Personally, I have never worked with angel investors, but I know other people who have. From talking to other folks, I'm not sure anyone would call them "angels" after they hand over the money. I'm sure it depends on the investor, but let's face it, they are after the money and nothing else. And just like you would, they want to protect and grow their investment. Some can get pretty tough to deal with.
Before I started my first business, I was told that it's always best to go it alone if you can. Only bring in an investor if you have no other choice, and then be ready to give up some control because the person supplying the money will most likely want to be involved than you want them to be.
I have had several customers that offered to invest in my business. Upon consult with others, I opted to go to a bank for financing as needed. The reason was that with a bank, it is cold and formal, and everything is according to Hoyle, whoever he was.
With customers as investors, I was afraid there would be favors and gimmes that could interfere with the viability and independence of the business. With a bank, I could easily maintain my independence and function well.
Also, from a point of future sale of my business, if there is a good track record with a bank, then it is a real plus for the company. Better than a few lines on a financial that are more vague than explanatory.
So, 20 years later, I found out just how cold and indifferent the bank can be in 2007. I probably would have fared better with the customer/investor, but still would have lost most of what was gained from 25 years of steady 10-15% growth every year.
Technically, aren't angels and devils the same creature, depending upon your viewpoint?
While you are moving around the edges for financing, why not kickstarter? Venture capitalists and woodworking shops, seems like that would be the greatest sales pitch in the history of man if successful. I'm sure they like businesses with just a slightly higher profit potential. Oh just had another thought, Shark Tank!!!!!!
Pat, You think ag is going to do well? Ask John Deere, they are down 27% for the first quarter for ag and turf, expecting a 23% drop for the year.
My point exactly with the Shark Tank, same response would be expected with venture capitalists.
Mel, I'm really tempted with that bet, but since I have no idea what you make, where you make it, how much money you are after, and even how long you have been in the industry, it's just too long of odds for me. Oops, maybe that is your creative way to raise money! How long have you been a business owner?
I agree that not many wood products businesses would fare well in the Tank. Nevertheless, I enjoy watching it, and feel it helps me focus my business when I think how I would have to answer some of the questions they pose, and then what the "right" answer is.
Brief Diversion: Does anyone watch The Profit? I find it predictable and a bit too dramatic. But then, just like passing a car wreck, I cannot resit looking. Maybe it is the same reasons that people watch soap operas - it makes their own lives look tolerable by comparison.
I watch The Profit as well. And, like the ST, I find it not only entertaining but generally educational as well. As "Uncle Kevin" says, "it's all about the money". A common problem with crafts/trades-people is that A) they often are not great business people, and B) that leads to them not being very wealthy and therefore C) they think their products are too expensive. So, rather than try and make the business more efficient (usually by growing/expanding) to lower their costs, they lower their prices.
While it's not ALL about the money for me, I find the way these moguls think very instructional.
Of course the shows are dramatic - that's what grabs viewers, and viewers is what the producers are selling.
Deere & Company is the largest manufacturer of farming machinery in the world. Deere & Company also manufactures forestry and construction equipment. In addition, the company operates a financing division to help customers finance expensive equipment.
Deere & Company is one of Warren Buffett (Trades, Portfolio)’s most recent purchases. The company is a timely buy as it is nearing its cyclical trough which historically reduces the company’s earnings and share price. This gives long-term investors a chance to pick up shares of this high quality business for a discount. With a price-to-earnings ratio of just 11.5, Deere & Company appears to be significantly undervalued. Peak earnings during the company’s last cyclical peak were $9.08 per share. During the next peak, the company should see earnings-per-share of at least $10 per share. The company has traditionally had a price-to-earnings ratio of around 10 during peak earnings years which will result in a share price of at least $100 when the company reaches its cyclical peak. At current price, Deere & Company is likely undervalued by at least 10%.
The company’s competitive advantage comes from its brand recognition and reputation for quality in the farming machinery industry. Deere & Company’s competitive advantage has given it a 60% market share of the farming equipment industry in the US and Canada.
Long term growth prospects are bright for Deere & Company. Increased affluence and population growth in emerging markets will likely drive demand for food, grains, and farming equipment globally. Over the last decade, Deere & Company has averaged EPS growth of over 12% a year. The company should continue to grow EPS at a double-digit rate over full market cycles going forward. This will result in more-than-satisfactory returns for shareholders. In addition to solid growth, Deere & Company currently has a dividend yield of around 2.7%, which provides current income for dividend stock investors.
Food and agriculture accounts for about 5.9% of the global GDP.
Global food retail sales alone account for about $4 trillion/year, and food accounts for 15% of what American households spend each year.
It is an industry ripe for disruption.
This is a blog about how every aspect of food is getting disrupted.
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Sensors, networks, machine learning/AI, robotics, 3D printing, synthetic genomics, stem cell science and material science are going to transform how your food is produced, delivered and consumed.
While this arena is going to change dramatically, we forget how much food has changed already over the past two centuries.
In 1790, farm jobs accounted for 90 percent of U.S. jobs, compared to less than 2 percent today.
Farm Jobs, % of Total U.S. Jobs
And while farming jobs have been lost to automation, the global food supply (per capita) has steadily increased.
Global Food Supply Per Capita
As we move towards a world of food abundance, let's look at a few of the fun areas of transformation and entrepreneurial opportunities.
Bioprinting of Meat: Modern Meadow is a Singularity University company that uses bioprinting (tissue engineering and 3D printing) to grow meat (beef, chicken & pork) and leathers in a lab. Their vision is to do this at scale and dramatically reduce the environmental impact of meat production. In 2012, it took 60 billion land animals to feed 7 billion humans. In success, bioprinting of meat (beef, chicken, pork) has huge advantages: 99% less land, 96% less water, 96% fewer greenhouse gases, and 45% less energy.
Genetically Engineered Crops: We will increasingly rely on genetically engineered crops. In 1996 there were 1.7 million hectares of biotech crops in the world; by 2010, the number had jumped to 148 million hectares. This 87-fold increase in hectares makes genetically engineered seeds (GEs) the fastest-adopted crop technology in the history of modern agriculture. After 30 years of research, a great many of our fears about genetically engineered products have been quieted. More than a trillion GE meals have been served, and not a single case of GE-induced illness has turned up.
Vertical Farming: We will grow our food in AI-controlled vertical buildings, rather than on horizontal land. Vertical farms will be immune to weather, so crops can be grown year-round under optimal conditions. One acre of skyscraper floor produces the equivalent of 10 to 20 traditional soil-based acres. Employing clean-room technologies means no pesticides or herbicides, so there's no agricultural runoff. The fossil fuels now used for plowing, fertilizing, seeding, weeding, harvesting, and delivery are gone as well. On top of all that, we could reforest the old farmland as parkland and slow the loss of biodiversity. Companies like FarmedHere, Green Sense, and groups like MIT's CityFARM are making strides in the field.
Food Production Closer to Home: The average American foodstuff now travels 1,500 miles before being consumed. As 70 percent of a foodstuff's final retail price comes from transportation, storage, and handling, these miles add up quickly. As a result of vertical farming and genetic engineering, production will become decentralized and distributed, allowing food to be produced nearer to the location of consumption, and the price of food to plummet.
Plant-Based Meat Alternatives: Beyond Meat and Hampton Creek Foods are companies turning plants into foods that look and taste just like meat and eggs. Hampton Creek's data scientists are actively weeding out billions of proteins from hundreds of thousands of plants to learn what could form the equivalent of a chicken's egg. The company is seeking to create the largest plant database in the world.
3D Printed Food: Companies like 3D Systems, Natural Machines, Print2Taste, and others are experimenting with 3D printed food. While 3D printing in chocolates and sugars is well underway, we'll soon see 3D printed starches, proteins (and even new proteins like algae and insects) and spices.
Personalized Nutrition: Our genome, microbiome, and even our blood type determine how we respond to certain foods/nutrients. Imagine if a 3D printed meal was custom produced depending on the amount of exercise you had that day, and your vitamin blood levels. Advanced biosensing will drive your diet and close the loop.
AI-Designed Recipes: IBM's Watson uses machine learning to construct new recipes and cocktails that no human chef would come up with. This algorithm matches foods based on extensive taste profiles and the chemical makeup of those edibles in their database. We tried a few of Watson's cocktails at last year's A360: Hoof-n-Honey Ale (veal stock, grilled beef and IPA), Plum Pancetta Cider (bacon and cider), and Corn in the Coop (old fashioned with chicken).
Food for Fuel, Not Pleasure: For those that opt-in to optimize their consumption (often at the expense of "taste"), we will have mixtures that will provide us with exactly what our bodies need in terms of nutrients, carbohydrates, protein, and more. Companies like Soylent and Ambronite are already doing this. These options will be cheaper and faster than traditional consumption practices – and they will feed many who don't have access to food at all.
Food On-Demand: Press a button and food will be at your doorstep in minutes. PitchBook Data reports that companies involved in delivering groceries and meals in the region attracted $433 million in funding last year. That's up from about $68 million in 2013 and only about $21 million in 2012. Companies like Uber Fresh, Munchery, and many others deliver high-quality, restaurant and chef-prepared food to your doorstep on demand.
How are you going to capitalize on the changing food economy?
As technology converges, the future will be a tasty, and abundant, one.
Let's Create a World of Abundance
This is the sort of content and conversations we discuss at my 250-person executive mastermind group called Abundance 360. The program is highly selective and has ~89% of the spots filled. You can apply here.
Share this email with your friends, especially if they are interested in any of the areas outlined above.
We are living toward incredible times where the only constant is change, and the rate of change is increasing.
Lets keep in mind that some of the first 3-d printing marvels were burgers and dongs. Not quite Earl Grey, hot.
Aside from that lovely thought--if we are to divert back to economy--we service Vancouver, Whistler, etc. Ever heard of the housing there? Second most expensive in the world. Those people are also buying kitchens. And renovated through the recession.
Some of you may occasionally wonder why my guys are still in business. Despite massive disorganization, they are busy as heck. Sometimes up to month late (yes you read that right) yet still super busy through even the deadest of seasons. Going super strong.
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