Marketing bubble ? – This one’s coming watch out!

 

Many business bubbles are focused in new industries where startups are abound.

 

Here’s when to get nervous. When you hear the words ’it’s different this time’, or people are overly focused on industry growth and the so called – revolution.

 

Here’s when there is no need to get nervous. When your business model based on basic business fundamentals like cashflow and growth in your net cash position. Startups take heed.

 

For 1000’s of years business and industries never grown much over 10% p.a. once compounded. Yes, there’ll be exceptions like Microsoft in the early 1980’s. But generally speaking when things are predicted to grow at rates above 20%, and valuations are more than 20 time earnings….get suspicious, very suspicious.

Perspective – internet boom 2.0 ?

Posted on by Steve Sammartino

There’s been a lot of talk lately about an ensuing second internet boom. With the billion dollar sales of many web 2.0 companies it’s easy to see why:

 

facebook-logo.jpg                          $15.1 billion

 

skype_logo1.png                                   $2.6 billion

  

feedburner_logo.jpg                            $100 million

  

aquantive-logo.gif                         $6 billion

 

doubleclick_logo.jpg                       $3.1 billion

 

youtube-logo.jpg                                $1.7 billion

 

digg-logo.gif                                     $60 million

Among others…

To give a little perspective the Nasdaq composite index peaked in the year 2000 at 5132 points. Yesterday it closed at 2320, just under 8 years later.

If you invested $10,000 at the peak, today it would be worth $4521. Still a very bearish 55% capital loss.

  

Sure we’d have to question some of the valuations, but the market hasn’t started to value ‘ideas’ at over a billion – yet.

  

Start up lesson – your company is worth what someone is prepared to pay for it.

Money follows ideas

Posted on by Steve Sammartino

Lacking the cash to commence a start up is a misnomer. There’s so much cash floating around western markets at present that the owners of this cash simply don’t know what to do with it.

All money in the world resides somewhere based on an idea. Let me explain:

Money in your wallet – based on the idea we’re going shopping, will need cash for lunch or maybe just for an emergency.

Money in the bank – based on the idea we’ll need it at a later date for something more significant and want to save it for this future transaction

Money in shares – based on the idea that this companies fortunes are improving and the money will grow and provide us with dividends and or a capital gain.

Money loaned to us – based on the idea that we can use this money to create something of bigger financial worth than the original loan and the cost of interest repayments.

All money follows an idea. Sometimes both parties profit. Sometimes one party profits, sometimes we all lose. But the thing which there is no doubt about, is the fact that money is out there for any idea, any time.   

If our start up is that idea we ought chase it and give that idea the money it deserves. The better the idea the greater the chance of accessing the money.

Tech bubble v2.0

Posted on by Steve Sammartino

I recently blogged about the unrealistic valuation of Facebook, seems there’s many who agree with startupblog. Sure web 2.0 is heating up, but as usual they’ll be stayers and those who disappear. The only thing that changes…. This is a really clever and fun parady.

[youtube=http://www.youtube.com/watch?v=KtdV3z9eCm8]

If we want to be here in the long run here’s some simple advice:

Offer a service people need, ensure it has a built in way to make you money, not an exit plan which sells eyeballs – these only work for a few ‘wordbeaters’ (like facebook & youtube).