Investor strategy call, October 15th
Speaker1: [00:00:27] Yes, that’s the one thing about us, right? It’s nice to see you recording right now, my good dear friend. So you have the the marketplace around racist that gives you if you’re a first time like, Oh, let’s explore what’s happening out there. Let’s get some interest as participant in some dialogues and conversations, just as a person like a fly on the wall, right? And so what ends up happening from that angle is you learn through experience like, Oh, this is the experience that I have to go through when it comes to raising liquidity. What are the biggest things you have to have to understand is as soon as you step into this marketplace, you are going to have to talk to your investors. Nobody’s going to do that for you. And so, you know, the best way to see the kind of experience that is also to join a team that’s already done it and you have two options to that as well. You go for the expense of which you pay for the access of the very expensive or you go through an educational process like what we go through here and then create the architect with you. And so that’s a lot less expensive. And of course, again, going to relativity speed and efficiency, right? So if it’s your first time, you can’t really rush it.
Speaker1: [00:01:28] You can have the best offering in the world for the 10 out of 10. But then you can boche your conversations with investors. And so even their relativity dictates so that because you’re lacking in that communication and leadership role of liquidity, race or capital race, that that may end up taking longer than in a mediocre company coming out of nowhere because they went through a cycle of experience and understanding dialogues and conversations in the investment landscape where they have a mediocre, you know, five on 10 security concept. And they went through that crux. They actually were raising money faster than you just because they’re really good at communicating, you know? And so that’s also an outcome in balance. So I would say, like, you know, think about what you have, what you want, right? And what’s the timeframe? So everything, if you were to look in summer, this is your time horizon to get something done. If you’re pressed for time. Don’t you even dare say the word free? But watch your tongue before you even think about it, OK, because there’s no free when it comes to time.
Speaker1: [00:02:27] But then there’s the other angle, if you have the time. It still can’t be free. There’s going to be a cost of something. But yet like the best avenue is find the best solution where there’s enough activities happening in that landscape, you know? And so that’s the best place. And I would say that’s what we do here, right? That’s what we’re trying to have a conversation about. But it’s all variable. Like if you have the time, that’s fine. Take your time, but do it the right way if you don’t have the time. Hire the right team, the tent on tents, but then be careful. Because if it’s your first time and that’s obviously contingent, you know, considering time contingent on you being the first time you’re trying to raise money for the facility is your first time. Even if you pay the 10 on 10s again, remember, you still have to talk to investors so you don’t have that formal education. Your experience at or through concept of just watching the marketplace or observing. It’s going to be tough. I so end result is be a great communicator, but choose your option, so is not based on contingent of time, how much time you want to expand on that.
Speaker2: [00:03:30] Yeah, because I mean, this is really interesting, because one thing I found like and I see a few people on LinkedIn and on Zoom feel free to ask any questions, obviously. And Alex Rafter can answer directly and so so can myself, obviously, for anything I can address. But yeah, because Ali, like there’s always like a balance because. I hate to say it, I mean, a lot of lawyers, you know, they can be the best types of salespeople, right? Because because. You know, it’s like, OK, listen, you have a problem, is this simple? Is it simple? It’s like, OK, you have this problem, right? And then it’s like, you know, the risk can be really they communicate you to risks of what you’re doing if you don’t use, we don’t use my services and you don’t bring me on. And then basically, it’s a balancing act of saying, Oh, how much of this is real risk versus how much of this is actually something that is a real thing that I need. You know, like some people don’t need flamboyance like extremely flamboyant, you know, homes that take like hundreds of pages or anything like that. Unless you’re doing like a significant achievement for a certain reason. There’s almost some politics in there and everything. So what how does one get the balance between? You know, something where it’s like, oh, you know this, this is something that I need versus this is something that is bonus, but then they’re just going to retrofit it.
Speaker2: [00:04:52] I mean, the reason I ask is because to start an exempt market dealer in Canada, in other words, a broker dealer, I was told by lawyers and say, Oh, you know, four hundred k. Right. But if you actually look about how look at how it works, like the exempt market dealer that I was a part of a few years ago, you know, they paid like what, like 80 K or whatever, because they had 60 K in the bank account and paid the rest of the lawyers. And then that’s it. So sometimes like if you don’t have to compensate people, just sell you software that you don’t need. And. Like, I didn’t like, you can use DocuSign to do subscription agreements with investors, for example, but a lawyer can sell you like a software for fund management that you don’t need. So it’s like, Holy Moly, and then they’ll sell for four K. What do you think? What? What is really the balance between what you need and what you don’t when you’re speaking to securities counsel to close the deal?
Speaker1: [00:05:45] Ok, and now I would say now you have to work with like the actual racial right. What I mean by ratio is what’s your size like? What are you? What are you asking for? It’s like you have to you have to understand it can’t be spending four hundred thousand, if you ask me. That’s just ridiculous, right? So like just there’s no math in the world that adds up to a happy ending in that we
Speaker2: [00:06:05] Know we know people that spend a lot of money for for things that. Oh yeah.
Speaker1: [00:06:10] So, yeah, that definitely killed my hike, by the way. But I was like, No, this is not true. I can’t believe it. And you and I were discussing our product lines at the time anyways. You know, like look at the scale, right, and just answer not to this question, like if you’re from zero to one million and that’s what the range is, then what you have to do is no disrespect to anybody is you have to overcome a lot of interpersonal stuff. Remember, we discussed this the other way. The difference for growth? Yeah, exactly. So let’s let’s climb that ladder together. And so when you’re going from zero to one million, you have to focus on a singular thing that you do really, really well. And so from that perspective, like you have to have enough interest in saying that, hey, I can take this to the next level because I’ve overcome any type of interpersonal issues to say that I’m open and willing and able to bring on a team or a competent level of individuals that can take it to the next level to expand. And so I think that that is dictated and contingent upon like what what you’re looking to get out of it. And so what’s the next step for you in phase? And so if that liquidity has, you know, I probability to take you from there to one to like, let’s say, the one to 10, which is our next phase, we’re going to talk about that, right? And so at that point, like you cannot afford to be very negligent with your expenditures, particularly if you’re doing a securities software because an investor is going to say, why are you spending a hundred grand? You’re asking for a million dollars and have to pay your lawyer $100000.
Speaker1: [00:07:35] That doesn’t make any sense because you have to face those conversations and you’ve got to justify what you were doing in the first place. So that’s not very pleasant. Regardless of a gold star business you have or Michelin stars you have in your restaurant, that doesn’t matter. You know what I mean? You’ve got to justify what the little girl’s white dress is splattered with one. And so this is one of the biggest things you have to you need to really understand. It’s going back to that. You’re from zero to one. And so therefore, your expenditures have to be very, very, very skeleton level. But you cannot afford to be negligent either on that to where, look, you’ve done your homework, you’ve seen the experience, you’ve gone through that process. So at the beginning, you’ve got to wear the hat of being a student in the space, right? So if it’s your first time around, although you can have best lawyer, buddy buddies or friends, or you have a network of very, very well reputed investment bankers and so forth, you’ve got to be the best student. And so from that perspective? You overcome the interpersonal issues, because being a student means that you’re willing to understand that there are other professionals out there that will take you to that level so long as you’re listening to the marketplace, right? And so at the beginning, that’s what you going to do.
Speaker1: [00:08:38] So pass that threshold. And so now you’re spending a little bit. Now, how much do you spend when you want to raise a million dollars? That’s a real question, right? And so I would say, like you said, you don’t want a softer about fund management. We’re trying to raise a million dollars, but I don’t know what on God’s Earth this is going to do with that right? But Bloomberg is like twenty twenty seven thousand a year. So like a lot of people are going need a Bloomberg chairman? I want to be a hedge fund. I’m talking about like, have you even managed a five hundred thousand dollar portfolio, let alone like ten million? So where are you? If you’re in the very beginning stage and this is the type of raise you’re doing, then you cannot afford to go above. That’s the ratio on the table above the five percent threshold. And so that’s fifty thousand that maximum, right? And so that’s justifiable. These are legal costs, closing costs, custodial accounts and whatever you need to get started if you need one. And generally speaking, like you can find very affordable attorneys and securities lawyer out there. They understand that. And so that costs is also very expensive, by the way, for that kind of range.
Speaker1: [00:09:36] It’s going to mean. So for example, that’s fifty thousand all inclusive, including legal banking in all of them. And so the other piece you have to look for. This how much am I willing to pay is based on like the likelihood of achievement and success rate? So going back to that formula, is it a lawyer that did like five thousand of these offerings and of the five thousand four thousand nine hundred and thirty six are very, very successful at capital raising or at least have closed most of the subscription agreements. So, OK, it’s not all on the lawyer. Like I said, you have to take leadership in communicating your message in your business and your vision. So like, OK, if that’s the case, then the price will go higher because there’s demand for that. There’s demand of high probability of success or as if it’s a guy who just graduated from the law schools and lost again in securities law, and he’s being sponsored by a major law firm. And so these are people feeling is like, Hey, look, I’m going to get started and stuff like that. The likelihood of achievement of creating a stellar offering can be high, depending on who the sponsors are behind him or her, respectively. But the idea here is like that time delay is going to be a factor because now you’re going to spend so much time going back and forth because there’s a lot of corrections that will need to be made here.
Speaker1: [00:10:40] This person didn’t do many 5000 offerings before, so the price is going to be cheaper by the time it’s going to be more. And therefore, like remember, time kills transactions, so you’ve got to kind of get a balance. The skills, the relativity, you know, it’s so like, don’t go about the five percent ratio, because if you start going above that, what ends up happening is it comes to a point where it’s no longer like, I’m getting the best. It’s a question of like the relative amount that you’re raising compared to the ratio of expenditure. You just becomes ridiculous. And so you’ll be ridiculed in front of investors and then, you know, probably hinder your ability to raise money because it shows like, OK, well, you’re expensive, you’re taking things like granted. And so my money is like, I don’t know if I’m going to spend it wisely or you’re going to go through that understanding of the framework of what’s important, you know? Yes, that’s true, right? So don’t think investors are dumb. I mean, they’ve got to do their due diligence and they’ve got to be careful. So if you’re not careful, then the market will make you more careful. And that’s going to delay your transaction or the probability of closing a deal. And then you’ll have to come up with some fictitious number instead of raising a million to justify that five percent raise it to two
Speaker2: [00:11:50] Three and then you put capital raising costs right on your. Yeah, have you seen that funny?
Speaker1: [00:11:58] Exactly. But that’s what I would say. Right. So that’s the ratio. So keep in mind the five percent threshold, and that’s like 0.1 million. But then when you go from a million to 10. Now you’ve got a team, hopefully at that time before you even think about cost. You should have a team that is designated to capital raising. Because you cannot be focused on that too much. You should be the leader that dictates look the best in the world who do this really well, take initiative and go out there and bring you liquidity like some of your team members who those to nurture you. And so they do what they do and they do it really well, and they’re really focused on a key activity. So designating a team? Right. And so like, you have to understand the ratio there, too. And I so like, what is your your role in that and that whole infrastructure? Right at that point, because there is know, one to 10 million you’ve overcome a lot of interpersonal structure, you’re getting to a point where you’re accepting that there is going to be other people up there, they’re going to do this within you. And so that experiential knowledge is not necessarily as important, but finding the right tenant is the most important piece. And so again, going through a ratio you can afford to go at like the five or 10 percent because that includes the team gaps. You know anything, we need to fill it. And so that makes more sense if you spend like closer to like a million dollars to raise 10 of those costs, like it’s very justifiable because, you know, the individuals out there, they’re actually putting infrastructure in place for you and keeping everything systematic.
Speaker1: [00:13:20] So you can you have the opportunity to kind of increase the ROI on that? And that makes sense. And so after that fact, now let’s say your business is doing really, really well and you have the stage of, look, 10 to 30 million dollars, you got to suit up, you know what I mean? Like, you’ve got to have the team, you’ve got to have the attorneys, you’ve got to have your financial guys. And that’s the team. We’re talking to corporates, right? And that’s the value of corporate because that experience is the 10 on 10s at that level, you’re talking middle market range. And so that means that you absolutely need a very designated team that understands this platform very well. So at that point, you’ve got to really distance yourself from trying to understand the game or really engage in the teams that do what you’re responsible still for the outcome. And so you’ve got to dictate the rules. I mean, got it. So you’ve got to be very careful there. And so from that angle, then you go from like thirty to one hundred. Now you’ve got investment banks and everybody, that’s the big boys. That’s the club where they do one hundred million dollar deals regularly. And so you have the confidence level by that time. Just say, you know what? We’ve come to a threshold. We went through the corporates, we got the infrastructure, you know? And so at that level, what ends up happening is you engage, you know, you spent five hundred thousand, you know, retain investment bank top tier.
Speaker1: [00:14:28] Is there recognize your middle market value, if not the upper middle market. So they see how we got the investors full before you get the role. This is the dangerous part. By the way, the 30 to one hundred million dollars you can go south really fast, faster than your zero to one because if you don’t have the right business model for the market at the time. And, you know, the investors deploying the liquidity of that marketplace, it has the highest volume of transactions with that marketplace, the 30 to hundred million this upper middle market rate. And so if you don’t have the pieces ready, the competitors next to you is taking it like right after your conversation ensued that minute, you know, and so you’ve really got to know your stuff. And so you can absolutely not afford to be lousy or careless or negligent when it comes to that market range. So if that’s the capital raising amount that you’re going for, then you need a designated team to do it really well and then you need to an investment bank that a thousand times. And so relativity again, once I said speed and implementation and the quickest you can get the feedback, the more you’ll be successful. And of course, if you’re raising one hundred million or more, go to not to and ask him how to go public, you know, because at that point, you can absolutely use that.
Speaker2: [00:15:30] Well, yeah, but to laugh. But then I was like, Oh yeah, right? We do have their relationship ups like have to exactly wipe the dust out of that marketing.
Speaker1: [00:15:40] So right, right?
Speaker2: [00:15:43] So, OK. So we went through a few things and a few people are commenting. I see I see Wendy on Facebook, and a few people are here. Just if you have any questions, just feel free. But basically, yeah. Just to summarize, basically, we’re at the point where we’re talking about people that haven’t issued a securities offering or an equity offering to in this case, let’s just say U.S. investors, and they need to rapidly do it in the compliant way. It’s like, what is the best route to do so in the first part of the call? We just talked about three ways of doing it. One. Go to Google. Look at. Go to Google. Go to Templates Dot Net and get whatever you can get to is work with a team that has done it that are more pragmatic. Maybe they’re not lawyers, but at least are pragmatic. Maybe they are. Three is use a securities attorney. And so and then so that was the first part. And then we talked about like different parts of how to balance using the securities attorney versus using the team versus doing your own research and how to optimize that based on what you’re optimizing for. Some people are optimizing for speed. Some people are optimizing for like getting a lot of investors in to different people are optimizing for different things there. And obviously ask a question, if any, anything that.
Speaker2: [00:16:57] And third, you know, then we start talking about, OK, once we get the raise, once we’re doing a raise, like what really is the are you somebody in survival mode versus somebody being a zero two one million range versus the one million to 30 million range versus the 30 million plus range? And generally it can be can be kind of silly to spend more than five percent of the capital raise on securities counsel because investors won’t really see. I mean, because why would I do that if I want investors to see that I manage money well? So that’s kind of, you know, that’s pretty much it. And I mean, from there, you know, Ali, now now I have the question. And obviously, anyone can ask any questions is, OK, so let’s see. Let’s say there are also other capital raising costs because people what would broker private placements does that five percent include. So are we talking about non brokerage private placements or brokerage private placements? Because let’s say you get some guy, some banker that says, Oh, give me my six percent. How does that work? And then what really is a point at which you’d say it would be stupid to keep on spending pre or pre or post closing? So that’s the question I have for you.
Speaker1: [00:18:16] Yeah, that’s a great question. So let’s let’s go back to the drawing board with like the actual relative cost of five percent when you were sort of one. Yeah. So let’s think about it this way. Also, what kind of broker doesn’t have a securities attorney on their team? Oh, good, you like? That’s another. You know, I know if you don’t
Speaker2: [00:18:32] Actually know if you’re not
Speaker1: [00:18:33] Doing well, they shouldn’t be in business. That’s my opinion. No disrespect, but hey, take it the way it is, you know? And so I would say it’s all relative, right? Like it’s. The tenant turns out there who are actually really good at raising money for you, like brokerage transactions in this case, the five percent is an all inclusive thing. Generally speaking, right, and you’re raising a million dollars. So if they ask for six percent and so on, so forth, that’s a very aggressive rate. But I’ve seen it be paid out without issue, and it’s fair in some capacity for the smaller guys, but you have to be extremely cautious. And the reason I say got to be cautious is because those guys out there, you know, they’re incentivized by high fees, right? And so the offering itself may not be as attractive and there’d be a really aggressive and get you in front of as many as investors as possible. Just say all these type of things and just convince them and so on and so forth. And so that becomes like a a not a very tactical move to do. And so what you want to do is keep a fine balance. You want to find a broker transaction process where we have a security team on board. And so they can give you some relative feedback in terms of what needs to be done. And there are cost effective four or five six percent backstops, right? But then it’s an all inclusive fee.
Speaker1: [00:19:43] The reason I say that is some of these guys were out there that might actually charge, you know, 10, 15, 20 a friend to do the job. And so anything like that, plus five or six percent, that’s fine, right? And so the merits of the transaction is never on the team that’s raising liquidity for you. I need you to understand that really carefully. This is one of the wisest words I can give you from experience and from a lot of people failing to raise money. It’s not. The onus is not on them to raise money for your business needs to be right for the money to come into it. It’s just very simple. It’s the math, it’s just the equation. It’s the it’s the Infinity Stones, you know what I mean? So if you want to have a right balance, exactly, there you go. Unless, you know, snap and it’s gone, right? Disappears your business overnight. It’s in the ether, right? So it’s forgotten. But if you want your business to be successful, what you need first is the right business. And so the security team and everything, what they’re doing is basically exposing the the conditions of participation. And so what that simply means is, hey, here’s the condition of participating in a really well-funded company that’s going to grow and has success or it is going to benefit from the merits of future success. So if you don’t have a relatively successful business or have an architect and so you’re expecting the world class team to do everything for you, I promise you it’s going to cost you a lot more than five percent.
Speaker1: [00:21:00] You know what I mean? And so that relativity is throwing off the whole formula. You got to be careful there. A lot of people, like even I was listening to some of your conversations, you know, you and I have discussed have all sorts of baggage to bring to the table. So look, I want to make sure I do this. You cannot dictate something if you’ve never done it before, like you’re not in a position, right? Like this is where I say, like, that’s the third option where you make a lot of mistakes and get fined and penalized and you’re wasting effort and sacrifice and so on and so forth. And your competitors just taking they’re sweeping the market right in front of them. You’re still like, you have dug into the wall, right? And so whatever baggage is, you’re carrying I that’s the interpersonal issues from the zero to one. And the reason there was a zero there, it’s because it’s going to remain there. Second of the scale is not going to move right. And so you got to overcome that. You know what I mean? You got to overcome that. So if you were trying to hire a broker, individuals and so and so forth, do you find a team that has a security team on board? They know their stuff.
Speaker1: [00:21:56] They’ve done transactions similar to yours. This is very important to you, right? And so what ends up happening is there’s a de-risking element for it. It’s like saying, like, Hey, there’s this neurosurgeon that surgery ten thousand tons versus one a third time. Who would you pay more? And so it’s worth paying a little bit more for the ten thousand one. The enemy, because you’re saving a lot of time, you’re not you’re not going back to a feedback that’s like indefinite for that godforsaken thing. So what you want to do is like, you want to have that process very, very, very well laid out. Ok, what do I need? Is there a security team on board if they’re done offerings like they’re similar in the past? This is my business, right? And can they expose the participation to the market about how to enter my business? What’s the merit of that? And so that’s their job. Again, the job of anybody trying to raise money for you is to expose the participation interest of your business. How do I participate in your business to take upside in the yield, the growth rewards? It’s not their job to sell your business, that is your job. And so if your business doesn’t do it, then there’s gonna be a disconnect. Are you going to blame the capital raiser? But the reality is, you go back to the drawing board, you realize, holy crap, this product doesn’t even work. I mean, so so, you know, there’s
Speaker2: [00:23:07] Enough so, Ellie, so I think it’s kind of like it’s almost like when somebody hires like a sales team, right? Like somebody has like a product, then you have the sales team and then they think that the sales team is really the they’re the people that are, you know, they’re the ones who are going to sell the thing. But then really the ultimate way to sell something is if the thing is the product itself can deliver results and if it can help customers and then they’re supposed to. Basically, all this stuff are just all these things are just tools and to multiply what is already there. It’s not supposed to. It’s like there are tactics. But in this strategy, it really has to be there in the in the core nucleus of the thing, which is the business and then all these other security tools and whatever they’re supposed to like, multiply what is already there. Like, I think that’s what you’re saying.
Speaker1: [00:23:53] That is correct. That is correct. So your outcome, your outcome is capital raised, right? And so there’s only one formula for outcome. It’s very simple. It’s scale multiplied by volume. So if you haven’t done something really, really good and you don’t have. And by the way, to get something to get good or really, really good at something, you have to be significant volume in your room, right? So that’s why a lot of startups are negotiating the hell out of their life cycle, you know, before they even get started. They’re giving out like the whole kingdom, right? And so. Again, outcome, which is liquidity, participation, interest coming from the outside through market, through the right teams to give you the market the exposure of what your worth is equal to the amount of skill you bring to the table multiplied by volume of that skill, how much you’ve exercised it. And so that lifespan shrinks in terms of how quickly you can go and get that liquidity. And so if you don’t have volume or if you don’t have that particular one thing or skill. And so the outcome is delayed significantly. Your spread way too thin. Know what I mean, and there’s no singular focus there. And so what ends up happening is you have to, you know, you have to be pragmatic about the whole thing. No, it’s as real as it gets. Like you can do all you want and you can think, Oh, you want to. But hey, I wonder why this is not working, why I can’t raise money, why I’m having issues and so on, so forth. And then what I would encourage you to do.
Speaker1: [00:25:06] And if that’s the challenges you guys are facing and it’s maybe think about like what part of that formula is missing because again, outcome is outside barrier. It’s it’s like the team that is going to expose the participation interest of your business and the merits of if it’s successful or not, that’s the market. It’ll tell you that. But then if you do really good at skill and volume of what you do really well, that’s what ends up happening is like, there’s no question, there’s no denying you are the best at what you do. There’s no question from investors on that. The question comes under participation risk at which point your security team could kill the shit out of you. Excuse my language, you know, they’re really good at what they do. They will obliterate that for you. And therefore, now you have a perfect marriage. All right. So think about that. If you’re coming here and saying, Oh, the security team is going to do everything for me and I’m going to go out there and raise money, I promise I would be a billionaire tomorrow. So your business hasn’t had sufficient volume in the marketplace, let alone scale hasn’t been actually assessed to its perfection. And it’s like a six on 10. You can raise money, probably from family, friends or people who are literally gullible. But that does some promise you a great outcome doctor. The matter is the investor is going to call you tomorrow is the should. I shouldn’t have done that. Can you send me my money back or at least a portion, right?
Speaker2: [00:26:16] Well, and yeah, and I’ll just jump in because what we said in the last call, I think, was like the investors version of a refund can be a lawsuit. But the what you’re saying and see, it just has a question. But what you’re saying, it looks like it’s it’s almost like, what’s the word I’m trying to look for? So it’s almost like it’s say these things are leverage points, right? Capital Labor. So Capital, Labor and now now in the new age, we have like digital media and all this stuff. This is all these are all just forms of labor or sorry of leverage. And so I think what you’re saying is like if the voice goes back to the beginning, if the origin of the thing makes no sense, the deal makes no sense, then you’re just multiplying something that you’re scaling crap and it makes no sense. And so for lack of a better word. So see, just just Isabelle, how do you acquire the corporation from a highly skilled team? So that’s the question that
Speaker1: [00:27:20] Gets me here. What do you want to take that a little bit and then I’ll go off of that.
Speaker2: [00:27:26] Yeah. So then when you when you say the how and then the acquire, I think. I can speak more towards the financing side of it because. You know, I mean, let’s just look at. I mean, Richard, it was a small it wasn’t really the biggest deal in the world, but let’s look at that one. The way that Richard Reid did that one for I and HTC is holding company. And he saw that. Is this the same story? There’s always a similar story about somebody who is either retired and the person has goodwill. They want, they want to. They like doing what they’re doing, but then to some external thing that prevents them from stopping it. But then the person internally wants to continue doing. But if it’s if it’s that, then it things tend to. That’s the story, because usually there’s like an internal motivation to want to continue doing it. But if something external that makes them stop like so you don’t want to retire or I’m old or whatever, that seems to be the story that is always that we always hear. And that seems to be the one that is most common because the skill is there. The desire is there. Is this something external that’s preventing them? Maybe somebody died or whatever. So that’s one, too, is to make sure that the team is highly skilled.
Speaker2: [00:28:47] So do you mean a team of the company or do you mean the team of the people acquiring? I’m assuming the team of the company. I’m going to assume, yeah, I just they already have this intrinsic motivation to continue working on the business. Right. And in three years to get some external people to perform some audits. I mean, just in your own reasons, I’ll come. You can use our user people to perform like some some sort of small version of a financial audits and then do some valuations. But just to make sure that the numbers don’t line up, make sure that you’re getting to the deal directly. If you can not use a broker. And if you can find a way to get it off the market directly without a broker, then the incentives will be better because these brokers are supposed to bump up the valuation of everything because they’re incentivized and the amount that you paid for it because of the commission that they get. And then they’re also incentivized to withhold information with you, especially the most the worst parts of the deal at the last at the latest time possible. Because you’ve already gone down, you’ve really gone down what is called, as you know, when you do something and then you probably shouldn’t be doing it, but you’ve already said you have sunk cost fallacy, so you’ve already gone down that route and then it’s too late.
Speaker2: [00:29:53] Typically, people only see the worst things at the latest times. So if you were to get it off the market, then it’s more likely that a lot less of that less of that will be present. It can still be presence in off market deals with brokers, but you just have less layers of that. So after that, then it can be easier to look at the team and everything. The ultimate way to test, though, is to see if you’re if you’re going to. If the investors are saying yes and if it’s more of a debt transaction, then there tends to be more of a focus on the target company. Broadly speaking, if it’s more of an equity that you need for somebody to join you as a JV partner for you to commence an acquisition, then there can be more of a focus on the acquiring company, in other words, yourself. So it depends on all those, those different points. And let me know if that makes any sense. But Ali feel free to jump in as well.
Speaker1: [00:30:46] Yeah, you said it. Well, I think like the point that she was asking is how do you acquire a cooperation from other skilled individuals to participate in your transaction? From what I understand of what I’m reading isn’t, is it the corporate cooperation, cooperation cooperation? Oh, the
Speaker2: [00:31:01] Agreements. Oh, OK,
Speaker1: [00:31:04] Yeah, what cooperation? And so I mean, you know that still that’s an entire pragmatic approach for actually getting a deal structure done. But then again, right there not too is a cooperative individual in that capacity, right? Because he’s in the area of actually getting it done. And so it really depends just like where you’re at, what the idea is. And again, like you have to understand like. What part of the transaction to get individuals to participate in in terms of their skill, right? Remember, I did like your business is the ultimate merit of the transaction, right? So whatever it is, like, whatever you’re trying to buy or hopefully for whatever you’re trying to buy is something that you’ve done scale and volume wise in the past, right? Don’t try to do something that is not really within your realm of comfort. And so the outcome is going to be kind of like, you know, stagnated, right? So I guess one of the biggest things is, let’s see, what did she say here? Whatever it is, my business revolves around raising the funds for other people that don’t know how to. I got your capital raised in that capacity. And so I would say that like if that’s the case, then you need to put a team that knows how to do this really well, right? And. The skill and focus level that I’m talking about just to just to go back on that and put a crystal focus here on this little topic of what skill and focus and volume is, you need to understand on a particular like you’ve got a niche down a little bit at the beginning, right? So be really good at raising capital for an industry that you’re really passionate about.
Speaker1: [00:32:26] And so what ends up happening is like, you have like that zero to one million dollar income range instead of the capital because then like what ends up happening is you’re really, really focused on a singular thing. And so that’s that’s been touching down and look, for example, building the stuff of real estate, for example. So you’re really niche down on that and you know your topic really well. So your expertise dictates like the outcomes that you create and that’s the skill and that’s the volume. So the more you niche down, the more you’re participating in the volume level of things and the more you get skill out of that. So that’s kind of interconnected. And so from that aspect, you create great capital raising outcomes, right? And so anybody that comes through you for raising capital with their own businesses and if they were to pay whatever equivalent value for getting your expertise? Well, they weren’t that expertise because then the outcome of the likelihood of them raising money from your expertise being passed on due to your level of skill and volume dictates it so that there’s a high likelihood of success. Right. And so that’s the that’s the biggest thing, but you cannot create that if you have multiple spread out skills.
Speaker1: [00:33:23] And so if you’re not necessarily done at the beginning, especially if you’re raising liquidity for other businesses, then what ends up happening is you’re spread too thin and therefore the outcome is spread too thin. Therefore, the volume is spread too thin because now you have to do multiple of everything to catch up to the ideal outcome. And so it’s just relativity if you look at, you know, idea of actually getting something successful. You have to niche down at the beginning until such point where you can bring in other individuals that are really good at what they do, but they are very passionate. And so they listen to you and they understand what the idea is. And again, yeah, sales team. Yes, but it’s not just a sales team, it’s individuals who have skill and volume in their own, in their own right and capacity. Know what I mean? And so you got to understand niche down at the beginning if you’re a capital raiser, unless you’re in investment banking. Kudos to you. But if that’s not the case, then niche down focus on a singular market problems real estate and a very focused area. And so do a lot of following there. And this ends up being that you have a lot of skill that comes out of that. And so whoever walks through you and follows through your process to get money out of the table or you focus is on you helping them get the participation interests out in the market.
Speaker1: [00:34:27] They know you’re reliable because then you’ve exercised that skill. Thanks development. So your niche down there for the outcome is very focused. You see what I mean? So you want to be very, very focused on what are you trying to do? So niche down on a very particular industry and sector and thus, from that perspective, get the volume and scale that’s required. And thus, when you reach that threshold of like, look, I’m ready to expand into other avenues until such point, your capital raising business is doing a million a year or more, then there is no other area of focus you should be doing right? It’s all relativity. And from that perspective, then you want to tenants what was going back to the drawing board, whether you’re raising capital or how much you’re doing in revenue. It’s always based on overcoming that little obstacle at the beginning. And so that’s my advice. And from that perspective, because they see they’re really good at what you’re doing in your niche down. You will get cooperation from other skill individuals because they’ll feel like, Hey, this person is 10 and 10 the sector that they’re really focused on. And thus I want to I want to create a synergy with them. Now, of course, you would attract the 10 on 10s because you are a tenant to yourself, you see. So you’ve got to be very careful. And there we go. And that, too is wonderful. One delegate, Disney should have hired you.
Speaker2: [00:35:31] Let’s do it. Just a mutual I still but yeah, man, I think I think, yeah, Ali is just saying like this focus thing, right? Because is it say I had a talk with somebody about this today on our stuff because it’s just like because I’m personally like, there’s like security’s a lot or this or is that there’s there’s so many things that a human being can do. So I mean, but then if you just nail down like what, really, you know, one particular subsector of the number one type of transaction that you think is the most likely to get done. And this is what we told Mark. Then just nailing down in one particular subsector of one type of transaction that you think is most likely to get done. And the most most common transactions that you’re getting in larger size, in larger size and then just doubling down on that, then it just saves you time for 99 percent of deals that won’t get done and waste your time until you’ve got enough volume and they close and you get enough volume that you can start to branch out. You know, so investment banks, these syndicates and then that’s what you say to industry agnostic and know, but I mean, you’re not you’re not charging people 200000 upfront, so you don’t have to say you’re industry agnostic. So. If you want to do so right, that’s what we’re headed there. I’d raise fifty two in year one. My first project, 90 percent got pledged trust. The trust promised funding for the Kenyan infrastructure. And so, so Ali. So on this man, I always, always think about this. What are your thoughts on? What are your thoughts on the emerging economy there? I mean, there are three reasons why I’m still trying to figure it out and why there’s always like a blockage for me to even enter it. But what are your thoughts in the economy? Do you do touch it or what are your thoughts? Like Kenya, Nigeria, all those places. What are your thoughts on the India?
Speaker1: [00:37:32] Yeah. Probably safer. Like, it’s it’s you have to look at where the population density is. And so from that perspective, what skill level type, population density is exercising the demographics right? And so if you see, like there’s a lot of blue collars in there and there’s a demand for real change and there’s a push and there’s government movement towards, obviously it’s very, very countries like that man like regulations are pretty crazy, like you can bribe your way into anything like midgets, you know, but again, like legitimate landscape of investment. I’d be very wary at the beginning. And just because, you know, like you have to, you have to have some sort of security that look whatever you step in or whatever you do over there. The merit of it getting done really well. You know, it’s always based on the actual outcome from all right. And I’m not talking about scaling equation of like volume. I’m talking about like the likelihood of achievement in those countries. You know, what’s the conditions around that? And so if you have like geopolitical issues, if security issues, you have infrastructure issues, you have unstable government. If you have an investment climate that’s not protected and no incentive from the government side to protect investment capital or incentive to bring in liquidity with sufficient backing. And that’s kind of hindering your ability to invest, right? And so you have to think about like, does the government? Is it pro investment? And that’s the first place I look because that’s where you’ve got to be, you know, you’ve got to be pro investment. And so I’d say just focus on areas where at least there is some attempt of pearl investment landscape, like where the government is actually subsidizing or at least encouraging investors from the outside to come in.
Speaker1: [00:39:11] And you know, there’s a reasonable amount of security and assurances there from that. That’s the first step, right? There’s a multitude of steps. That’s the first step. Understand the economic landscape that you’re going into the geographic issues that are around that, of course, the political stuff. And so solve that first because that’s the biggest one we need to do because obviously that’s where it all is. And then from that perspective, like what is the demographics of the actual investment landscape, like any government can incentivize you to step in. But if it’s just like one piece of island with a single home in there and like fifty thousand investors are fighting for it and it would give them volume two, right? And so you got to do is like, you’ve got to make sure that there’s sufficient, you know, temporary environment where you can step in and it’s a growing market, right? And so the market has to be on an uptrend. And so the only way you can dictate if it’s an uptrend is there’s a lot of news coming out of that region. And so like you’re seeing like a lot of financial activity right now, even though and it’s not the other way around, people say there’s a lot of financial activity and therefore I need to go and invest and we’ll do what the government and all that kind of stuff later. And so I said, don’t do that, start with that geopolitical stuff first and then check the market and see if there’s an uptrend. And from that perspective, like what’s the rules of engagement, which is a third step, right? And so if you’re not really familiar with the rules of engagement, they’re damn sure need.
Speaker1: [00:40:26] Remember, like we talk about relativity here, you’ve got to have somebody with a skill and one that has done quite a bit in that region and thus partner with them or in some capacity, or give them an equitable interest that can actually help you navigate that landscape because it’ll be easier because you’ll have qualified the first, which is your geo-political your second if there’s an upward trending market with enough sufficient financial activity and thus ultimately, you know, your rules of engagement will be solidified. And so from that perspective, then the decision is the fourth step. But is it something you want to step into? So those are the qualifying criteria is that even family offices go through and now we go ahead and convert it within among family members. Let’s agree with the Patriarchs who always want to divest their interests in different foreign national territories. And so we just have to have that serious conversation, right? So what ends up happening, like if there’s nothing really that gives one hundred percent confidence of stepping into that territory after having done one or two, then obviously that’s because we’re missing number three, which is a competent team around that area that really understands the rules of engagement, and they’ve done enough volume that’s placed right. And so that’s the way to go about it. Again, it’s all relative. So if you guys look at it this way, we’ll be very, very, you know, protected in your investment landscape or it was the decision of going into investment. Does that make sense?
Speaker2: [00:41:39] This is went on just.
Speaker1: [00:41:42] No worries.
Speaker2: [00:41:45] We got we got let’s just keep this one on the on the on the back of our mind here we have. Ok, so then we have Durazo. I like this question. Basically is asking what’s the best way to go from five million to a target of 50 million once you have the Company Foundation and your business model is in place? So I’m trying understand what he means by to go from five million to a target of 50 million, so is he saying, is he saying, Hey, I have a five million dollar target and then I want to raise 50 million or I’m trying to understand, go for?
Speaker1: [00:42:24] Yeah. So let me see this how you say is the best way to go from five million to a target of 50 million and once you have the Company Foundation. I think this is all based on exit planning. Oh, for a company for five and you’re trying to go to a 50, so it’s again relativity based in scale, right? And so, man, there’s so many ways of answering this. But not to mention, let’s let’s let’s hear from you. I’m thirsty.
Speaker2: [00:42:47] I can imagine. Yeah, I can imagine. So, yeah. So this one, I’d say, I’d say, Well, one example I’m seeing, it’s like under somebody working on an acquisition and then just one of the people. But one way is really just saying, OK, somebody who has who’s already running a business in particular niche, they’re running the business in particular niche and making one million RR Annual recurring revenue. And then they want it to just simply acquire a company that is already doing 50 million. So that’s probably the easiest way in terms of. So this is if you want to just acquire a company and then all of a sudden, then you have an. Yeah. Then you then you’re a principal in the company has been doing 50 million. So that’s probably the cleanest way. So that’s probably the cleanest way if you want to do that, and then instead of using that investment bank, probably best just to talk to a private equity firm, make sure they have enough equity in that so that you know, they take, they invest, take part of the deal and maybe you get another remainder. And then if you can find a deal like that, that’s probably the cleanest way to do it.
Speaker2: [00:43:55] But in terms of if you’re like, if you already own a company and then you want to grow to 50 million and if you already own it and. Yeah, this is more of like the the scaling of the business part of it’s scaling, scaling the operations and so on. So I. More of what I focus on is more on helping people actually find the find the funding to acquire it or to transact. The only way I know in this sense is probably to go public route. And, you know, I mean, one of the relationships we have helps people multi list and they do post. So they list on three exchanges. There’s a Frankfurt and some other exchanges. And then after they list, they do some post listing marketing to get the to get pump those prices up. I mean, that’s one way. So, so I guess there two and then three is just probably working with somebody who is just really good at just scaling the company and who has has a track record of scaling companies from X to Y and then just onboarding them like you got any more thoughts. I mean, those are pretty cut and dry.
Speaker1: [00:45:05] Now, but it’s good, and you’re right. You know, there’s many avenues. And one of them is a formal right of acquisition. It’s almost like, OK, we are at a five million dollar target. We’ll find like maybe two others that are twenty five and then just merge them together. And so like, that’s the fastest relative relative, the quickest way, the other way. It’s like, no, the income range, which so I’m assuming if it’s a target of five million dollars, there’s multiplied by EBITA or a certain range that the income is based on like a million and a half or two. Maybe God knows, right? And so now you got that. And so I think like ultimately. Now it’s the business has to be. Look, you can scale and you can have the organic scale, which is where your company and that’s the lengthy route. But that’s a very rewarding route as you control the majority throughout the entire process. You remain in control, you remain in the actual captain’s quarters. And so that’s probably the organic way of doing things. And that’s basically like that, that economic range that we talked about from zero to one to one to 10, the income model, you know, from 10 to 30 to 30 different. So not to is not wrong to say you go public, that’s a good avenue. But I think after a certain threshold, right? And so. You know, if you want to stand a chance of getting that, that kind of skill, yeah, you can onboard a team that’s really good at scaling.
Speaker1: [00:46:22] But again, M&A, any type of mergers, any type of acquisitions and so on, so forth, like if you’re responsible for that company, there’s only so much you can be personally expended. And so what I mean by that is eventually you’re going to have to send personal guarantees for everybody else. You’re going to eventually have to sign over the house. You’re going to eventually have to find team members that are aligned with your vision. That’s just the reality of it. A lot of people say, I’m going to do a dollar deal and then I can help just build the equity stake in that company. Yeah, but then you’re a new relationship to the company, and therefore creditors can change their terms. Leases can be renewed at higher rates. They don’t have to be obliged, and that’s a condition in clause and covenant within their agreements when the original leases were signed. If you look back very carefully, please read disclosures, my friends. And so you’ve got to be tactical, right? And so skill is based on relativity, too. I’m going to say that word, and this is the favorite word of today’s episode. Here is what exactly you’re trying to do. Why do you want to scale? Sometimes it’s not. It’s not even needed, right? And so the reason I say that is like, if you can remain in control and you have that organic growth naturally and you understand, like what needs to be done, then you just have to go back to the drawing board with your company and say, Well, why? Why can’t we just go higher and further with what we already have? And so that’s just based on like allocating the resources to specific components of that business.
Speaker1: [00:47:33] They can take it to the next level. And so that’s internal internal communications, right? And so from that perspective, that’s one way. The other way is, well, let’s find individuals that are willing to partner with us. If you’re a 10 on 10, remember if your business has the merit, you will attract the others. And so it’s a lot easier to emanate at that situation. We cannot M&A easily. If you’re not a tenant and there’s no real happiness in the world of scenarios, that is going to help you get to that scale faster. And by the way, if you’re really 10 on 10 with your business and you’re still that five million value, I promise you you get to the 50 much faster. Is you going to track the other people based on who they are or what they do really well? So that’s the organic and naturalization process. But then if you’re going to the M&A route, keep in mind you will be expendable at one point and you still require a team has not adjusted. You’ll have to hire people who have the same alignment of interest as you do. And so they’re willing to put their skin in the game as much as you want. So that’s the only other natural way of doing it. You can help you or you can do all the kind of stuff, but then eventually what happens with the capital markets if you really want to expand and take it to the next level or become a unicorn is you’re kind of like undercapitalized because you have debt that you have obligations towards.
Speaker1: [00:48:36] And so those are restrictive ways of like a growing basically, you’re going to be tap out, right? And so rule of thumb is understand why you want to be a $50 billion company because that’s anybody can give a predetermined value. Why you want to be a 50 million dollar company, one at one hundred and fifty one to twenty five, one at three hundred and fifteen point six. 150. Right, and so that’s one of the one of the things, right, and so I think the right question to ask is what’s stopping the natural natural selection of growth here? So what are the resources they need to allocate? And so what am I looking to get done ultimately? And so what kind of market participants do I need to get to where I need to be? So are you looking for basically what the ultimate outcome is going to do? So it’s not a question of how to get to a certain size. It’s why do you want to get to that size and how are you going to achieve that? Appropriate action is you need to take the next few miles. You need to do it right. So that’s the way to look at it, because this is the most important thing to do.
Speaker2: [00:49:33] Exactly. Just a meter, but because one thing is like. I mean, it looks like it reminds me of something I said in one of these. We didn’t put these one this one live yet, but we’re talking about people that are companies, broadly speaking, that are pre-revenue to have to go public that aren’t public yet. You know, and even companies that want to raise capital that they need to raise capital to build their MVP. And then in that particular video, like me, I was just kind of pressuring and telling the people to listen. Just, I mean, if. Like, if there’s a roots for you to make the MDP without raising capital and without building those relationships in Silicon Valley and and Y Combinator and doing that, doing that for the early stage startups, then it can be much harder. And so it’s like there are bigger problems to be solved. The reason capital is just creating a business, basically. So let me just check in here for any additional questions. I would see. When? Ok, so we have we have one from Facebook. So, Wendy. Let’s see. So I see Daniel Wayne and I see Wendy. Ok, so Wendy, share my screen here. So when are you saying that she has a first? Because Wendy and I had a quick discussion, but she’s saying that she had her first trust portfolios sold. Create your own hedge. So, yeah, if you when you ask the question if you can just be a bit specific, so we can answer, but she looks like she wants to create her own hedge fund. Um. She doesn’t government contract for the next two years, how can I fund that?
Speaker1: [00:51:33] Hmm. Ok. So we need specificity to help. What kind of government contract are we talking telecom logistics? Like what type? Hmm. And so that’s one of the things we understand. Hmm.
Speaker2: [00:51:49] Ok, so we have anyway, in any event, we wait on that and then we have another question or another comment from Jess.
Speaker1: [00:51:58] Yes, has been blowing it up.
Speaker2: [00:52:00] Oh yeah. I like it, I like just a style.
Speaker1: [00:52:03] It’s fun. Yeah. I think it’s all based on, look, our conversations, but look, the 50 million dollar thing and so on, so forth.
Speaker2: [00:52:10] Oh, OK.
Speaker1: [00:52:13] That’s it. So, yeah, you know, contracts and stuff like that, it’s fine. You know which government also? Remember, we talked about geopolitical and then economic climate in that area, the ability to get it done through rules of engagement and so on and so forth and the decision. So it could be a government contract that’s from Zimbabwe. And so there’s not much strength there. So that’s why specificity in terms of word is what the dollar amount is. What’s the contract for? What’s the assurance is that they will pay. So stability is a growing market. What’s the effort of collection in case of failure? I mean, and so am I going to get murdered overnight for trying to collect from a government that I really don’t know? So that’s another situation we’ve got to think about. And I do have to go find a U-boat of Mr. Adolph to see if I can find my treasure, as, you know, very specific. And then from that perspective, you know, my rule of thumb is any foreign national areas that you have to jump into geopolitical stability, analyze market trend, is it upward or is a downward analyze? Rosa, engagement really, really analyze, right and their decision. And so you see, OK, yeah, let’s let’s go for it. So that’s what I would say. But you know, we need that specific. So it’s very important. Yeah, Amy, about what you want to do.
Speaker2: [00:53:27] And I see Joe growing up here is like, what’s the best way to find founders, to find founders?
Speaker1: [00:53:32] You mean people who are starting businesses or people who have businesses?
Speaker2: [00:53:37] I’m wondering if it’s acquisition purpose.
Speaker1: [00:53:41] You need to do an origination for transactions.
Speaker2: [00:53:45] You’ll give me something to play with here, so then you need partners.
Speaker1: [00:53:52] Was it Joe and Jess? Now it’s getting confusing. Yeah. Double J founders. So what’s the intent? So like, what are you talking about when it comes to funders?
Speaker2: [00:54:04] I can do 80 percent of the business.
Speaker1: [00:54:09] Ok. Acquiring a firm. Is that what it is? Is that the case? Start up. Oh, geez. You basically go on, Angel, go and put yourself as an investor and just comment on everything and you have a flood of funders messaging every day. It’s the fastest way I’ve seen on planet Earth. Yeah.
Speaker2: [00:54:33] Put in the whole Y Combinator thing, the whole Hacker News and all that.
Speaker1: [00:54:38] So yeah, it’s really like portfolio of different areas where people are like seeding and creating seed funds and like, you know, that kind of stuff. So you want to put yourself as an investor, as a profile. And so from that perspective, you’re going to have all sorts of I’ll promise you one thing, though, like you will probably struggle real hard to identify what’s real or not because it gets really, really there’s a lot of contrast there. You know, it’s very, very difficult to identify, like with full transparency, what the idea really is to such a point. Like they demand like a DNA sample from you for an NDA. Like, that’s that’s what I’m talking about. Like that relativity is so crazy, you know? All right. Why don’t you hire?
Speaker2: [00:55:15] Is hire an intern like a student or something and then just keep on doing that?
Speaker1: [00:55:20] You can. You can. But again, like what you want is you want that skill and volume, right? Because you’re at a zero to one. So you’ve got to you’ve got you can hire an intern, but like anybody that you have to, there’s a talent grid that I always follow, right? And so the talent grid is the 10 interns that are the best at the world, at what they do bar none. Then there’s a nine on 10. They’re the best of the world at what they do that are right for your business based on your business size. Right, and then there’s an eight on 10 where they take initiative and they can bring upside to your company, and they’re really good at what they do, not the best, but they’re really good at what they do. Nissan to where they constantly need direction, but they’re really good at what they do. So anything that sticks above or below the majority of the companies in the world, they’ve got the six holes, right? And so if you’re not a 10 on 10 at yourself, like you cannot even dictate the rules of number of nines, eights or sevens, you know what I mean? And so on. My friends volume, it’s going to be the best and gioco investor profile the world has ever seen and just go crazy and ballistic on that. Sorry that I didn’t
Speaker2: [00:56:21] Know you’re not like really? Because if you get somebody that’s like, that’s like a B, they’re going to bring on because like, if you scale, then the BS are going to bring on CS and then the C’s are going to bring on DS because the problem is that the BS are going to the BS that their ego like, broadly speaking, their ego is probably going to be too big to hire somebody else. That’s better than them. So then they’re going to start hiring people worse and then you, then you have a toilet. But then if you just hire people that are just age so they keep on hiring h and then then you have a machine that is flowing.
Speaker1: [00:56:52] Exactly, exactly.
Speaker2: [00:56:56] Flow Research Collective. I like that. What that is.
Speaker1: [00:57:01] Yeah, I’m not sure what that is here, but thank you for that. Yeah. So what else do you get? I mean, that’s the best I can say about that, you know? And so. You know what else?
Speaker2: [00:57:14] And one thing, one thing, Jess, I think you can benefit from this and I think we can see things seems to be kind of winding down, but you know, the brute of capital you’re taking on this past. And so I know that, Jesse, I know you see a lot of transactions that flow on. You come to your desk, but you want to just talk a bit about little bit of capital or.
Speaker1: [00:57:35] Yes. A quick two minute teaser, if I may. Well, you know, the British capital, you know, not to an eye partner because we’re constantly acquiring financially challenged and distressed companies, that’s what we do. But the angle in which we acquire them is through their creditors, right? So we take out the first position, we acquire them, we turn ourselves in the first position and we do something called a friendly foreclosure. So we prevent the business bankruptcy right and all the tedious requirement of administrative process to try to save an economic value, the business. So if we can keep the employees the actual economic value of the company and so on, so forth. And so from that perspective, you know, we take one hundred percent of the company. The owner will have to surrender temporarily the equity just simply because the subordinated creditors who are those are unsecured personal guarantees on the other. And so we have to settle those amounts over time and we give a fair compensation to the owner through a contract that we keep them engaged and so we can settle that. And plus that process, there’s an opportunity to re-enter at a fair value because now the balance sheet will be keen.
Speaker1: [00:58:32] So we’ve done this for quite some time. You know, we’re 800 deals collectively with our group. And so we’re really good at this. And definitely, I think the benefit here is we’ve got to look at the balance sheet to to qualify the deals. But if you’re looking for a company that’s financially challenged, private equity can’t take it. There’s no Delta Typekit. There’s literally no assets to leverage. So most of T anyways will leverage or do LBO. And so what we’re trying to do here is try to be the solution that’s required post-pandemic to try to help economic values of companies and try to keep them preserved and then foreclosure are shutting down. I mean, there’s a lot of jobs at stake. And so that’s what the British capital does, and that’s why, you know, not doing that partner because every deal is unique and there raises dot.coms feedback, as always, provided for each of these transactions. The one to one basis. So there’s an indefinite amount of things to do.
Speaker2: [00:59:22] Oh, yeah. And essentially, because part of it is like, I don’t know if you saw a slowdown in distressed deal flow. We saw a bit of a slowdown before, but essentially if anyone is working, if any distressed assets, lack of capital or debt, I think it redirects because their team is a pretty good source of just giving us some more exposure into distressed debt markets. And it’s been pretty exciting to see what types of long term relations we can build there from those deals that closed.
Speaker1: [00:59:58] So. Exactly and yeah, and the fun part is, I just have to add this, you don’t have to worry about getting yelled at by creditors. On the other side, we take care of all that pleasure for you. You know, we go through that process and then what you end up having is is a nice turnaround at the end of the day. Yeah, that’s it.
Speaker2: [01:00:15] So just has been trying to negotiate created finance with business acquisition, creative finance. Yeah, I mean, and listen, that’s that’s really the point. But you know, all in all, you know, based on suggesting to you in particular, I think the main thing that Ali was saying, too was saying, OK, especially with you, because you see a lot of opportunities. So then if we can just kind of nail down like what is the number one type of transaction that is most likely to close? And then just focus on that right? And then that’s like the best way, I think. And then just because the point is really to get something across the finish line, otherwise it’s just it’s emotion and it’s hype. But if we just get something closed and then we just move on to the next one, then then we have something here. So.
Speaker1: [01:01:03] Exactly. All right, so I think I’m done with it for the time being. And hopefully, you know, people got some clarity. And just to recap quickly, you know, we talked about the six ways or three ways at the beginning. So when you guys are going to the marketplace for the first time, raising money for the security is right in the subscription agreements. The first was hire a really good, you know, the 10 on 10 lawyer securities legal practitioner that knows exactly what they’re doing with. What’s the intent of understanding that again, it’s your business is merit that will allow participation of interest from other parties in the marketplace. So their job is simple exposure and articulating that clearly, depending on what kind of business you have. The second way is hire or work with the team, or at least engage in some capacity through our membership portal or access for constant education, learning about other transactions that are similar, if not like, at least comparable. We’re trying to investigate, you know, how the conversations are going because again, you will have to take leadership on conversation and dialogue with investors if you’re one time or one individual that’s trying to do all this for yourself. And so from that perspective, keep in mind the interpersonal issues. You’ll have to overcome a three zero to one million dollars in the ratio we talked about in terms of expenditure of what’s allowable for investors to be, you know, feel confident that this individual is responsible. The third is make the mistakes and try to do it yourself and hire all the templates or find those on Google and hopefully not get penalized. And so that’s probably the most expensive one. So please don’t do that. You know,
Speaker2: [01:02:26] It’s on the back end. It’s expensive on the back end, it’s like. Exactly. It’s really interesting. It’s like, Oh, you know, I want to get like, I want to get a five year lawyer, five securities lawyer and pay them on the back end. And then you end up paying five.
Speaker1: [01:02:42] Wow.
Speaker2: [01:02:43] Then the pain that you see on the back end. All right. So it bounces out.
Speaker1: [01:02:47] Yeah. Yeah, yeah. Go to the actual government body that allows you to go into the market. You know, they’ll they’ll help you. They’ll give you an investment check or list an invoice, you know? But yeah, just be careful there, right? And again, like I think the. This is more and more important thing to do there, but all in all, I think if you follow these rules and regulations, you guys will be fine. And like I said, naturalisation growth. Understand. Don’t don’t tell me like you want to go from five to 50 or five to six million or 10, 20 million. That’s not a very good information because it’s very premature in terms of like what the potential of that business is. That means you’re capping it at 50 million. And so when investors come to the table, especially PE firms trying to buy those businesses and say, Well, why did you stop at 50? So what’s to do? Is there something I should know about that that’s the maximum limit. And so it’s an unlimited potential. And so when you have the momentum going up, you’ve got a you’ve got to take the uptrend of the liquidity and the valuation because there’s constant growth in that business. And that’s when you sell because you’ve got to help investors capitalize on on the long term, you know. And so if you cap it at 15, you take it to that level, then investors always have a natural question about why is it capped at 50? And so what amount of work do they need to do from their side because they’re paying a premium for, like what’s tapped out already? And so there’s really no upside. Just what I’m saying. You got on to sound like increased the engine’s turbine engines ticking on the takeoff. And while it’s going up, give the give the yoke of the aircraft to the actual people who want to invest so that they can go at the crews out to get to their destination. So that’s how you get it treated.
Speaker2: [01:04:17] Yeah. And also to the big takeaway, too, was that the securities lawyers, the capital raisers, even the bankers, they’re all just multiplying like they’re just getting the deal and then they’re just putting it in the right places and they’re multiplying. They’re kind of putting gas on the fire that already exists. Even if it’s a startup startup starts, some start up like it’s already. There’s something there. So then you can’t just take this and depend on people to raise capital for you if to change your deal for you and then use a SPAC or whatever. Because it’s just there’s no there’s no nexus to there’s no seed there to, like, grow into something. Yeah. So that’s what Ali. That’s a good point that Ali was talking about, too.
Speaker1: [01:04:57] Exactly. You know what? To your point about startups, and this is for everybody out there like, you know, don’t get me a number like, you know, I have X amount of dollar valuation or have potential here in this and that. Or like even no disrespect to anybody who’s got like a letter of interest or y or commitment. There’s nothing yet until the bank account, as is liquid. You know what I mean? And so and it’s the right way to kind of
Speaker2: [01:05:20] Like and it’s a correct bank account because people can still circumvent and not pay you.
Speaker1: [01:05:24] Oh geez. There you go. There you go. Or they can reject their offer simply because they don’t like something along the way, right? Or some some urgent scenarios happen. So what I would say is understand this one skill. If you’re in the capital raising game and that’s the skill of relentlessness, be completely relentless with the attitude that you have of raising liquidity. And so don’t rely on a singular source, you know, and be very transparent about what you do. So if you’re a startup and you have an idea and you’re looking for funding. That’s OK. You’d be questioned, and this is a route that consumer knowledge and credit and that kind of stuff I do like, I’m not trying to tell you guys to go check it out. But if you’re not financially viable yourself on a personal level, if you don’t have skin in the game or if you haven’t really done the volume and skill equation yet, there’s no merit of investment, regardless of fancy or term is. So you have to be careful. Remember what we said? Razors are their job. Is exposure of participation to your business. Right? So if you don’t go out of business and if it’s just a start up, you might have some interest, but it doesn’t mean that doesn’t mean anything significant down the road. There’s a reason why a lot of startups fail because they miss this equation for a long trip. Yeah, and go ahead.
Speaker2: [01:06:34] And then so then remind us of the value of the value, not the value equation. I’m thinking of something else, but if the volume equation, I want to say, what is that equation?
Speaker1: [01:06:45] Ok, so it’s math, but let’s go again. It’s scale. So what exactly is your business? So it treats skill as business, and it’s going to be really good at something, but the only way it gets really good at something is. You’ll multiply by volume equals to outcome, and so outcome is what what exactly you want. Do you want liquidity? Do you want to raise money? Do you want to get investors? Do you want to go out there and scale your business, acquire more companies? And so you’ve got to determine what your outcome is, but then you’re going to exercise your skill and value on a regular basis. So that’s the equation you’ve got to follow. So if you don’t have that, if you’re not, that’s the principal thing. You get a master. If you don’t have some way of really saying, you know, I’m actually increasing the volume of each and increasing the, you know, the aptitude of actual skill and increasing the volume and the likelihood of increased volume through whatever means I can to materialize the actual outcome. And it’s going to be spread thin. By the way, you can have multiple skills and you have to exercise a lot of volume in those extra skills and therefore the outcome is spread out also. And therefore you got to catch up to that and therefore you’re not sleeping all of a sudden, you know what I mean? So be focused also. So what I mean by skill is extreme focus, crystal focus. And so from that perspective, the likelihood of achievement of getting liquidity in the market or the exposure to participate in your business is a lot more successful.
Speaker2: [01:08:11] So, so, Ali. So let’s let’s write that down. You know, I dealt with a little glitch in Zoom. And so let’s write down this equation here. So it is. Sure.
Speaker1: [01:08:20] Yeah. So again, volume
Speaker2: [01:08:23] And volume
Speaker1: [01:08:25] Multiplied by.
Speaker2: [01:08:27] So I’m going to put asterisks.
Speaker1: [01:08:30] Why can’t you just put an X, man? I hope it’s hard to put her next. All right.
Speaker2: [01:08:36] Quoted again, skill.
Speaker1: [01:08:38] There you go. Skill equals outcome. And so, like I would put in brackets like especially if you’re a zero to one million, you know, especially. Inside me. So this is one of the most important promos out there.
[01:08:58] Beautiful. You’re going to
Speaker1: [01:09:01] So that’s my two cents today.
Speaker2: [01:09:03] Secrets to the universe from Wall Street.
Speaker1: [01:09:07] All right. Yeah.
Speaker2: [01:09:11] All right. Good, so tell you what, so, you know, I think we’ve gone through quite a lot and it’s a lot for a Friday Friday evening.
Speaker1: [01:09:18] So tell me about it.
Speaker2: [01:09:21] Yeah, with this call, I’m just going to sit and meditate on everything we’ve gone through, especially from Ali. And obviously, we’re really grateful for Ali’s time because even at night, I believe you’re working on distressed deals. You look at the distress right now
Speaker1: [01:09:36] Looking at
Speaker2: [01:09:37] Them.
Speaker1: [01:09:37] So that’s exactly true. Yes. Not red handed.
Speaker2: [01:09:43] So suggest and tell you what. Yeah. And before we go increasing, increasing that you believe that you can close 40 percent more. If you had the skill factor. One thing to remember, too, I mean, the skill can come from somebody in your team as well. That’s something else to remember. What a value.
Speaker1: [01:10:03] Correct? Yeah, it’s possible, right? So if you’re, it depends on your mandate. Right. And what I mean by that is, what is your job in the business? Is it to keep the lights on? And if so, is the person who is killed? I would say, you know, 50 50 on that for two reasons, number one, if that person with the skill is gone tomorrow, you don’t have a legitimate business. And so you have to be very careful with the zero to win. What are you depending on? What factors are you dependent on? You know what I mean? So I’m not saying that’s one hundred percent always, but the scale of what I mean by skill is like. The thing that you really do for your business, like you are the name brand, right, and so that’s your reputation on the line. And so what part of that skill are you doing so well, based on the amount of volume you’re exercising out there that allows you to blow it out of the water compared to everybody else? And so if you’re if you’re dependent on a particular skill, what ends up happening is like the volume is being exercised away from you and therefore you have no control over the outcome because you’re dead up. Does that make sense? And so I’m talking personal stuff, interpersonal things. Not to you and me.
Speaker2: [01:11:16] Yeah, I’m just reading all this because just as a pretty active here.
Speaker1: [01:11:22] Got you, got you. Somebody said, you know, make sure that you don’t have, I got you. That’s funny, man. Yeah. And listen, man, and listen,
Speaker2: [01:11:31] We can leave it and just, you know, feel free like, you know, contact supports will take care of you. And that’s why we that’s why we spend bucks hiring people anyway. So just send send the notes. And I think I think we may be able to leave it like this because people would get encouraged by splitting the pie. Use us, use other people as well and then just go through the competency sheets because then we walk through is like saying, OK, what are we good at? What are we not? And then just breaking that down, defining the problem so that we can understand the cause and effect. What the hell is happening so that we can go out and fix it? And so I think that, yeah, I think I think this is pretty comprehensive, which probably led to go by now and then replayed it for the European guys. But with this Ali. Any closing words about the British capital before you go?
Speaker1: [01:12:22] No, not the capital or anything, but I think from you and I both like, we wish you guys a good weekend, enjoy. Hopefully, this educational piece give you guys some insights on what you really need to focus on. Again, we’re doing this to create a more engaged and educated group of individuals out there based on what they need to do. Help you guys get funded and the more you guys could fund it, the more we benefit too, because then we can collaborate, right? And so that’s all I got to say.
Speaker2: [01:12:45] That’s it’s let’s increase the bar because the more we raise the bar, the more competitive the marketplace gets, the more competitive the marketplace gets, the more interesting mutations come out of it and more deals get done. Exactly. All right. So everyone, so this has been fun. I enjoyed this one. Have a good weekend, and we shall see you when we see you. And we’ll leave it with a bit. Sure. All right. Bye for now. Easy.
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