Master Classes with Peter Adams
Business Accelerator UKIM together with Digital Innovation Hub and Challenger will host four Master Classes with Mr. Peter Adams, Colorado-based author, investor, speaker, educator, and community leader, to inspire Macedonian startup founders and angel investors on their joint venture development journey.
Do you want to generate new knowledge and turn your innovative solutions into a profitable business?
Then these Master Classes are ideal for both startup founders and angel investors.
Masterclasses were held in the Center for Technology Transfer and Innovation – INNOFEIT (MAP).
MC 1 – Angel 101 and Exit Strategies
Working materials
Description
Have you ever been interested in investing in start-ups? Are you interested in investing in innovative companies, and disrupting industry sectors with new products and marketing strategies? And would you like to know how to reduce the risk of investing in these early-stage companies?
In this course, we’ll teach you the basics of investing in startups. This is an introductory course, so no prior education or experience is required.
Topics Covered Include a high-level introduction to essential elements of successful early-stage investing:
- What is angel investing? What kind of people are angels, what do they invest in, how much do they invest, what kind of returns do they get?
- Is angel investing as risky as everyone thinks? (Hint – it’s risky, but not if you do it right)
- Exits – how do angels get their money back and how long does it take?
- Syndication and working with other investors.
- Venture Funds vs. Single Investments
- Benefits of angel investing in groups vs. by yourself.
RVC Academy: Exit Strategies
A workshop to learn how to develop and implement exit strategies for venture companies.
“Begin with the End in Mind” (Habit #2 of Steven Covey’s Seven Habits of Highly Successful People)
Whether you are an angel investing in a new company or a founder who is pitching to angels, it is important to your net worth to figure out what the Exit will be for this venture. Investors and Founders will enjoy an in-depth discussion on exit strategies as they relate to companies that are seeking seed stage capital. The time to start thinking about the exit is at the beginning when you can create the greatest value for all stakeholders.
Think of the acquirer of a company (regardless of whether it is by M&A or IPO) as the “second customer” for your company. Just like the first task of a startup should be to understand who the customer is and the unique value proposition that the company provides, the exit is selling to the “second customer” who buys the company. The value proposition for that customer is different than the proposition for the first customer and learning how to develop these two value propositions simultaneously is critical to maximizing investor return.
Successful angel deals result in a return on investment in 3-7 years. Exit potential is one of the main criteria that investors use to decide which companies to invest in. To get there, we need to begin with the end in mind.
This Exit Planning session will discuss the following:
- What is an exit or liquidity event?
- How does your exit strategy impact valuation now?
- What will your company be worth in 5 years?
- How and when to target potential acquirers.
- How to build an exit strategy even though it’s five years away?
- Is talking about the exit a bad idea because it sounds like a quick flip?
- Implementing the exit. Roles and responsibilities, gotchas and tips.
- How to balance early vs. normal exit strategies against IRR, opportunity, risk and more
MC 2 – Proformas – Financial Projections
Working materials:
- Believable Proformas
- Sample Proforma #1 – EdTech
- Sample Proforma #2 – Med Device
- Sample Proforma #3a – Travel Tech (Annual Summary)
- Sample Proforma – Bitsbox
Description
Believable Proformas (Financial Projections)
Proformas are the founders’ chance to present a well-educated set of projections for the financial performance of their company in the future. While nobody can predict the future with 100% accuracy, the proforma is one of the most important planning tools available to founders and the most important due diligence document for investors.
In this workshop, we will cover:
- What is a proforma?
- What is the format for a well-crafted proforma?
- How far into the future should a proforma project?
- How can the exit strategy help to create a believable proforma?
- How are proformas used in valuation modeling?
- What are the steps to create a proforma?
- How should investors evaluate a proforma?
- And more.
MC 3 – Valuation Workshop and Capital Stack Strategy
Working materials:
Description
Valuation is a mystery for both founders and investors, but it doesn’t have to be. In this workshop, we will work through five different valuation methodologies and how they work together to form a smart and fair valuation for a company at the early stages.
Participants will learn:
- What is value vs. price for company stock?
- How to use the valuation methods in negotiation
- How to think about “externalities” that can impact value
- The Scorecard Valuation Method
- The Risk-Adjusted Valuation Method
- The Burn Rate Method
- The Venture Capital Method
- The Cap Table Method
By the end of this masterclass, participants will have the tools and knowledge to fairly value companies.
Capital Stack Strategies
The capital Stack is the combined projected capital raise for a company. These raises are broken into “tranches” or bite-sized chunks that will typically result in about eighteen months of operating runway for a company. The proper use of a capital stack strategy is closely tied to the proforma and exit strategy and when properly configured, will help the founder and investor to minimize dilution from multiple follow-on rounds of investment.
In this workshop, we will cover:
- Runway – how to calculate it and how long should it be?
- Reserves – when should the next capital raise begin
- Size of Raise – how much should a founder raise
- Number of Raises – what is the optimum number of raises to grow fast, but reduce dilution?
- Milestone Evaluation – how does value increase with milestones reached?
- When is the optimum time to raise in order to minimize dilution?
- Investors – what is the relationship between raises and valuation?
By the end of this masterclass, participants will understand how to construct a capital strategy to maximize returns for both investors and founders while minimizing risk.
MC 4 – Term Sheets and Due Diligence
Working materials:
Description
Understanding Term Sheets
The term sheet can be intimidating for founders and investors at first, but once you get the general ideas, they become a lot easier to understand. In this workshop, we will review the purpose and use of the term sheet, and we will cover the main terms and how they are used in negotiation.
Participants will learn:
- Purpose of the term sheet
- Different kinds of deal structures and the pros and cons for each.
- When and how to prepare the term sheet.
- The role of the “lead investor” in creating the term sheet.
- Deal structure options
- Review of key terms including valuation, deal close date, minimum to close, antidilution, liquidation preferences, information rights, board seats, dividends, prorata rights, control provisions, conditions precedent to financing, and more.
We will also cover common vs. preferred shares and how to understand the difference.
Due Diligence
Due diligence is the process of evaluating an investment opportunity. This process is often approached haphazardly. We will cover how founders should prepare for diligence and what investors should be looking out for during the diligence process.
Participants will learn:
- What are the key elements of due diligence?
- How long should due diligence take?
- When does an investor decide to say “yes” or “no”?
- What are the phases of diligence?
- What are the financial impacts to investment with high vs. low diligence?
- How to identify the three key risks in any company. (Hint – they’re not the same for all companies)
- How founders should handle discussing risks with investors.
- Due diligence in syndicated deals – best practices.
- The role of the lead investor in due diligence.
Peter Adams is a Colorado-based author, investor, speaker, educator, and community leader. He is the Managing Director of the Rockies Venture Fund, a venture fund supporting high-growth early-stage companies in technology, healthcare, and life sciences. He is also the Executive Director of the Rockies Venture Club, the longest-established angel investing organization in the U.S. He is the founder of the Rockies Venture Institute, the first non-profit to create accelerator programs that serve investors and entrepreneurs. Peter is a board member and officer of the Angel Capital Association and the Angel Investor Foundation and the author of Wiley & Sons’ Venture Capital for Dummies.
The Rockies Venture Club is the longest-running angel investing group in the U.S. with a mission to further economic development by educating and connecting angel and VC investors with early-stage entrepreneurs. With over 140 events every year, including the Angel Capital Summit and Colorado Capital Conference, this non-profit organization is active in collaborating with ecosystem partners, including universities, startup organizations, economic development entities, federal laboratories, regional events, and more. The group invests in over thirty deals yearly and co-invests via the Rockies Venture Fund. With its non-profit partner, the Rockies Venture Institute, the Rockies Venture Club offers weekly workshops, classes, and accelerators for investors and entrepreneurs.
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