We are happy to share this fast paced 30 minute interview with Peter Vekselman, who is based in Atlanta, USA and is a successful real estate investor with experience of 1000+ real estate deals across the USA. His real estate investing tips and coaching have helped dozens of real estate investors to achieve success in every possible market.
In this telecon/video, Peter shares his tips on how to avoid the wrong buying decisions, how to make the right buying decisions, and how to identify the best properties.
You can learn more about how to make successful real estate investments, in any market conditions, by visiting Peter’s website at: CoachingByPeter.com
Tags: real estate investing courses, real estate investing tips, real estate valuation
Prof. Stewart Friedman of the Wharton School shares his views on work-life balance, and how taking leadership and the associated risks and challenges, helps in bringing out the best in you. Its takes more self-discipline than you are probably exercising today. And it needs you to accept your assets and limitations better. Self improvement is a process, and that’s a learning.
In this post, we will answer 5 Questions on Venture Capital Investment, that we have seen from early stage companies seeking Venture Capital funding. The above video also expresses similar views.
Q1: How does Venture capital work?
Answer: Venture capital is the term used for unsecured equity funding by specialist investment firms (often focusing on a few sectors) in return for a part of the equity in the company being funded. Venture capital investments carry considerable risk because they are unsecured and it is estimates that only 1 in 10 early stage companies generates good profits.
Q2: How much equity stake do VCs usually take?
Answer: The most common equity stakes taken seem to be in the range of 20-50%, which ensure that if the company succeeds, then the VC makes a good return. Over 50% equity investment by any one VC is rare because the risk increases significantly.
Q3. What do a VC expect in return for the equity funding.
Answer: Because only a few ventures actually become profitable, a venture capital company looks for a high return (a compound return of 25% or more) on each plan, largely generated by growth in the share value of the invested company through increasing brand name and also increasing sales. Most VCs also seek a representation on the company’s board, though it is not a guarantee of producing success from the venture. A good VC would be a partner with the entrepreneur. So personal dynamics are very important. VCs help with raising additional money and financial strategy and also executive team strengthening.
Q4: How much time does it take to raise venture capital?
Answer: It takes about 6 months. Raising capital will take longer than you imagine. Plan for 6 months, and think beyond initial funding. Set realistic milestones, and keep planning for future capital. Learn from others, including other business owners and investors. If you are looking for funding, you have to be patient. For every VC who invests in your venture, there will be 10 VCs who would say no to you.
Q5: How should we approach the business plan writing?
Answer: When it comes business plans, you need a crisp 1-2 page executive summary and it must show a good story of what you want to achieve and what resources you have and what you are looking for. The more you precisely know your Haves and Have Nots, the better your business plan. So don’t get trapped in a 50 business plan that’s full of all kinds of data and it never completes itself.
A long business plan is not a good idea if the same message can be expressed in a couple of pages. Don’t confuse number of pages with clarity of thoughts. Go ahead with a business plan that’s brief and present a coherent logic that interests to the VC. Be honest on things you don’t know. Investors appreciate people who are transparent.
Genetically modified seeds can give higher farm yield but they come at a high price because the real cost of the seeds comes from the sustained dependency of the farmer on the seed company. In fact, for the control it gets on the farmers, the seed company could even give the seeds for free.
So the business strategy is very similar to how the printer companies like HP can actually afford to give the printers free, because the actual money comes from the printer cartridge sale.
The main difference is that seeds are much more important for a country’s economy, especially for a country like India with a large base of farmers who depend completely on agricultural income. It is also believed that most domestic seed companies in India are controlled or influenced by the multinational seed company.
A company like Monsanto is just doing its business. They have made investments in R&D and want profits like any other business. The solution lies in having more educated farmers who can make informed decisions about when to use Genetically Engineered/Modified Seeds and when to stick to organic seeds.
Warren Buffet doesn’t have to prove anything to anyone because his performance numbers speak for themselves. And that’s what makes it so interesting to hear him take Q&A: “The nastier the better”… as he says!
It’s a long video… if you are in a rush, here’s our summary of the various Q&A:
Q1. What do you look for in the people you like to work with?
WB: I like to work with people I like. I don’t look at their CVs or Grades to decide who can do what. In fact, I don’t even look if they have a degree. If you are working with people you don’t enjoy, please do yourself a favour, and leave the job and work with people you like. You’ll do better.
Q2. What kind of businesses do you like to invest in?
WB: I want to invest in businesses that are stable and where I can visualize it 10 years from now. Companies like Coke (soft drinks), Gillette (mens shaving blades) are examples of my investment choices. There are many others like GEICO (automotive insurance), Nebraska Furniture Mart (maximum sales from a single store location in the US), Iscar Metalworking Company (an industry leader in metal-cutting tools from Israel). I don’t have the understanding of technology-intensive business like software etc, and I stay away from them.
Q3. How do you do business valuation? How detailed is it?
WB: I like to invest in businesses where I have great comfort with the business owner. A paragraph is often sufficient to know the business value. The example being Nebraska Furniture Mart owned by Mrs. Rose Blumpkin, who recently turned 101 years, who has no formal education but has great common sense.
Q4. Tell us some of your bad decisions and what you learned from them?
WB: I invested in US Air though it was a difficult sector. Call it Temporary Insanity. I have learned that my bad decisions have happened when I had more cash than necessary. The airline industry is one step forward for mankind, a giant step backward for capitalism! And then there are other mistakes that conventional accounting does not capture, like the selling of 5% stake in Walt Disney (at $6m) within a year of buying it (at $4mn) in the 1960s. Today that stake is worth over a billion dollars.
Q5. Why not split the Berkshire Hathaway share to make it more affordable to investors?
WB: I think of my investors as a club or an audience in my presentation and we want long-term investors not traders. I don’t want high trading volumes for our shares. In fact, I will be happy with no trading at all. Our share price ($25k per share in recent times) has helped us maintain that seriousness and attract long-term investors.