BizEquity is the leading international online provider of business valuation knowledge and big data that provides business owners, and the financial institutions and wealth managers that advise them, with insight into the fundamental question of ‘how much is my business worth?’ Previously business valuation had been tethered to the offline age, requiring a great deal of time, effort and money.
Now the process is easier than ever, and in the 4 years that it has operated, BizEquity has grown to be in a position to help 29 million businesses around the world answer ‘how much is my business worth?’ and is still growing, having just expanded in to the UK and opened a new Asia-Pacific headquarters in Singapore in March.
HT: From what I understand, you help business owners answer ‘how much is my business worth?’. Can you expand on that and tell us how the idea came about?
MC: In between selling my last company and starting BizEquity I did venture capital work, and every business owner you’d meet, you’d ask them to answer ‘how much is my business worth’, especially privately held small businesses. That question was the last question my mentor (and now our Co-Chairman at BizEquity) Warren V. “Pete” Musser always has asked entrepreneurs or business owners for over 50 years. Pete was the founding investor of Comcast; QVC; and Novell. Anecdotally, 99% of the time they didn’t know and couldn’t answer that question.
I found out why they were unable to answer this key question ‘how much is my business worth?’. It was incredibly expensive and time consuming and data on small private businesses was very hard to come by and wasn’t easy to find. I came to find that the market opportunity was significant with over 98% of private companies not knowing what they are worth, because prior to us it was all done offline – the old way to do it – and it would take 4 to 6 weeks, with an average cost of £5,000.
This meant that less than 2% of businesses valued their businesses in a $20 billion market. I thought if we could democratize this knowledge and make it available to the masses we would grow the pie and create a billion dollar company that would matter and have an important mission.
I just thought, there’s categories of software for automating mundane tasks, yet there isn’t a category of software to help business owners answer the most important question they could ever answer which is: ‘How much is my business worth?’
Knowing the worth of their business allows owners to ensure they are in a position to structure their financing in the most optimum way and also seek the best terms. It also helps to ensure securing proper credit and risk management – around 100 million business globally are thought to operate underfinanced and underinsured.
Whilst assisting growth companies with their own strategy and planning, having a better understanding of what a business is worth will also help SMEs get a better service from banks, insurance companies, wealth managers and all other providers that supply growth companies with necessary services to promote their expansion.
So that began the journey four years ago and now we’re the global leader in the space, having valued over 29 million businesses.
When you first started out, what were the main competitors in the market?
It was just us in the field in terms of the proper software in the cloud. There were a lot of calculators out there which were just throwaway solutions, but no one was helping business owners answer ‘how much is my business worth?’.
We now have over 60 patents and inventions pending and 7 patents granted already for our IP.
Compared to the offline versions of business worth calculators, how does your online evaluation stack up?
We benchmark against offline providers all the time. We’re typically within at least 5% and I think it’s because we’ve created a science around it using the infamous buzzword: ‘big data’.
We can afford to get data from many different sources in terms of comparables for businesses, we have 197 million different data elements that we judge against and constantly benchmark against to ensure our valuations are as accurate as possible as we help people answer this crucial question: ‘How much is my business worth?’
This, is versus your typical ‘mom and pop’ business valuation firm which on average has 2.2 people pulling on average data from 1.6 sources. So we should really begin to be saying that offline providers are within 5% of BizEquity.
How did you first fund the company when it started up?
I was the first investor, and the largest investor prior to the last round of funding. Most recently we raised $5 million from UK boutique private equity firm Frost Brooks. Frost Brooks has been a tremendous partner having already introduced us to over 20 strategic financial services firm prospects and clients and is helping us bring BizEquity to a new country later this year.
How have you marketed the company so far?
Primarily we’re marketing the product through financial institutions: wealth managers and accounting firms, who share it with their clients to help them to truly become advisers and better serve their clients. However, word of mouth is also important and a number of our clients are past referrals.
How do you see the business expanding over the next few years?
We view this as a global opportunity, so we want to be in all the major economies around the world. Ultimately, our main goal is to be able to help every business owner around the world answer ‘how much is my business worth?’, and we already have over 30 financial institutions as clients and are targeting 100 by the end of the year.
You’ve already got the US, the UK and Singapore, where will you go next to help business owners answer ‘how much is my business worth?’
India; Australia; Germany; and Brazil.
Do you find there is a lot of challenges with the varying language barriers and currencies?
We kind of have a science in terms of how we role out the whole product, from getting the right language done, getting the right data provider and sources and normalizing it for the economies.
What are your major challenges at this point?
I think just continuing and maintaining our culture. As you add people, you don’t want to lose that hunger and the culture that you have.
We’ve moved from a ‘tribe’ to a company, but we still want to keep that tribal culture.
Do you feel like you have quite a strong sense of identity as a company at the moment?
Big time. The thing I’ve found is, no matter who you are or what you do; whether you’re a VP of a function or an associate, the key is everybody has to do primary work.
You have to be able to do your own work, if you’re a salesman you have to be able to do your own proposals, if you’re a developer you have to be able to write your own code. If you’re running engineering you also have to be able to code. I think that’s what we’ve done really well. We want to keep that.
We are a tribe that happens to be a company. I think companies fail when they hire a whole layer of management that actually doesn’t do primary work. A lot of companies when they get properly funded, they hire a layer of folks who don’t do the primary work, so we’ve been very cautious with that.
We didn’t hire a sales team ‘till 9 months ago, and at the time we had a dozen referenceable accounts before doing that. Now we’re up to 33 and we hope to get to 50 by June -in terms of distributors/financial institutions.
We’ve valued over 29 millions businesses, we have over 200,000 businesses that have used our product to answer ‘how much is my business worth?’, and we currently have around 33 that distribute.
What is your goal as a company?
Google’s goal is to index the world’s information, ours is to value every business around the world, and in doing that we’ll be able to democratize business valuation knowledge for every business owner and help them answer ‘how much is my business worth?’.