NY Roundtable Recap: Growth Capital and Exits in Digital Media

In partnership with Fox Rothschild, Attorneys at Law, FastPay hosted a NY roundtable discussion with managing directors from KPMG Investment Banking Group, Eastward Capital, and Quake Capital Partners.

The panel discussion was centered around Growth Capital and Exits in the Digital Media Space and included CEO and Co-Founder, Anne Kavanagh, of Steereo, who just completed her first-round equity raise.

Together, the panel navigated the challenges that go along with raising capital, managing a debt stack, and selling a company.

Below are some highlights and thoughts from the panel:

Raising Capital

The panel emphasized the importance of evaluating your needs when choosing capital. Amy Coveny, Managing Partner at Quake Capital, expressed the idea that founders should only take VC money if their business model is repeatable and ready for scale. She also explained how important it is that founders do their diligence on their investors. Referrals from past companies that have been both successful and unsuccessful are equally important.  

Chris Bodnar, investment partner from Eastward, highlighted how many financing options are available to companies today. He explained that this is a relatively new phenomenon and founders should take advantage of these new resources. Chris also highlighted the effectiveness of receivable financing as a resource far cheaper than dilution.

Conclusions:

  • Don’t give away equity if you have a strong balance sheet. Debt is always cheaper.
  • If you need to scale and grow quickly, identify investors who will give you more than just a check. You should expect your equity partners to add value!
  • Choose investors who work with companies you could partner with.

Managing Debt Stacks

In this segment the panel touched on the importance of good communication between capital partners of a company. Chris Bodnar shared his experiences on effective pairings between receivable and term lenders. He explained how pairing facilities like this can be beneficial for all parties involved, and bring down the overall blended cost of capital. Chris encouraged founders to facilitate meetings between their different capital partners in the mutual interest of seeing the company succeed.

The panel also agreed on the importance of not over-borrowing, maintaining a clean cap table, and maximizing runway.

Conclusions:

  • You can effectively pair a receivable lender and term lender through good communication! This will ultimately bring down your blended cost of capital and help the company remain liquid.
  • Be careful when raising money, don’t over borrow. Receivable financing is a great way to avoid a messy cap table and streamline operations.
  • Be careful of traps! Higher valuation offers may seem more attractive on the surface but often have caveats that make them more expensive in the long run.

Exit Strategies  

In the final segment, the group turned their attention towards exit strategies. Roddy Moon of KPMG stressed how important it was for companies, looking to exit, to hit their KPIs. He explained that missing projections in the quarters leading up to a sale can have a drastic impact on valuations and that CEOs should be mindful of this when beginning exit negotiations. Roddy also went on to say that founders should not try to time the market on an exit, but evaluate based on company specific conditions. Roddy finished with an overview of the M&A landscape, adding that the market continues to remain robust headed into 2019. The panel agreed founders should speak with multiple firms before picking an advisor to guide their exit.  

Conclusions:

  • Pay attention to how much capital you’ve raised.
  • Hit your numbers. Don’t miss your KPIs when looking to exit.
  • Don’t try to time the market on an exit.
  • M&A markets remain robust. Hire the right advisors, do your diligence and speak with multiple options before picking an investment bank. Smaller boutique firms may be less flashy but offer good value!

Thank you again to everyone who participated in the New York FastPay Roundtable!

LA Roundtable Recap: Debt vs Equity

Debt vs Equity Roundtable

 

On November 15th, FastPay hosted a panel on the topic of Debt vs Equity, moderated by FastPay’s own, David Bensimon. In partnership with Gunderson Dettmer, the panel featured four industry experts, and the room was filled with thought leaders looking to gain insights on how to grow their companies and network with peers over breakfast. Below is a quick summary of the event:

Debt vs Equity Highlights

  • Take debt when you can
  • Raise equity – two schools of thought:
    1. Be careful not to raise too much too quickly
    2. Raise money now, because you don’t know when the bubble is going to burst

Debt vs Equity Roundtable

Debt for working capital. Equity for growth.

Lori Murphree, of Diamond Capital Advisors, shared that “debt is cheaper at the end of the day, most people don’t realize that. If you’re going to sell your company for hundreds of millions of dollars, do the math!” She also mentioned, “you always want an AR lender that you can use for working capital. If you are going to raise equity, try to raise some debt to go with it.”

17 percent of $100MM > 100 percent of $1MM

There are things to be careful of when taking on Venture Capital, including being aware of how much ownership of your company you are willing to give up. Laurent Grill, of Luma Launch, said if you partner with the right VC and have a good growth plan, the goal of taking on VC money is to grow rapidly. As long as you don’t mind giving up control, “17 percent of a hundred million dollar company is better than 100 percent of a million dollar company.”

Venture funds -> Revenue growth

Matthew Levin, founder of automotive publishing company Donut Media, suggested, “have a plan in place before taking on investment… [As a content company] we have faced the unique challenge of balancing both growing our audience and financing the business.” He advised founders to think about: “the right time to take on equity and how that equity returns audience size that will ultimately turn into revenue.”

Tips to raise money

Founders should be networking with potential investors months before they are actually looking for funding. Dulari Amin, of Synergy Ventures, gave insights on what founders should do. “Talk to your mentors, professors, your army, anyone who has good connections and can bolster your credibility factor and get you in the door with a known VC in town. They can help introduce you to potential investors.”

Stay tuned for more tips from FastPay!

NY Roundtable: M&A Process

In the last couple of years, M&A for digital media businesses has nearly doubled. For most entrepreneurs, an exit strategy is often top of mind. However, the process of M&A can be a confusing mystery: where to start, what questions to ask, and things to put in place for success.

Here are the highlights:


FULL VIDEOS

SALE SIDE
David Leider, Panel Moderator
David Segura, Founder of Giant Media
Dylan Kearns, Petsky Prunier Investment Banker

BUY SIDE
Dane Atkinson, Panel Moderator
Lance Barton, Dir of M&A @ Match (IAC)
Martez Moore, Former EVP of M&A @ Viacom
Teddy Himler, Principal @ Comcast
Justin Trudel, Former Dir. of M&A @ Dentsu Aegis


For more information contact our sales team at 844-299-1540

LA Roundtable Recap at Fullscreen

On June 6, 2017 FastPay hosted a roundtable discussion called, “Understanding Content & Video in 2017” at the Fullscreen offices in Los Angeles. Here’s a recap.