Texas Economics Association
Meet one another!
Please greet the people
around you!
Ask them what their
majors are, make “ca...
Texas Economics Association
General Meeting #2
Today’s speaker:
Mr. Brian Sandahl
Analyst
Sign-ups going around
• Adopt a Kiosk Community Service
• HS Tutoring Community Service
• Coed Volleyball IM Sports
• Comm...
What is the TEA?
• Social
• Philanthropic
• Professional
• Academic
What’s new this year?
Tutoring high school students
• Garza HS needs tutors
Economics Company Night
• Professional committ...
How to join?
Membership dues:
• $30/semester, $60/year – the YEAR option is with t-shirt
Active membership:
• 8 points thr...
Questions?
Ice Breakers!!
And now…
Mr. Brian Sandahl
Analyst
Texas Economics Association Meeting
September 15, 2010
Brian Sandahl
Analyst
Austin Ventures
Page 11
Agenda
– Private Equity Investing Overview
– Firm Overview
– Firm Structure
– A Career in Growth Equity Investing
Background
• BBA, May ’09
• Finance / Business Honors
• Minor: Spanish
• Orgs
• Freshman Business Association
• Undergradu...
Page 13
• Total Portfolio: Public Equity,
Fixed Income, Cash
• Alternative Investments
Hedge Funds, Private Equity, Real E...
Page 14
An Overview of the Private Equity Industry
• VENTURE CAPITAL
– Early Stage
– Growth Stage
– Later Stage
• PRIVATE ...
Page 15
Overall, Private Equity Fundraising Remained Strong
US Venture Capital Fundraising
(peak $104.3B)
US Buyout Fundra...
Page 16
Austin Ventures Overview
• A venture capital and growth equity firm
• Over 25 years of venture capital/growth equi...
Page 17
1984 1987 1991 1994 1997 1998 1999 2001 2005 2008
Austin Ventures Overview
Vintage
Fund I II III IV V VI VII VIII ...
Page 18Page 18
Funding Every Stage of Innovation
Growth Equity Practice
• National investment sourcing effort
• Partnering...
Page 19Page 19
Growth Equity: Providing “Flexible”
Capital and Structuring Alternatives
Founder /
Management
Buyout
Incuba...
Page 20Page 20
Venture: Partnering with Visionaries to
Build Category-Defining CompaniesRecent Deals What We Look For
Targ...
Page 21
What Service Do We Provide?
Limited
Partners
(“LPs”)
Our Customers
AV raises $ from LPs
AV
Portfolio
Company
AV in...
Page 22
How AV Makes Money
$900
Million
AV Fund X
Management Fee Carried Interest
% %
• A fixed % of fund assets
• Used to...
Page 23
Exit
Portfolio
Company
Exit Strategy
IPO
Leveraged Recap
Sale
Wind Down
Sell a portion of AV’s
ownership through a...
Page 24
A Career in Growth Equity Investing
I-Banking Consulting Public Accting
Exit Opps
Experience
Competition
Commitmen...
Page 25
A Career in Growth Equity Investing
• Constant learning curve
• Relatively few job openings
• Competition among “t...
Page 26
Next Steps: Positioning Yourself for a
Job in Private Equity
• Do your homework (READ, talk to people, self-reflec...
Thank you!
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Sandahl Austin Ventures Sept 15

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Sandahl Austin Ventures Sept 15

  1. 1. Texas Economics Association Meet one another! Please greet the people around you! Ask them what their majors are, make “casual conversation” The meeting will begin shortly.
  2. 2. Texas Economics Association General Meeting #2 Today’s speaker: Mr. Brian Sandahl Analyst
  3. 3. Sign-ups going around • Adopt a Kiosk Community Service • HS Tutoring Community Service • Coed Volleyball IM Sports • Committee Interest
  4. 4. What is the TEA? • Social • Philanthropic • Professional • Academic
  5. 5. What’s new this year? Tutoring high school students • Garza HS needs tutors Economics Company Night • Professional committee will lead Research advising contacts • Online research guide and professor network • Dallas Federal Reserve Conference Committees, leadership positions • For your resume/sharing the load!
  6. 6. How to join? Membership dues: • $30/semester, $60/year – the YEAR option is with t-shirt Active membership: • 8 points throughout the year (meetings/event attendance) Committee membership: • Apply to individual officers, more info coming Officer elections: • Open to active members only Join
  7. 7. Questions?
  8. 8. Ice Breakers!!
  9. 9. And now… Mr. Brian Sandahl Analyst
  10. 10. Texas Economics Association Meeting September 15, 2010 Brian Sandahl Analyst Austin Ventures
  11. 11. Page 11 Agenda – Private Equity Investing Overview – Firm Overview – Firm Structure – A Career in Growth Equity Investing
  12. 12. Background • BBA, May ’09 • Finance / Business Honors • Minor: Spanish • Orgs • Freshman Business Association • Undergraduate Business Council • Work Experience • Austin Capital Management Page 12
  13. 13. Page 13 • Total Portfolio: Public Equity, Fixed Income, Cash • Alternative Investments Hedge Funds, Private Equity, Real Estate Strategies, Energy & Natural Resources, Distressed Securities, Special Situations, Emerging Markets • Private Equity Leveraged Buyouts, Secondary Funds, Growth Equity, Mezzanine Capital, Venture Capital • Venture Capital Seed/ Startup Capital, Expansion Capital, Growth Capital Investment Asset Classes In Perspective Venture Capital Private Equity Alternative Investments Total Investment Portfolio
  14. 14. Page 14 An Overview of the Private Equity Industry • VENTURE CAPITAL – Early Stage – Growth Stage – Later Stage • PRIVATE EQUITY INVESTING – Growth Capital Firms – LBO Firms
  15. 15. Page 15 Overall, Private Equity Fundraising Remained Strong US Venture Capital Fundraising (peak $104.3B) US Buyout Fundraising (peak $281.6B) Source: Thomson Financial $12 $18 $26 $33 $38 $52 $79 $72 $88 $78 $51$49 $79 $155 $200 $282 $252 $88 $54 $0 $50 $100 $150 $200 $250 $300 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 1H '10 (US$Billions) $5 $4 $9 $10$12 $20 $30 $56 $104 $39 $9 $11 $20 $29 $32 $35 $28 $16 $8 $0 $20 $40 $60 $80 $100 $120 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 1H '10 (US$Billion)
  16. 16. Page 16 Austin Ventures Overview • A venture capital and growth equity firm • Over 25 years of venture capital/growth equity experience – Growth equity businesses are more established, growing rapidly and can be modestly leveraged to enhance returns – Venture capital investments are riskier, but investors can strike out on 5 deals and hit 1 home run and still provide a great return – The combination of both investments in AV’s portfolio meets the needs of LPs wanting to invest in both asset classes – Allows AV to invest at every stage of the funding lifecycle, from initial seed investments, through startup and growth capital, to management-led buyouts and recapitalizations • $3.9 billion under management across 10 funds • Invest nationally but maintain a particular focus on Texas, where we are the region’s most active investor
  17. 17. Page 17 1984 1987 1991 1994 1997 1998 1999 2001 2005 2008 Austin Ventures Overview Vintage Fund I II III IV V VI VII VIII IX X Cumulative Committed Capital • 25+ years of venture capital/private equity investing • Nationally-recognized, regionally-dominant • 325 investments and 81 active portfolio companies • 100 IPOs and acquisitions • 27 investment professionals28M 88M 163M 278M 448M 768M 1.6B 2.9B Annual Totals: 2.4B 3.9B 1984 1987 1991 1994 1997 1998 1999 2001 2005 2008 2008 2005 2001 1999 1998 1997 1994 1991 1987 1984 = $900M = $525M = $830M = $825M =$320M =$170M =$115M =$75M =$65M =$28M
  18. 18. Page 18Page 18 Funding Every Stage of Innovation Growth Equity Practice • National investment sourcing effort • Partnering with leading industry executives on high potential investment theses • Focused on recurring revenue and asset-light business models • Preference for the following industries: — Supply Chain and Logistics — Integrated Media — Software — Information, Financial, and Business Services • Capital for acquisitions, growth, purchasing stock from owners, liquidity with leverage, management buyouts, PIPEs and take privates Venture Capital Practice • Partnering with innovative entrepreneurs and founding teams • Seed and Series A lead investor • Leveraging extensive talent network of experienced executives • Focused on: Internet; Enterprise and Infrastructure Software; Data Center / Com Systems; Alternative Energy, and Semiconductors • Capital for new product and service innovation
  19. 19. Page 19Page 19 Growth Equity: Providing “Flexible” Capital and Structuring Alternatives Founder / Management Buyout Incubated Deals Thematic Rollups Expansion Capital Take Private Transactions Example Deals What We Look For Business attributes: • Revenues: $20 to $100MM • EBITDA: $5 to $15MM • Demonstrated growth • Recurring revenue • Scalable business model • Higher execution risk • Lower market risk • Founder led; not for sale • Asset light Opportunity for: • $20 to $100MM equity commitment • Conservative use of leverage
  20. 20. Page 20Page 20 Venture: Partnering with Visionaries to Build Category-Defining CompaniesRecent Deals What We Look For Target characteristics: • Proven entrepreneurs with deep domain experience Transaction / Company Size: • Seed and Series A • Growth capital Investment Size: • $100k-$10MM Industries: • Business Services & Supply Chain • Financial Services • New Media, Internet, & Information Services • Software • Texas Special Situations Lo Software New Media Financial Services Business Services
  21. 21. Page 21 What Service Do We Provide? Limited Partners (“LPs”) Our Customers AV raises $ from LPs AV Portfolio Company AV invests $ on behalf of LPs in private or public companies LP $ LP $ and AV Partner $ AV identifies, executes and manages investments in companies and seeks to exit the investment at a profit– our ability to profitably exit in turn affects our ability to attract more money from LPs
  22. 22. Page 22 How AV Makes Money $900 Million AV Fund X Management Fee Carried Interest % % • A fixed % of fund assets • Used to pay salaries, bonuses, rent, utilities and deal related expenses • % of Profits • This is where the real money is made
  23. 23. Page 23 Exit Portfolio Company Exit Strategy IPO Leveraged Recap Sale Wind Down Sell a portion of AV’s ownership through a public offering of stock Put more debt on the company and take a dividend Sell the company in its entirety to either a strategic or financial buyer Stop funding the company and eventually close the operations Return of Capital AV LPs
  24. 24. Page 24 A Career in Growth Equity Investing I-Banking Consulting Public Accting Exit Opps Experience Competition Commitment Private Equity Hedge Funds Corporate Development Graduate Business School Highly Competitive Top Accounting Majors 2 – 3 years 2 – 3 years Various Highly Competitive Valuation, M&A, Capital Raising Business Strategy, Operations Auditing, Financial Statement Analysis Popular Career Choices Post-Graduation
  25. 25. Page 25 A Career in Growth Equity Investing • Constant learning curve • Relatively few job openings • Competition among “the best of the best” • Investment banking and consulting are the closest analogs • You touch every aspect of company creation, growth and value maximization • Strategy consulting; transactional / investment banking; operational involvement; team building; recruiting • Unlike other types of investing, you can influence the outcome • Regardless of AV’s ownership % in a specific investment, you are in the “power of persuasion” business • Be patient: very long term business with lots of uncertainty
  26. 26. Page 26 Next Steps: Positioning Yourself for a Job in Private Equity • Do your homework (READ, talk to people, self-reflect) and decide what your short-term career goals are • Have a diverse array of experiences through internships to see what fits you best; work hard and maximize your experiences • Challenge yourself to get the most out of school; don’t be afraid of tough classes • Pursue “tried and true” investment banking analyst program (preferably bulge bracket bank with M&A exposure) or management consulting at top firm (McKinsey, Bain, BCG) – Investment banking is the easiest path to a job in private equity due to the analytical / modeling foundation – Consulting is a solid path due to its strategic emphasis – If you pursue a career outside these two fields, getting into private equity will be more challenging because you will not be a “known quantity” • What are we looking for? – Excellent academic record (BHP and/or MPA with high GPA and A’s in accounting classes) and high standardized test scores – Strong professional experience in investment banking or consulting – A demonstrated hard work ethic, proven extracurricular leadership and involvement in activities outside of school – Someone with a clear idea of (1) why he/she wants to pursue growth equity investing and (2) why a position at AV would be right for him/her – A general knowledge of how private equity investing works – Strong fundamental understanding of financial accounting and a track record of success in Intro, Intermediate and Financial Statement Analysis courses – A curious mind with a knack for problem solving and comfort dealing with ambiguity – A fun person who has a good attitude, is easy to work with and good to be around in social, non-work settings – Broad interests and a passion for learning in fields beyond just finance and accounting • Questions ???
  27. 27. Thank you!

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