Entrepreneurs

In my line, i deal with a lot of entrepreneurs with me being one of those aspiring entrepreneurs.

without prejudicing myself, i have come to the conclusion that in my small circle of entrepreneurs that i have come in contact with, a lot tend to overvalue their companies and technologies. Sometimes it's good, but most times it starves the company of needed investment.

because i am both on the buy (entrepreneurs)and sell (investor) side, i see a disconnect between the 2, which makes life interesting and difficult.

how do investor value a company? There are known methods like pe multiples, discounted cash flow etc. Of course there is a premium on technology but you'd be surprised how much (or little) that premium is. Customer orders, unless it's already in hand means zilch in calculating the value of the company. Counting on the future does not manage the risk.

on the other hand, entepreneurs tend of overweigh on the utility of their technology, and also potential customer orders, and thus value their company accordingly. And also some of them hang out for 'name-brand' investors.

sometimes, the gulf isn't too big that it cannot be bridged, and most of the time, it.s not even worth putting in the effort to close the gap.

the reality is that in the land of the have and have-nots, the haves win it, and unfortunately, the investors hold a commodity that the entrepreneurs desire: money, thus relegating entrepreneurs to the have-nots category.

and if you can get an investor interested enough to to listen past the first 10 minutes, the entrepreneur should take any offer or advice being given seriously.

in singapore, both side have a lot to learn though.

n


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