What VCs Look For What You Should Look For In A VC UBC Advancing Canadian Entrepreneurship Sauder School of Business  Marc...
About Stirling Mercantile <ul><li>Sectors </li></ul><ul><li>Mid market financings </li></ul><ul><li>Early-stage VC financi...
About Stirling Mercantile
 
Sources of Financing <ul><li>Equity  – friends, family & employees, angels & VCs  </li></ul><ul><li>Debt  – banks, subordi...
The Financing Map F, F & E Seed, Angel Series A Series B Year  1 2   3   4 5 Beta Customers Early Adopters Crossing the Ch...
VC Activity Background
What happens when you bring in equity investors? <ul><li>Dilution </li></ul><ul><li>More governance and oversight </li></u...
Standard Terms <ul><li>Preferential treatment: </li></ul><ul><ul><li>First payment upon exit (acquisition or IPO) </li></u...
What Do VCs Need? <ul><li>Strong team, with integrity </li></ul><ul><li>Clear, lucrative and sustainable value proposition...
What Do VCs Want? <ul><li>Traction from the target market </li></ul><ul><li>2 or 3 independent board candidates </li></ul>...
Business Plan <ul><li>Executive Summary </li></ul><ul><li>Product or Service Description </li></ul><ul><li>Industry and Op...
Executive Summary <ul><li>“ Put it at the beginning but write it at the end” </li></ul><ul><li>Start with a simple descrip...
Position Value to Customer Sales Unit Volume You Comp Comp VCs Want
Pro-Formas VCs Want
Keep It Concise! <ul><li>Use grade 8 English, and test it </li></ul><ul><li>Ask yourself if each paragraph helps to explai...
Avoid Saying… <ul><li>Our projections are conservative </li></ul><ul><li>We have no competition </li></ul><ul><li>We have ...
Presentation <ul><li>A picture tells a thousand words, but… </li></ul><ul><li>… don’t spend time or money on graphics and ...
Due Dilly Binder <ul><li>All material contracts </li></ul><ul><li>Details of financials </li></ul><ul><ul><li>Inventory an...
What Should You Look For in a VC? <ul><li>More than money </li></ul><ul><li>“Been there, done that” management </li></ul><...
What Should You Look For in a VC? <ul><li>More than money </li></ul><ul><li>Contacts  </li></ul><ul><ul><li>for additional...
Summary <ul><li>There are subtle yet important differences between all investors </li></ul><ul><li>Research their website,...
Thank you <ul><li>A copy of this presentation is available at:  www.stirlingmercantile.com/speakers.htm   </li></ul>David ...
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What VCs Want, What Companies Want In A VC For UBC Ace

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  • F, F &amp; EEs can be in the form of debt Best financing is still revenue from target customers
  • Should help all buyers understand your business and it’s value to them
  • PDF, available for download
  • PDF, available for download
  • What VCs Want, What Companies Want In A VC For UBC Ace

    1. 1. What VCs Look For What You Should Look For In A VC UBC Advancing Canadian Entrepreneurship Sauder School of Business March 3, 2006
    2. 2. About Stirling Mercantile <ul><li>Sectors </li></ul><ul><li>Mid market financings </li></ul><ul><li>Early-stage VC financings </li></ul><ul><li>Mergers and acquisitions </li></ul><ul><li>Valuations </li></ul><ul><li>Public market advisory services </li></ul>
    3. 3. About Stirling Mercantile
    4. 5. Sources of Financing <ul><li>Equity – friends, family & employees, angels & VCs </li></ul><ul><li>Debt – banks, subordinated lenders & others </li></ul><ul><li>Grants – governments and government supported agencies </li></ul>Background .
    5. 6. The Financing Map F, F & E Seed, Angel Series A Series B Year 1 2 3 4 5 Beta Customers Early Adopters Crossing the Chasm Mainstream Growth Design Beta V. 1 V. 2 IP Roadmap Funding Roadmap Background .
    6. 7. VC Activity Background
    7. 8. What happens when you bring in equity investors? <ul><li>Dilution </li></ul><ul><li>More governance and oversight </li></ul><ul><li>Additional management </li></ul><ul><li>Capital to accelerate development </li></ul><ul><li>Access to broader network </li></ul><ul><li>Added business insight </li></ul>Background .
    8. 9. Standard Terms <ul><li>Preferential treatment: </li></ul><ul><ul><li>First payment upon exit (acquisition or IPO) </li></ul></ul><ul><ul><li>Protection against dilution </li></ul></ul><ul><ul><li>Right to purchase more </li></ul></ul><ul><ul><li>Varying levels of control over business </li></ul></ul><ul><li>Motivated solely by return on investment </li></ul>Background
    9. 10. What Do VCs Need? <ul><li>Strong team, with integrity </li></ul><ul><li>Clear, lucrative and sustainable value proposition </li></ul><ul><li>Large market opportunity and the ability to scale into it </li></ul><ul><li>Realistic valuation and deal terms </li></ul>.
    10. 11. What Do VCs Want? <ul><li>Traction from the target market </li></ul><ul><li>2 or 3 independent board candidates </li></ul><ul><li>Appropriate deal size for their fund </li></ul><ul><li>Appropriate market sector for their fund </li></ul><ul><li>Transaction ready due diligence binder </li></ul><ul><li>Close proximity </li></ul>.
    11. 12. Business Plan <ul><li>Executive Summary </li></ul><ul><li>Product or Service Description </li></ul><ul><li>Industry and Opportunities </li></ul><ul><li>Marketing and Sales Plans </li></ul><ul><li>Competition, Competitive Advantages </li></ul><ul><li>Management and Board Members </li></ul><ul><li>Financials and ProFormas </li></ul>VCs Want
    12. 13. Executive Summary <ul><li>“ Put it at the beginning but write it at the end” </li></ul><ul><li>Start with a simple description of who your clients are and why they will buy from you </li></ul><ul><li>Keep it down to about 2 pages – just enough to stimulate questions of interest </li></ul>. Background
    13. 14. Position Value to Customer Sales Unit Volume You Comp Comp VCs Want
    14. 15. Pro-Formas VCs Want
    15. 16. Keep It Concise! <ul><li>Use grade 8 English, and test it </li></ul><ul><li>Ask yourself if each paragraph helps to explain why this company has value </li></ul>. VCs Want
    16. 17. Avoid Saying… <ul><li>Our projections are conservative </li></ul><ul><li>We have no competition </li></ul><ul><li>We have a first mover advantage </li></ul><ul><li>We only need to capture x% of the market share </li></ul>. VCs Want
    17. 18. Presentation <ul><li>A picture tells a thousand words, but… </li></ul><ul><li>… don’t spend time or money on graphics and eye-candy </li></ul><ul><li>Docs in PDF, available for download from your site </li></ul>. Background
    18. 19. Due Dilly Binder <ul><li>All material contracts </li></ul><ul><li>Details of financials </li></ul><ul><ul><li>Inventory and valuable assets </li></ul></ul><ul><ul><li>HR tables and analysis </li></ul></ul><ul><ul><li>Comments on liabilities or notes to the Financials </li></ul></ul><ul><li>Don’t leave out anything salient </li></ul>. VCs Want
    19. 20. What Should You Look For in a VC? <ul><li>More than money </li></ul><ul><li>“Been there, done that” management </li></ul><ul><li>Corporate governance </li></ul><ul><li>Exit strategies </li></ul>.
    20. 21. What Should You Look For in a VC? <ul><li>More than money </li></ul><ul><li>Contacts </li></ul><ul><ul><li>for additional management </li></ul></ul><ul><ul><li>for customers </li></ul></ul><ul><ul><li>for partnerships </li></ul></ul>.
    21. 22. Summary <ul><li>There are subtle yet important differences between all investors </li></ul><ul><li>Research their website, then ask them and their references what they prefer </li></ul><ul><li>Compare that to your list of what you think is important from a VC </li></ul>.
    22. 23. Thank you <ul><li>A copy of this presentation is available at: www.stirlingmercantile.com/speakers.htm </li></ul>David Shore [email_address] 604 484-0070

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