Missed out on an Amazing VC Deal... Let's talk :(

Hello Everyone, 

Hope you're well during these tough times. 

I'll keep this short for all my busy folks. 

I have been in the CRE Sales/Asset Management space since College and started VC Investing a few years prior. (at the VERY VERY micro level) Simply because VC returns are amazing. 

The Story about the VC Investment: 
about 4Yrs ago I met a family that grew up not-rich. They worked hard via many blue-collar jobs (Retail service, Truck driving, leasing, etc) for 13+ yrs. 

When we spoke they talked about how they are scrapping up $1m to start a franchise restaurant chain company. We were friends and so we talks a great ton about it and gave them insights over the months. They asked me if they wanted to provide capital because they need it to put the $1m as a Down payment. I chickened out for the associated risks of that industry. 

Fast forward 4yrs. They have turned their $1m investment into a $100m company . 

AMAZING... I was insanely bummed out for weeks. 

FYI: 3.5-4yrs ago, $100K was equal to about 9.5% of my total net worth 

The Potentials of the VC Investment. 

Invest $100,000 

Equity stake = 10% 

4Yrs later... Company was doing about  $9M - $10M in NOI. 

THUS, at an average of 11X - 12X EBIDA multiple, the firm would be worth $100M. 

Thus, making it a 10,000% ROI over 4yrs for me.... 
I am truly upset!!! at my myself. 

They wanted $100K - $250K from me for a 10% - 20% stake in the company. 

If I listened  and invested just $100K for a 10% stake. I would have walked away with $10M today.. 

Comments (12)

Most Helpful
  • Principal in RE - Comm
Jan 16, 2022 - 4:05pm

I instead invested in a few smaller companies. 
So far they're doing well. 

a) I invested into a power washing company 

     Added in $25k for a 10% stake 

     As of now the firm does about $604K per Yr in profit. Valuation is about $4.23M 

    My stake is worth about $423K 

b) A car detailing company in New Jersey 

     Added in about $20K for a 10% stake. 
   As of now, the company does about $810K in profit per year. Valuation is about $4.9M 

   My stake is about $490K 

I was a seed investor. I met the entrepreneurs (of the companies above) when they were just starting out the ventures. 

  • Associate 1 in PE - LBOs
Jan 16, 2022 - 7:22pm

Don't mean to rain on your parade, but those valuations are off. No one is paying 6-7x for Bob's Corner Washing Business. Such shitcos regularly trade for 3-4x tops. 

  • Principal in RE - Comm
Jan 16, 2022 - 4:18am

Do explain your statement. 
So you're saying.. my involvement would have made it worse for them? 

  • Principal in RE - Comm
Jan 16, 2022 - 4:00pm

The range varies. So I'm assuming a average multiple. 
Many <$50m businesses in my area trade at 7X - 8X

Jan 17, 2022 - 2:52pm
Friedmaneconomics, what's your opinion? Comment below:

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