Founder Net Worth Map

we've got speaker Ben carpel of Galleon whose revenue is north of one million dollars let's give it up for Ben [Applause] uh hey guys thanks so uh we are Galleon uh a couple of the teams are here partners simran and David in the audience as well galleon's uh SAS for e-commerce companies so we help um e-commerce has to get from point A to point B the parcels in the cardboard box so we help people basically save time

save money and get better Intel on shipping which is one of the most painful parts of e-commerce today though I'm not going to talk about that I'm going to talk about a little bit of this conference of the founder path and the product of how you well first quick question how many of you guys uh have five ten percent or majority stake in a business um if not now or will you in the future good to know um anyone had a previous exit before to private Equity as well

great so that's helpful I'm going to talk a lot about kind of the evolution of the financial tools and products that are out there and they're available to you so um and the context was prior to the SAS world as a SAS entrepreneur I was an investor so I know a little bit what I'm talking about I can frame that in what was available to you at the time and then why there was actually a big dilemma with the old style of products now there is this new world that founder path and pipe and espresso and a few

others have to get you with your ownership in your business you can unlock that diversify into other Investments whether that's real estate the broader public equities your dream home and we'll talk a little bit about how you might want to pick those and once you have the money we'll talk where would you put it how to track it and who you should counsel and entering in terms of taking a Founder path loan or something like that um so this is us like I said less about

uh us today more about advice on what's out there um and yeah here's the history so we had um you know my first part of my career was um as an investor in private equity and hedge funds uh and invested in all sorts of assets then I became a SAS guy had a private Equity exit as well there were some a few guys had the same and what and so I'm talking about this in this in

the context of what I witnessed as an investor and then also on the other side of the table as a SAS entrepreneur like all of you guys um what at the time you only had you had basically to sell in terms of an equity perspective which would mean loss of control loss of equity right all else equal you're hoping to create a bigger round so you're getting a smaller piece of a bigger pie that's the theory right but there are a lot of negatives that came with that debt of course you would maintain control

um but a lot of covenants would regulate what you can cannot do a lot of paperwork um and then the other thing you could do too is just bootstrap and and toe the line not take equity and it becomes the The Tortoise and the Tortoise and the hair Fable you know the downside is you know you won't you may not be able to grow as fast as someone with capital um but there's nothing wrong with that either when I exited prior to that we we very much took this path we kind of went for the slow growth path so this is the

Dilemma you face right it's about losing control or losing power um the nervousness the intimidation the paperwork and even the risk of losing it all if you take that um and finally you know if you don't want any of those paths you can kind of slog along as you have been um so this is a little bit about this so this here is an um a little bit too hard to read but it's a closing basically a closing dock this was a deal that was uh very actually it was

I think I can say it was um the what the famous story of when Michael Jackson bought Paul McCartney's royalties in the 1980s uh he ended up you know that's why Paul McCartney hated because it did so well so this was Sony ATV and Michael Jackson very high quality um pool of assets but this is just one page of about eight pages at the closing so this is about as gold standards you could get from an investment even so it still took five or six months to do the point is with private Equity even when

there's a lot of enthusiasm from the other side of the table it's a slog of many months a lot of straws dog of stress anyone ever like bootstrapped or started their company on credit cards before I have I don't know what everyone else has but common approach too uh it's Scrappy it's high interest it's creative but personally I would rather be buying guava and cheese cookies and pastelitos with my daughter with my credit card instead of uh instead of using it to fund a business and then finally on the right this is a d this is like a war

room I guess they called it of an actual inside of a private Equity Firm so this is them looking at you guys in your SAS businesses what they want to invest in how they see it how they are thinking about control and taking power from you um that's the investor perspective so this on this page we talk about debt like we said the advantage of here is you can maintain control um but even then um you know for SBA which is low

interest very flexible pretty borrower friendly terms on the whole it'll still take five or six months at the max on the on the fast end maybe more like two months but still even after they pre-approve you in you know month one there might be three or four months of waiting right VC same thing they like the deal they like you but they're still going to go through their processes I've seen so many times where they say yes to you at first and then they will retrade you so your terms get worse at the very very

end right so uh yes it's never 100 um so both debt and equity and private equity and VC they all do have their their cons it's not to say there's everything is bad right it will power you it will give you more size it will give you the capital and the fuel that you need to grow right in many cases with a secondary with the debt they will allow you to diversify and take cash out their wealth that's very much a positive right um so it's permitted that when that

Capital comes in from VC or PE or debt you can buy that dream home you can do what you want with it you can buy the dream car or invest into real estate whatever you might however with all these advantages that they come here with the themes you've heard me talking about so far are the loss of ownership the loss of control the long processes and just the new stresses so um those that's the old way so let's talk about what's on the table now so a few people including Nathan out there

saw a problem from their own issues um other people Beyond Nathan who came from the insurance world who came from the e-commerce world where David and simran and I play um saw the same thing so they thought there had to be a better way they all had kind of these light bulb moments right um so they said forget about um term sheets forget about months and weeks of documentation we are proposing a product where you can get your money in days instead of weeks right and you can keep your SAS use it

use the money that comes in to grow it invest in marketing invest in engineering or diversify into other investment types finally though if you do take this Capital you know the product out there pipe is espresso SAS Capital others you do need to think about these things and and talk to either a CPA not just a bookkeeper but someone um or do your do your own calculations itself in terms of understanding the term the flexibility um the APR it's going to cost you

so here's an example this is actually obviously the founder path we've plugged it in before so you can see kind of how you can how easy it is in theory to get an estimate of how much Capital you could use and with that Capital again it would be wired out and you can use it to invest in sales marketing product engineering Ops whatever you may use in this particular product one of the advantages that I think Nathan's product does better than others is that there's no real restrictions as far last I heard on the uses so if you

didn't if you already had a very high margin cash flowing machine and you didn't necessarily need to fuel sales or marketing for whatever reason but you you know 99 of your net worth in many ways is concentrated in your private business so it's very it's you might be definitionally Wealthy on paper right but how do you unlock that wealth it's illiquid it's it's on paper so this is one way you could do it unlock the wealth take the money and put that into

other things again the S P 500 um a commercial building buy a house for your mom buy a house for yourself um all permissible and all doable with this product um so a little bit of what I talked about here was you know how you well back to this you know if you were to use this or pipe or espresso or SAS or lighter um the things I would tell you are to consider the various options and like do your research on each consider the pros

and cons understand the restrictions some of them may not allow you to take out the money to put it into a commercial real estate investment or to seed another VC you would like to if you wanted to invest the money and back a friend starting another company for example um however ultimately understanding those terms understanding what it's going to cost you will make things easier and um you will feel less nervous about in

the long run if you understand up front the discount rate the cost of capital what it's truly going to cost you this isn't free right they need to make their return too so there is definitely a cost to you by taking a portion of your recurring revenue and accelerating It Forward 12 24 36 months that's amazing right it's not free though so as long as you understand the cost associated with it and how it's going to be repaid whether it's over 12 months 24 months that's what's um that's what's in Ketone

so before you take this before you press the button I would always recommend if Finance is not your strong suit or account is not your strong suit talk to someone you trust to get their spit take and just quickly do it it doesn't need to be a complicated analysis but quickly do a model in Excel to understand okay if I'm borrowing one hundred thousand dollars today when what is that really going to cost me how many you know how many thousands of dollars over the next 12 months or two years or three years so I would really recommend doing that and

I think what the the founder path product that we have here which is a big advantage over pipe um you know pipes out there they're famous I think pipes Max term is 12 12 months right so something like this you may be able to get more like two two three years of financing um I've heard there could be terms up to four or five years so it gives you a lot of flexibility to bring forward the cash flows from the customers you've invested so hard and so much effort to win now they're paying you recurring contracts

and it's wealth Is definitional wealth like why sell your business at 5x ARR when you could and give up 100 of that when you can still control 100 of your business and bring forward a select period of contracts that are three to five x ARR um and use that money like I said to to diversify to unlock that liquidity um so yeah I mean that's I wanted to to do this presentation more in the context of advice understanding that it's not just

um uh yeah so here it is like this is the idea like what we have is you guys definitionally wealthy probably Millions if not more in terms of what your business is but it's on paper it's a liquid right so this product is a new phenomenon that allows you to unlock that wealth turn that into hundreds of thousands or millions in a matter of days um without having to worry about the paperwork without having to worry about the you know the diligence and do it into other things like I said stocks

crypto real estate uh real estate for your family or you know if you're doubling down into the sales and marketing engine too but before you do it I would obviously talk to someone and make sure they're spit taking in the right all right it's not going to be too expensive or too dilutive and yeah I mean any questions before I I kind of get out of here but I just wanted to make sure that yeah

what I've seen in the market it tends to be around 10 so sometimes it's a little bit eight you know kind of be as can be as low as eight I've seen low teens as well so the bogey I say is 10 could be a little lower kind of like eight percent oftentimes I've seen kind of 12 13 as well um what I understand so what I've seen personally from founder path they have a variety of criteria that look at your strength as a borrower and that's going to influence both one the interest rate

and two the repayment meaning it's a one year loan a two year loan or three year loan yeah um yeah anything else

I think I mean that's another great path to liquidity the issue I would say is do you want to still be involved heavily in the business or not if so if you do you'd be giving up a lot more proportional control than otherwise so if you do a secondary you risk off and you've converted your illiquid wealth Into Cash which you can do for whatever but if you want to stay involved in that SAS you're going to give up a lot in

terms of control vote voice so you have to be prepared to face the person who just came in is going to have a lot more of an influential voice than you did so I don't think there's anything wrong with it I just think be prepared to give up a lot that goes beyond just money you'll unlock that money in day one but you're not going to have nearly as much of a voice going forward yeah um what's nice is like this is a way to do a secondary in the form of uh that

isn't going to harm or hamper you for the long run if you've done if you've done the calculations and say I can pay back 10 a month over two years right yeah that's the um I don't know like debt world that's the the Draconian stereos like back what you have uh sorry back here like that world here and that world here you know if you

can't repay they're going to do everything they can to make sure they like all they care about is making an interest rate and getting their money back so the horror stories of just like you have to give the keys back and take it while probably too exaggerated and untrue um there is going to be a huge emphasis on on them get making their money back one way or the other whether it's from your SAS business or other sources of income uh with lighter with SAS I think

it's a little bit more it's dressed up in the same in a different way but the most important thing is they need to see their money back so um one way or the other if you're borrowing money you're you're expected in your it's an obligation to pay it back like um VC is one thing like they're making bets and they're making bets and they're trying to get the 10x the 20x outcome and some will come up with zero or 0.5 and they won't return their Capital however

um with debt it's it's very imperative that you're you're serious about paying back the money because they will have legal kind of mechanisms to to take the SAS and take control or find ways to get their money back yeah the uh look for personal guarantees now so the good news on this too so the the bet this uh I said the good news this is an SBA example so again low interest right now it's tends to be seven percent or so which is not bad for

small businesses very flexible terms um in terms of repayment and often you can have 10 years to pay back SBA lots of paperwork and as you just said personal guarantee so one of the big drawbacks to sbas is requires you to personal guarantee meaning the other question about what happens if you can't pay it back you got to find another way to pay it back that means you know finding another job selling you know liquidating collateral selling your home putting a HELOC on the SBA because this you know this program

here is a government-backed program and so it's almost taxpayer money you're playing with and you have to pay it back that's why there's a personal guarantee with Nathan's product and pipe and espresso and lighter as far as I know almost every of them do not have a personal guarantee and for some of you who came from I know a lot of us traveled from not us I traveled from Miami but some some of some of you guys were London Amsterdam I saw already um Nathan's product allows you to borrow

in this you know one of the you know the the one of the the biggest machines about the US is the the ease it is to start a business the ease it is to raise Capital so even if you're Incorporated in Netherlands uh in the UK southeast Asia wherever you can borrow using founder path and again without a personal guarantee um that may change others and the in the market may change but as far as know that's the other big advantage that these guys have versus say an SBA loan

yeah thanks guys yeah