Alternative Investments

The Problem With Investing In Super Deep High Tech

Gregory Pearl

Technology continues to move forward and what was once leading edge often becomes ordinary. For instance, technology advancements such as high-resolution portable screens and even websites were once leading-edge and risky.  Many made boatloads of money from investing in these technologies at the earliest stage, most of these investors did not. That is why it is sometimes called ‘the bleeding edge” of investing. Now, so-called “deep tech” involves reusable space rockets, cryptocurrency, next-gen solar cells, many biotech applications, artificial intelligence  (AI), and so on. Some of the efforts in these areas could be phenomenally successful, most will not. But the…

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Alternative Investments, Culture and Ethics, Decision Making

Venture Capital and Avoiding Human Bias

Gregory Pearl

Here are some thoughts on Venture Capital or early-stage investing. As readers of my blogs know, Alteris LLC has had professional Venture Capital firms as clients. We have acted as business valuators, but also in the role of “operating partners” to some of these firms. This situation has allowed us to observe best-practices in these early-stage investment firms. Venture Capital and other types of investing is a competitive and often brutal activity. In a typical VC fund, a small number of investments typically account for a large portion of returns. The simple fact is that the majority of investments do…

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Alternative Investments, Culture and Ethics, Decision Making

Three Deadly Sins of Startups

Gregory Pearl

If you have been around the venture capital industry for a while, you will know the “three deadly sins” VCs look to avoid in a potential new early-stage investment. Standard questions VCs ask entrepreneurs often focus on these. You hear this over and over from investment partners at these firms. I’ve worked extensively with an international venture network, and sure enough – it is a focus. Here are the three: 1) The founder (me!) must be the boss, always and forever 2) Too many products, no focus 3) Not enough capital Smart founders know these are hot issues for VC…

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Decision Making

Survivor Bias is Everywhere

Gregory Pearl

Survivorship Bias is one of the most deceptive and common traps in decision making. It’s normal to examine the life stories of very successful people.  Not only is it interesting by itself, but maybe we think that there is something to learn about success from them. If they are successful, maybe we can imitate them? The concept of survivorship bias is easy to understand but maybe not intuitive.  Still, when a person does understand, it seems to be almost everywhere. That’s because it is. There are so many examples. It’s very common in advertising. Weight loss programs and diets feature…

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Decision Making, Exit Planning

Can Your Strategy Survive a Meeting with Reality?

Gregory Pearl

Everyone wants to avoid making major strategic mistakes. The problem is that the world is complex and most decision-making models and strategies are based on simple tools and processes. It is difficult to foresee and plan for all the factors that might impact a positive outcome. Therefore, you need to find the weak points in your strategies before the strategy is implemented. This can only be accomplished by applying a rigorous process to your strategic decision making and following it ruthlessly. Seeing where a strategy can go wrong ahead of time means you can take actions to prevent those bad…

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Buying & Selling a Company, Exit Planning

Selling A Troubled Company

Gregory Pearl

To start, let’s see if your Company actually is ‘troubled’. Of course, there many different types of ‘troubled’.  And some are in more difficulty than others. But you will know it when you see it.  Here are some of the characteristics to look out for: Declining earnings or negative earnings Negative book value Rapidly running out of cash Default on bank loans Inability to meet debt obligations Just knowing that a company is in trouble can decrease the time needed to sell the company by addressing the issues that a buyer will be concerned with. Sellers of healthy companies try…

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Buying & Selling a Company

Mind the Gap: Closing The Price Difference Between Buyers and Sellers

Gregory Pearl

In an acquisition situation, there almost always is a price expectation difference between the buyer and the seller. The most important factor in closing that gap is whether the buyer and seller really want to do a deal. And also how much their advisers help to accomplish this. Here are some ideas on how to close the gap through deal structure. A subsidiary is created for the fastest-growing part of the business, in which the buyer/seller share 50/50 in the best-performing part of the business. The next generation of sellers could take back 10% of the transaction in preferred stock.…

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