This article provides a concise overview of Maria's speech, highlighting key points and offering valuable takeaways for investors and entrepreneurs alike.
Watch Maria's keynote speech here.
Understanding Equity Crowdfunding and Venture Backing
Maria began her speech by distinguishing between equity crowdfunding platforms and venture-backed platforms. At Stride, we combine venture capital with equity crowdfunding.
We have set up Stride Lead, a venture fund that co-invests with the Stride Equity crowdfunding platform. Stride Lead co-investing up to 20% of the round, while retail and wholesale investors contribute the remaining 80%. Stride Equity is the first venture-backed equity crowdfunding platform in Australia.
Unlocking Opportunities in the Pre-IPO Bridge Funding Market
Stride Equity's focus lies in supporting pre-IPO companies. Maria explained that due to the current state of the IPO market, many well-established private companies with revenues, profits, and dividends are not going public. At Stride Equity, we believe that this situation presents an exceptional opportunity for investors to explore these companies, given their attractive valuations and favourable terms.
The Importance of Exit Strategies
Maria emphasised the significance of considering exit strategies before investing. She highlighted that we prioritise exit plans at Stride Equity when evaluating potential investments. She discussed the main opportunities for exiting a company: IPOs and mergers and acquisitions (M&A). and the current challenging market environment, which we last saw in the late 90s.
Factors Affecting the Market Environment
In her speech, Maria discussed various factors impacting the investment landscape. She highlighted geopolitical tensions, such as the war between Russia and Ukraine. Additionally, she addressed the shifting power balance between China and the US, along with inflation concerns and potential interest rate hikes. These factors, coupled with technological advancements and the potential displacement of jobs by AI, contribute to an environment of uncertainty but simultaneously create many opportunities for investors. Maria predicted that this environment would persist until around 2025, making it an attractive space for investors.
Optimising Exits: Key Considerations
Maria provided essential insights on optimising exits for both founders and investors. The timing was identified as a critical factor, taking into account macroeconomic conditions and the company's growth cycle. The ideal scenario for an exit involves maximum valuation, peak revenues and profits, a robust human resources base, and a balanced board. She also emphasised the importance of demonstrating future growth potential and aligning interests between shareholders and the company.
Other considerations discussed included keeping relationships open and maintaining clear communication with shareholders, investors, and potential acquirers. Building these relationships and exploring regulatory considerations should begin early in the business's life cycle to maximise exit opportunities.
Examples of Potential Exit Strategies
While Maria emphasised that her examples were not investment recommendations, she showcased two notable cases to illustrate the criteria for successful IPOs and M&A deals.
The first example highlighted Redox, a family-owned company with consistent growth in revenue and profits over the past decades. Redox’s IPO is a good case study for a well-prepared and executed liquidity event.
The second example showcased the Newmont/Newcrest acquisitions. This deal highlighted the execution of a long-awaited transaction with substantial synergies. Though it was not a complete exit for shareholders, it can be viewed as a partial exit due to the special dividend shareholders received.