Andrew Lear

Does money behave like oil, water, or hydrogen? Given changes in tax and economic conditions, It will likely flow down the path of least resistance from the source of financial pressure. It can be used as a combustible, stable fuel for economic growth through investment, research, and hiring. Finally, in large enough quantities, it can create reactions that can theoretically power entire cities. Conversely, if enough of it is called back, loans default, and derivatives are triggered, leading to a rapid change in value. It can trigger the equivalent of a thermonuclear explosion or, at a large enough scale, a star collapsing in on itself (a wipeout of an entire financial system). What's interesting about money is it can be all these things, depending on when you decide to measure it and where you find it. Traditional economics treats money like a system of account, but I think it behaves more like a system driver, in a black box model. What do you think? #money #finance #economics

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As a founder, your equity represents your hard work and dedication. Protecting your ownership stake is key, but balancing that with appropriate equity raises is crucial for long-term success. While dilution is inevitable for high growth, there are steps you can take to minimize its impact. From strategic fundraising to managing your option pool wisely, you can make informed decisions to preserve your equity while driving company growth. Here are a few best practices for managing equity dilution: 📊Conduct sound financial and capital runway planning: Keep a close eye on the company’s capital structure and know funding is actually needed to meet your goals. 💰Raise only what you need:  Carefully plan your runway and focus on achieving key milestones before seeking additional funding. 💬Negotiate your valuation: Clearly articulate your company's advantageous positioning and potential for growth to justify a higher valuation. 🏊‍♀️Manage your option pool wisely: The first few hires you grant equity to will set the standard for future equity grants. Think long-term and don’t set the bar too high. 🏦Explore alternative financing options: Debt financing or revenue-based financing can provide growth capital without immediate equity dilution. 📈Play the long game: While dilution might seem like a loss in the short term, remember: It's all about building long-term value. Check out my latest blog post for more equity dilution insights: https://hubs.la/Q02Grmk70

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VC Market Update: Riding Out the Post-Boom Bumps. 2021's high-flying valuations and growth have given way to a more complex reality. With longer private timelines, tough exit markets, and capital tightness, startups face unique challenges—but also fresh opportunities. For those navigating today’s VC landscape, strategic planning is key. Whether it's balancing growth with capital efficiency or exploring secondaries smartly, there’s a path forward. And with boosts from AI and future rate cuts, brighter days could be ahead!

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🌟Innovative VC Firm Overcomes Exits Drought with Secondary Sales🌟 ⛵Navigating a challenging landscape where exits are scarce, Santa Barbara Venture Partners (SBVP) has pioneered a novel approach to sustain its growth and attract investors for its second fund: secondary sales. Instead of waiting for traditional exits like IPOs or acquisitions, SBVP opted to sell shares of its portfolio companies, demonstrating its ability to generate returns for investors and stand out in a competitive market. 🎤According to Dan Engel, founder and managing partner of SBVP, these secondary transactions have been a game-changer, sparking investor interest and bolstering the firm's credibility. By leveraging its recent successes, including a lucrative stake in sports-betting company DraftKings Inc.' acquisition of digital lottery app Jackpocket, SBVP seized the opportunity to return profits to its limited partners (LPs) and pave the way for its second fund. 💡Engel highlighted the challenges faced by young VC firms in raising subsequent funds, particularly amid a downturn in exit activity and heightened investor scrutiny. With traditional exit routes becoming increasingly elusive, the pressure is on for firms to demonstrate tangible returns and establish a track record of success. ✨"For us, secondary sales have been a game-changer. They've helped us return profits to our LPs and attract investors for our second fund," said Dan Engel. 💰For SBVP, the decision to pursue secondary sales was driven by the need to provide liquidity to LPs and validate its investment thesis in the eyes of prospective investors. By strategically offloading portions of its holdings in high-performing portfolio companies like Bark Technologies and Rad AI, SBVP not only generated substantial returns but also bolstered investor confidence in its ability to deliver results. ⚠Despite the complexities and potential stigma associated with early share sales, Engel emphasized the importance of prioritizing investor returns and seizing opportunities to unlock value for stakeholders. With a focus on profitability and transparency, SBVP remains committed to its mission of delivering sustainable growth and maximizing returns for its LPs. 🔍 "Returning profits to our investors is our top priority. By strategically selling shares, we're proving our commitment to delivering results and driving value for our stakeholders," added Engel. As SBVP continues to explore secondary transactions and expand its investor base, the firm stands as a testament to innovation and resilience in the face of market challenges. 🚀 ✅ Looking to raise capital for your #fund and increase the international pool of your LP #investors?   🤝 Need warm #LP introductions?   📝 Selling #secondaries to increase liquidity?   🧐 Looking for co-investments?   ▶ G+QUANT's link for inquiries and fund decks: https://lnkd.in/gjC_EuTE #VCInnovation #SecondarySalesSuccess #InvestorReturns #ValueCreation 

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The Information has a tremendous behind-the-scenes article about how OpenAI can raise spectacular amounts of funding, including the $6.5B on tap over the coming days, at ever-higher valuations. It is a fantastic read for any #CFO and #CEO trying to replicate it. The short answer is not what you would think: #technology, and more about #credibility #revenuegrowth and Sarah Friar, OpenAI's CFO, and keeping the story straightforward. What do you think? #management #venturecapital #privateequity #capitalmarkets #aifinance https://lnkd.in/gVUfZxDx

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Estate Planning for Small Business Owners

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One of the things we see quite often at Grit Capital Partners, is a newly minted CEO. We see a big difference in the transition to CEO based upon the historical lane the CEO is coming from. There are different new muscles if you are coming from Product, Engineering, Finance, etc. In this article, we go deep on the CRO to CEO transition, which includes some thoughts from Rosie O'Meara, a particularly fine example of someone who has made the transition quite well. What were your biggest transition moments? https://lnkd.in/eEB-K2ZU

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Do you know how to get a good FICO to ensure minimum points lost for maximum FUNDING? Sign up for my next free webinar if you want to learn how to get the money you need for your business ➡️ https://lnkd.in/gX7f3bdz

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Acquisitions are an exciting, often nerve-wracking step in a business's journey. They signal growth, success, and the promise of something greater but also demand preparation. Signs You Might Be Ready: 1️⃣🟢 Strong Financial Records: One of the most telling signs that you're ready for acquisition is having organized, reliable financial records. A potential buyer will want to see a clear picture of your company's financial health, including revenue, expenses, liabilities, and profitability. If discrepancies exist between your accounting records and operational contracts, you may need assistance to get your books in order. Missing stock option entries, unrecorded leases, or misplaced contracts can be significant red flags during the acquisition process. 2️⃣🟢 Sufficient Data Room: Another indicator of readiness is having a well-constructed data room. A data room contains all relevant documents that a prospective buyer might want to review, such as contracts, financial statements, tax returns, and corporate records. Ensuring all contracts are appropriately manifested and all liabilities are accounted for is crucial. Buyers may use any lack of documentation against you during negotiations. 3️⃣🟢 Aligned Departments: Often, when businesses are running at full speed, internal miscommunication can occur, especially between sales, executives, and accounting. If your sales team has closed deals or executives have made compensation promises that aren't communicated to accounting, your financial records could be incomplete. Aligning these departments is critical to presenting a united and accurate financial story to potential buyers. Steps to Prepare for Acquisition: 1️⃣🛠️ Identify Gaps: Start by identifying gaps in your financial records or processes that might impact your valuation. This can include everything from discrepancies in revenue recognition to improperly amortized loans. Addressing these gaps is essential for ensuring your financials are rock solid and won't cause issues during negotiations. 2️⃣🛠️ Clean Up Liabilities: Make sure any accruals, such as lease liabilities or employee benefits, are fully recognized in your financials. Buyers often scrutinize liabilities, and anything that isn't properly documented could become a point of contention. The goal is to leave no surprises for potential buyers. 3️⃣🛠️ Document Everything: Proper documentation is critical. Make sure every contract, lease, guarantee, and compensation promise is accurately recorded and included in the data room. Buyers are thorough in their due diligence, and missing information can make them question the integrity of your business. Acquisition preparation is about more than having strong sales or a promising product. It requires airtight financial records, complete documentation, and a thorough understanding of your business's agreements and implied risks. Address these areas before acquisition discussions to ensure the best outcome.

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I've been a bit surprised recently with the number of decent-sized software businesses (i.e. $15M+) that don't have a legitimate VP of Finance or CFO on their leadership team. I think some product and/or industry-expert founders and CEOs view finance as simply "accounting" vs. a strategic partner to help them properly scale the business. This seems to particularly be the case with first-time CEOs. They likely haven't seen "what good looks like" when it comes to a finance leader and the positive impact they can have, so they hire an outside firm or individual to manage their finances...treating it like a "necessary evil." The role is far more critical than that. I've found that the right CFO is a fact-based, unemotional partner and sounding-board for the CEO, and an invaluable resource to other members of the leadership team as they determine strategy, budgets, etc. Plus, referring back to another recent post of mine (https://lnkd.in/eTjvqdnv), having the right CFO allows your company to better represent itself and speak the language of your investor / buyer. P.S. I was fortunate to have two strong partners as CFO at Daxko. Jonathan Sides and Winston Gillum both made a world of difference!

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You think that’s not a great outcome?!! Here are some staggering statistics about the US economy - since mid-2020: 1) US nominal GDP has grown by ~7 trillion 2) US total debt has grown by ~8.5 trillion Growth and the economy are driven by debt. Check out this fantastic chart created by E.J. Antoni (first chart). It illustrates how the rise in federal government debt (red) has outpaced US nominal growth (blue). The red bar surpasses the 8 trillion threshold when private sector debt is included. The US nominal GDP has grown by around ~5 trillion as a result of the large fiscal deficits, the resulting ~7 trillion increase in US debt, and more private credit creation. debt accumulation. The US nominal GDP has grown by around ~5 trillion as a result of the large fiscal deficits, the resulting ~7 trillion increase in US debt, and more private credit creation. Now think about this: The production of debt and credit is the mainstay of our monetary system, which supports economic growth. That is not intrinsically bad; the important issue is to finance reforms and investments using the proceeds from increased debt. As the following figure illustrates, we wind up producing far less new GDP growth for every new dollar of debt (2nd chart)!

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Demystifying the C-Suite… 🚀 Secret to successfully scaling your business I am always surprised at how confused management teams are about the role of each c-suite member. Ok, so the CFO may be more obvious - tracking the $$$ But what about the CEO vs COO??? Regardless of the size of a business, we like having both a CEO and COO. It’s the secret to successfully growing your business. 🚀 ❌ We have found that if the CEO is handling all operational issues, the business stagnates… As I like to say, the CEO should be working ON the business, while the COO is working IN the business. The CEO can't do both. So… ✅ CEO needs to focus on strategy, growth and clients ✅ COO makes sure the company is executing seamlessly - operations ✅ CFO makes sure we are making money! What does your management team look like? BTW, don’t forget about your CHRO, without the right people, you are sure to fail!

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📊 Founders, don't miss out on understanding your authorized shares. It’s not just about legal limits, but about saving significant tax dollars! 🎥 Check out the video and see how choosing the right method to calculate Delaware franchise taxes can benefit your startup. Link to the article in the original Kruze Consulting post. #Startups #VC #Finance #Taxes

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Executive Edge | Issue Two: Suite Success. Should a case study approach be used to successfully hire C-level talent? ------- If you're a #cfo currently working in private equity, venture capital (or other investor types), or, you're a business seeking to hire transformational finance talent Camino Search specialises in head-hunting & consulting for investor-backed tech businesses. Globally. #fd #saas #pe #privateequity

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Why Buying Your First Business is the hardest & Financing The Fear is Being seen as too risky by lenders and investors. The Solution: Prepare a solid business plan with detailed financial projections. Work with a financial advisor to enhance your credibility. Consider alternative financing options like SBA loans or seller financing.

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September is a crazy month for #climatetech #FOAK themed events. Some I'd like to shout out from the first half: ✅ A FOAK-themed dinner Tim Franklin-Hensler, Charlie Nelson, Dev Motiram, and I hosted, sponsored by Jordan Kellerman (Peachtree Group) and Robert Sarfatis (Polsinelli) during the inaugural #HoustonClimateWeek ✅ A FOAK panel at the Rice Alliance for Technology and Entrepreneurship's Energy Tech Venture Forum, also during HCW, moderated by Tim Franklin-Hensler with panelists Charlie Nelson, Laureen Meroueh, PhD, Mac Hatch, and Janice Tran. Topics included adapting rapidly to delays in timing, managing cost runovers, balancing the myriad of KPIs for FOAK, learning to be smarter about how to talk to customers, and how market uncertainty can dramatically affect FOAK projects ✅ A 4-hour "pilotathon" hosted by the Energy Tech Nexus, where different startups got to pitch their pilots. SUCH a good idea, Jason Ethier, Nada Ahmed, Juliana Garaizar, and the rest of the ETN team! ✅ A FOAK panel during Decarb Connect's TechInvest that I got to moderate with panelists Claude Vachet, Jeff Johnson, Francis O'Sullivan, and David Yeh. Topics included using corporate and DOE dollars in FOAK deals, encouraging communication between different investor classes, the 10,000 hours of experience needed to be a good developer, educating companies on project development, and the need for everyone across the climate universe to stretch their roles & take a bit more risk ✅ A generally FOAK-themed set of talks at Decarb TechInvest, expertly curated by Alex Cameron and her team, which included (among others): - a fascinating fireside chat with Rob Day and Matt Lucas moderated by Wim Reyntiens that touched on how critical it is to have accurate cost forecasting, how ROFRs can block additional access to capital, evaluating offtake risk beyond just the ideal, the folly of up rounds for the sake of up rounds, and why one shouldn't obsess over scale up factors and number of operating hours - a talk by Chris Creed that outlined the LPO's strategy around FOAK deployment loans - a FOAK success panel moderated by Kerri Fox that included Leah Ellis, Martin Keighley, and Shreya Dave, which talked about using a carbon price to incentivize corporate action, choosing the right cooperative FOAK partner, creating new offtake agreements in markets that haven't had traditional offtake (like cement<>concrete or CDR), and using job growth to incentivize growth vs. decarbonization. AND ⭐TOMORROW⭐ is the second annual Cleantech Day at Denver Startup Week hosted by Colorado Cleantech. I'm moderating a panel on FOAK successes in Colorado with Eric Davis, Johanna O., Carling Spelhaug, and Kimberly Purdy. Shoutout to Ken Carlson, Laura Hickernell, Joseph P., and Jack Fritzinger for their help & hard work. REGISTER BELOW!!

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Channeling everything through your corporation isn't just smart—it's your lifeline to financial success. Ready to set up your safety net? 🏢🛡️ Sign up for my next free webinar if you want to learn how to get the money you need for your business ➡️

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A well-rounded PE board has: • Finance know-how • Strategic skills • Execution chops • Human capital expertise ...around the same table. Same goes for a port-co leadership team. Gotta have these key ingredients. Great convo with Ryan Tansom on the Intentional Growth Podcast! #PrivateEquity #Board #Leadership #Talent

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