Sheehan Burns
IMPACT INVESTING

Sheehan Burns

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Portfolio Manager – Tactex Asset Management

Liquidating your business – Sheehan Burns

“You can have the best idea in the world and have flawless execution and be completely focused on creating the best widget as it were. If you can’t sell that and get that out there, it’s not a business. It’s an idea. And it’s not going to be profitable.”

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THE FULL INTERVIEW

Sheehan Burns

The full #OPNAskAnAngel talk

Jeffery: Welcome to the Supporters Fund Ask An Angel. I’m your host Jeffery Potvin and today we’re going to welcome Sheehan. How are you today?
Sheehan: I’m doing well, Jeffery. Thank you for having me today.
Jeffery: we’re really excited to dive in and learn a lot about where you come from and all the great things that you’re doing in this ecosystem. So, the best way for us to start is perhaps you can give us a little bit of a background from school-wise all the way up to all the great things that you’ve done and then we’ll dive into one thing about you that nobody would know.
Sheehan: Sure, I’d be happy to. Yeah, so I’m legally trained. So, I’m a leader by training. I’ve never actually practiced law but I have a law degree from University of Sydney and I think that that legal background is good for a lot of things. I think as investors risk management and being relatively conservative always serves us well and I think the legal training is a good foundation for all of that. So, that’s how I come at things from an educational perspective. My career started as a corporate governance research analyst at a firm called Glass Lewis which basically advises institutional investors on corporate governance policies and how to manage corporate governance issues in their equities portfolios. So, it really involves a lot of breaking down public companies on a very granular level and identifying risks in their corporate governance structure. And I think as investors, if we dig deep into finding corporate governance issues with concerns about management and or directors, usually where there’s issues with corporate governance concerns, there are deeper issues with the companies. And a recent example of that in Canada could be Rogers. So, that’s an interesting one. from corporate governance, I went to Nesbitt Burns in Toronto. I worked as a portfolio manager there for approximately 10 years managing portfolios for both private high net worth and institutional clients and made the transition in the fall of 2019. And I’m in the independent world currently. So, I’m partnered with a firm called Tactics Asset Management headquartered in Montreal. I’m still in Toronto here and two main lines of our business are traditional long only North American equity portfolios. So, we manage those portfolios much as we did where we’re looking at high quality North American equities, so if you think of the Canadian financials, the TBs, the Traditional Bricks and Mortar Brookfields CNCP rails Google, Bank of America, Goldman Sachs, those types of things, so very traditional high quality North American equities portfolios. And then the other side of the business on more of the venture or early stage type of investing, we invest in early stage public and or private equity companies. We are very sector agnostic so we’ve invested in anything from mining to fintech to med tech. We’ve done gaming. We’ve been pretty broad based in terms of investing in the early stage public and in private space. And on a high level, that’s really what we’re about, I think the risk management combined with a very healthy entrepreneurial approach to things would be where we fit into things.
Jeffery: That’s awesome. And I think this is really key to the growth and opportunities that happen in the early stage market. They eventually make their way to people like yourselves where if it’s going to go public or even staying private but getting into a lot of dollars that are going to be invested. There’s a lot of work that goes on at the top and I want to look at it and say well there’s all this great work that happens at the top to go public. How much of that information can we learn from today that will help businesses at the early onset to work their way through this a little bit easier? so that when it does get up to these positions where they’re IPOing or they are going public or staying off from being public but going to be taking in hundreds of millions of dollars in investment. what are the types of things that you look for? and you started off by talking a little bit about this which was earlier on in your profession which was risk management or risk mitigation. And I’m wondering if we can dive a little bit into that risk side because a lot of the time, a lot of the questions that come from early stage companies or startups is they don’t need to create boards. it’s not needed. I don’t need to have any of that right now. it’s not helpful. it’s only going to slow me down. And if I have all these people in there, I don’t want to lose my company. I hear all these horror stories and we try to mitigate that by saying look that’s one in a billion. This is very rare. if you’re going to run naked through town and do all these crazy things then maybe there might be a reason that you might get moved out of your company. but even then, it’s probably pretty tough. but when you’re looking at a risk assessment and you’re looking at all of these angles in order to decide if this company is something that you want to invest in and put in a large dollar amount into these companies, what are you looking for? What are the things that really set either red flags or green flags however you want to put those together? Can you dive into a bit of that for us?
Sheehan: Sure. I’ll come at it from the standpoint of maybe a founder from the outset and perhaps speak to some of the things that people should be aware of as an early stage entrepreneur or business person. you have a you have an idea and you have [Music] a means to getting that to at the end of the day generating earnings and therefore value in your company and value for your shareholders. at the end of it, that’s a pretty simplistic process. but we know that there are a lot of moving pieces in there. So, to break that down a little bit, I would say at very early stages, you need to look at advisors or strategic advisors. And even if it’s not in a formalized board structure or a structure where you look like a public company with all the traditional checks and balances that go in there. On a very basic level, find people that you trust and have that relationship that you can work with and have that mutual trust that they will give advice and guidance in the best interest of the company and help you along. The other thing I would say to people is get folks with diverse backgrounds. So, if you’re a technology specialist and you’re very good at tech, just talk with someone and learn from someone who has a background in in financials and get someone who understands capital markets and understands what your capital structure should look like, how you should raise funds, how you should structure things, speak with someone who has a legal background and understand just the very basics of structuring your business and how you should allocate equity. If that’s the case, if you’re bringing in advisors and compensating them with equity in your business, understand the longer term implications of how that works and make sure you have at least a good understanding of potential control issues going forward to your point about control over the business. And at the end of it, if you’re taking that entrepreneurial risk, you’ve worked extremely hard for that, [Music] the shares should not just be granted to folks. don’t go liberally handing out your shares for the sake of advice. be very focused on who you bring into that business in an ownership capacity. So, I would advise people to, first and foremost, bring in people that you trust and can work with long term. bring in folks with a variety of backgrounds. I mentioned legal and financial. If you’re not a salesperson and some very technical people are not sales people, that’s fine. but get someone who is that. That’s a fundamental point for any early stage co