...Depending on the quality of the MicroCap company, cash and stock can buy a lot of revenue, earnings and a multitude of assets. The hunters of MicroCaps now have a new and larger field of prey including crowd-funded companies. Theoretically, investors put a few bucks into a good entrepreneur's hands and good things can happen. Executing the business plan from proof of concept to confirming a disruptive business model, getting through the money raising process, can have life changing results for successful entrepreneurs...and investors.
Between the amazing strides in tech transfer, incubators, accelerators, angels and VCs using new investor legal allowances, there is a startup and rampup rampage underway. Investors, coupled with plenty of cash looking for a home, an installed regulated financial transparency and more available market exposure and investor visibility, raising early money for MicroCaps has eased and many more opportunities now exist. Today a targeted company requires at least having a good deck, PowerPoint, and a CEO that can sell and has "PVC."
This should excite MicroCap CEOs to no end and happily I am getting to interview so many fresh CEOs of new companies that are flat out brilliant. Although early in their financial exposure to the street, this generation of startups is special. They are usually dedicated, having sacrificed their own wealth for years of struggle and tapping out personal credit cards to prove out their creation. Their outlook on life includes a plethora of futuristic ideas and a panacea of new treatments, cures, green and alternative energies to name a few as growth spawns agnostically across sectors.
If I were looking for a model to follow it would be pharma and super pharma who have determined it's far less costly to buy a molecule and the company that developed it than develop one from within at a billion per molecule. The MicroCap space is filled with opportunities, therefore good due diligence is imperative.
In summary, despite their denial, investors and companies alike either deal with the intended exit strategy openly and upfront or know it's looming for discussion. IPO's and APO's will always be a carrot to issuers, but many private MicroCaps will never get that far because an acquisition could be a perfect fit with much less hassle than dealing with the filing itself.
The next phase of growth in the MicroCap market will see many acquisitions by well capitalized small-, mid- and large-cap companies. I end with this: Happy Hunting!
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