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Loyola Guest Speaking
 

Loyola Guest Speaking

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This is an overview of venture capital, from startups to finding deals to investing to working with those companies. I've borrowed some ideas from Mark Suster and Dave McClure. Thanks to those two.

This is an overview of venture capital, from startups to finding deals to investing to working with those companies. I've borrowed some ideas from Mark Suster and Dave McClure. Thanks to those two.

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    Loyola Guest Speaking Loyola Guest Speaking Presentation Transcript

    • Tim Flannery - @f1annery January 2014
    • • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 1
    • • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 2
    • • Loyola Undergrad (2008) • JPMorgan (2008 – 2013) • Co-founded Pilot Mountain Ventures (2013 – Now) • NYC since 2008 via Allentown, PA • I’m not a writer, I just blog a lot: www.startupharbor.me 3
    • • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 4
    • • Startups need fast growth • VC funds invest money for growth • VCs biggest value add: NOT MONEY • VCs bring introductions • “Exit” is the end goal (acquisition / IPO) FYI: don’t raise money unless you have a compelling reason 5
    • • VC popped up in 1960’s/70’s in Silicon Valley • Firms like KPCB, Sequoia, NEA, Dr aper Fisher established • Invest in companies like Fairchild, Genetech, Appl e • Industry explodes over coming decades • Something Ventured  Excellent documentary on Netflix 6
    • • Internet bubble & shrinking industry • SV leads, NYC and Boston follow • New investing models • Startups happen everywhere FYI… Want more? Read blogs of Fred Wilson / Mark Suster / Paul Graham 7
    • Private Equity Venture Capital Invests in more established companies Invests in high growth startups Mix of investing styles (i.e. leveraged buyout, debt, go-private) Mainly cash-for-stock Focus on optimizing cash flows Focus on growth Investment review based on financials Financials are meaningless until later stage Makes money via dividend, income, IPO, sale, and other Rarely makes money except for IPO and acquisitions Funds and deals can be HUGE ($30B plus) Funds vary, but investments max out in $100s of millions Expect to make money on each investment Portfolio performance follows “power law” Funds have LLC/LP/GP legal structure Funds have LLC/LP/GP legal structure 8
    • • • • • • “Seed stage” venture capital NYC / NC based Activist investors 80/20 :: technology / med device Previous investments include companies like The Ladders 9
    • • • • • • Hardware 3D Printing Mobile Consumer FinTech Sharing Economy 10
    • • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 11
    • • Small business doesn’t mean startup • Startups = Growth • Doesn’t require technology, funding, exit • VC’s interested in $1 billion ideas 12
    • 13
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    • • Startup becomes only priority • Vacation days? Haha. • Maxed out credit cards • Convince employees you’re crushing it • Attempt to remain convinced company will stay afloat • THEN convince investors for money! • Don’t forget about shipping product • Build, test, release, rev iew, repeat 15
    • • • • • Do something you love Autonomy Rewarding Off chance at hitting it big 16
    • • Costs are at all-time lows (cloud, etc.) • Easy access to resources – blogs, helpful community • Supporting infrastructure in place 17
    • • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 18
    • David Wright striking out Chase Utley hitting a home run 19
    • • • • • • Inbound traffic Outbound activity Hosting community events Participate in networking events Leverage online resources (i.e. AngelList) FYI…VCs look at 1000’s of deals per year 20
    • • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 21
    • • • • • • • Startup/investor introduction Identify opportunity size Track startup progress Perform due diligence Negotiate & close deal Portfolio company management 22
    • Contact Effectiveness Order • Warm Introduction • Cold email / phone call • Snail mail…seriously. Intro Content • Quick sentences. Get to the point. • Be forwardable • Attach pitch deck or executive summary • Provide call to action Some other do’s & don’ts… 23
    • • • • • • • Startup = Growth (remember?) Total market size? Nope. Total addressable market size! Industry analysis Appropriate need for money Most importantly… TEAM 24
    • • Track company performance • Watch team manage problems • Larger sample size to predict future results Courtesy of Mark Suster… 25
    •  Believe in opportunity size  Believe in team  Believe in industry direction Time to execute due diligence • Fancy word for deep dive research • If all goes well, investment should follow • Reference check employees • Call customers • Contact business development partners • Contact industry experts • Review financials & cap table • Formality varies 26
    • • Negotiate financing terms • Cut the check 27
    • • Investors get involved at different levels • Board seat / observer • Recruiting • Business partnerships • Getting your hands dirty • Continued fundraising • Review performance with management • Report back on performance to fund investors • Things are great until they aren’t • Champagne wishes & caviar dreams (hopefully) 28
    • • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 29
    • Differences • Investment goals • Social good vs. profit • Portfolio performance • Some evaluation criteria Similarities • Belief in people & idea 30
    • • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 31
    • • Student-Faculty-Alumni community • Focused on tech/entrepreneurship • Connecting people with resources (like getting you a job) • In-person monthly meetings in NYC • Group listserv hosting online discussion • Private directory of members Contact me for more details… 32
    • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Q&A / Heckling 33
    • Tim Flannery - @f1annery January 2014