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TRENDS IN PRIVATE EQUITY, VENTURE
CAPITAL AND ANGEL INVESTING
Presented by Tom Beusse
FairCo TEEM Meet up—10/27/10
TRADITIONAL FINANCING SOLUTIONS
 Private Equity--focusing on investments in cash
flow positive companies
 Venture Capita...
CURRENT TRENDS
 Private Equity
 Credit markets were tight but are loosening up again. Can’t get as
many turns of leverag...
CURRENT TRENDS
 Venture Capital
 High unemployment has increased entrepreneurial activity
 Funds have become very hard ...
CURRENT TRENDS
 Angel Investors
 Most common way to finance an early stage business
 Cash available on more agreeable t...
THINGS INVESTORS ARE LOOKING FOR
 Intellectual property
 Barriers to entry for competition
 A clear customer need/chall...
THINGS TO CONSIDER WHEN SEEKING
FINANCING
 Sector expertise of the investor
 “patience” of the capital
 Age of the fund...
THINGS LEARNED ALONG THE WAY
 West Coast VC firms are extremely reluctant to
invest in East Coast start ups
 There is a ...
QUESTIONS?
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PE, VE, Angel investing -- Tom Beusse (FairCo TEEM - 10-27-10)

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Interactive Capital's Tom Beusse's analysis of the Venture Capital, Private Equity and Angel Investing landscape as of 10/27/10.

If you are near Westport, CT and would like to join the FairCo TEEM Meetup, please visit http://bit.ly/9Z0Jgk

Published in: Economy & Finance, Business
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Transcript of "PE, VE, Angel investing -- Tom Beusse (FairCo TEEM - 10-27-10)"

  1. 1. TRENDS IN PRIVATE EQUITY, VENTURE CAPITAL AND ANGEL INVESTING Presented by Tom Beusse FairCo TEEM Meet up—10/27/10
  2. 2. TRADITIONAL FINANCING SOLUTIONS  Private Equity--focusing on investments in cash flow positive companies  Venture Capital--focusing on early stage start ups that may be revenue positive but not cash flow positive  Angel investors—high net worth individuals who like to invest in early stage businesses Note: All smart investors are considering exit before deciding to enter.
  3. 3. CURRENT TRENDS  Private Equity  Credit markets were tight but are loosening up again. Can’t get as many turns of leverage but can borrow at 3-4%  25-40% of firms shut down as a result of shakeout  Remaining PE firms sitting on piles of cash and waiting to hit the bottom (PWC says $850 Billion in unused capital)  Multiples have come way down so sellers aren’t selling unless they have to.  Debt heavy balance sheets are creating “distressed asset” sales.  Many PE firms have raised VC funds  Strategic buyers have a huge advantage in acquiring assets now  Most active categories are healthcare, IT, energy and banking/finance.  Software, media, electronics and telecom is starting to pick up again  Obama Cap tax laws providing incentive to sell this year
  4. 4. CURRENT TRENDS  Venture Capital  High unemployment has increased entrepreneurial activity  Funds have become very hard to raise after the economic collapse  Limited partners are cash strapped  Still placing bets on Management and ideas  “A round” financing is harder and harder to raise and cost of capital is increasing  “institutional venture capital” comes with aggressive terms attached to it.  Many small/early stage companies are seeking earlier exits. Less “b and c rounds” are taking place.  Multiples/valuations have come way down reducing the upside for investors and entrepreneurs  Investors looking for clear indications of traction
  5. 5. CURRENT TRENDS  Angel Investors  Most common way to finance an early stage business  Cash available on more agreeable terms for the entrepreneur  Some days it feels like 1999 all over again. Investors placing lots of “small bets” hoping for a few wins  Cash often comes with expertise  Vanity investments are common  Arrival of the “Super Angel”
  6. 6. THINGS INVESTORS ARE LOOKING FOR  Intellectual property  Barriers to entry for competition  A clear customer need/challenge to be solved  Recurring revenue  Scalability  Obvious exits  Opportunities to disrupt markets  Executional ease  Strong management teams  Clear metrics for success  And Ultimately………ROI
  7. 7. THINGS TO CONSIDER WHEN SEEKING FINANCING  Sector expertise of the investor  “patience” of the capital  Age of the fund  “growth equity” or not?  Operationally oriented or not?  Attitude toward management  Strategic portfolio investments that might be helpful  How much money do you really “need”?  Do I like these people?
  8. 8. THINGS LEARNED ALONG THE WAY  West Coast VC firms are extremely reluctant to invest in East Coast start ups  There is a strong and growing group of East coast media and tech VCs (Boston/DC/NY)  There is a growing number of CT based PE and VC firms  Strategic investors can complicate exits  Working with PE firms is like working with the mob. If you say you will have $5oo by Monday, don’t show up with $300 on Tuesday.  20% of something is better than 80% of nothing
  9. 9. QUESTIONS?
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