I couldn't believe how much money I was leaving on the table
My roadmap to +$100m net worth in 3 years
Most people who read this newsletter know me as the author of best-selling books Pitch Anything and Flip the Script.
And if you’re one of them, chances are you’ve read about one of the crazy deal stories in those books and thought to yourself “Hey Oren no way that really happened” and then if you’re like most people you started thinking …
“I really hope that actually happened".”
Just in case you’re wondering… yes, it all happened.
But here’s the truth about being a complete savage of a dealmaker: a lot of the stuff I wanted to write about, my publisher cut out of both my books…
Even though my books most certainly frame me up to be a –ahem– rather heroic main character in those stories, those were highlight reels and it’s not like I’m negotiating with Russian oligarchs everyday, selling car factories in a foreign country, or pitching the construction of a major airport.
The truth is, the deal business is a #^%$*& thankless grind.
First you have to find a good deal from the dumpster bin of the deal word, then you have to figure out some fresh new angle to pitch the deal that one else has thought of, then manage a capital raising process, and eventually … get paid something for the months of work and risk taking.
But also, you could easily not get paid. Worse, you could be stuck hard up and wind up losing money instead.
Don’t get me wrong. I’ve done plenty well for myself over the past 15 years – I’ve personally participated in more than 250 transactions, both buying and selling equity in companies, usually getting some sort of large fee for doing so.
But the deal business is built on a fundamentally broken business model that has all the same problems every “Agency”-style business has:
You constantly have to defend your fees… because no one likes to pay for $1000/hour professional services.
You have to tell the clients they wasted a ton of money so far on a “cheap solution” and now they're starting over from scratch.
And otherwise solve problems that you don’t get paid for in order to get the job done and cashed out.
What kind of problems do companies have, you ask?
Almost always, the problem is the management team itself.
After all, the reason they hired me was because they couldn’t get the job done on their own.
But in order for me to help a company raise capital (or otherwise sell the business), I have to produce the following documents:
Pro Forma Financial Model: This HAS to be done by my team (not yours) because your entire capital raising efforts rely almost entirely on The Numbers. You MUST have current financials and a bulletproof financial model that looks professional like you do this all the time.
Pitch Deck & Teaser: Most people think that all they need is my Magic Pitch Deck to raise unlimited amounts of capital for any project, no matter how dumb it is.
News flash! Without the Pro Forma numbers, there’s no way to build an effective story about the deal (and how the investor will make money with you.)
Securities Documentation: Last but not least, if you actually want to collect checks from investors, you need to have some sort of legal document (like a private placement memorandum) in place to accept funds. I am shocked by how often clients assume this 200-hour body of work is my job (spoiler: its not).
But here’s the thing…
Even if I manage to produce alllll of those items for the company raising money, and even if I manage to set the founder up with tons of qualified meetings with investors…
I don’t get paid unless they can close those investors and collect the cash.
This means I now have to train the management team on the Pitch Anything Playbook – of which I don’t get paid any extra to do – in order to get paid the fees they likely already don’t want to pay me, and may try to stiff me on.
As a matter of fact, anytime I had smart people on my team – like ex-McKinsey consultants – they always tried to help the client’s company “actually be better” by fixing some kind of product or marketing problems, and I always had to stop them from doing it.
Every time we’ve ever tried to help them improve their business, they almost always ignored the offered help. And if they used our help and it worked - they wouldn’t pay for it.
This, in turn, creates a very lumpy revenue stream that is high-stress for me and everyone on my team (for anyone whose worked in finance, legal or advisory services I’m sure you can relate).
For years, this was always just “the way things are done” in investment banking and advisory services– you get them the money, you get paid, and then you get the hell out.
But here’s a question that has haunted me for a decade: how do the investors make out after my job is done?
For 15 years, I wasn’t really concerned with the answer to that question.
My job was to raise money for the company, not to make a deal “perform.”
That all changed a few years ago when I accidentally bought $60m for $20m in a deal I where only one thing was different from every other deal I’ve done.
In order to get the deal closed, I had to attach my name to it.
In other words, I vouched for the management team, I put my name on the due diligence materials and, going the other way, I had to vouch for the investors.
There’s obviously a huge risk to doing this – If anything goes wrong, all fingers will be pointing at me saying “YOU got us into this.”
(this is exactly why most Financial Advisors sound like an “Apple disclaimer form” when they’re talking to you. They want zero liability.)
The Big Idea in 10 seconds: Even though I have a plenty big ego about the value of the Oren Klaff name, it wasn’t until I started attaching my name to large financial transactions did I see some impossible deals start to happen.
The moment that first “Oren Klaff” deal closed, I immediately saw a new opportunity for me – not just as a dealmaker, but as a company builder and investor.
Now that I had my money and my name at risk in the deal, all of a sudden, a lot of these issues I never really cared too much about in the past became very relevant for me.
And what about the old way of matchmaking companies and capital institutions?
Once I learned the cheat codes behind how private equity funds (and other financial brands) REALLY make those huge returns, I wanted OUT of the “clipping transaction fees” business model.
As I put my new high-performance business model together, a lot bankers, lawyers and other pros I rely on told me “This will only work in if you partner with the cashed-up, deal-savvy and ‘smart’ investors in Silicon Valley, Boston, New York, Dallas, Austin, Chicago and Los Angeles.”
Well that’s comedy right there!
Because If you’re telling me I NEED a certain kind of Ivy League investor from the Bay Area or Boston to do some great money-making deals, you don’t know anything about me:
Because I literally wrote a book about one simple idea: NEVER BE NEEDY.
That’s why I decided to Flip the Script on so-called professional investor networks, and just build my own.
In Oct 2021, West Coast Finance was born!
For long-time readers of this newsletter, you’ve already seen the 10,000 sqft facility I’ve spent more than $2m building:
In fact, I just put another $250,000 into the facility to make some more upgrades. And I even built a brand new podcast station.
Why am I doing this?
Because I believe we are moving into of one of the greatest money-making opportunities I’ve ever seen in my career!
And that opportunity is to build a new capital market ecosystem designed to do one thing, and one thing only…
Take exciting, private companies from their debut private financing to their initial public offering.
I call it…
THE IPO FACTORY
Over the next 12 months, I am going to be the lead investor for four financings in four different companies that I am putting my own personal money – and reputation – at stake.
My investment thesis is simple: Invest in companies I can (potentially) take public in the next 1-3 years, with a target 5-10x return in 5 years.
After I invest, the large funds I work with and my investment banking colleagues will write the large checks.
But here’s the catch… just me and 5-6 big funds are a very small cap table.
In order to qualify for a Nasdaq or NYSE listing, I need 400 shareholders to meet the listing standard.
Ideally, 400 small – but important – shareholders who understand the playbook we’re running and aren’t going to muck up the deal for everyone else.
THATS WHERE YOU COME IN!
Want to find out what I’m investing in?
I’ll be hosting a webinar this FRIDAY Sept. 22 @ noon PST where I’ll tell you all about it. Click here to save your seat.
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