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Jon's venture capital presentation


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  • 1. Venture Capital: An Insider’s Perspective Jon Staenberg Staenberg Venture Partners October 10, 2002
  • 2. Venture Capital: An Insider’s Perspective  The Venture Capital Industry     Staenberg Venture Partners      What Venture Capitalists Do Statistics – National and Local Where the Industry is Going Who We Are What We Look For in Companies Jon Staenberg’s Background Our Team Careers in Venture Capital  Online Resources
  • 3. The Venture Capital Industry  What Venture Capitalists Do:      Invest directly in new and rapidly-growing private companies in exchange for equity Raise money from corporations, financial institutions, private foundations, and high net-worth individuals Sit on the Board of Directors and add value to the company through active participation and industry expertise Take higher risks and sacrifice short-term liquidity with the expectation of higher rewards in the long-term Make money through management fees (typically 1 - 2.5% of the fund’s capital commitments) and carried interest (typically 15 - 30% of gross profits)
  • 4. The Venture Capital Industry  Statistics – National:       U.S. venture capital investments totaled $102.3B in the year 2000, at the height of the “bubble” Annual returns for U.S. venture funds peaked at 165.3% in 1999, above the S&P 500 return of 19.5% Venture capital investments totaled $6.0B in Q4 2002, the lowest level since the pre-bubble era of Q4 1998 Annual returns for U.S. venture funds fell to -27.8% in 2001, below the S&P 500 return of -13% Since the bubble era, fundraising has outpaced investing, resulting in a huge “overhang” of uninvested capital More money returned to investors in Q4 2002 ($2.7B) than was raised from investors ($1.8B), resulting in $-887M of committed capital for the quarter
  • 5. The Venture Capital Industry  Statistics – Local:     Northwest venture capital investments totaled $283M in Q2 2002, 4.7% of the $6.0B U.S. total While U.S. venture capital investments declined from $6.4B in Q1 2002, Northwest venture capital investments increased from $172M in Q1 2002 Medical Devices & Equipment received the most funding of all Northwest industries in Q2 2002 at 29.4% of the region’s total, compared to Software as the national leader at 18.1% Select Northwest companies receiving recent funding: AccessLine Communications, digiMine*, Captura, New Edge Networks, Qsent, ProSight, Par3 Communications*, Impinj * Staenberg Venture Partners portfolio company
  • 6. The Venture Capital Industry  Where the Industry is Going:        Fund commitments “rightsizing” – more money returned to investors in Q2 2002 than was raised Reduction in management fees as a percentage of fund commitments – i.e. from 2.5% to 2.0% VCs having difficulty are laying off senior staff Companies are raising money at lower valuations and on onerous terms VCs are spending more time on their existing portfolio and making fewer new investments Soft IPO market means no clear path to exit Very little green space, still too much money chasing too few ideas
  • 7. Staenberg Venture Partners  Who We Are:    Venture capital firm located in downtown Seattle that invests in technology companies at all stages of development Focuses on companies in the Northwest and Silicon Valley, in order to create synergies and shares resources between these two regions Add value to our portfolio companies through advisory board relationships, industry contacts, and access to resources
  • 8. Staenberg Venture Partners  What We Look for in Companies:  Management Team – Experience, Credentials   Market – Can this be a billion-dollar company?        Are there any functional “holes”? Market cap, penetration Value proposition Competition Technology – IP, Patents Barriers to Entry Risk-weighted return potential Exit scenario – How long will it take, How big will it be
  • 9. Staenberg Venture Partners  Jon Staenberg’s Background:         Managing Partner since 1998 of two venture capital funds with approximately $100M in assets under management Serves in a Director, Advisor or Consultant capacity to over 25 startups in the Northwest and Silicon Valley Graduated Phi Beta Kappa from Stanford University, earning his M.B.A., M.A. and B.S. Worked in Marketing at Microsoft for 5 years Led the Marketing department at Virtual i-O Started his own company and successfully sold Avid collector of sports ticket stubs Native of Omaha, Nebraska and hardcore Cornhuskers fan
  • 10. Staenberg Venture Partners  Our Team:  Jon Staenberg, Managing Partner  John Chase, Chief Financial Officer  Dan Gerrity, Consulting Partner  Casey Higgins, Analyst  Amy McFarlane, Office Manager  Justin Calvo, Intern
  • 11. Careers in Venture Capital    Venture capital is a small and exclusive industry, thus it is difficult to find positions Although the majority of positions are at the partner level, the number of non-partner professionals (Associates, Analysts) is growing 5-8% every year While the most prominent VC firms are in San Francisco, Boston, and NY, Seattle has a high concentration of entrepreneurs and a less competitive VC climate
  • 12. Careers in Venture Capital  Online Resources:  Harvard Business School’s Venture Capital & Private Equity Club -  Careers in Venture Capital: The WetFeet Insider Guide  The National Venture Capital Association  -