Valuation

Too many seed-stage entrepreneurs think carelessly about valuation. They see it as merely a means to protect themselves from dilution or worse as a representation of current achievement. The reality is that valuation represents a commitment to future achievement. Investors don’t care what you did yesterday or today. They care what you are going to do tomorrow.

Entrepreneurs should see current valuations for what they are: a pricing spread based upon a current discount to a future valuation. This is a future valuation they will need to reach. Keep in mind that the goal post continually moves until there is an exit. Fall short of the spread and your financing ability dies along with your company.

A high valuation may feel good and allow an entrepreneur to boast at cocktail parties, but the astute entrepreneur sees its potential to be a gun to the head. Building companies is not a linear curve of progress. Operating flexibility is needed and the higher the valuation, the less flexibility.

Sophisticated VCs understand this. Yes, we don’t want to over pay and potentially hurt our ROI, but we also don’t want to invest in a company that has no wiggle room to adapt. Entrepreneurialism is an iterative process of constant intelligence gathering and execution. Capital structure, including valuation, must accommodate this process.

VCs also know that too much dilution to the entrepreneur kills incentive. No VC wants an unmotivated founder. The simple fact is that entrepreneurs who build great companies in partnership with VCs of integrity get richly rewarded.

A correct valuation should reflect a targeted and achievable operating plan aligned with a strategic capital plan. Valuation must be milestone driven. Successful entrepreneurs ask what milestone needs to be achieved in order to trigger the subsequent financing event after the current round. Capital planning should not be an afterthought to operations

Laconia Capital Group L.P. Announces Late Seed-Stage B2B Venture Capital Fund

NEW YORK, New York – January 25, 2016 – Laconia Capital Group L.P. announces the launch of a new Business-to-Business Venture Capital Fund.

The new fund utilizes an investment approach described as “Inflection Capital Investing,” through which Laconia will invest in late seed-stage companies that have reached an inflection point in their business development that strongly suggests continued growth, attractive future funding rounds, and current tangible value.

Companies reaching Laconia’s inflection point have an in-market product, existing primary revenue stream, relatively light future capital requirements, and a valuation that reflects the current asset value rather than a hockey stick projection.

These companies typically need late seed-stage financing to further build out their product features set, and refine their market value proposition and sales structure.

Inflection Capital Investing allows Laconia to target companies that have solid fundamentals, but which have not yet achieved the full demonstrated scalability needed to attract a Series-A round of financing.

Laconia has identified a large pool of pre Series-A companies that have been created over the past 24 months from a record influx of Angel and institutional seed stage capital. “This is an excellent time to discover quality companies on the cusp of scalability, especially now that valuations are stabilizing, and may be falling”, says David Arcara, Laconia’s Co-Founder and Managing Director.

Entrepreneurs and independent investors David Arcara and Jeffrey Silverman founded Laconia. Amongst their past investments are Localytics, LeagueApps, TripleLift, LocalVox, Alice, and Wymsee.

Laconia plans to complete 8-10 investments over the next 18 months with an average investment size between $250,000-$750,000.

Laconia Capital Group L.P. is headquartered in New York City and was founded in 2014. Laconia is a fund investing at the Late Seed and Series-A stage of B-to-B SaaS companies solving immediate market, product, and legacy work flow problems in the marketing services, data management, mobile communications, publishing, media, sports, and entertainment industries.

Treat Your First Investor Meeting Like a First Date

A friend has made the introduction. You have wanted to meet this person for some time. Thanks to the Internet, you search all about them, wanting to learn anything that can give you insight into who they are, what they like, and what gets them excited. You visit their LinkedIn Page, Facebook page, check out their latest tweets, see if they have written any blogs, and find any news articles about them. The information can be overwhelming and take the excitement out of the unknown, but being prepared is so important.

No matter your gender or sexual preference, everyone gets nervous about a first date. It starts with what to wear. You want to look respectful and dress appropriate for the occasion. There is no worse feeling then being the most overdressed or underdressed person in a room.

As you head towards your date, so much is running through your mind. How do I start the conversation? Do I really open up about the weather? Should I talk about the big sports game last night? What happens if they are not a sports fan or a fan of that team? Breaking the ice is tough, and both sides know why they are there.

Your mind drifts to chemistry. Will you connect with this person? Will they like you? Will they get who you are or will they see you as someone totally different? How do you come off confident, but not cocky? How do they learn about you without you monopolizing the conversation?

Oh boy – the conversation. You sit across from them and have so much you want to say. You try to sit up straight and not fidget with your hands. This is not their first date, nor yours, but they seem to have all the control as to whether or not there will be a second date. You want to tell them just enough that they will want to see you again, but you also do not want to scare them away or overwhelm them. What will be enough information to peak their interest for a second date? You want to open the door wide enough for them to see how great you are, but at the same time demonstrate that you’re able to listen. Yet you’d like to learn more about them than what you discovered from your Internet search. You ask yourself, would they be a good partner? Is our thinking in unison? Would they help balance out your weaknesses?

The date comes to an end. Did you get across to them what was needed in order to secure that second date? How do you follow up but not look desperate. Is a thank you email appropriate? A phone call? Do you go old school and write a handwritten note? You remind yourself that if this does not work out there are many fish in the sea.

Each date is a learning opportunity to becoming a Casa Nova entrepreneur. Learn from past dates and incorporate that learning into future ones.

You can laugh about the analogy but it is 100% true. A first meeting with a VC is just like a first date. Treat it that way. From how you dress, to how much you would say, and listen. Do not go for the close. A VC will not write a check after a first meeting. As in dating, each side must get to know each other and see if there is a real future there or is it just a one and done.

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