Venture Capital PresentationPresentation Transcript
Investopedia : Funds made available for startups firms and small businesses with exceptional growth potential. Managerial and technical expertise are often also provided. Also called risk capital.
Ola Report : Source of investment capital for small, growing companies. Usually have an interest in companies going public in order to realize their investment.
PrenHall.com : External equity financing provided by professionally-managed pools of investor money.
Wikipedia : Venture capital (also known as VC or Venture) is a type of private equity capital typically provided to immature, high-potential, growth companies in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company. Venture capital investments are generally made as cash in exchange for shares in the invested company.
VCs raise pool of capital from different sources
Finance new and rapidly growing companies
Purchase preferred equity securities and take board positions
Take high risks
Expect high returns
Are in it for the long-run
Make $$$$ either through M&A or IPO liquidity
They own a piece of the pie
By Sector ( healthcare, IT, Clean Energy, Social Entrepreneurship etc)
Size of Fund : (Small - < $100M vs. Large > $1B+)
Location: ( US, Europe, Israel, India)
Public vs. Privately Formed Funds: (Norwest Venture Partners – Wells Fargo Division, Intel Capital vs. Sequoia Capital, Altos Ventures etc )
Money loaned in exchange for repayment + interest charge
Keep full ownership of the business
Immediate access to cash
Money provided in exchange fro ownership
Founders and be replaced ….
I define “Bootstrapping” as the act of starting a business with little or no external funding. Bootstrappers don’t write lengthy business plans, chase deep-pocketed investors, or indulge in overly academic market research exercises. Instead, they focus all of their considerable energy, brainpower, determination and skills on creating a business that can actually succeed in the real world .
Greg Gianforte- RightNow Technologies
Angel Investing Angel capital fills the gap in start-up financing between "friends and family" Although it is usually difficult to raise more than a few hundred thousand dollars from friends and family, most traditional venture capital funds are usually not able to consider investments under US$1–2 million . Angel investment is a common second round of financing for high-growth start-ups, and accounts in total for almost as much money invested annually as all venture capital funds combined
Team (who are the team members, background, how they know each other, what makes them domain experts, history of collaboration and success) My Boss : “If you can’t convince your best friend to join your team– I don’t want to fund you”
Market (it needs to be an emerging and fast growing market. Web 2.0; Social Collaboration; Viral Marketing)
Business Model ( $$ Show me the Money$$)
Technology (How easily replicable is your idea?)
If you can eliminate one of the areas in your balance sheet…..Call me!
Example: Amazon and Ebay – eliminated Inventory
Marketing (Viral Marketing has become the next wave of advertising)
Examples: Facebook, MySpace, Skype,
New type of venture firms specializing in early stage startups
They do seed funding – really early stage!
Usually invest $20 K for an exchange of 5% preferred equity
Provide mentorship opportunities for entrepreneurs
Founders have a chance to talk to other pears
Y – Combinator (One of the more successful ones)
The most important thing we do is work with startups on their ideas. We're hackers ourselves, and we've spent a lot of time figuring out how to make things people want. So we can usually see fairly quickly the direction in which a small idea should be expanded, or the point at which to begin attacking a large but vague one.
Don’t give up and be prepared to knock on many doors
Hire a great lawyer – Incorporate the company
Identify your niche
Identify your needs (VCs, Angels, Bootstrapping)
Identify the right partner
Get an introduction
Prepare a 2 pg overview to send to him/her
10-15 slide presentation
KISS (Keep it simple..stupid ) – don’t overcrowd the presentation with slides. If it is an elevator pitch, you only have 5 minutes to present. Make it short.
Proof of Concept (Validates the opportunity and gives credibility to the team)
Need – What need is there currently in the market for your product (Solving a problem)
Market Size & Growth Projection (This market is an X million, X Billion USD Market – BE HONEST!)
Total Addressable Market – who are you going after?
Solution – How are you going to solve the problem?
Business Model – how are you going to monetize the opportunity
Competition – Be honest about this too. VCs know when you are lying.
Marketing – How will you acquire your targeted customers?
Financials (Break-even, growth margins, 5 –year forecast and financial metrics)
Status of the startup to date
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