The Deal Scout Josh Wilson

🚀 The Crowdfunding Galaxy: Exploring New Frontiers Fuzzy took us on an interstellar journey through the three major crowdfunding constellations:
Donation-Based Wonders: Think GoFundMe, where generosity knows no bounds, and backers support causes with no expectation of return.Reward-Based Systems: Kickstarter and Indiegogo are the stars here, where your support earns you a ticket to be the first to experience innovative products.Equity Universe: Where you, yes YOU, can claim a stake in the next big thing, with companies offering actual shares to their supporters.🌟 Navigating the Equity Space: The Tiers of Opportunity We zoomed in on equity crowdfunding, where Fuzzy illuminated the paths of Reg CF, Reg D, and Reg A – each a unique route for startups to attract investors and raise capital, from the grassroots $1,000 to the soaring heights of multimillion-dollar ventures.
💼 Venture Capitalists & Angel Investors: The Gatekeepers' Perspective Venture into the minds of VCs and angels, as we discussed the importance of a clean cap table and the sometimes-unfair stigma attached to crowdfunding. Fuzzy shared the secret to setting realistic goals and showcasing success to attract these celestial investors.
📈 The Startup Launchpad: More Than Just Money Crowdfunding isn't just about filling the coffers; it's a goldmine of data, a crucible to refine your marketing, and a proving ground for your business model. We talked about how to leverage this platform to rocket your startup to the next level before you even think about knocking on a VC's door.
🤝 Managing a Universe of Investors: The Art of Organization As our conversation neared the event horizon, Fuzzy offered sage advice on managing a galaxy of individual investors. He shared strategies like creating a Special Purpose Vehicle (SPV) and employing transfer agents to keep your investor universe in perfect harmony.
🔗 Join the Crowdfunding Constellation Fuzzy's invitation to connect is as open as the cosmos. Visit pre-ipo-hype.com for a universe of educational content, podcasts, and a community that's as passionate about crowdfunding as we are.

https://www.preipohype.com/
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🎸 From Rocker to Rainmaker: Mr. Fuzzy's Journey In our latest episode, I had the pleasure of welcoming back the legendary Mr. Fuzzy. He's not just a maestro of melodies but also a virtuoso in the crowdfunding arena. We jammed about his wild days in a rock band, complete with a mohawk adorned with feathers, and how he transitioned to orchestrating successful crowdfunding campaigns.
🚀 Crowdfunding: The New Frontier for Startups We dove deep into the challenges of the early days of equity crowdfunding, the impact of the JOBS Act, and the delicate dance between creative marketing and regulatory compliance. Mr. Fuzzy shared his playbook on how to make your company irresistible to investors and the importance of a compelling narrative.
💡 Keeping It Clean: The Cap Table Conundrum Ever heard of a safe note or an SPV? Mr. Fuzzy breaks down these crucial tools to keep your capitalization table pristine, ensuring you're ready for the big leagues when venture capitalists come knocking.
🤔 Valuation Vexations: Setting the Right Price Determining your company's worth can be as tricky as hitting a high note. Mr. Fuzzy and I discussed the golden bear syndrome and the importance of being honest with yourself when setting your valuation.
👥 Crowdfunding: Not Just for Startups Anymore We also explored how mature companies are now using crowdfunding as a strategic move to provide liquidity or clean up their cap table. It's not just for garage bands anymore!
So, are you ready to turn up the volume on your crowdfunding knowledge? Tune in to "The Deal Scout" podcast for all this and more. Let's hit the play button on success together!

https://www.preipohype.com/
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Navigating the Exit: A Guide for E-commerce Entrepreneurs In this post, I'll share the valuable insights from our discussion, focusing on how e-commerce founders can prepare their businesses for a successful sale.
The Art of Building to Sell
Jason joined me on the show to shed light on a unique approach to exiting e-commerce businesses. Unlike traditional banking methods that focus primarily on the transaction, Jason's firm takes a hands-on approach to help founders build their companies into irresistible acquisition targets. This strategy is not just about selling; it's about crafting a business that stands out in the marketplace.

Understanding Valuation and KPIs
One of the key takeaways from our conversation was the importance of understanding valuation and key performance indicators (KPIs). For e-commerce founders looking to work with Jason's firm, it's crucial to have a grasp on these concepts. Valuation is not just a number; it's a reflection of your company's health and potential. KPIs, on the other hand, are the vital signs that keep you informed about the state of your business.
Jason emphasized that before considering an exit, founders should meticulously analyze their financials, customer acquisition costs, lifetime value, and other metrics that impact valuation. By doing so, they can identify areas of improvement and increase their company's worth.

The Shift in E-commerce: 
Another interesting point Jason brought up was the evolution of the e-commerce market. There was a time when the industry was in a "party era," where growth at any cost was the mantra. However, we're now entering a more profitability-focused era. This shift means that investors and acquirers are looking for sustainable, profitable businesses rather than just those with skyrocketing sales.
For founders, this change in the market landscape means that it's more important than ever to focus on building a solid, profit-generating business model. The days of burning cash for growth are dwindling, and the businesses that will attract attention are those with strong fundamentals and a clear path to profitability.

Final Thoughts


Exiting a business is a significant milestone for any entrepreneur. It's the culmination of hard work, dedication, and strategic planning. My conversation with Jason highlighted the importance of building a business with the end in mind. By focusing on valuation, KPIs, and profitability, e-commerce founders can set themselves up for an exit that rewards them for their efforts.
I hope this post has provided you with a clearer understanding of the exit process and what it takes to make your e-commerce business an attractive acquisition target. 
Stay tuned for more insights and discussions from the front lines of e-commerce, and as always, keep innovating and pushing the boundaries of what's possible.


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The Art of Selling a Digital Marketing Agency: Insights from an Expert

Our conversation was a deep dive into the process of selling a digital marketing agency, and I'm excited to share the wealth of knowledge Todd imparted during our discussion.

Understanding the Transaction Landscape


Todd began by shedding light on a common misconception about selling a business. Many assume it's an exit strategy, but Todd clarified that for most sellers, it's an evolution and acceleration of their business. He pointed out that the typical clients in these transactions are digital marketing agencies with a net profit ranging from $1 million to $5 million of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

Who's Buying?


The buyers, Todd explained, are often private equity firms or companies that are backed by private equity. This is a crucial piece of the puzzle because these buyers are not just looking for a quick purchase; they're looking for a business they can grow into something much larger.

The Deal Structure


One of the most eye-opening aspects of our conversation was the financial structure of these deals. Sellers usually receive a significant cash payout, which is about 50 to 70% of the deal's value. But that's not all—they also retain equity in the larger, combined company. Todd emphasized that the goal is for the 'second bite'—the value of the remaining equity—to be larger than the initial cash payout.

A Real-World Example


Todd provided a tangible example of a company that sold for $8 million while retaining a 40% stake. Over time, as the company's EBITDA doubled to $16 million, the value of that retained equity soared, making the sellers' stake in the larger entity even more lucrative.

Life After the Sale


A key question I posed to Todd was about the post-sale life for sellers. Do they need to show up every day? Do they have a new boss? Todd's response was enlightening. While sellers do have targets to meet, they essentially work for themselves if they hit those numbers. However, if they miss their targets, they find themselves working for the buyers. This dynamic creates a balance between independence and accountability.

The Importance of EBITDA and Growth


Throughout our conversation, Todd reiterated the importance of EBITDA, recurring revenue, and client retention. He also mentioned that even businesses with narrower offerings could find opportunities for transactions. It's clear that a strong financial foundation and potential for growth are key attractors for buyers.

Seeking Advice and Making Connections


As we wrapped up our discussion, Todd offered advice for companies in the digital marketing space considering a transaction. He stressed the need for a solid understanding of EBITDA and the benefits of recurring revenue and retention. For those interested in exploring potential deals, Todd extended an invitation to connect with him through LinkedIn or his Second Bite Podcast.


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🚀 The Capital Raising Journey We all know that the startup path is an exhilarating one, but let's face it, it can also be quite daunting, especially when it comes to funding. Christopher, with his wealth of experience since 2004 in the financial industry, shed light on why having a Regulation Crowdfunding (Reg CF) exemption is a game-changer for startups. It's not just about having funds; it's about being ready to seize opportunities at a moment's notice.
💡 Why Reg CF? Imagine having the ability to tap into a diverse pool of investors, turning customers into passionate brand ambassadors who don't just love your product but believe in your vision. That's the power of Reg CF. It's efficient, cost-effective, and positions you for the highest success in raising capital. Remember, the worst time to raise capital is when you desperately need it.
🌐 ChainRaise: A Platform Like No Other ChainRaise isn't your average crowdfunding platform. It's tailored for the gen tech ecosystem, including tokens, NFTs, blockchain, and crypto. What sets it apart? A focus on aligning issuers with investors who share similar interests, comprehensive support for filing, structuring, and marketing offerings, and solid banking partnerships.
🤝 Connect with the Future Curious to learn more about ChainRaise or connect with Christopher? Head over to chainraise.io or find him on LinkedIn. Trust me, it's a connection that could shape the future of your venture.
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The Evolution of Modiv Industrial: Insights from CEO Aaron
Our conversation was a deep dive into the company's journey, its investment philosophy, and Aaron's personal commitment to transparency and continuous improvement.
Aaron recounted the company's origins as a real estate crowdfunding company known as Rich Uncles and its transformation into Modiv Industrial. This evolution was not just a rebranding exercise but a fundamental change in focus towards industrial manufacturing. 

Navigating Public Market Challenges


Going public is a monumental step for any company, and Modiv Industrial was no exception. Aaron was candid about the initial spike and then stock price dip and the market fluctuations that followed. He emphasized the importance of long-term investment and his dedication to fighting for the company's growth and value. This resilience is a crucial lesson for any investor or entrepreneur facing the volatile tides of the stock market.

Learning from Mistakes: The Earnings Report Revelation


One of the most enlightening parts of our conversation was Aaron's discussion of the latest earnings report. He openly shared a mistake made in a property investment and the lessons learned from it. This level of transparency is rare and invaluable, as it provides a real-world example of how setbacks can be turned into learning opportunities to refine future decisions.

The Art of "Calf Kicks" in Investing


During our talk, Aaron and I explored the concept of "calf kicks" in investing—a metaphor for the strategic, persistent efforts needed to overcome challenges. Aaron's insights into the company's unique investment strategies and his role as a CEO with skin in the game were particularly enlightening. It's a reminder that leadership involves both personal investment and a strategic mindset.

Aligning Interests with Shareholders


Aaron's commitment to aligning his interests with those of the shareholders is a cornerstone of his leadership philosophy. He consistently buys shares and invests his own money in the company, demonstrating a dedication to the success of Modiv Industrial. 

A Non-Linear Path to Public CEO


Aaron's journey to becoming the CEO of a publicly traded company was anything but linear. He shared his experiences across different sectors of the real estate industry, from working at a real estate office to joining a prominent investment firm. His diverse roles in client work, modeling, business development, and product development have all contributed to his broad expertise and leadership style.

As we wrapped up, Aaron invited listeners to connect with Modiv Industrial and emphasized the company's genuine and folksy style.

Conclusion: The Value of Transparency and Connection


I am grateful for Aaron's transparency and the insights he shared about his career journey and Modiv Industrial's approach to business. It's a reminder of the value of connecting with guests and expressing gratitude for their time. 
Thank you for joining me on this exploration of Modiv Industrial's evolution and the investment wisdom of its CEO, Aaron. Stay tuned for more insights and stories from the front lines of industry and investment.
Connect with Aaron here - https://www.linkedin.com/in/aaron-halfacre/
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