Luis Rodeguero

To find comparable multiples, I never forget the 𝘂𝗻𝗱𝗲𝗿𝗹𝘆𝗶𝗻𝗴 𝗮𝘀𝘀𝘂𝗺𝗽𝘁𝗶𝗼𝗻 𝘁𝗵𝗮𝘁 𝘁𝗵𝗲 𝗺𝘂𝗹𝘁𝗶𝗽𝗹𝗲𝘀 𝗼𝗳 𝗼𝘁𝗵𝗲𝗿 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗮𝗿𝗲 𝗰𝗼𝗿𝗿𝗲𝗰𝘁. That may not be always true. The multiple method assumes that "I can´t find a fair value, so I will copy the fair values of others". Most of the times, that is the best information we will ever have. My advice: 𝗳𝗶𝗻𝗱 𝗰𝗼𝗺𝗽𝗮𝗿𝗮𝗯𝗹𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝘁𝗵𝗮𝘁 𝘄𝗶𝗹𝗹 𝗯𝗲 𝗮𝗰𝗰𝗲𝗽𝘁𝗲𝗱 𝗯𝘆 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗮𝘀 𝗹𝗲𝗴𝗶𝘁 peers or references. Doing that, you will help to 𝗮𝗱𝗱 𝗿𝗲𝗹𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝘁𝗼 𝘆𝗼𝘂𝗿 𝘃𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻.

For me, 𝘁𝗵𝗲 𝗯𝗲𝘀𝘁 𝘁𝗼𝗼𝗹 𝗶𝘀 𝘁𝗵𝗲 𝗼𝗻𝗲 𝘆𝗼𝘂𝗿 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿 𝗯𝗲𝗹𝗶𝗲𝘃𝗲𝘀 𝗶𝗻. Particularly for startups, valuations are very imprecise and sensitive to assumptions. So, 𝘁𝗵𝗲 𝘃𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻 𝗶𝘀 𝗮 𝗿𝗲𝗳𝗲𝗿𝗲𝗻𝗰𝗲 𝗳𝗼𝗿 𝘁𝗵𝗲 𝗺𝗼𝗺𝗲𝗻𝘁 𝘁𝗵𝗲 𝗻𝗼𝗴𝗼𝘁𝗶𝗮𝘁𝗶𝗼𝗻𝘀 𝘀𝘁𝗮𝗿𝘁. The goal is to find some common ground to discuss. A good alignment of assumptions, criteria, and strategic alternatives for the company is a great way to start a relationship of transparency and trust with your investors. The best part of it all: it will be really useful in finding the 𝗿𝗶𝗴𝗵𝘁 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿 𝘁𝗼 𝗯𝗲 𝘆𝗼𝘂𝗿 𝗽𝗮𝗿𝘁𝗻𝗲𝗿 𝗶𝗻 𝘁𝗵𝗲 𝗷𝗼𝘂𝗿𝗻𝗲𝘆 !!

𝗧𝗵𝗲 𝗯𝗶𝗴𝗴𝗲𝗿 𝘁𝗵𝗲 𝗶𝗺𝗽𝗮𝗰𝘁 𝗶𝗻 𝘁𝗵𝗲 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀, 𝘁𝗵𝗲 𝗺𝗼𝗿𝗲 𝗵𝗶𝗴𝗵𝗹𝗶𝗴𝗵𝘁𝗲𝗱 𝘀𝗵𝗼𝘂𝗹𝗱 𝘁𝗵𝗲 𝗶𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻 𝗯𝗲. I like to make a list of the main decisions that management usually make, validate with the users, and propose a dashboard with all the main drivers. I particularly like to see all the information in one page, for a specific decision. We may have different one-page dashboards for each critical decision. 𝗜𝗺𝗮𝗴𝗶𝗻𝗲 𝗮 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗺𝗲𝗲𝘁𝗶𝗻𝗴, 𝘄𝗶𝘁𝗵 𝘀𝗼𝗺𝗲 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁 𝗱𝗲𝗰𝗶𝘀𝗶𝗼𝗻𝘀 𝗶𝗻 𝘁𝗵𝗲 𝗮𝗴𝗲𝗻𝗱𝗮. I would love to have one page taylored for each decision. The meeting would go smoothly through the pages, each decision being taken and documented.

𝗩𝗖𝘀 𝗯𝘂𝘆 𝗿𝗶𝘀𝗸! That is the nature of the business. Some of them will be mitigated or eliminated. Others will materialize, no matter what. That being said, VCs may be more or less active in helping their portfolio companies. I prefer an active and healthier model (for the LPs and for the relationship with investees), with a "Value Creation" approach where VCs work closer to the founders. While the core business is usually responsibility of the founders, VCs can help in a few areas. Corporate Governance is one of them, ensuring the company won't fall in some pitfalls as IP risks and disagreement between founders. Go to market is another area, especially in B2B models where VCs can really help with their relationships.

One thing I have learned: startups are volatile. They are usually quite different from what they were 6 months ago. You need to update and revisit your pipeline frequently. Keep interacting with your best candidates, observe the founders behaviour, monitor the company performance... ...and find the best time to make the investment. It is not easy, but no one said it would be! :)

Timing is fundamental for a VC strategy. Not only for exits, but for also investing, fundraising, seizing market opportunities. The exit strategy starts with the investment. One of the criteria is the potential exit opportunities. 𝗜𝗳 𝘁𝗵𝗲 𝗲𝘅𝗶𝘁 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆 𝗶𝘀 𝗻𝗼𝘁 𝗰𝗹𝗲𝗮𝗿 𝗳𝗿𝗼𝗺 𝘁𝗵𝗲 𝗯𝗲𝗴𝗶𝗻𝗻𝗶𝗻𝗴, 𝘁𝗵𝗲𝗻 𝘆𝗼𝘂 𝗽𝗿𝗼𝗯𝗮𝗯𝗹𝘆 𝘀𝗵𝗼𝘂𝗹𝗱𝗻'𝘁 𝗶𝗻𝘃𝗲𝘀𝘁 𝗶𝗻 𝘁𝗵𝗮𝘁 𝗰𝗼𝗺𝗽𝗮𝗻𝘆 !