Now, not many people know that, but you can make investments in early-stage companies, including through VentureSouth, using funds that are in retirement accounts. How? Step 1: Have cash in a self-directed IRA at a custodian that allows alternative investments. That...
So, we’ve now exited, reached the bottom of the waterfall, and cleaned our pie of plate! Many posts ago, the $100 million exit in this example was a cause for celebration. Despite the evaporation of some of the delicious watery proceeds along the way, the optimistic...
So, finally! Our preferred shareholder has a distribution. Less than expected by the naïve optimists hearing the headline price, but still it’s nice to see money flowing back from an exit. Now what? ’Tis impossible to be sure of any thing but Death and Taxes. Indeed....
The pie is so close you can almost taste it. But wait a second! Escrow accounts In most transactions, the buyer will insist that some of the proceeds are set aside into an escrow account. Why? Despite all the diligence an acquirer might do on a company, they cannot...
As we’re close to the bottom of the waterfall, we are now including a third metaphor as we figure out how to “divide the pie”. Management Bonuses An acquiring company is typically buying a company and, at least for a while, its management team. The buyer, therefore,...
There are a few immediate claims on the water heading into the waterfall; some of these are fairly obvious, others are more complicated or controversial. Transaction fees Investment bankers, attorneys, accountants, advisors, and other service providers that have...
Nothing happens in investing without flowery metaphors. When we discuss “exits” we are talking about getting our money back out of an investment. This can happen in several different ways. Typically, we are talking about a company being acquired, either by another one...
“Make Money. Have Fun. Do Good.” is the VentureSouth motto.This first part, Make Money, is (we believe) the key point of angel investing – and something our members have been able to do. You do it through “exits” – getting your investment back plus, hopefully, a gain...
Hopefully between the prose and the spreadsheet, we have illuminated the cost of the compromise for founders and investors finding this middle ground of a “capping participation.”If not, at least you hopefully come away knowing that VentureSouth would never willingly...
Following from the last post, there was a range of fairly attractive outcomes where the capped participation had an impact: let’s review the results from the grey zone.Grey zone: In the (C) grey zone, we have a moderately good result, but one where the capped...