Term Sheets and Valuation: ENET Meeting, March. 7, 2017

TONIGHT, on Tuesday, March 7, 2017 at 630pm, the Boston Entrepreneurs’ Network (ENET), will hold a meeting with speakers on this subject, at the group’s Waltham location:  Constant Contact, 1601 Trapelo Rd., 3rd Floor, Great Room, Waltham, Massachusetts (Exit 28, I-95/Route 128)

Company founders getting ready to raise outside financing do not want to give up more equity than necessary.  Investors want more equity for their investment as a reward for the risk they are taking on the young company.  Valuation is used to determine a fair trade-off of cash for equity.  But….

  • What is a reasonable valuation for a startup?
  • Must this determination be made when first obtaining funds?
  • What terms might an entrepreneur see when presented with a Term Sheet and what are the tradeoffs when negotiating these?
  • How do terms impact founders’ managerial control of investments and operating decisions?

Our panel, including a valuation expert; the general manager of a large angel investment group; and the president of startup, will discuss these issues concerning valuation and term sheets.

A networking session will precede the meeting and a question and answer session will follow the panelists’ presentations. Join us for an exciting and informative evening of informative presentations and networking.

Agenda:
630-730 PM Registration & networking
730-740 PM ENET Chairman’s announcements
740-755 PM E Minute – Up to 3 Startup companies’ presentations
755-845 PM – 4 expert speakers on the night’s topic
845-900 PM – Audience / Speakers Q & A
900-930 PM – Final networking including meeting speakers

Panel:

fransonJohn Franson, CFA, Director of Globalview Advisors LLC,  http://globalviewadvisors.com

John’s over 15 years of valuation experience includes valuation of business enterprises, intangible assets, and equity instruments for various purposes including common stock valuations, business combinations, goodwill impairment, corporate acquisitions and divestitures, litigation support, and financial and tax reporting.

Prior to joining Globalview Advisors in 2007, John worked as an independent consultant assisting CFOs with acquisition and divestiture projects, managing capitalization models, assessing business activity, communicating between all stakeholders, and customizing financial presentations.  He was also employed with KPMG Valuation Services where he performed valuations in connection with both publicly traded and privately held companies.

John received his MS in Finance from Boston College and his BA in Economics from the University of New Hampshire.  He has successfully completed the business valuation curriculum of the American Society of Appraisers (ASA), as well as the national exam on the Uniform Standards of Professional Appraisal Practice (USPAP).  John is a Chartered Financial Analyst (CFA).

mirabileChristopher Mirabile, Co-Managing Director, LaunchPad Venture Group

Christopher Mirabile is the co-Managing Director of LaunchPad Venture Group. Christopher is a full-time angel and an active member of the Boston-area angel investing community with investments in more than 40 start-up companies. He was named one of XConomy’s “Top Angel Investors in New England” for 2012.

Christopher is an adjunct lecturer in the MBA program at Babson College, a regular advisor and mentor to start-ups, and a frequent panelist and speaker. He is a member of the Board of Directors or Board of Advisors of numerous start-up companies as well as several non-profits.

Christopher has served as a public company CFO with IONA Technologies PLC, a corporate and securities lawyer with Testa Hurwitz & Thibeault and as a management consultant with Price Waterhouse’s Strategic Consulting Group.

Christopher earned his J.D. from Boston College Law School and his B.A., with honors, from Colgate University.

karlssonSven Karlsson, CFA, MBA, President & Co-Founder, Platelet BioGenesis

Sven Karlsson, an Eagle Scout, has over six years of experience in business development and financial analysis. Prior to co-founding Platelet BioGenesis, Sven Karlsson worked in Business Development at J.P. Morgan and as a Research Analyst at Seamans Capital Management. Sven received a B.S. in Engineering from Cornell University and an MBA with Distinction from New York University’s Stern School of Business.

Moderator:

chesterMichael S. Chester, President, International Manufacturing Consultants, http://www.imcglobaladvisors.com, intlmfg@aol.com, Past Chairman Boston Entrepreneurs’ Network (ENET)

Mike has founded and built companies, set up manufacturing operations, formed strategic partnerships, set up global joint ventures, raised over $40M for startups which he co-founded, both in the US and China, and commercialized technologies. Mike advises startups in high tech, clean tech, biotech, software, and manufacturing. The Chinese government has invested in Mike’s companies.  One of his startups provided mobile banking services in China and was acquired by a European company.   BioHermes, a biotech which he cofounded in China, was sold in 2010.  Mike was VP Business Development for Tonbu, which developed web-based collaborative environments for the electronics industry grew to 142 employees. Mike spent 16 years with IBM designing robots and automation, marketing and selling IBM products to manufacturing companies, setting up global operations and supply chains, and founding an IBM consulting organization for manufacturing clients that he grew into a $20M business. Mike also lived in China from 1986-1987 while consulting to companies owned by the Machine Building Ministry and teaching graduate courses at Hunan University.

Mike earned his BS in Electrical Engineering and MS in Computer Engineering from Syracuse University and his MBA from Union College. He is past Chair of the IEEE Boston Entrepreneurs’ Network, has served on the board of APICS Boston, and was a member of the planning committee of the MIT Enterprise Forum for over 10 years. Mike is a frequent speaker at conferences on Global Entrepreneurship, Supply Chains, Manufacturing, and China business.  He is judge and mentor to companies competing the Mass Challenge and the Clean Tech Open. Mike and his sons have competed on the TV show Robot Wars with their robotic rabbit, “Bunny Attack”.

For more information or to register for the March 7 ENET meeting in Waltham, go to LINK:  http://www.boston-enet.org/event-2314311 or   www.boston-enet.org

Tweet This Event

If you use Twitter and would like to tweet this event, here are five  of my tweets and re-tweets that you are welcome to re-tweet or use for your own tweets about this event –

Boston Entrepreneurs’ Network – Next Event: Term Sheets and Valuation @BostonENET 3/7: http://boston-enet.org/event-2314311?utm_source=TwitterMMALM&utm_campaign=030717 … #BosENET #PitchENET #startups

Join next @BostonENET 3/7 on Term Sheets and Valuation! @ConstantContact RSVP http://boston-enet.org/event-2314311?utm_source=Twitterpin&utm_campaign=030717 … #BosENET #PitchENET #startups

@cmirabile of @LaunchpadVG Chair @ACAAngelCapital speaks on #Termsheets #valuation @BostonENET 3/7 @Constantcontact http://www.boston-enet.org/event-2314311

@cmirabile  Sven Karlsson, John Franson, Mike Chester on #startups #termsheets #valuation  @BostonENET 3/7 Waltham  http://www.boston-enet.org/event-2314311

@cmirabile @LaunchpadVG Sven Karlsson @PlateletBioGen John Franson on #termsheets #valuation @BostonENET 3/7 Waltham http://www.boston-enet.org/event-2314311

Hopefully, this meeting on financing will be helpful to entrepreneurs in small and early stage companies I represent.  Hope to see you at Constant Contact 630pm tomorrow night!

For additional information on Presentations on Term Sheet Negotiations for Startups…

Earlier, I gave a presentation for one of ENET’s alliance partners that is relevant to the ENET topic tonight.  That earlier presentation was “Preparing your Company for Investment – Angel & VC Term Sheet Negotiations – Post-Deal Relations”.  This presentation was in June 2008 for TiE Leadership Workshop in Waltham, Massachusetts. http://boston.tie.org/ For much of the presentation, I discussed how, in order to gain investment, a company must first put its house in order including legal due diligence on capital and debt structure, employee relations and incentives, licensing and other commercial contracts, intellectual property issues, assets, liabilities and any regulatory issues.

I then discussed negotiating with angels and VCs, the term sheet and key financial and control terms, and then the documentation through to the closing the financing transaction. Key term sheet terms I discussed included:

  • Liquidation Preferences and “Participating Preferred”
  • Anti-Dilution and “Play or Lose” provisions
  • Redemption and investor “Put” Rights
  • Co-Sale, Drag-Along and Tag-Along Rights
  • Vesting or re-vesting of Founders Stock
  • Board Composition and Investor blocking rights controls

I concluded with a discussion of the post-funding relationship between company management and investors.

For presentation outline, see LINK: https://robadelson.files.wordpress.com/2017/03/preparing-company-for-investment-tie-6-21-08-presentation.pdf

Hopefully, this presentation on preparing for investment and term sheet negotiations as well as the presentations tomorrow night, will be helpful to entrepreneurs in small and early stage companies I represent.

My Continuing role as ENET Chairman and frequent speaker & moderator…

I remain active in ENET, a Waltham and Cambridge based non-profit group, affiliated with IEEE, that aids tech and life science founders, entrepreneurs, small and early stage companies, and people who invest or work in those companies.  www.boston-enet.org

A member of the ENET Board since 2002, I have served as Chairman of this non-profit group since 2009.  In May 2015, I was elected to my fourth 2-year term as ENET Chair.  During the period of my leadership, ENET’s annual program has grown from 10 meetings per year to 19 meetings in the current 2016-17 year that ends in July 2017:  10 meetings in Waltham, and 9 in Kendall Square Cambridge, plus our annual cruise of Boston Harbor to end the program year.  Each meeting has three or more speakers on a subject of interest to entrepreneurs and company founders, in life science, tech and other areas of New England’s innovation economy.  Each meeting also has ample networking time before and after the presentations to allow entrepreneurs to meet each other and later meet with the speakers

image002On January 30, 2016, at a ceremony at the national meeting of IEEE-USA in Las Vegas, NV, the President of that organization Peter Eckstein (pictured below) presented me with the IEEE-USA professional achievement award for “extreme dedication and contributions to the IEEE entrepreneurial community”.  For more information on that award, see LINK:  http://www.boston-enet.org/IEEE-USA-Professional-Achievement-Award

sunsetThis past summer, on July 14, 2016, I arranged, as cruise director, the final event of the 2015-16 ENET program year, our annual Sunset Networking Cruise of Boston Harbor.  In this cruise, that we called the EntrepreneurSHIP 2016, ENET was joined by our partners MDG – Medical Development Group, WIE – IEEE Women in Engineering, The EntreTech Forum, and the Massachusetts Bio Pharma Networking Group (MABPNG).  This was the 14th annual cruise I’ve arranged for ENET, and it drew our largest attendance yet, 219, on a lovely July night – great sunset over the outer Harbor Islands.  The cruise sold out the day before we set off from Rowes Wharf.

Besides my work as ENET Chair, and annual cruise director, I have organized and moderated two of ENET’s meetings of the current 2016-2017 program year and five (5) meetings in the 2015-16 program year, just completed.

Last month, on January 17, 2017, I was meeting organizer and moderator for ENET’s first meeting at new Cambridge location at Pivotal Labs just outside Kendall Square.  We had 100 in attendance for our presentation on Compensation and Equity for Early Stage Leadership Teams”.

It’s been said that 70% of the investment decision of an early-stage company is the team.  That’s so because so often everything goes wrong and only great teams can respond to competitors, markets, funding environments, staff departures, PR disasters and the like.

Yet, how do your build that early stage leadership team to attract investment if you don’t have the cash to pay competitive salaries and benefits?  That’s was the conundrum of our ENET presentation on January 17th.  Our 3 speakers discussed use of startup equity as a key weapon of choice to recruit needed talent to build you’re A-team.   We discussed allocation of equity and vesting in both tech and medical device companies with an all-star panel. Unfortunately, we do not have slides from this presentation but videos were taken of each speaker that we hope to post soon at the ENET website.

Our speakers that night (pictured below) were –

andy-palmer-et-al

  • Katie Rae, Managing Director @ Project 11, a pre-seed venture fund investing in tech-driven startups. Katie is Co-Founder, Chairman @ Startup Institute, teaching people how to join great startups and be effective on day 1, and Chairman of Techstars Boston.
  • Nancy Briefs, Entrepreneur in Residence @ M2D2 UMASS Lowell and Angel Investor with MA2.  For 5 years and into 2016, Nancy was CEO @ InfoBionic. Her career includes 30 years as an Entrepreneur, CEO, Angel Investor, Independent BOD Member and Business Advisor.

There were no speaker slides from my January 17, 2017 panel.  However, there is video for each of the speakers from this event.  You can view the videos at LINK:  http://www.boston-enet.org/event-2314292

Several months earlier, on September 6, 2016, I was meeting organizer and moderator for the kick-off meeting to ENET’s 26th year. For that meeting in Waltham, our subject was What builds the most value in a tech or medtech startup Company?  It was a great evening for ENET where our founders of startup companies heard first about defining the value proposition of your company’s product or service.

  • Do you fix a problem that has real and measurable consequences to inaction?
  • Is this problem a top priority to your target customer?
  • Is the market significant?
  • Is the market underserved?

Then, our audience heard about key means of building value in your company after that value proposition is established to attract angel investment in tech and life science companies.  Then, finally about building value for an exit / liquidity event.

piret-et-al

Our speakers on September 6, 2016 (pictured above), were

  • Marguerite A. Piret, President & CEO, Newbury Piret & Company, Inc., http://www.newburypiret.com/ a Boston M&A firm, with Marguerite twice nominated for “Woman Deal Maker of the Year” for her work building value in companies to successful exits,
  • Jordan Leef, Healthcare VC and Director, The BioBreak Organization http://www.biobreak.org/ a life sciences investor and director of an organization that brings together executives across med tech and life science fields, and
  • Walter M. (Jerry) Bird, President, MassVentures, http://www.mass-ventures.com/ the President of one of the most successful VC/angel firms that invests exclusively in Massachusetts startup companies.

For links to the meeting write up I prepared and the speaker slides from that meeting, LINK:  http://www.boston-enet.org/event-2289358

Additionally, in prior years, I’ve moderated and/or spoken at a number of ENET panel presentations, including presentations on the following subjects:

  • “Building and Using Board of Directors and Boards of Advisors”, April 2015 (moderator),
  • “Founder Agreements and Stock Vesting – Building a Team, Protecting yourself, Managing expectations ”. February 2015  (moderator & speaker)
  • “Entrepreneur Success Stories ” , September 2014 (moderator),
  • “Raising Money from CrowdFunding , May 2014 (moderator),
  • “Ready, Set, Launch. Knowing when you’re ready & How to start a company” , September 2013 (moderator),
  • Bootstrapping 101: Alternative Ways to fund a Startup without an Angel or VC, November 2012 (moderator)
  • Seed and Angel Financing , October 2012 (moderator),
  • Getting Stuff for Free, April 2012 (moderator),
  • Transforming Your Idea into a Successful Company, September  2011 (speaker and moderator),
  • Get Going! Launching a Successful Business, September 2010 (moderator),
  • Licensing Technology,  February 2010 (moderator),
  • How to Select and Retain Management for your Startup Company, February 8, 2008 (speaker and moderator)
  • Getting Initial Money to go from Nothing to Something, October 2007 (speaker and moderator)
  • Strategic Alliances and Partnerships: to build, finance, and develop early stage companies, November  2006 (speaker and moderator)
  • Building Boards of Advisors and Boards of Directors, March 2006 (moderator)
  • Protecting Your Intellectual Property, January 2006 (speaker)