How do Investors Assess Value in a Company?

You may think that investors assess value in the companies they back in a strictly financial way – analyzing the proformas, return on investment, key ratios and so on.  These things are important, but investors look at a lot more than just the financials.  In fact, the financials are driven by other less easily measured aspects of the company such as the Team, Patents and Intellectual Property,the social or environmental impact the company has, the speed at which it can scale up and grow,  their brand value, the solidness of their core mission, vision and values as well as a clear path to an M&A or IPO transaction for an exit.

Investors analyze a company holistically, so there’s no “one thing” that they look for.

They will all tell you that the most important thing is the Team, but after that, there needs to be a critical mix of all the other factors.  Business scholars have tried to create a system that would predict entrepreneurial success by assigning numbers and values to each of the key elements in a business.  These efforts have failed 100% of the time for the same reason you can’t create a software program to tell you if a novel or a painting is “good”.   Business strategy is contextual and cannot be a cookie cutter project.

For investors to become good at making smart angel investments, they need to look at a lot of companies so that they can “connect the dots” and see how high the bar has been set for success.

They need to learn what the “red flags” are, and even more importantly, to see the “green flags” which are the aspects of a company that are likely to make it successful.   By looking at dozens of deals, investors can learn which are most likely to succeed and which have little more behind them than an entrepreneur’s wishful thinking.
Investors at this year’s Angel Capital Summit will have a chance to view twenty four companies pitching over a two day period, combined with some of the strongest experts in Colorado telling us what startup value looks like from multiple viewpoints.  Those who are new to Angel Investing or who just want to get a taste for it will find everything they need at the Angel Capital Summit.

The Angel Capital Summit is hosted by the Rockies Venture Club at the University of Denver, March 18-19th, 2014.  The event is followed by an Angel-Only session the morning of March 20th where Angels can work together to evaluate deals, conduct due diligence and negotiate term sheets together.

What: Angel Capital Summit

Where: University of Denver, Sturm Hall, Davis Auditorium, 2000 E. Asbury, Denver, CO

When: March 18-19 Conference,  March 20 Angel only event

Cost:  The event is open to the public and non-members may attend for $299.  RVC Basic members $249, Full Members $199, Students (with valid ID) $49 and RVC Keystone members are always FREE.  Consider becoming a member while signing up for the conference to save on your entry!

More Information: http://www.angelcapitalsummit.org

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Angel Capital Summit is a two day event, March 18-19 at the University of Denver Sturm Hall, Davis Auditorium.  Twenty companies will pitch to investors.  This year’s theme is “Building Value” and we have an all star group of speakers and panels who will address investor interests in building value in early stage companies.

Register Here for the Event

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Peter Adams is Executive Director of the Rockies Venture Club, Managing Director of the Rockies Venture Fund and co-author of Venture Capital for Dummies, (John Wiley & Sons 2013) Available at Amazon, Barnes and Noble and your local book store.

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