Raising venture capital venturebeat-ackerman


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Raising venture capital venturebeat-ackerman

  1. 1. The Financing Pitch: Raising Capital in a Down Market Robert R. Ackerman, Jr. Founder & Managing Director Allegis Capital
  2. 2. SOME CONTEXT <ul><li>Founder & Managing Director; Allegis Capital </li></ul><ul><ul><li>Seed and Early-Stage Venture Firm – Founded 1996 </li></ul></ul><ul><ul><li>Based in Palo Alto, California </li></ul></ul><ul><ul><li>Active Investor in IT Security </li></ul></ul><ul><ul><ul><li>IronPort Systems: Purchased by CISCO for $830M </li></ul></ul></ul><ul><ul><ul><li>Current Companies: Symplified & Solera Networks </li></ul></ul></ul><ul><li>Previous Life </li></ul><ul><ul><li>17 Years Operating Executive Experience </li></ul></ul><ul><ul><li>Founder and Chairman – InfoGear Technology Corporation (VC Funded) </li></ul></ul><ul><ul><ul><li>The iPhone </li></ul></ul></ul><ul><ul><li>President & CEO – UniSoft Corporation (Self Funded) </li></ul></ul><ul><ul><ul><li>Leading Unix Systems House </li></ul></ul></ul><ul><li>B.S. Computer Science </li></ul>
  3. 3. IS VENTURE CAPITAL RIGHT FOR YOU? <ul><li>Venture Capitalists are Looking for Large Opportunities </li></ul><ul><ul><li>Is Your Target Market Large Enough to Warrant Attention? </li></ul></ul><ul><ul><li>Are You a Feature? A Product? A Company? </li></ul></ul><ul><ul><li>Differentiation – Barriers to Entry are Essential </li></ul></ul><ul><ul><li>Are You Ready to Surrender Total Control? </li></ul></ul><ul><ul><li>“Investor” Means “Partner” </li></ul></ul><ul><ul><li>Most Companies Will Raise Capital “4” Times </li></ul></ul><ul><ul><ul><li>You Will Likely See Dilution with Each Round </li></ul></ul></ul><ul><ul><li>When You Have a Venture Board – You Have a Boss </li></ul></ul><ul><ul><ul><li>Choose Very Carefully </li></ul></ul></ul><ul><li>Are you and your Company Ready? </li></ul><ul><ul><li>Timing is Important </li></ul></ul><ul><ul><li>Preparation Essential </li></ul></ul>
  4. 4. SELECTING POTENTIAL INVESTORS <ul><li>Not all Venture Capitalists are Right for You </li></ul><ul><ul><li>Location </li></ul></ul><ul><ul><ul><li>Most Firms Invest Within 100 Miles of Their Offices </li></ul></ul></ul><ul><ul><li>Sector Preference </li></ul></ul><ul><ul><ul><li>Firms Invest in Targeted Areas (Expertise) </li></ul></ul></ul><ul><ul><li>Stage Preference </li></ul></ul><ul><ul><ul><li>Firms Tends to Focus on Different Stages of Investment </li></ul></ul></ul><ul><ul><li>Partners </li></ul></ul><ul><ul><ul><li>Collection of Individuals – Domain Knowledge (Expertise) </li></ul></ul></ul><ul><ul><li>Portfolio </li></ul></ul><ul><ul><ul><li>Complimentary or Conflicting Investments (Expertise) </li></ul></ul></ul><ul><ul><li>Assets </li></ul></ul><ul><ul><ul><li>Do They Have Sufficient Capital </li></ul></ul></ul><ul><li>And then the Hard Work Begins </li></ul>
  5. 5. SCREENING YOUR TARGET LIST <ul><li>Not all Venture Capitalists are Equal </li></ul><ul><ul><li>What is the Firm’s Reputation – With Entrepreneurs </li></ul></ul><ul><ul><ul><li>Do They “Add Value”? </li></ul></ul></ul><ul><ul><ul><li>When Things get “Tough” – How Do They Respond? </li></ul></ul></ul><ul><ul><ul><li>Are They Helpful in Fund Raising? </li></ul></ul></ul><ul><ul><ul><li>Would Entrepreneurs Work with the Firm Again? </li></ul></ul></ul><ul><ul><li>Where is the Firm in Their Fund Cycle? </li></ul></ul><ul><ul><ul><li>Do They Have the Capital to Support You Through Your Growth? </li></ul></ul></ul><ul><ul><li>Do Your Due Diligence </li></ul></ul><ul><li>Can You Get a “Warm” Introduction to “the” Partner </li></ul><ul><ul><li>Firms Will Look at 1000+ Opportunities in a Year </li></ul></ul><ul><ul><ul><li>1% +/- Will Lead to New Investments </li></ul></ul></ul><ul><ul><ul><li>You Need to Get to the Top of the Stack of “Possibles” </li></ul></ul></ul>
  6. 6. THINGS TO KEEP IN MIND <ul><li>Invest in Yourself First </li></ul><ul><ul><li>Putting Your Money Where Your Mouth Is </li></ul></ul><ul><ul><li>Get to the “Right Time” to Seek Venture Capital </li></ul></ul><ul><li>Raise Money When you Don’t Need It </li></ul><ul><ul><li>Raise from a Position of Strength </li></ul></ul><ul><ul><ul><li>Have Options </li></ul></ul></ul><ul><ul><li>Convey Scarcity and Build Momentum </li></ul></ul><ul><li>You are Selling Yourself </li></ul><ul><ul><li>Ideas are Great, but Success is About People </li></ul></ul><ul><li>Investors Have Heard it All Before </li></ul><ul><ul><li>Need to Build Credibility and Confidence </li></ul></ul><ul><li>For Most Entrepreneurs – Success is About Persistence </li></ul><ul><ul><li>A Lot like Dating </li></ul></ul><ul><li>The Money is not raised until it’s IN THE BANK. </li></ul>
  7. 7. TILTING THE ODDS IN YOUR FAVOR <ul><li>Three Types of Risk for a Start-Up </li></ul><ul><ul><li>Market </li></ul></ul><ul><ul><li>Product </li></ul></ul><ul><ul><li>Execution </li></ul></ul><ul><li>Ensure You Know Your Customer Better Than Anyone </li></ul><ul><ul><li>Validation of Problem & Value Proposition </li></ul></ul><ul><ul><li>Customer References </li></ul></ul><ul><ul><li>Critical to Conveying an Ability to “PIVOT” </li></ul></ul><ul><li>Have a Product </li></ul><ul><ul><li>Address Technical Credibility </li></ul></ul><ul><ul><li>Brings the VISION to Life </li></ul></ul><ul><li>Get Traction </li></ul><ul><ul><li>Connecting Supply and Demand Builds Confidence </li></ul></ul>
  8. 8. BEST WAYS TO MAKE A PITCH <ul><li>The Dance of the Seven Foils </li></ul><ul><li>The Golden Matrix </li></ul><ul><li>And… </li></ul>
  9. 9. SEVEN SLIDES TO FUNDING <ul><li>Your Credentials </li></ul><ul><li>The BFD (Big Fundable Deal) </li></ul><ul><li>The Market </li></ul><ul><li>Competition </li></ul><ul><li>What We Own (IP, Trade Secrets…) </li></ul><ul><li>Summary Financials </li></ul><ul><li>Parallel Time Lines </li></ul><ul><ul><li>Product </li></ul></ul><ul><ul><li>Sales/Marketing </li></ul></ul><ul><ul><li>Revenue </li></ul></ul><ul><ul><li>Financings… </li></ul></ul>
  10. 10. THE GOLDEN MATRIX Not Fundable $$ Features, Benefits Better Impossible Unthinkable Form Factor x Battery Life UI x x Network Coverage Application x x … x …
  11. 11. THE BEST <ul><li>Just show up, no foils </li></ul><ul><li>We’ll give you a marker and a white board </li></ul><ul><li>You’ll show your command of your BFD </li></ul>
  12. 12. FAMOUS COUNTER EXAMPLES <ul><li>Just to keep (some) perspective </li></ul><ul><ul><li>Jobs and Wozniak: Who will fund these unbathed hippies? </li></ul></ul><ul><ul><li>What? A third search engine? </li></ul></ul><ul><ul><li>WebVan: Big Idea, Big Names (Investors, CEO), Big Crater… </li></ul></ul>
  13. 13. A FEW HINTS <ul><li>Even with Screening – Don’t assume your Audience are Experts </li></ul><ul><ul><li>You should be the “subject matter expert” in the room </li></ul></ul><ul><li>Make Sure you have Your Elevator Pitch down Cold </li></ul><ul><ul><li>Open your meeting by Framing the Conversation </li></ul></ul><ul><li>Manage your Meeting Time </li></ul><ul><ul><li>30 Minutes for the Presentation </li></ul></ul><ul><ul><li>10 Minutes for the Demo </li></ul></ul><ul><ul><li>20 Minutes for Questions </li></ul></ul><ul><li>The Objective of the First Meeting is to Get to a Second Meeting </li></ul><ul><ul><li>Don’t try to convey everything you know – You will FAIL </li></ul></ul><ul><ul><li>Engage with Questions – Don’t Become Defensive </li></ul></ul><ul><ul><li>Don’t Bulls#$% - Building Confidence is Essential </li></ul></ul><ul><li>Anticipate Due Diligence Requests and BE PREPARED </li></ul><ul><li>Read http://venturebeat.com/author/scott-weiss/ </li></ul>
  14. 14. THANK YOU [email_address]