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Interview with Callum Laing: The Entrepreneur Exit Alternative

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So, if you’re an entrepreneur, there’s a lot you need to know about scaling your business; especially when it comes to getting funding.

If you’re looking to grow a successful business, chances are you will need to obtain more capital. It’s an essential part of building a thriving enterprise.

But it’s not easy, is it? For many entrepreneurs, it can be quite confusing.

Any founder of a company or small business owner knows that it’s tough going out there. Small businesses are the lifeblood of economy, but entrepreneurs have many challenges facing them. This is especially true when it comes to gaining the funding needed to scale.

I spoke with Callum Laing, partner at Unity Group, about the challenges small businesses face and a unique opportunity that they can potentially benefit from. Laing is co-author of the new book “Agglomerate – Idea to IPO in 12 Months”, and is a previously published author of “Progressive Partnerships – The Future of Business.” 

Laing’s mission is to make it easier for entrepreneurs and startups to get the resources they need to achieve their objectives. As an author and businessman, he has helped many business owners realize success in their funding efforts. In this interview, you will learn why an IPO or an acquisition might not be the best funding solution for your company. You will also learn alternative methods of raising the capital you need to grow your business.

What are some of the biggest challenges small and mid-sized companies face at this time?

Small and mid-sized companies, generally referred to as SMBs (Or SME’s outside of the US), usually are companies with less than 500 employees. According to the 2012 US Census Bureau data, firms with fewer than 500 employees accounted for 99.7% of those businesses.

Access to resources is always a major challenge for SMBs. Business owners struggle every day to scale. Without capital it is difficult to attract great talent. Without great talent it is nearly impossible to compete with the big companies. If they are ‘lucky’ enough to be in a position to take on investors or a bank loan to scale, the terms are normally so onerous it ceases to be attractive.

What about achieving scale through an IPO or an acquisition?

Because of the difficulty in accessing capital, business owners often believe the only way to get investment is by going public or getting bought out. However glamorous those two options may sound, the reality is much harsher and often comes at a very high price. The public hears about the shiny new “unicorn” start-ups that end up being covered in the media all the time. These include the Ubers, the Airbnbs, and the Dropboxes. But the vast majority of businesses toil away under the radar.

IPOs, acquisitions or investors all come with strings attached. In fact, those strings are often more like chains and padlocks. Business founders have to sell their soul, their dream and their control to the investor. In small business, much of the value of that business resides with the founder and her senior team. When investors come in and take control they are removing the power from the very people that got the business to where it is today.

What are the drawbacks of these options that founders often aren’t aware of?

When companies sell or merge, you often see an exodus of talent —- sometimes with key accounts. Small businesses depend heavily on the talent of key employees. A change in management philosophy and execution often creates conflict between the buyer and the bought; many M&As fail because of this.

Post-merger, you also frequently see the removal of one of the brand names, usually by the company that was bought. This destroys a lot of the brand equity carefully cultivated over the years. Most roll ups are either debt funded or investor funded. Either route creates a huge stress on the eventual vehicle.

Then there’s going public through an Initial Public Offering (IPO), which is very time consuming and costly. Public companies also need a board to run both the business and the IPO. Some IPOs are exits in disguise. The talent is either leaving or planning to leave. This can lead to building a bad reputation. In other cases, the IPO is pushing for the highest valuation because of a planned exit, or they want to raise money and thus want to minimize dilution. While there are lots of advantages of going public, IPOs are simply not a great way to raise capital for the average business owner.

Where does that leave small businesses then?

It leaves them between a rock and a hard place. This is the exact situation that our firm, Unity Group, sought to alleviate. The solution we arrived at is what we call the “Agglomeration.” It sounds like a fancy word, but it is taking the best of mergers, reverse takeovers (RTOs), roll ups and IPOs…with none of the downside.

The best way to look at it is as a cooperative IPO where a group of businesses join forces and publicly list, growing further by acquiring more companies in the same space. The twist to the model we have introduced is that the individual founders keep full control over their own entity. They are just using the publically listed vehicle as a platform. Allowing them to swap shares for more liquid shares, yet still retain the control of their own entity.

This way they achieve scale while still being able to run the business as they see fit. All member companies share a common holding company with a consolidated income statement and balance sheet. Instant scale helps them win bids when pitching for contracts, geographic coverage, and product diversification. They can talk big when they need to, and be small and nimble when it comes to serving individual clients.

What other benefits does an Agglomeration have besides scale?

There are many unique aspects of an agglomeration that helps small business owners. In terms of liquidity, the public listing allows people to sell when they want or sell a little and keep the rest. It creates financial freedom for the founders. The fact that they are all in the same boat fosters cooperation to drive share value and the timing of share exits. Since all the entrepreneurs joining are looking to grow and not exit, it is easy to get a significant multiplier effect.

When it comes to wealth and value creation, this is really the “Holy Grail” of entrepreneurship. It takes away the binary sale choice, and creates smooth and growth platform. Profits and cost savings are directly multiplied in the company’s valuation creating a direct correlation between effort and reward. We also have a dividend policy so all companies in a group issue dividends, meaning the founders get income from their shares without the need to sell them.

From an investor standpoint, an Agglomeration provides a very compelling proposition. Finally you have the ability to invest in fast growth small businesses but with the liquidity that public stock provides allowing you full access to your capital at any moment. Additionally, because there is a portfolio of companies in the group, your risk of any one company struggling is minimised by the diversified nature of the agglomeration. Companies within the group can also access soft loans from the parent, or cash and expertise to help with consolidation. This significantly increases their ability to survive and scale over their competitors outside the group.

What’s the future of Agglomeration?

Unity Group currently has around a dozen Agglomerations in process from Marketing to Childcare and from Tech to Finance, plus many others. We are always looking to speak to good, debt free, profitable businesses that would like to explore whether this is the right option for them.

Because of the massive potential in this movement, we are releasing the intellectual property on the Agglomeration in our book “Agglomerate – Idea to IPO in 12 Months.” Rather than keeping it to ourselves, we feel that letting everyone have the blueprint is the best way to allow as many small businesses to benefit as possible. In so doing, we hope to unlock the massive potential that is the small business which ultimately benefits the economy and its workers as a whole.

You can download a free copy of the book here:  http://www.callumlaing.com/wbaf/

This article first appeared on Huffington Post by Jeff Charles.  https://www.huffingtonpost.com/jeff-charles/callum-laing-the-best-way_b_12077962.html

This article is part of the World Business Angel Forum media partnership with AsianEntrepreneur.org

If you would like more information about WBAF, please contact Callum Laing WBAF High Commissioner for Singapore. [email protected]

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Renata Brkić

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Renata Brkić only invests in businesses which are changing the world for the better and pushing the human race forward.

What’s your story?
I am a serial entrepreneur and investor. I am CEO and owner of a company active in licensing, consulting and the organization of worldwide supply chain operations for licensed products. Furthermore, I am strongly devoted to fostering social impact orientation in businesses with the following key words: science, women, education and children. Therefore in my capacities as President at the General Assembly at ZEZ centre and Head of the Social Impact Investment Hub Professor Balthazar, I am responsible for the revival of the Professor Balthazar character as a unique, artistic, socially responsible brand. For this specific investment, I am also the TBAA reward- holder for the best social impact investment in South East Europe. I am a mother of three and I live with my family in Zagreb, Croatia (EU).

What is your involvement with Investment?
Throughout my entire career I have passed all the necessary steps from corporate manager, serial entrepreneur, followed by the running of a science communication start-up incubator and now investor. This step by step build up led me to my present position as founding partner and starting my own investment fund with inspiring partners – theFeelsgood Social Impact Venture Fund. I invest in wonderful ideas that do not necessarily have fast payback, but that can change the world for the better and push the human race forward.

I also serve as High Commissioner to Croatia in the World Business Angels Forum – an international organization that aims to convert the world economy into a smart economy.

How did that come about?
It was from the experience of raising funds for my entrepreneurial project Professor Balthazar, that I realized I could also help many young inventors and entrepreneurs active in developing impressive spin off endeavours around it.

I have therefore established the Social Impact Investment Hub for start-ups and scale-ups and I am involved in their incubation.

What are some of the key things you have learnt about Investing?
Investing is an action-reaction iterative process between the investor and investee. For me, it is of utmost importance that we share common values. I’m an impact investor, apart from profit making it is important to me that the project matters in terms of making the world a better place. I therefore prefer a more hands on approach. And when it comes to the exit, it’s not only exit, it’s all about good feelings, before a good exit.

What mistakes do you see less experienced investors making?
Big expectations of fast paybacks. I have regretfully witnessed recently, the stories of unicorns. Sometimes it seems that even experienced investors can’t resist them. We will see what happens at the end of their life cycles. What I see now is that they are just swallowing more and more, let’s see how bright will be the light at the end of that tunnel?

At the same time, there are many great, realistic opportunities in the market achieving the triple bottom line; people, planet and profit – and ensuring safe exits. They are the ones I would always recommend considering.

What mistakes do you see Entrepreneurs making?
Accepting bad money when desperate. Patience is the key to success. Hold on for a while until all your ducks are in a row. The right investor should offer much more than money; values, experience, expertise and a rolodex of distribution channels.

What’s the best piece of advice you ever received?
Persistence, endurance, resilience, patience and respect time as a safe road to clean success.

What advice would you give to those seeking funding?
Use the thorough approach. Work on your professional presentation and pitch. Invest in attending industry conferences and start-up competitions. Have a record of first sales, at least pilot ones. Adjust the model to the development level and nature of the project and know who is the best match for you – business angel, crowdfunding campaign or venture fund.

Who inspires you?
Inspired people who create a symbiosis of science and business in the effort to come up with solutions for making the world a better place on a global scale.

What have you just learnt recently that blew you away?
Honestly, it’s a discovery of the wonders of the astrophysics that blew me away only now that I’m reaching my middle age crisis!

What business book do you recommend the most?
Homo Deus by Yuval Noah Harari

Shameless plug for your business/organisation:
http://professor-balthazar.weebly.com/

How can people connect with you?
[email protected]

Social Media profiles?
Facebook: https://www.facebook.com/renata.brkic.37
Twitter: @renata.brkic
Linked In: https://www.linkedin.com/in/renata-brkic-7b47822/

This article is part of the World Business Angel Forum media partnership with AsianEntrepreneur.org

If you would like more information about WBAF, please contact Callum Laing WBAF High Commissioner for Singapore. [email protected]

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Norris Krueger

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Dr. Norris Krueger talks to everyone, especially people on the “elevator.” He believes networking is key when growing a business.

What’s your story?
I’m a recovering Caltech physics major and tech entrepreneur, who turned into a leading entrepreneurship academic. I’m now an ecosystem builder and experiential educator. I spent the last 15 years in glorious Boise, Idaho while getting to travel and speak at various events across Idaho. I’m a senior subject matter expert for OECD and EU on entrepreneurial learning and on entrepreneurial ecosystems.

What is your involvement with Investment?
Today, I’m primarily coaching and mentoring entrepreneurs but I started out with an investment banker focus on portfolio strategy and forecasting.

How did that come about?
I went to grad school to study forecasting and got recruited by Ohio State’s chair in entrepreneurship, the legendary Al Shapero. I interned with a local VC firm. Soon I was immersed in a semiconductor production equipment startup, helping my technical cofounder by revising his 200 page business plan [back when business plans were a thing] to something readable. That landed a key angel investor. I kept critiquing business plans with a certain knack of finding the fatal flaw. I returned to academe, building an entrepreneurship program that won 6 national and 2 global best practice awards. Now I help entrepreneurs to grow.

What are some of the key things you have learnt about Investing?
The need to educate both sides. I am not terribly amazed when entrepreneurs simply do not understand how to purse money (and when) but I am often amazed by veteran investors who also do not understand the process as well as they should. Moreover, many other key players in the entrepreneurial ecosystem are also under- and ill-informed. Simply educating everyone on what makes entrepreneurial investment work for all concerned, is something that we all need to do more of.

What mistakes do you see less experienced investors making?
“Never confuse brains with a bull market.” Something I learned in equity markets applies equally here. A successful investment need not mean I’m terribly smart. I see veteran investors always rethinking their methods. In short, we don’t learn from our mistakes and we don’t learn from our successes – unless we work at it!

Similarly, the data on angels in North America suggests that it is all too easy to get hung up on trying for that 10X hit. Pushing entrepreneurs too hard is counterproductive. On the other hand, there is no shortage of US angels who seem to be playing at angel investment. There’s nothing wrong with having a lot of fun but you owe it to your investees to be serious.

What mistakes do you see Entrepreneurs making?
Biggest mistake, not bootstrapping. Getting outside equity may be sexy and growth accelerating but was it worth giving up equity early? (Inc. magazine’s annual list of the 500 fastest growing firms always shows that almost all of them are bootstrapped.) Number two, not understanding that once you take someone else’s money, it’s not really your company any more. A close number three, why don’t entrepreneurs do their homework on the people helping them, whether mentors or investors?

What’s the best piece of advice you ever received?
Never settle for just one piece of advice? If I did pick one: “Always talk to people on elevators.” It’s not a cliche, you really can learn from everyone and you never know who they know. It’s no longer “6 degrees of separation from Kevin Bacon”, it’s more like 3.

What advice would you give to those seeking funding?
DO YOUR HOMEWORK! On your customers. On your industry. On your mentors. On your investors.

Who inspires you?
The resilient. I’m persistent but am I just stubborn? I admire anyone I can learn from… and that’s pretty much everyone.

What have you just learnt recently that blew you away?
Changes daily! I follow many science/tech blogs and something incredible pops up almost daily. I read a great deal of science fiction in my younger days; now I’m living IN those stories. If I had to pick one: LIGO. LIGO is the Laser Interferometer Gravitational Observatory… The people who discovered/proved the existence of gravity waves. This is beyond awesome.

What business book do you recommend the most?
The one I write! Seriously, though, Peter Drucker’s 1993 Innovation and Entrepreneurship is one I give people. It’s a good place to start. Brad Feld’s 2012 Startup Communities is my other go-to gift book. But I’d also recommend the websites out there that curate the best stuff: the Kauffman Foundation’s entrepreneurship.org, Stanford’s EdCorner (videos galore), Alex Osterwalder’s Strategyzer.com.

Shameless plug for your business/organisation:
Nobody knows more about how to grow entrepreneurs, whether it’s by growing the entrepreneurial mindset through deep experiential learning or whether by growing a healthy entrepreneurial ecosystem that’s bottom-up and entrepreneur-led. There are plenty of people who know as much, though and, yes, some do know more; but many are my friends and I know almost all of them.. And I keep meeting new ones on the elevator!

P.S. I am also working with the incredible Joe Bonocore (4 Silicon Valley startups, 4 significant exits) and I am learning so much from him. Check him out on LinkedIn!

How can people connect with you?
Email: [email protected] or [email protected]
Phone/WhatsApp/WeChat: +1 208 440 3747
Skype: norris.krueger
My blog: http://bit.ly/NKblog2a
My presentations: http://bit.ly/NKpres

Social Media profiles?
LinkedIn: https://www.linkedin.com/in/norriskrueger/
Facebook: https://www.facebook.com/norris.krueger
Twitter: https://twitter.com/entrep_thinking

This article is part of the World Business Angel Forum media partnership with AsianEntrepreneur.org

If you would like more information about WBAF, please contact Callum Laing WBAF High Commissioner for Singapore. [email protected]

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