The "Tip of the Iceberg" is hard to attain...
Building a business in not easy
After years of persistence, dedication, commitment, sacrifice, and failure (below the surface), most Entrepreneurs never get to reap what they desire “The Tip of the Iceberg”.
Messy Middle
Entrepreneurs need to get through the messy middle (Struggle Zone), where the business really creates true value and success, in order to enjoy the “Tip of the Ice Iceberg”.
Private Equity vultures
Private Equity firms seek out companies that have built the foundation (below the surface) so that they can disproportionately enjoy the “Tip of the Iceberg” rewards from the business.
Entrepreneurial vulnerability
The quicker Entrepreneurs want to get to the “Tip of the Iceberg” the more vulnerable they are to making mistakes and not enjoying the “Tip of the Iceberg”.
Why liquidity is an issue for Entrepreneurs...
Start Up Phase
Start Up Phase
Start Up Phase
During a start up, the Entrepreneur puts in blood, sweat and tears to get the business off the ground. There is barely enough money and the founder does not get paid
Struggle Phase
Start Up Phase
Start Up Phase
In the struggle zone the Entrepreneur needs to leverage their personal financials to get bank support. Paying themselves little to support growth and not over leverage themselves.
Lifestyle Phase
Lifestyle Phase
Lifestyle Phase
Finally the Entrepreneur can get paid a decent salary, has built a nice business but is unable to liquidate the value in the equity.
Growth Phase
Lifestyle Phase
Lifestyle Phase
Entrepreneur needs to reinvest or bring in dilutive PE into the company.