- [Neil] Hey everyone,
it's Neil Patel and welcome to another day
of Growth Hacking Unlocked.
If you missed any of the previous lessons
you can check them out at Neilpatel.com/training
and click on growth hacking unlocked
this is the second lesson where
we talk about raising capital
where we focus more on the later stage.
If you think about the sources of wealth
if you look at some of the most richest people in the world
Jeff Bezos, Bernard Arnault and family
I don't know how to say his last name
I do apologize just for that.
If you're listening Bernard
although I know he probably is not listening
Elon Musk, of course
and then you have Bill Gates.
When you think about funding, there's a lot of stages
as I mentioned last in the last lesson
in this lesson we're talking about the later stage
a series D, E, F, H, late stage, M and A, IPO,
leveraged buyouts, secondary offering.
When you think about a lot of the large companies out there
there's a lot of successful people who ended up making money
through their startups, many cases, they raised money
and then they ended up selling
or they use leverage or took IPO,
like you look at the GoPro guy, right?
He went public,
he's been on Shark Tank a few times.
Mark Cuban Broadcast.com was acquired
by Yahoo for 5.7 billion in stock.
Kevin O'Leary, Mr. Wonderful,
he, in 1999, TLC was acquired by Mattel for $4.2 billion.
When you think about series A, B and C rounds
that are typically smaller
these days I'm seeing A rounds a lot of times around 10, 15
even 20 plus million dollars.
In series A funding, investors are not just looking
for great ideas.
They're looking for traction.
So you need to make sure
that you have a money making business.
And the average estimated capital raise
for a series B round is 32 million
and series C rounds typically are focused on scaling
as well series B.
Now with series D, E and F,
you know people are like, alright, you got a real business,
you're headed towards IPO,
you want to expand before going public or selling
and there's not a lot of companies
that make it to series D, E and F.
So when those companies do make it out there,
there's a lot a lot of pent up demand for them
and the valuation and pricing, just go to the roof.
Just look at UI path.
When UI path first started raising money,
you know much lower rounds
and then later on, the valuation started going high
and at one point before they went public,
people were like wait,
their last private round may be higher
than the valuation of when they're going public.
Now, eventually it all sorted out
and their investors did fine
but that just shows you how much pent up demand there is.
You all know that we work example as well
in which we work at higher valuations
in the private market than they did in the public markets
and people learned a lot from that
but generally speaking,
what they ended up seeing, with the whole
we worked fiasco, is with a lot of these companies,
they, you know, the private investor is like all right
we need to make sure unit economics are right
and these companies have long-term potential.
Now with M and A that just stands
for Mergers and Acquisitions.
You know, a lot of people go out there
and they just buy companies.
You can merge with others, or you can buy
like Facebook bought Instagram,
they bought WhatsApp, Google bought YouTube
and Microsoft has bought a ton of companies
including Skype and GitHub
and that is what happens in the M and A ramp
heck, they even bought LinkedIn.
And as you grow your company, what you'll find is
you know, you'll generate revenue over time
and M and A is just a negotiation.
The better technology you have, more something unique
that you have, the better pricing you're going to get
the bigger you are better pricing as well.
But if you want to set a lot of these things, right
from fundraising to acquisitions, even potentially merging,
you got to really fine tune your marketing do growth, right?
Which we'll cover in the next three lessons.
And it's everything from searching optimization
to doing affiliate marketing, to social media, to ads
whether it's on Facebook, YouTube, or Google
you know participating on LinkedIn, even leveraging things
like clubhouse, doing email marketing, push notifications,
messenger bots and essence marketing has turned
to omni-channel approach where you can't just
use one channel to do well.
You kind of got to use them all.
And that's why if you go to Neil patel.com/training,
you'll see that I have courses in content on everything
because marketing has turned into an omni-channel approach.
Google purchased Wildfire in July 2012
for 450 million roughly
which was at least what was reported online.
And regardless of the economic conditions,
these companies like Google and Facebook,
they all have a lot of cash
and they're willing to spend it in any sort of economy.
And you can grow a lot through M and A.
Just think about Minecraft or Microsoft and LinkedIn
and the potential synergies are endless out there.
And the whole thing I have for you is
when you're doing this, just make sure it's strategic
if you're the one buying,
and I have a whole guide for you
which you can find at Neil patel.com/training
click on Growth Hacking Unlocked,
then go to week one
it's a second lesson in there, and download the guide
and it'll help you.
Going back to funding stages as I mentioned,
there's Private Equity,
there's Venture Capitals, Public Markets.
Typically what you'll find is, the venture capitalists
will give you higher valuations for Private Equity
cause Private Equity is typically cashing out founders.
Then when you think about Merging and Acquisitions
you can end up getting paid a little bit more
than what you can in the private markets
selling to a Private Equity Company.
And then with public markets, if you go IPO, typically
that's where the highest valuations are.
In many cases,
what you'll find is when companies buy you
and they're publicly traded,
let's say you get bought out by like a Salesforce.
If they're valued at 60 times profit
I'm making it up or 90 times profit
and they're buying you for 10 times profit or 20 times,
they're making money on the buy
cause the markets are evaluating more than
what they gave you cash for.
And that's why a lot of people go public
because when they go public, you know, you can raise money
and then you can use that money to buy companies for less
when the public markets value at you for way more.
So you got to think about your exit strategy
and what you think is right for you
but you don't need to worry about that too much right now
because if you listen to this course
you want to grow faster
and typically you're going to be in the earlier stages
and you may want to think about funding
and what capital can have to your company
what effect it can create.
Can it help you grow a lot faster?
Can you end up just scaling up much quicker?
So think about that when you're thinking about
the whole funding thing.
Now, if you have any questions
you can leave a comment below.
If you liked the video
make sure you like it, share it, tell people about it.
And if you just want my ad agency
to help you with your growth marketing,
you can check out NPdigital
and next week, we're going to go into specific tactics.
Thank you for your time.