- Programme: Financing the Entrepreneurial Business
- Nationality: Argentinean
- Job Post-programme: CEO, Intraway
“This programme gives you tools to help you avoid some of the common financing pitfalls”
Leandro Rzezak, CEO of the international telecoms software company Intraway, is an entrepreneur whose company attracts both funds and invests in start-ups. “We find ourselves on both sides of the table.” Despite being experienced, he wanted to gain clarity around the multiple rounds of financing, the options, deal structures and evaluations. So he joined London Business School’s (LBS) Financing the Entrepreneurial Business (FEB) programme.
The programme is case-study based and Rzezak says this was an invaluable approach. “It was great – like gaining in one week what you’d otherwise need years of experience to learn. It gave us a lot of new tools and it really drilled down into what happens outside of the textbooks.” The participants learnt how some start-ups skyrocketed and went to IPO, others floated, others fell because of a poor relationship between the investors and the entrepreneurs. “Those stories are really insightful – you learn what can go wrong and how to avoid it.”
Insights and tools
Rzezak points out that it’s easy to find success stories but few people are prepared to stand up in public and share their screw-ups. “Nobody talks about that. This programme gives you rarely discussed tools to help you avoid some of the common financing pitfalls.”
The programme illuminated aspects of financing deals that he hadn’t previously thought about. For example, “Normally the investor is the one who does due diligence on the company but we found out it’s important for the entrepreneur to do the correct research on the investor because that will define what happens after the deal.”
The programme also explored how to get a higher evaluation for your own company – what’s the right time to ask for finance, what’s the right valuation and who are the right investors who will bring something extra beyond the funds. Standard valuation techniques are taught on business masters but according to Rzezak this programme went far beyond those.
It also covered the less obvious, non-financial forces that come into play during financing deals, such as emotional and strategic factors such as a parent company not wanting to sell to a competitor. He also learnt about health-related and family issues – specific situations that could lead a great company to become a fire sale. “I learnt that not every fire sale is a bad deal.”
Rzezak was able to apply the learning right away when his company entered into a restaurant business in which one of the owners was a family member who wanted out. “We were very conscious of the emotional factors affecting the valuation. We kept on bidding even though some people were making higher bids, because we felt we were better partners, offering a better journey after getting into the company.”
Another key lesson was the importance of shareholder agreements, which can make a smaller deal be worth more than it appears.
“It was eye-opening,” he says. “Before, we didn’t pay much attention to shareholder agreements. Now it’s the first thing we look at. We also learned about good-leaver, bad-leaver clauses – what happens if a CFO, say, leaves the company, under different conditions – we have those in all our agreements now.”
Rzezak recommends FEB to entrepreneurs as well as investors because they mix in the same study group, either party has the chance to see the other side of the coin and gain an understanding they would not have come by otherwise.
Together with the specific content of the programme, Rzezak benefited from the mind-expanding perspective that participants gain from being in London. “Unlike US business schools, LBS is much more world-focused. The viewpoint is global and your classmates are from all over the world – Asia, the Middle East, South America – it’s an international experience.”