The Exit Strategy Podcast

In Episode 35 we speak with Andrew Heintzman, who is a managing partner of InvestEco. This venture capital fund focuses on high-growth North American companies that promote health and sustainability in the food & agricultural sector. InvestEco's mandate is to deliver strong financial returns to its investors while helping its portfolio companies build a better world. Andrew gives us his feedback on the current fundraising market, and its changes over the past couple of years versus today. He's bullish on the North American market due to its large size and its competitive landscape, as it is a market that is so large that U.S.-based VCs have the bandwidth to help accelerate their growth. This translates to Venture Capital firms being more open to providing higher valuations due to the market size which offers the potential to expand. Andrew also provides his feedback on what he would expect to see from a European company were InvestEco to consider an investment. InvestEco has had positive experiences in their portfolio company's exit strategies. Andrew confirms that there is no one way to exit an investment and focusing on only one could become a struggle; so, being flexible is essential given market conditions, timing, the ability to be patient, etc. You need a good operating business, a good process and to create optionality, and this will create the best outcome.

The debt ceiling, the subject of the current drama consuming the nation’s capital, is something else entirely. While legally separate from the budget process, it represents yet another check that has evolved into the system since a version of the debt ceiling was first adopted in the run-up to World War I. The Treasury Department has been given gradually more leeway by Congress over how to finance deficit spending, be it for wars, emergencies or the creation of the social safety net. As negotiations over addressing the US debt ceiling continue and the threat of default draws closer, President Joe Biden has resurfaced the controversial idea of using the 14th Amendment as a way to lift the borrowing cap without Congress. Biden has said he doesn’t consider the move an imminent solution, but several liberal lawmakers in both chambers are pushing him to invoke the amendment rather than give in to Republican demands to cut spending and tighten work requirements, among others. Sens. Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts are among 11 senators who are urging the president to take advantage of the amendment to avoid the US defaulting on its debt. China’s $23 Trillion Local Debt Mess Is About to Get Worse. Stanford University political science professor Jean Oi, who specializes in China’s fiscal reforms, said: “The local government debt problem is spread throughout the country. While rich coastal areas will have more opportunities to repay their debt and more resources to draw on, less-developed places in China are going to be much more limited in what they can do. Durham report shows it was Clinton, not Trump, who colluded with Russians. Durham’s 300-plus page report also states that the FBI used “raw, unanalyzed, and uncorroborated intelligence,” to launch the “Crossfire Hurricane” investigation into Trump and Russia but used a different standard when weighing concerns about alleged election interference regarding Hillary Clinton’s campaign. The report also concludes that “at least on the part of certain personnel intimately involved in the matter” there was “a predisposition to open an investigation into Trump.”

We welcome Glenn Argenbrigth, a start-up founder and the founder of the Venture Capital firm Quake a VC that invests at the Seed Stage. We discuss the topics of the venture capital and start-up world today and his views on the start-up scene. Quake is a global player with offices in the US and Europe. Glenn has over 25 years of experience operating and running various private, pre-IPO, and public technology companies. He has founded over a dozen startup ventures, resulting in three public offerings, nine exits, and billions in shareholder returns. His background includes expertise and projects in software, firmware, middleware, hardware, enterprise, SaaS, consumer goods, and Web and mobile applications. Early in his career, he co-founded Mediaplex, one of the original online ad-serving platforms. The Company went on to a successful IPO, with a valuation in excess of $4.5 Billion. It was later acquired and is now part of the ValueClick family of companies. Other notable exits include Intellicom - acquired by Softnet Systems; Jotter - acquired by Saflink; and SFLK - where he restructured the business and successfully relisted the Company on NASDAQ, where the valuation climbed from roughly $18M to over $425M.In addition to his work in the areas of finance and operations, Mr. Argenbright has extensive experience in business development, marketing, and distribution across many verticals. In commerce, he’s negotiated agreements with Walmart, K-Mart, Target, Price / Costco, Sam’s Club, Walgreens, Phar-Mor Drugs, Sav-On, Toys-R-Us, Kay-Bee Toys, and Shop at Home. In tech, he’s forged strategic partnerships with Apple, Microsoft, VISA, Unisys, and Accenture. In entertainment he’s worked with VIACOM, Sony / Tri-Star / Columbia Pictures, Walt Disney Company, and many others.Glenn has appeared as a guest lecturer at numerous universities and startup events throughout the U.S. In addition, he’s been interviewed for both print and television, including Barron’s, Bloomberg, Business Week, CNBC, CNN, Entrepreneur, Forbes, Fox Business, Fox News, Inc. Magazine, Wired, and many others.

France has a plethora of opportunities to make starting a business quite successful through its tax incentive programs and grants that many US companies may not be completely aware of. Thomas clearly helps us understand these programs and even walks us through a case study that helps clarify how it could be done. There are different types of public aid to finance your research and development projects: The Research Tax Credit (CIR): Up to 30% of the expenses incurred, in the form of a corporate tax credit (IS) that can be reimbursed. The Innovation Tax Credit (CII): The CII allows companies to obtain a tax credit of 20% of the number of certain innovation expenses. The Young Innovative Company Status (JEI): Exemption from employers' contributions from URSSAF and IS. Bpifrance Aid: Zero-interest loan or subsidies of 25 to 60% of the R&D budget, Innovative Company label.

As the Biden administration escalates its threats against TikTok, the company’s chief executive made his first appearance before Congress on Thursday. Given the U.S. government’s aggressive recent posture, TikTok CEO Shou Zi Chew was destined for a harsh turn under the glare of the government’s big, bright lights — and that’s very much what played out across the hearing’s sprawling five hours. ChatGPT, OpenAI’s text-generating AI system, has taken the world by storm. It’s able to write essays, code, and more given short text prompts, hyper-charging productivity. The tech is not going away — and indeed has expanded dramatically since its launch just a few months ago. Major brands are experimenting with it, using the AI to generate ads and marketing and it won't stop there. India has long harbored a strong entrepreneurial spirit, and it’s not uncommon to see people leaving their jobs to set up their own businesses. A hallmark of that spirit is quite visible these days in the country’s flourishing startup ecosystem, which has expanded rapidly in the past few years, to say the least.

Episode 30, The SVB Collapse is sending shockwaves throughout the market but let's review what really happened. Act 1 – We developed ANOTHER Technology Bubble, Interest rates cut to zero. The developed world received thousands of dollars in stimulus checks sent to people, and tech stocks rose significantly. In 2020-2021 you had a tremendous amount of cash being dumped into these tech start-ups. This caused SVB deposits to multiply from $62 billion > $198 billion USD in Deposits Act 2 – A tremendous amount of cash was deposited into the SVB balance sheet, and the bank had discretion to re-invest that money. The problem was the SVB was trying to provide loans to their clients in the technology scene, but they all had too much cash already. So, what SVB did was that they took a lot of long-term bonds, which is extremely interest rate sensitive. Now with interest rates rising, you have less demand to invest in start-ups, many of which were unprofitable and many with unrealistic business models. Deposits by this point dropped to $165 billion. Act 3 – March 8th, Moody’s calls SVB and notifies them that they will be downgrading the bank and on March 10ththey downgraded them to a C-rating following the collapse. WHY? Because of all the exposure to all these long-term bonds and notes, and with rising interest rates they were forced to increase the saving rate payout to keep the customers from moving their money to a competitor bank.  The Moody’s call pushed SVB to sell all their $21-billion USD in long-term assets at a $1.8-billion USD loss, and Act 4 – Once the SVB tried to sell $2.25 billion of its stock to investors to make up for the $1.8-billion USD loss and instead of helping it triggered panic, which further dropped deposits by another $42 billion USD to around $ 120 billion USD in deposits. 85% of all deposits were uninsured; so, it means that many of their customers didn’t diversify their banking, and every company should diversify their banking relationships. Act 5 – SVB UK Acquired by HSBC, shares in HSBC fell 3.5%, while Commerzbank slid around 12% and Credit Suisse was down 9.4%. Elsewhere Sunday, U.S. regulators shut down New York-based Signature Bank, a big lender in the crypto industry, in a bid to prevent the spreading banking crisis. First Republic Shares Fall 60% Despite Liquidity Reassurance 2-year on: March 08, 2023 -  5.05% March 13th, 2023 at 4:30 PM - 4.095% 0.97% drop, which is the largest drop in such a short period of time This means that the market expects the Fed to stop raising rates.

Fed Chair Powell says interest rates are ‘likely to be higher’ than previously anticipated. If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes. Powell said the current trend shows that the Fed’s inflation-fighting job is not over. In their December estimate, officials pegged the terminal rate at 5.1%. Current market pricing moved higher following Powell’s remarks, to a range of 5.5%-5.75%, according to CME Group data. BlackRock says European companies are showing ‘surprise resilience’ — and better value than the U.S. The Wall Street giant highlighted in a note Tuesday that European fourth-quarter earnings showed corporate health extended beyond the region’s bedrock sectors of banking and energy. Regional stock markets have been on a good run year-to-date but remain at a discount both on a historical basis and versus U.S. peers. The global human population reached 8.0 billion in mid-November 2022 from an estimated 2.5 billion people in 1950, adding 1 billion people since 2010 and 2 billion since 1998. Population in the world is, as of 2022, growing at a rate of around 0.84% per year (down from 1.05% in 2020, 1.08% in 2019, 1.10% in 2018, and 1.12% in 2017). The current population increase is estimated at 67 million people per year. By 2100 we can expect that population growths will cap at around 10+ Billion people living on the planet.

Swatick breaks it all down in this special episode about the country of India. Strong economic indicators India is the fourth largest economy in terms of purchasing power parity The nation’s GDP is expected to grow by over 8.5 percent in 2010-2011 Liberal and transparent foreign investment regime Well developed banking system and vibrant capital market Strong and independent judicial system Among the highest rates of returns on investment Incredible human capital skills A strong pool of scientific and technical manpower from such places as the  India Institute of Technology and the India Institute of Management Over 255 of Fortune 500 companies getting services from India Second largest English-speaking population in the world Abundant, high-quality, cost-effective, competitive manpower. Over 100,000 IT professionals added each year IT Industry over US$14 billion and growing at 50 percent per year Pervasive entrepreneurial spirit Prevalence of foreign technology licensing: Ranked 1st in the world Availability of scientists and engineers: Ranked 2nd Quality of management schools: Ranked 9th Firm-level innovation: Ranked 12th Firm-level technology absorption: Ranked 16th Easy industrial licensing policy Under the Industries (Development and Regulation) Act of 1951, an industrial license is only needed for items that fall under compulsory licensing, are reserved for the small-scale sector, or in a location that is restricted All industries exempt from industrial licensing are required to file an Industrial Entrepreneur Memorandum No approval is required, only notification needed Financial sector reform Stable tax regime; only three rates of indirect tax and trade facilitation measures have been introduced The Foreign Exchange Management Act, of 1999 provides a liberal regime; forex procedures are straightforward Stocks can be sold on without prior approval Profits, dividends, and capital investment can be repatriated Royalties can be paid by wholly owned subsidiaries to parent companies

In Episode 27 we discuss Fundraising by venture-capital firms hitting a nine-year low in the fourth quarter. Venture firms raised $20.6 billion in new funds in the fourth quarter. That was a 65% drop from the year-earlier quarter and the lowest fourth-quarter amount since 2013.  “Dry powder” would prove to be “wet powder ” as venture capital funds opt to support existing portfolio companies through rough times over making new investments. Recent data from the secondary marketplace shows that bridge rounds became more common during Q4 2022 at every stage, from Series A to Series D. Treasury yields hit new highs last week, with 10-year yields approaching 4% and two-year reaching 4.7%. Short-term US Treasury yields reached their highest peak since July 2007 last week, after new official data revealed the US economy is still coming in hot. The ten-year Treasury yield is an indicator many use as a benchmark for the economy. The Fed is more determined than ever that more interest rate increases are needed. Let’s take a look at what’s driving yields up and if inflation is here to stay.

Venture funding has started flooding back in at least one area: Secondaries! But what is a Secondary? Ralph DiFiore, discusses his experience raising money for one of the pioneering secondary funds in the market. What is the market for it and who is to benefit but more importantly why is it useful? Meta’s Reality Labs lost $13.7 billion on VR and AR last year. What is the Largest US Venture Funding Deals Of 2023, it’s clear that AI is the big winner but Biotech is not too far behind.

In episode 25 we discuss the Fed Funds rates, and we all agree that they are going up. We discuss the EU market and find that there are many amazing deals but they are typically in the smaller size versus the United States but could be seen as attractive. George Santos is a hot topic and much more. 

In Episode 24 we go over the economic situation and the current environment. The technology sector is showing a lot of layoffs, opening the floodgates for many other companies, even those not in the technology space, to let go of employees and reduce their operating costs. What's going on with the Venture Capital world and what does Dry Powder really mean? 

Apellix is a patented Software Controlled Aerial Robots (Drone) with Precision Flight, that autonomously Paint/Coat, Clean/Surface Prep, and Measure Paint Thickness. Apellix is an aerial robotics company that develops autonomous aircraft with robotic arms and end effectors (hands) for use in industrial applications and the built environment. Apellix engineers safer workplaces by programming drones to perform tasks in dangerous environments, with the worker safely out of harm’s way.  The nondestructive testing (NDT) drones perform ultrasonic testing (UT) on wall thickness and dry film thickness (DFT). To perform measurements, the pilot navigates the aircraft to the desired inspection area and activates the autonomous flight. The onboard computer then programmatically flies the aircraft to the material surface and achieves contact for measurement readings. Once sufficient readings are obtained, the aircraft backs away from the targeted wall and returns to a safe position awaiting navigation to a new area. Data can be reviewed in real time on the ground at the test site, or securely in the cloud. The full data is also as an Excel or CSV file for review and records retention.   Their drones also offer a Powerwash/Cleaning Drone, that is able to spray 3,000 psi at 8 GPM on 120' elevated water towers.  The Spray Painting Drone is currently under development.  Safety is fundamental at Apellix. By removing workers from dangerous environments, Apellix is engineering a safer occupational workplace for the maintenance, inspections, cleaning, and coatings industry. They create technology that eliminates the need for personnel to physically access elevated industrial surfaces and/or come in contact with dangerous substances. Reducing the number of injuries and deaths attributed to falls or hazardous substance exposure is a motivation they take with enthusiasm and pride.  

Episode 22, we have Mark Gaalswyk, the CEO of Easy Energy Systems (EES). EES designs, manufacturers, operates, and sells patented 1M, 2M, and 5M gallon per year, small-scale, modular biorefineries called Modular Energy Production Systems (MEPS®) for the production of alternative liquid biofuels from organic waste streams. MEPS® biofuels can be mixed with, or can selectively replace, gasoline derived from fossil fuels. Their systems are centrally manufactured and can be shipped anywhere in the world, thus we are able to bring new energy sources to locations that would otherwise not have access to it.

The Exit Strategy Podcast is #live on the floor of the most influential tech event in the world with Gustavo Neiva de Medeiros, CEO of TeleUP & WISPTV an #analytics tool in the #B2B space for #TV streaming content creators. Gustavo has over 20 years of #entrepreneurial/C-Level #experience in the TV Streaming space with global success. Gustavo is also an angel investor & a VC investor. We sit with Gustavo to understand what he is doing at #ces2023 / #ces2023w3t  with my #FAST partners (Free advertising Supported TV) and the search for a unicorn at Eureka Park (where all the startups are located). We go over what he's seeing at CES 2023 and there is clearly a very noteworthy discussion regarding Artificial Intelligence and the clarity has come from the development in #ChatGTP and the clear #developments of what's coming next in the artificial intelligence space. #streaming #startups #artificialintelligence #development #success #tech #advertising #content #event #ceo 

Episode 20, it’s part two of the start of 2023. We have Sebastian Laye back on the show, Sebastian just published another article on the New York Times Equivalent in France, Le Figaro, the view on how Inflation is hitting the economy in Europe. We go over the 2022 market, the impact of everything on the stock market, and the decline of the CAC 40, the S&P 500, and the NASDAQ. The decline in funding to the growing economy could realize an uptick in the consolidation play in the market as funding tightens along with the increase in inflation, forcing companies to consolidate or realize a failure/bankruptcy. But what does consolidation look like? We have not seen this kind of market in quite some time; so what is the take from our hosts that have been in the Financial space for quite a number of cycles? 

Episode 19 of the Exit Strategy, 2023 is here and we are looking back at 2022 and discussing how the market has changed. The market has not seen a real interest rate environment since 2008, and we need to come to realize that the market forgot how to manage this kind of market. What this means is that for the past 15 years we have had a zero interest rate environment which means many funds were built around this environment, and we could expect to see that funds will need to rework their LP Agreements to reflect a real interest rate environment. We discuss that market consolidation will be a very positive thing for Venture Capital and Private Equity investors but do the market leaders understand this? Major LPs could see for the first time in a long time, a market where they can invest in government treasuries and perform at a higher rate than their cost of capital; so this could mean a slowdown in their investment into the private and start-up market. But what was the impact of there being a 15-year zero-rate market? It seems to have allowed us to form mega tech companies like Facebook, Google, Amazon, etc. In 2023, we are starting to see more regulations coming into the technology market through congress, as we expect more social media regulation is coming in 2023. We try to figure out how TikTok is different in China versus the United States but what does data collection from TikTok really adversely impact us? Nasdaq closes out its first four-quarter slump since the dot-com crash in 2008. It dropped 9.1% in the first three months of the year, followed by a second-quarter plunge of 22% and a third-quarter decline of 4.1%. It fell 1% in the fourth quarter because of an 8.7% drop in December. For the full year, the Nasdaq slid 33%, its steepest decline since 2008 and the third-worst year on record. The drop 14 years ago came during the financial meltdown caused by the housing crisis. Overall we are positive in 2023, and we look forward to what is to come. We expect market consolidation to happen in the technology space, and there to be changes in spaces such as renewable energy and we are excited to our live discussion at CES 2023 with Gustavo Medeiros and Sebastian Laye for the European view of 2023.

Episode 18, we welcome Hans Blankenburgh, who is the Chief Representative of #NBSO a Dutch Agency Responsible for Aiding Dutch Companies Expand Into the Americas. We discuss with hand how the agency helps in the expansion, and what steps the government takes to facilitate international expansion into the Americas. Hans feels that expansion through a local acquisition is the best way to expand into new territory as you acquire: clients, cash flow, and a structure with working employees who have the experience of working with the local culture, regardless of which country you are expanding into in the Americas territory.  We go over the new quantum technology accord between the Netherlands, France, and Germany with the intent of joining forces to put Europe ahead in the quantum tech race. To meet the challenge of European (open) strategic autonomy in this technology area, and to create the basis for future European leaders in quantum but we really want to know how the Americas, especially the US & Brazil could work with the companies within this pact as they seek to expand or look to exit with a US or Brazilian organization, through M&A.

In episode 17 of The Exit Strategy, we have Charles Bennett, an adjunct professor of leadership and executive coach. He has taught the topic of leadership for many years and expresses how its definition differs.  Charles Bennett clearly identifies how leadership styles differ in the USA vs. France, and Charles goes through his experience of working at Cartier in North America and France, and despite it being the same company, the leadership was quite different. Charles believes that leadership is and could be a title but at times a leader rises to the occasion, and that leader could be more impactful.  Leadership in the USA is seen as you either have it or you don’t but in France leadership is bestowed and granted to the person.  Swatick discusses his experience dealing with leadership in India, and how leadership was less delegated compared to the USA and especially France. Ralph, being one of the founders of Chatsworth, has seen how leadership has changed significantly since the foundation of the organization.  Elon must is a great example of how you could be in the same country, start SpaceX, and Tesla, and become the leader of Twitter, and what skills are important in leadership in various industries even within the same country.  Charles working at the greatest educational intuitions in France sees how leadership changes through going through educational training and implementing those skills in real-life situations providing confidence by putting the mirror in front of them to honor and own the success of their careers.