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Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
Liquid Computing Corporation Launching Postmortem
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Liquid Computing Corporation Launching Postmortem

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Presentation to The Ottawa Network Venture Creation Group

Presentation to The Ottawa Network Venture Creation Group

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  • 1. Liquid Computing Corporation December 14, 2004 VCG Meeting “The Red Pill” LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 2. LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 3. Liquid Computing Corporation Launching Postmortem 10, 9, 8, 7, ... LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 4. Liquid Computing Corporation Launching Postmortem 7.9999, 7.9998, 7.9997, 7.9996 ..... LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 5. Agenda   ClosingDay   The Long and Winding Road   The Good/Bad/Ugly LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 6. CLOSING DAY LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 7. LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 8. LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 9. LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 10. LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 11. LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 12. LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 13. LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 14. LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 15. LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 16. The Long and Winding Road LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 17. An Entrepreneur is Born! LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 18. Getting “the” Idea   Brainstorm, brainstorm, brainstorm   Identified technology trends   Identified growth markets   Identified customer problem areas   Identified our “know-how”   Got “the” idea LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 19. Opportunity Validation   Local experts/friends   Sampling of cross-segment customers   Non-competitive companies in the market   Online research   Brought on informal advisors in US and Canada   Adjust LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 20. Launching   Confirmed family support   Filled missing skill sets   Incorporation in Canada   Established working infrastructure team working process, domain name, website, e-   mail, team file server, business cards, PO Box, fax number, logo, etc   Established sense of formality/company LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 21. Identifying Reference Customers   Not all the same as the validation customers   Active industry thought leaders   US-based   Online research   Personal contacts and introductions   Adjust LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 22. Engaging Candidate Customers   Research individual and company   Personal contacts and introductions   Cold calls (e-mail/phone)   E-mail contact   Conference call   Face to face   Adjust LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 23. Technology Solution Validation   Road-trip to “the valley”   Face-to-face technical discussions with three major customers   Enthusiastic endorsement   First presentation to a Tier 1 “associate” gave us initial dose of VC reality LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 24. Next Stop... LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 25. Establishing Financing Strategy   Got advice from friendly VC and business expert   Considered bootstrap, seed, Series A   Rifle-shot versus shot-gun in terms of approaching investors   Decided on Series A based on size of opportunity LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 26. Series A Financing Preparation Did first pitch to two   friendly VC’s, one Angel and business advisor   Acted on feedback   Secured experienced entrepreneur and industry executive for COO   Secured industry “name” CEO   Adjust LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 27. On The Financing Trail Went after big money in   California   Tier 1 all the way   Personal contacts of CEO and COO opened the doors to VC senior partners   Face-to-face meetings with VC senior partners LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 28. Meanwhile… LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 29. …Back At The Office Investor collateral preparation   Product requirements analysis   Competitive analysis   Intellectual property identification   Developed detailed financial model   Business plan development   Ramping staff in anticipation   Secured Legal services from L&W   Incorporation in US   Prepared for operations (e.g. bank account,   estimates and prep for facilities/insurance/etc) LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 30. ...Back At The Office Identified major technical risk   areas and de-risked Progressed technical   implementation Detailed product cost model…   based on researched BOM Detailed technology specs,   thermal analysis, mechanical design spec, ... Collaborative support from local   companies LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 31. ...On The Financing Trail   Due diligence experts who weren’t   Hot and cold on the drop of a dime   Questionable ethics   Intense emotional peaks and valleys   Much longer than expected   Adjust LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 32. LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 33. The End of the Beginning   11 months elapsed   Worst investor climate since 1998   Not in Canada, Eh   Reaching Series A not viable without seed investment LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 34. ADJUST! LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 35. A New Financing Strategy Go for seed in Canada     Established seed round objectives   Recast operating financials for seed   On the financing trail again   Investors receptive to new strategy LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 36. The Beginning Version 2   VC end-of/start-of year dead-zone   Team shrinks   Impatient CEO leaves for more immediate returns   Team stands on the brink and looks down... LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 37. LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 38. Getting The Term Sheet Targeted seed-oriented investment   companies Seed investors “keeping busy”   Secured lead investor   Investor to investor dialogs   Preparing for success - logistics   Term sheet only the beginning   LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 39. Getting to Closing Day Renewed interest from other   investors Paper, lawyers, auditors,   accountants, recruiting, meetings, promises, paper, ... Giving blood and other samples   “They get it” - oversubscribed   Closing Day - money in the bank   5 months elapsed   Move-in to 11 Hines Road!   LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 40. The Good/Bad/Ugly LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 41. The Ugly Went for big money at the worst time   Part-time team members – not workable for the business   Ramping staff early was problematic   Taking some bad advice early on   Not taking some good advice early on   Prepared marketing collateral after the fact   Delayed formal biz plan completion   Developed more details on the implementation than we   really needed to secure financing Should have switched to business focus exclusively after   technology validation, i.e. customer value proposition, case studies, business plans LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 42. The Ugly (cont’d) Didn’t fully understand the requirements to achieve Series   A ... varied by investor Didn’t tightly formalize founder’s shareholder agreement   or associated employee contracts at the front-end Didn’t bring an experienced biz dev/market-facing person   on as a co-founder on Day 1 LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 43. The Bad Staff addition/departure was disruptive   Sustaining customer engagement time consuming   Sustaining team morale and commitment   Doing something with nothing   Idea at Day 1 =/= Idea at Day 365   Unnecessary iterations for different investors   Took much longer than expected   Legal paperwork for all staff to protect IP and   confidentiality and officer liabilities LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 44. The Bad False starts on ESOP, Board of Advisors   Wasted time on internal valuation discussions   Didn’t keep all receipts for expenses (or in one place)   (necessary for end of year financial filing) LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 45. The Good Cold calls – if they have problems they will talk to you   Using personal introductions to access investors   Being your own boss   Learning about the financing cycle   Made something from nothing   The Ottawa community   People willing to share risk   People willing to help with advice, introductions, references, resources,   morale support One stop shopping   Tremendous skill base to draw on   Reduced our payable taxes!   Closed our seed round of financing   LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 46. Lion Taming... LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 47. ...If We Did It Again Understand time commitment and need for perseverance   Prepare collateral for anticipated FAQ’s sooner then later   Get help to write the business plan   Tie the business together with tight legalese   Select your business partners very carefully   Don’t bring on non-founding members until after you secure funding   Focus on the business not the technology solution   Recognize areas of strengths and weaknesses and compliment as   appropriate early Business development and marketing is very important   Keep accurate receipts and expense tracking for tax purposes ...   from day of incorporation on, make one person responsible Clear value proposition to the customer – job 1   LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 48. Good Practices... LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 49. Good Practices Team server for file archiving and sharing – RedHat,   USB backup disks, SFTP server with Filezilla, Firestarter, DYNDNS fname.lname@domain.com e-mail addresses – use   Yahoo small biz e-mail service (cheap, easy) Business card templates, single supplier   Regular team meetings   Milestone plan and action tracking   Clarity in role definition   Clarity in interface responsibilities   Grid loans for shareholder expenditures   LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 50. Post-Seed Experience… LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 51. LIQUID COMPUTING CORPORATION POST-SEED TEAM LIQUID COMPUTING COMPANY CONFIDENTIAL
  • 52. Liquid Computing Corporation Thank You LIQUID COMPUTING COMPANY CONFIDENTIAL

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