Notes from Reverse Takeover Morning Startup

Morning Startup – Perth
Wednesday, March 25 at 7:30 AM

Is Back Door Listing your startup on the ASX a good idea? (Expert Panel) – Hear from those that do it, and have done it – The whys and wherefores …

Details: http://www.meetup.com/Morning-Startup-Perth/events/219930098/

400M-1M a year plus upfront to be on the ASX
Investor relations
Accountants
Lawyers
CEO willing to take phone calls
Continuous news/deal flow. Otherwise “gravity” kicks in

Elements:
Value of the shell
Value of the vendor
Due diligence on both – vendor has to be audited

The trifecta:
Money
Exciting
Learn

Raising – $4-20M

Advantages
IPO – 300 shareholders on the register
RTO – existing shareholders
RTO – seed capital gets existing shares. Takes around 6 months
IPO – lose the $150ish K in the seed. Takes around 3 months.

An RTO is NOT an exit
All shareholders in the vendor can’t sell for 2 years. You usually won’t get cash back as a founder, usually equity. Best to base this on reaching milestones.

Be very careful about the directors selling shares – it will attract media attention

You want the cash/benefits of being a public company. You won’t remain a nimble startup

After an RTO: directors have around 12 months to execute

RTOs are unusual overseas – especially the USA. In Aus there’s a lack of money and education, plus there’s a higher share holding rate. Mining tends to be creative in how they raise money. In Perth there’s a history of people making money going from mining – tech – mining – etc.

IPOs are making a comeback but there’s plenty of mining shell companies and they are getting cheaper. It’s a great time given the mining slowdown.

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