There’s no better person…
To take Angel Investing advice from than…
Kevin O’Leary aka Mr. Wonderful.
Yesterday, Jeff Bishop and I had the pleasure of hosting him for a LIVE Q&A session with our members.
Man, did Kevin come with some fire! He was dropping gold nuggets left and right, the entire time.
More on that in a sec––
You see, Kevin just signed an investment deal with mcSquares – a whiteboard system startup The Boardroom invested in earlier this year.
Anthony Franco (mcSquares’ Founder) estimates that Kevin adds an additional $3-4M of value to the company…
Well, mcSquares just opened their next investment round yesterday…(all the details are posted on our Angel Investing Insider deal flow).
And to kick off this next round, Kevin offered to sit down and open up about angel investing for our members about…
Why Shark Tank is such a powerful platform for startups…
What his favorite business model is for a startup investment…
The future of equity crowdfunding…
And so much more.
The Boardroom landed a deal with the startup mcSquares a while back. Little did we know that a few months later founder Anthony Franco would appear on Shark Tank.
Anthony landed a massive deal with Mr. Wonderful himself, Kevin O’Leary in front of an audience of millions!
Now the next round of funding is here, and The Boardroom is giving another $50,000 in funding — and you too can get in on this deal.
We sat down with Anthony and Kevin for a live interview and Q&A.
Kevin gave us gems of knowledge on his investing strategies as well as a fun and fascinating behind-the-scenes take on the show Shark Tank.
Kevin and Anthony both broke down mcSquares and explained why the company is going to be big.
What you’re about to read gives a glimpse into this exclusive interview. We condensed it down to the best parts for your reading pleasure.
The full interview replay is on mcSquares’ deal flow page for Angel Investing Insider member.
Let’s get right into it.
Mr. Wonderful explained why Shark Tank has been such a remarkable platform for launching businesses.
They get the product and entrepreneur in front of tens of millions of people. Once you become a part of the Shark Tank family, the business can sustain. Shark Tank shows updates on the startups, they go into syndication and stay connected to their investors.
The Sharks themselves do everything in their power to acquire customers for the business. Sharks work closely with the founders — building up American jobs and helping people achieve success.
Even in these tough times, companies like mcSquares have thrived. The truth is, the huge social changes caused by COVID-19 have opened up doors for savvy entrepreneurs like Anthony Franco.
While other startups were struggling, mcSquares managed to land a deal with The Boardroom and Shark Tank back-to-back!
We asked Kevin O’Leary what made him invest in mcSquares.
He says it all came down to the company solving a problem. The key to making it on Shark Tank, Kevin says, to be able to explain your product and the problem it solves in less than ninety seconds. Any more — you’re screwed.
A founder needs to show investors the problem they are solving and how they are going to execute on that idea. There are millions of great ideas out there but very few people who can execute them. Anthony brought both of these together and slapped an impressive resume down on the table to boot.
You see, Anthony has already started and exited four companies. That is a rare feat. The Sharks naturally did their due diligence and verified Anthony’s history of success.
The next thing we asked was how quickly O’Leary knows an entrepreneur is worth betting on. What are the key components he looks for?
Having such a large portfolio of startup investments, Kevin needs to look at how the company fits.
Does it fit into his sustainability model? Does it fit into the kinds of products and services he has already sold? Does he have an existing user base he can sell to?
Only if a startup checks all these boxes does he consider investing.
The next step is making sure the entrepreneur fits within the Shark Tank family. The entrepreneur should want to work with the team. After all, the best salesperson for the product or service is the entrepreneur. If there are trust and cooperation, the company has a better chance of success.
The Sharks and the team behind them work hard to make these companies successful.
To be a Mr. Wonderful-backed company, the founder must be able to pivot. The reality is, running a startup is never smooth sailing. Founders constantly find themselves in a position where they need to re-brand, tweak product lines, or change industries altogether.
Anthony has already proven himself an adaptable founder. In a short time, he restructured the company to manufacture all of its products in-house, a huge and risky undertaking. His previous manufacturers were stalling production and giving him constant headaches.
Since the big change, business is booming and Anthony is pulling in insane gross margins on his products.
Over the years, Kevin has invested in over fifty shark tank startups. Some have failed, some have exceeded expectations. But what makes a company or founder stand out?
Again, Kevin looks for something that solves a problem and someone that can execute. More specifically, he looks for a specific business model that you might not expect…
Kevin wants companies that can sell digitally, direct-to-consumer.
He explains — these are the highest gross margin businesses. These businesses tend to work best with the Shark Tank model and benefit greatly from the exposure the show brings.
He wants an entrepreneur and team that understands Customer Acquisition Costs and knows how to multiply that over time. In other words, if it costs them $4 to acquire a customer, and they make $16 on a sale, all Kevin needs to do is connect the business to his social media team and millions of followers and the business can scale incredibly well.
So now that we know Kevin’s favorite model for success, what about the startups that don’t make it? What goes wrong along the way?
O’Leary says, 90% of the time, it’s a lack of execution skills.
Once the business starts growing rapidly from the funding and exposure, they just don’t know what to do with it. They have never been there before and lack key execution skills.
Kevin says failures in startups and even mid-sized businesses tend to come in that critical $1-5 million in sales period. This is where the majority of entrepreneurs will need to think on their feet and pivot to maintain growth and stability.
Some people are adaptable and can pull it off — some can’t.
Many people talk about how you can go to school and learn to be an entrepreneur or learn how to be adaptable in business. O’Leary doubts that. He says, “You either have the ability to pivot or you don’t. You are either an entrepreneur or you’re not.”
Kevin doesn’t tell his entrepreneurs what to do. He gives them all of the guidance he can, explains the mistakes he has made, tries to make their path easier, but in the end, it’s up to them to execute.
Any investor that says they make money 100% of the time is lying. Startups fail sometimes and that is a reality of investing in them.
Kevin says that the JOBS Act is a huge opportunity that democratizes angel investing.
In his portfolio, he has bonds, stocks, corporate credits, and so on. But, for full diversification, he wants some startups. Early-stage companies fill the space for high-risk, high-reward investments in your portfolio.
He says that the key to the JOBS Act was that if you only had $100 or so dollars to invest you can still get equity. Now ordinary people have access to the asset class with the highest returns.
Not only this, but he sees this as an opportunity for a startup’s customers to be a part of the journey.
And his favorite part of this — it brings venture capitalists down to earth.
Now companies don’t need to grovel to VCs to get funding. They can start with their Regulation Crowdfunding round (Reg CF), raising capital and gaining traction, and then move on to Series A and B all within their ecosystem.
In terms of keeping people equal, with Equity Crowdfunding, companies don’t need to let VCs get special preference and special terms. Everyone can get into the deal on the same terms, keeping future rounds of funding simple and honest.
All in all, equity crowdfunding is just incredible for the startup space.
Q – What does mcSquares that makes it special? Why do you think it will succeed?
A – More than anything, people just understand the products. They are simple, innovative, and people want to pick them up and use them.
There is a little secret test that goes on behind the scenes of Shark Tank.
Kevin takes a startup’s products and puts them on the table in the office. People from all over the world come in and out — investors, entrepreneurs, TV people.
When Kevin sees that people are drawn to the products and can’t stop picking them up and asking about them, he knows he has a winner. To him, this little test is as important as anything else when it comes to investing.
With mcSquares products, people were just drawn to them. The products are relatable and effective. Everyone wants to use them.
Q – If everything looks great on a deal, what is the one, non-negotiable thing that will make you say no?
A – If you lie to me. It’s that simple.
I don’t have to do business with people that can’t tell the truth, and if it’s a blatant lie and we asked you a question and you just weren’t honest — it’s over.
I urge every entrepreneur — when they are negotiating with investors — do not lie. The truth is going to come out one way or another, it always will.
Q – Here is a fun one for Anthony — Why is Kevin getting a better deal than me?
A – Well it is pretty clear the value that Kevin brings to a startup. There is only one Kevin O’Leary, there is only one Mr. Wonderful.
I did a spreadsheet and I calculated the ROI of Kevin O’Leary. For mcSquares, Kevin brings $3-4 million of value to the company. I structured a great deal for our shareholders, I don’t have any shame about that.
When Anthony shook hands with Kevin O’Leary…
The deal was sealed…right?
Well, kind of…
You see, they make everything look easy on television.
Deals this big aren’t solidified with a simple handshake –– come on.
The reality is, Anthony was in negotiations with Kevin’s team for over 2 months before the final deal terms were inked.
Now it’s official –– mcSquares has an investment deal with Shark Tank’s Kevin O’Leary!
And we’re celebrating this incredible moment with something BIG.
Thursday, July 30th at 9:00 AM ET, Kevin will be hosting an exclusive live training call with our members!
Members of my Angel Investing Insider service will not only get access to this special event…
Negotiations can be brutal for both the startup’s founder and the investor.
To help you better navigate those waters, I’ve put together a quick guide to startup negotiations.
If the deal doesn’t benefit both sides — it isn’t a good deal.
It took Anthony Franco (Founder, mcSquares) two months to finalize his Shark Tank investment deal with Kevin O’Leary.
Both the investor and the startup founder need to have similar goals and expectations. Above all else, an investment starts with a relationship of trust.
If either side is getting too much out of the deal, they will bring the other party down.
In the case of an investor, winning too much in the negotiation can hurt your investment in the long-term. The terms you set can prevent the startup from getting funding down the road.
This is why negotiating a good deal is so tricky.
You walk a fine line — making sure the deal makes you money yet stays fair to the common goal of a successful startup exit.
Investing in startups is always going to be risky.
Due diligence is about documenting risk so you can make an informed decision on an investment.
Negotiation is about reducing your risk by improving the terms of a deal.
You are never looking for a deal with no risk, but rather looking for a deal where you know what you are getting into.
When a lead investor sits down to negotiate with a founder, they work through the term sheet, acknowledging all of those risks to split them fairly between the two parties.
Usually, the lead investor is the one negotiating on behalf of the other investors. They fight for favorable terms and set the stage for future rounds of investing.
These investors should have experience leading deals and a track record of entrepreneurial or investing success.
To successfully negotiate an investor must:
Once an investor has found a potential startup, they will set up a meeting with the founder. This is the pitch deck.
Here, the founder “sells” the startup to the investors, showing off the team, vision, financials, and all relevant information to entice investment.
There can be some amount of negotiation in the pitch itself. If an investor is very interested in the startup, they might start right in on the deal terms.
But, the real negotiation begins once the term sheet has been drafted. This gives both sides the chance to see the full deal on the table. They decide what works and what doesn’t. The startup team and the investor then try to negotiate for a mutually beneficial agreement.
Once both sides have made changes and agreed on the terms, a legal document is made for all to sign.
Founders have a lot of work on their end.
They need to search for investors to meet their capital goals and then negotiate terms that satisfy investors — all while still running the company!
Here’s what founders can do to get a fair deal when negotiating.
To understand pitch decks, term sheets, and deal negotiation, there are a few terms you need to know.
Equity is the amount of money that would be returned to a shareholder (investor) if all of the assets were liquidated and all of the company’s debt was paid off.
Equity is just how much of the company an investor owns.
For angel investors, the deal usually comes down to how much equity they can buy and for what price. This can change depending on the amount of capital being raised, the valuation of the company, and the other investors.
A term sheet is a document that outlines the terms and conditions of a deal. It defines the key points of the agreement between the founder and investor. This document isn’t legally binding, rather it is the precursor to the final, legal document.
Entrepreneurs try to raise the needed capital while keeping value for the company, while investors try to ensure they will make adequate ROI upon the company’s exit.
After the pitch, the term sheet is the last chance to get to know your founder. This is where you can see who they really are — what are their intentions and what compromises are they willing to make.
This will set the stage for the entire relationship between the two parties.
It all comes down to the term sheet.
A cap table is a spreadsheet or table that shows the capital structure of the startup. This just means that the document shows how much of the company each shareholder owns.
This includes common equity shares, preferred equity shares, warrants, and convertible equity.
The tap table is important because it shows a lot about the startup and founders. Most importantly it shows who has invested in the company and what kind of a share the founders and leaders are taking.
The JOBS Act has fundamentally changed the angel investing world. Now thousands of investors across the U.S. are investing in startups on Regulation Crowdfunding platforms.
One of the nice things about this approach to investing in startups is that there’s no negotiation involved for the investor.
If you find a startup you like and the valuation and deal structure make sense, you can make your investment immediately… often with as little as $100.
The process is very straightforward.
In fact, many members of our angel investing service aren’t long-time investors with years of experience under their belt — just regular people trying to improve their portfolio and build wealth.
It’s a great place to earn your wings as an angel!
When I hosted our AdTech Explosion training last week…
I was blown away by just how many investors aren’t familiar with the rich opportunities in AdTech (advertising technology) startup space, let alone know what it is!
Before I give you a quick run-down though, I have to let you know…
The replay of our exclusive training session is still available, but won’t be for much longer.
So, what is AdTech?
Its textbook definition is…
a range of software and tools that brands and agencies use to strategize, set up, and manage their digital advertising activities.
Basically, any products and tools that power digital advertising fall under Adtech.
Think Facebook, TikTok, Twitter, and Snapchat –– these are all AdTech platforms.
And you’ve likely experienced this if you’ve ever gone to a companies website…
Then been followed around the internet by ads for THAT company.
Profitable? Without question.
In the last six months, we have brought eight new companies into The Boardroom, and our members have funded them close to $5 million.
The latest of these is Rad Intelligence — an innovative Adtech company that is changing the influencer marketing game.
Today, we will explore the Adtech space through the lens of Rad. You will get a chance to meet the founder, Jeremy Barnett, and see why his company experienced 400% growth from Q1 to Q2 this year.
Jeremy is going to teach us about the incredible new demand in Adtech, its place in the New American Economy, and what his company is doing that no one else is.
The founders of The Boardroom and I have already funded $40,000 into this startup. All of our members now have access to this investment opportunity.
And now — for a limited time — you can invest alongside us through this special Boardroom Spotlight.
Advertising technology, or Adtech, is defined as:
“…a range of software and tools that brands and agencies use to strategize, set up, and manage their digital advertising activities.”
Products and tools that power any kind of digital advertising fall under Adtech.
Did you know — Facebook, TikTok, Twitter, and Snapchat are all actually Adtech platforms?
But, aren’t those Social Media platforms? Where does Adtech come in?
Well, Facebook is driven by advertising revenue — all social media is.
When you scroll through your feed and see an ad, that isn’t randomly chosen. That ad was chosen for you based on data science. There is special technology behind the curtains that decides the right place, right product, and right time to show you that ad.
All of these companies are in the business of understanding users to show them ads. They are first and foremost powered by Adtech.
From a humanity standpoint, the pandemic has really sucked. From a business standpoint, things are going pretty well in the Adtech space.
Actually, things have never been better.
There has been a 77% increase in online usage. Combine that with a 75% increase in eCommerce buying, and it’s easy to see why there is a newfound demand for Adtech tools.
These are stats that usually only come on Black Friday, but now it’s like this every day.
Rad was already doing great business, but then it found itself in the right place at the right time.
Jeremy explained that between 2017 and 2019, Adtech was all about data collection.
How can we get the data? We need more data!
Now, companies have the data, and they are struggling to find objective, trackable ways of leveraging it.
2020 is all about finding customers and finding out how to continually communicate with them using data.
The breakthrough that has finally made this possible is Artificial intelligence.
AI is no longer a lip-service or a buzzword to sell a piece of software. AI and machine learning are the keys to unlocking the data-potential that advertisers and publishers have been dreaming of.
This is how Rad provides “hands-free” influencer marketing.
From a brand’s perspective, advertising is about understanding the customer, and figuring out how to get in front of them.
Rad Intelligence has the solution — internet-celebrity recommendations.
Now, these aren’t Brad Pitt-type celebrities, these are what we call influencers.
An influencer is someone who has the power to sway customer buying decisions through their authority, popularity, expertise, or relationship with their audience.
The problem with other influencer marketing strategies is how fickle they are.
Building relationships and content is difficult, and the effectiveness of any ad campaign is hazy at best. Rad, on the other hand, is cutting through this haze with data.
Rad has found out how to remove all of the noise across all of the ways that a brand engages with its audience.
The main reason Q3 2020 looks so bright for Rad Intelligence is its clientele.
Firstly, the early-adopters of the service have stuck around and have become evergreen supporters. The ones who came to try Rad early have found so much value that they decided to keep using it again and again.
On top of this, some new, high-profile clients have joined the party.
Nikola Motors, Toyota, the American Lung Association, and the City of Las Vegas have all started using Rad Intelligence marketing campaigns.
Members of The Boardroom grilled Jeremy during our live chat. Having the opportunity to invest in this startup, many members dug deeper with pressing questions.
Q: Does Rad have a product for small business owners with limited budgets?
A: Yes. These are the types of businesses where we “cut our teeth”. These small to medium-sized businesses (SMBs) are the heartbeat of Rad.
Starting out, we worked mostly with SMBs. Compared to traditional advertising agencies, Rad can offer trackable ROI for a fraction of the price which attracted many such clients.
SMBs can’t afford a PR department or a marketing department — they can’t afford to waste thousands of dollars a month on something that has questionable results.
Rad eliminates all of the resistance associated with selecting influencers, crafting new content for them, optimizing the campaign, etc. Once the client sets things up and tells us their goals, our technology does the rest.
This is why we call it “hands-free” influencer marketing.
Q: On your website, it says “guaranteed performance”. That is a big statement in the marketing world. What exactly are you guaranteeing and how?
A: We can make that guarantee because of the way Rad works. When a client comes to us, they set the CPC (cost-per-click) of the campaign.
Let’s say RagingBull decides it will pay $2.80 for each unique visitor. Keep in mind — each unique visitor only counts if it fits criteria that RagingBull chose based on its “perfect customer”.
So, RagingBull only pays for the unique clicks, from their perfect customer, at its perfect price.
Rad’s clients only get what they pay for and decide on their own metrics for success. All Rad needs to do is deliver.
Q: How are you differentiating yourself from other Adtech companies?
A: The key difference between Rad and other Adtech companies is that we aren’t looking to make any new assets or content. The brands we work with can use pre-existing content to run their campaign, they don’t need to create new content tailored to specific influencer audiences.
The other big thing — because Rad is a marketplace that the brand is actually in control of, the brand can decide on its own cost of customer acquisition. Other Adtech platforms don’t do this.
On Facebook, for example, the value of the traffic is set by the demand — which is some secret algorithm that dictates how much all brands pay for an impression.