The Tech Start-Up vs. The Bootstrap Lifestyle
About this episode
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Peter Demangos has started two businesses in the Human Resources sector. One was a bootstrapped insurance brokerage where they sold employee benefits programs to large clients. The other was an HR software company called Collage, where Demangos and his co-founders raised $3.5 million of investment capital and sold three years later for $15 million.
Given that Demangos was the common denominator in both companies, his story provides a unique contrast of two different approaches to starting and building a business. Demangos retained 100% of the equity in his employee benefits brokerage, and with high margins, more than a million dollars in sales, and just five employees, it funded his lifestyle. When Demangos sold, he was able to get 8 times EBITDA for the brokerage, the majority of which was paid in cash.
By contrast, Demangos held a minority stake in his tech startup Collage, yet it was a much higher sale price, so he still had a healthy windfall.
The combination was enough money for Demangos to hit “his number,” a net worth beyond which he would never feel compelled to work again. This is why the conflicting set of emotions he feels today are somewhat surprising.
Listen now, and you’ll learn:
- Why your software company should have a technology person among the founders.
- How memberships drove more value for Collage than revenue or profits.
- Why hiring a marketing intelligence specialist could give the value of your business a big boost.
- The entrepreneur’s dilemma and why it can be such a vexing challenge to overcome.
- The unusual trigger that caused Demangos to sell both of his companies.
When Demangos hit his number, he decided to sell to give himself the freedom never to work again. Wondering how to figure out the point where you’ve built enough value to stop working? Find out now by getting your PREScore™.
Check out our article on The Acquisition Entrepreneur.
About Our Guest
Peter is the Founder of PDF Employee Benefits (acquired by Hub International in Oct 2019) and Co-Founder of Collage HR (acquired People Corporation in Nov 2019), organizations that have actively reinvented the way Canadian businesses manage HR & Benefits.
Holding an MBA (from the Schulich School of Business), CFP and CLU designations, and a Bachelor of Commerce (from the Rotman School of Management), Peter is a strong believer in continued education.
He continues to share his experiences by teaching the Pension & Benefits course at Humber College within the Human Resources Management Post-Graduate program, frequently guest lecturing at York University’s Masters in HR program, and regularly instructing for the HRPA / Canadian Benefits Program Certificate.
Peter is also the President of the Entrepreneurs’ Organization, Toronto Chapter, and is passionate about entrepreneurship in Canada.
https://www.linkedin.com/in/peterdemangos/
