Veteran I-Banker Greg Porto Part I: Raising the Next Round

For this week’s interview, Venture Hype got in touch with Greg Porto, a veteran investment banker and business advisor who’s cool enough to give us a quick overview of what he does for growth-oriented startups. This is part I of the interview. In part II, Porto will point out some common mistakes companies make and offer advice to keep them ahead of the competition.

Greg Porto is the managing director of Ion Partners, an investment bank that works with growing, innovative companies. The seasoned I-banker frequently advises clients ranging from startups to Fortune 50 corporations across America. Areas of focus include: mergers and acquisitions, capital-raising techniques and transactions, and strategic growth development and execution — with particular expertise in the tech industry, e.g. software, communications, and digital media.

Prior to joining Ion Partners, Porto ran a strategic advisory firm whose client list included investors and high level executives. He was also the managing director and principal of several investment banks in the ranks of Kidder, Peabody & Co. and A.G. Edwards & Sons. Aside from the I-banking arena, Porto took up the roles of CFO for a rapidly expanding entertainment company and managing partner for a branding and public relations agency.

Of course, Porto wouldn’t let his impressive rolodex go into waste. Since joining Ion Partners, he often introduces early-stage investors and startup management team to his extensive network of legal advisors, operating executives, joint venture partners, potential advisory board members, and private equity and venture capital allies — key players who can “shake things up” for the company.

* Edited interview

VH: What does Ion Partners do?

GP: In a nutshell, Ion Partners helps angel-backed and growing companies make the transition to institutional investors. My client base is 500 miles from Chicago. While there are ample providers of ‘risk capital’ in Chicago, such as private equity, venture capital and junior debt funds, it’s often more difficult to source institutional capital in some smaller Midwest geographic markets. This means angel investments may be riskier, and returns lower, if companies can’t obtain the next, bigger round of capital that typically comes from institutions. We help to bridge that gap by connecting growth companies to institutional capital providers, so these companies can reach their full potential.

Outside of Chicago, we’re also very active in St. Louis, an entrepreneurial market where startuppers are building businesses in industries like technology, health care, life sciences and agribusiness. Though a vibrant angel network exists in St. Louis, there aren’t enough institutional investors to supply the next, bigger round of funds. Again, we’re here to help.

VH: So the focus is on raising the next round from later stage investors. What about you? How can you help these companies on a more personal level?

I’m more sales-oriented than most financial guys – I think it’s due to my firsthand experience with branding, marketing and public relations companies. I can package an investment opportunity in a way that clearly presents the value to the institutional investor and communicates a sense of urgency to invest. When I’m raising money, I put myself in the investor’s shoes, so I can address their concerns and make the deal as ‘investor friendly’ as possible. This collaborative approach has been well-received, and I also get to land the best deals for my clients while building lasting relationships with everyone involved.

VH: Time and again, sales and marketing are some skills to have. What about valuation? How do you go about preparing for the process when raising the next round for startups?

GP: We break the valuation process into two steps: 1) The Basics and 2) The Presentation.

1) The Basics are the numbers. We analyze things like:

• market size and potential market share
• valuation of comparable companies
• financial forecasts and discounted cash flow scenarios
• current and future capital needs
• prior investments in the company
• value of intellectual property

2) The Presentation. Numbers aren’t enough. Remember a company is only worth what an investor is willing to pay. We address the needs and concerns of the institutional investors in the presentation, and we gain investors’ confidence by speaking their language and demonstrating our insights and competence.

When arriving at a proposed valuation, Ion takes into account critical factors such as:

• the management team’s track record and capability
• demand and competitive advantage of the product or technology
• quality of the board of directors, board of advisors, technology/industry advisors
• proposed deal terms

That said, quantitative and qualitative factors are equally important in valuing a company. Join Venture Hype tomorrow as Porto offers advice to startups and shares his perspectives on the kind of companies that will most likely weather the economic storm – insights that angel investors can draw on.

Link:

• Ion Partners