Juan Higueros

Very similar and a complement to Independent Sponsor led transactions targeting $15 million to $100 million plus EV, search fund deals target acquiring companies for around $15 million EV, priced at approximately seven (7x) times EBITDA or less. Over the years, companies tracked by Stanford have shown annualized equity returns exceeding 30%! The target universe for search funds and Independent Sponsors is substantial, with nearly 200,000 businesses valued between $10 million and $100 million, according to NAICS Association data. Search funds often seek out companies with retiring family founders looking for liquidity. Middle and lower-middle market financial sponsors generally avoid targeting companies worth $15 million due to high overhead costs and the need to deploy significant amounts of capital. However, for individual entrepreneurs, these micro-sized deals are not only accessible but also offer attractive bargains. This has led to the emergence of specialized search PE funds alongside Independent Sponsor transactions. Great article by the FT. #privatecapital #privatemarkets #privateequity #buyouts #growthequity #independentsponsor #searchfund #middlemarket #smallbuyout #sme #institutionalinvestor #alpha #moic #irr #privatecredit #privatedebt #familybusiness #founderowned #fT

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How to value a seed stage company? Who knows...(Well, Jack McQuire does but I had to fill in for him at the last minute for last week's Valuation Masterclass.) Here's a slide I prepared highlighting some of the recent seed rounds we have led and supported. Two surefire valuation methods: comparables (i.e. numerous rational references to companies similar to you) and the market (i.e. pitch as many investors as you can and see where they land). I have seen valuations double simply as a result of well-managed competitive processes. Governance, Terms, and War Stories sessions coming up. Register here: https://lnkd.in/ghJJpdR4

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Last month, Uncork Capital celebrated its 20th anniversary with a jubilant gathering attended by 420 guests, marking two decades of success in the venture capital realm. Over the years, the firm, alongside industry peers like First Round Capital and Felicis, has witnessed remarkable growth, now managing billions of dollars in assets. This expansion reflects the flourishing landscape of venture capital, with the industry experiencing exponential growth in investment. Moreover, positive shifts in VC norms, such as the evolving attitudes towards board seats, underscore a commitment to providing tailored support to startups, enhancing their growth prospects. Amidst discussions surrounding sectors like AI, optimism prevails, emphasizing a steadfast dedication to investing in innovative ventures with lasting impact. Read More Here: https://lnkd.in/efN6-Spd Branded Hospitality Ventures Jeff Clavier Susan Liu Ashley Cravens Tripp Jones Sarah Du Andy McLoughlin Amy Saper #innovation #technology #management #venturecapital #startup

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Too many small and mid-sized businesses struggle with capital constraints out of fear and misunderstanding. Sourcing the capital required to remove those constraints is key to unlocking the value creation potential of these companies. https://lnkd.in/gRYTKEmN #smallbusiness #businesstransformation

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Boards of Directors – How Relevant To The Business Is The Board? In 2014, activist investor Starboard Value successfully replaced all 12 directors on the board of Darden Restaurants. The following shows the Darden incumbent board at the time of Starboard's proxy fight, Starboard’s value creation plan initiatives, the Starboard director nominees and the before and after performance (revenue, EBITDA, EBITDA margin and stock price). Note especially the direct relevance of each Starboard nominee to the industry or some aspect of the value creation plan. How often do you see this level of relevance on public company boards?

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🚀 New Episode Alert: Investor Connect with Gary Forni, Chairman of CTAN 🚀 Join host Hall T. Martin for an insightful conversation with Gary Forni, the visionary Chairman of the Central Texas Angel Network (CTAN). With a storied career in technology and venture capital, Gary has been instrumental in shaping the startup ecosystem in Central Texas. 📅 Listen now: https://ow.ly/Po6Q50RBUJt 🔹 What to Expect: Gary's journey from Intel Corp to leading one of the most active angel groups in the U.S. An inside look at CTAN's investment strategy and how they're nurturing the next wave of disruptive tech startups. Expert advice on overcoming challenges in angel investing and adapting to economic changes. 📈 Under Gary's leadership, CTAN has invested over $129 million in 215 companies, driving innovation and economic growth. Learn how this network supports entrepreneurs with capital, mentoring, and more. 🎧 Tune in to "Investor Connect" for more expert insights into the investment landscape. Don’t miss it! #InvestorConnect #AngelInvesting #Startups #Innovation

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Great analysis by the AGC team on SaaS public company comps. It's worth a look as we recalibrate mid-way through earnings season. The analysis aligns with the broader Nasdaq equity performance, where the Mag 7 (or fab 4 now :-)) have shown more resilience than the rest of the market. #AGC #SaaS #EarningsSeason #Nasdaq #EquityPerformance

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Among the many inefficiencies weighing on the heavy construction sector, equipment maintenance management is one of the more costly, particularly for heavy equipment dealers who bear the primary responsibility for managing the maintenance of the equipment they sell. We are pleased to have Digital Iron join C2V's portfolio. Ditial Iron seamlessly integrates machinery manuals, CRM data, and customer ERP systems to create a centralized source of equipment specifications, maintenance parameters, and field usage data and provides a natural language interface for researching these issues (the gen AI piece). Once dealers have established the cause of each issue, Digital Iron will automatically check dealer inventory and third-party suppliers for availability, lead time, and price of the necessary parts. This information can then be instantly shared with customers for approval and immediate order of needed parts. In addition to saving hours (often days) identifying and sourcing replacement parts, Digital Iron’s AI models also compare equipment usage information to manufacturer useful life/replacement recommendations for each component and prompt dealers to proactively suggest parts replacements to customers, allowing them to monetize all of the additional (and substantial) post-sale revenue for each piece of equipment they sell. https://lnkd.in/e2QJeQut #ai #construction #investing

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At Selva Ventures we operate a highly concentrated strategy Each fund invests in 10 to 15 companies (for reference, the average seed / series A venture firm invests in 25+ and some upwards of 50) Our largest positions represent 10-15% of a fund This strategy is a key foundation of our firm, for a few key reasons: 1. Diminishing marginal conviction Investing in 10 to 15 companies per fund means 2 to 4 investments per year This creates an incredibly high bar for conviction, which we think is a good thing We believe that a fund making 3 to 4 times as many investments can’t maintain that conviction threshold. By the way, they might not need to; if they’re hunting for a 500x, their best bet might be maximizing shots on goal But in our experience, beyond the 4th or 5th investment in a given year you start to see declining conviction in the marginal ideas And we think generating high conviction is key to our purpose and service offering 2. Attention per portfolio company We genuinely aspire to provide our companies with an unfair advantage We have no delusions of grandeur in the value we provide, but we listen to what they need help with and invest in capabilities to solve their problems We’re only capable of identifying and providing that value if our portfolio is a manageable size — when a fund invests in 50+ companies I do not know how they can fulfill that promise… 3. Size our winners to matter The worst thing you can do in venture or growth is be right in a big way, but not size your bet large enough to matter Nearly all of the best performing funds have at least one fund returning company Our space (consumer facing wellness companies) has much fewer 50x opportunities, so if you land a 10-20x you need it to return your fund (so the bet must be 5-10% of the fund) 4. More proof means fewer losses While we have smaller winners, we have the benefit of more proof at the time of investment In tech, a seed stage co hasn’t launched and a series A co is barely in market In consumer products at that stage, we have a clear sense of customer reception, repeat purchase, margin structure and growth With that data, we should have a much higher batting average, and therefore a lower loss ratio and the opportunity to take fewer swings 5. Our investors want outperformance To do right by our customers (our LPs) we need to consider what they are looking for from us They are taking meaningful risk in stage and illiquidity, and for it they want higher return potential Diversification is ultimately the enemy of outperformance — by definition it’s reversion to the mean Our savviest LPs have told us: “we’re already diversified, we want to be invested in your best ideas”

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Public and private SaaS company revenue multiples remained steady in Q1 2024 at 8.5x and 7.2x, respectively. The trend towards stabilization started in Q4 2022 after the go-go days of 2021 and early 2022—and we believe steadiness is here to stay. Read more in our latest #SaaSMeter report: https://okt.to/A7jaXC

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Red eye flights are cool, three learnings from the VC Platform Global Summit, and a special curtain call. I had the opportunity to spend the last few days with 500+ #VCPlatform professionals from around the globe. Sandwiched between my son’s basketball tournament (GO GOLD!), a red-eye to Miami, and my daughter’s 4th grade play, the VC Platform Global Community Annual Summit is an event I look forward to every single year. The growth of this community is something that is so special to have witnessed since I joined in 2017. We’ve gone from a small handful of people in a single conference room to a multi-track event touching all aspects of Platform. I walk away feeling as though I learn as much as I share. And while these lessons aren’t specifically Platform specific, they are things that I walked away with in order to be a better manager (and human being)! Here are some of the highlights: ❤️ Lesson 1: Take a moment to be empathetic: Up until this very moment, everybody has a unique journey to where they are in life. No two people see things the exact same way. This fact impacts how they perceive everything in front of them. What is logical to you could be unfathomable to someone else. Take a moment to try to understand what could be unfathomable to you, but is a valid and very real perspective for them. This is applicable in both my professional and personal lives. (A million thanks Julie for helping me remember this.) 🤫 Lesson 2: Thriving as an introvert: In what is seemingly an industry built for extroverts, finding your own way to thrive is nobody’s job but your own. Unbeknownst to me, Dominic and I have taken similar approaches to finding ways to thrive by applying data to our work. What I do with Scale Studio and Go-to-Market scaling, he does with Talent. (Introverts Unite!) 🤝 Lesson 3: Genuine relationships matter: It’s really easy to scan a QR code and connect with someone on LinkedIn, but those aren’t the relationships that truly matter. Sharing the struggle of being a parent, tips on visiting Disney, and talking about a shared passion for fitness are what makes us who we are and open up the doors to build trust and openness in a professional context. Creating these genuine relationships, and continually working on them, have helped me create the network that I come to rely on everyday. (Thanks to my dinner mates Allen, Huff, Stephen, Saydeah, Carolina, Julie, Jindra) Special thanks to the rest of the board at VC Platform (Joshua, Keji, Annie, Cory, Arabella, Brianna, Casey, Cliff, Elyse, Erica, Samantha) for putting this amazing event together. And yes, I made it back for the performance.

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Join us tomorrow for a panel discussion on the complex relationship many FirstGens have to money and how that affects founders, investors, operators and others. See you tomorrow! https://lu.ma/9rixyzgs

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The SomosVC 2023 Annual Report is out! Key findings of the report include: 👉 79% of venture funds over $100 in AUM have no Latino/a investment professionals at all. 👉 Latino/a's represent only 1.6% of all investment professionals at funds over $100M in AUM 💪 Latino/a led firms are more likely to invest in diverse founders - 48% of portfolio company founders identify as underrepresented people of color. 💪 Latino/a-led firms in the SomosVC community have played a pivotal role in job creation, with investments leading to an estimated 51,612 new jobs. Learn more about the report in this Axios piece! https://lnkd.in/e4d58sNd

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I recently had the pleasure of speaking with and learning from several software execs from our portfolio companies and industry experts during Thoma Bravo's AI Summit in Miami. It was great to share our insights into trends and practices we see in our portfolio and how we manage opportunities and risks. At TB, we have a long history of guiding enterprise software companies through digital transformation, and we’re already navigating the transition driven by generative AI. Our focus is on managing this new innovation by absorbing the technology to bring meaningful benefits to our portfolio companies and indirectly to their customers. And it’s evolving fast! We see our portfolio companies today using gen AI in generally three ways: first, to create new products and provide customers with incremental use cases. Second, to defend against cyber attacks that have become much more sophisticated by bad actors. And third, as an enabler of talent to make business operations run more efficient and productive. In our view, AI presents a significant growth opportunity, but we also believe that to really maximize that potential, companies should carefully evaluate the risks and be thoughtful about governance, trust, security and data privacy. AI is poised to accelerate innovation and it’s hard to predict the full, transformative potential of AI, but we are confident that some of the advantages of incumbent knowledge and data will be key to unlocking its value.

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As an economist, I obsess (probably a little too much) about profit, cash flow, and IRR. It's one thing to see gains in paper valuations, but those are just a proxy. Sure investors will vary in their preferences for liquidity, duration etc. but in the end they all require the same thing -- realized returns. There are a ton of companies in limbo right now where they can't quite exit nor are they in a position to generate a dividend. For investors, this is a tough spot to be in, and even more so when it's a systemic trend affecting their whole portfolio rather than a one-off.

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This week Mikal Ventures brings you a 4-week breakdown of the non-US capital market with an emphasis on the Mikal verticals. Over the 4-week period ending May 29, a total of 1,545 new companies were added, with 101,688 companies included in the non-US Health Tech, Med Tech, Fin Tech, AI Tech, and Ed Tech verticals. The non-US AI Tech saw the greatest percentage growth in new companies for the period, weighing in at a notable 27%, nearly two times the overall vertical average of 15%. The non-US Heath Tech vertical led the group in transactions. Non-US Med Tech vertical lead in both SEC Filings and news articles. Mikal Ventures publishes these stats on a rolling 4-week basis to provide a perspective on how the verticals and new startups move through time. We hope you find them informative and thought-provoking. VC Investors are always adjusting their "Play Book" with a variety of options for investing. Mikal Ventures is one of those alternatives, offering curated solutions to real world problems. Reach out if you have questions on how we can be of assistance and bookmark https://mikalventures.com/ for additional insights and information.

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According to the latest report from Rock Health, digital health funding in Q1 2024 totaled $2.7B across 133 deals, with an average deal size of $20.6M. It doesn’t break out device-related investments, but most medtech founders I meet these days are being forced to chase tiny rounds made up of endless little checks, consuming valuable energy and slowing their progress. The benign neglect of this next generation of diagnostic and therapeutic devices is counterproductive and surprising. Given the crowded virtual care market, for example, I’d expect more such companies would be exploring medtech partnerships, investments or acquisitions that'd enable them to back integrate into delivering sharper, and more differentiated, care and treatment. This is exactly what Maverix Medical is doing from the other direction: Reshaping the entire spectrum of lung cancer care by integrating more advanced + effective approaches to screening and diagnosis, treatment and therapeutics, and even palliative care…And putting it all to work through an innovative provider network. One notable investor exception is Y Combinator partner Surbhi Sarna who’s been backing great teams like Selera Medical (YC W24) doing foundational work on ambitious medical devices. Without more support from investors like her, we’re going to increasingly find ourselves stuck with the incremental portfolio improvements from the incumbents, and that’s just not nearly enough.

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https://lnkd.in/e-Cc-PhA Just wrapped up a case study highlighting some successful value creation work for a vertical software company. After a funding event, it can be tough for management teams to align on which initiatives to tackle first. Here are a few tips from my experience: 📈 Prioritize Compounding Benefits Start with initiatives that enable or build capabilities. These early projects are not the most glamorous. The long term value is the momentum they create and tone they set. They pave the way for bigger wins down the line. 🚧 Address Bottlenecks We identified and fixed a major technical bottleneck in the sales funnel. This gave us an immediate boost to revenue and win rates. The less obvious win was a finding that our marketing efforts were more effective than we thought. Many opportunities fitting the ideal customer profiles were getting stuck at the bottleneck! ✴ Find the Triple Word Score Initiatives Focus on initiatives that add value across multiple valuation categories like revenue, margins, and multiple expansion. My favorites are those that improve operating leverage and scalable unit economics. Operating leverage improves as each dollar of increased revenue earns a little more Operating Margin (EBITDA) over time. In the case study, I renegotiated two of the largest variable cost supplier contracts, leading to immediate improvements in unit contribution margins and setting the stage for increasing margins as revenue grew. This is a valuable function of a durable business model. Most teams agree on what needs to be done, but not always on the order. Choose initiatives that start building a solid foundation for future investments or the Quick Wins with high impact. A few good articles that touch on the technical concepts.. Healthtech: Show Your Magic | Andreessen Horowitz  https://lnkd.in/eGkDnkiG The Gross Margin Problem - Bottom Up by David Sacks https://lnkd.in/e9J2Eqaa

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While not always true, but mostly true. Capital formation at scale can drive major shifts in industry. We are seeing it with VC and AI. We have seen it with PE and AEC. What I am starting to see is capital formation to truly disrupt the AEC. Why? Massive Market Slow adoption/digital transformation. Outdated business practices that may or may not align with the clients goals. It is a bit of a perfect storm. You can bet against capital allocators. But the forcing function of large amounts of capital entering any market will have a resounding effect. Stay tuned…

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