Venture financing class at duke 01 26 2012

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I presented these slides at Duke Law Professor Bill Brown's Structuring Venture Capital and Private Equity Transactions Class on January 26, 2012.

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Venture financing class at duke 01 26 2012

  1. 1. CONFIDENTIAL Startup & Venture Lessons Duke Law School Jay Jamison Partner, BlueRun Ventures jjamison@brv.com | @jay_jamison | jayjamison.com
  2. 2. CONFIDENTIAL Agenda Introduction Early Stage Valuation Methods Exiting VC: Venture or Vulture Capital?
  3. 3. CONFIDENTIAL Introduction • Duke, BA, English, 1992 • Emory Law School, 1995-96 • MBA, Wharton,1998 • Microsoft, 1998-2007 • Founder, Moonshoot, 2007-10 • Partner, BlueRun Ventures, 2010-Present 3
  4. 4. CONFIDENTIAL About BlueRun Ventures • Over $1.0B under management • Investing out of Fund IV ($240M) • Focus: Mobile & consumer internet • Seed & Series A 4
  5. 5. CONFIDENTIAL What is my job? 5 • Unearth great dealsFind • Convince NewCo to take our $Close • Help NewCo reach full potentialAssist
  6. 6. CONFIDENTIAL Early Stage Valuations 6
  7. 7. CONFIDENTIAL It’s a Golden Age for Entrepreneurs…. Cheaper than ever to start a company. Better resources • Incubators: Y-Combinator, 500Startups, … • Resources: Startup Digest, Lean Startup, TC, VB Technology is easier to learn, access, &c. • Codecademy • RoR • AWS Driving valuations up
  8. 8. CONFIDENTIAL … And Investors Understand This. I see lots of great companies that are: • Capital efficient • High velocity in coding and releasing • Product in market with traction • Clear customer insight on what works • Battle-tested founding teams • Clear, concrete ask on what $$$ they need
  9. 9. CONFIDENTIAL Implication While we’re in a Golden Age for Entrepreneurs, it is raising the bar for most very early stage companies… You need to prove more on very little money, because so many other start-ups are already doing so.
  10. 10. CONFIDENTIAL Early Stage Valuations Plain vanilla Series A • VC: 20-30% • Option pool: 10-20% • Founders & Angels keep rest Items we watch • Founder incentive must be very high • Maintaining a clean cap table is important 10 Founders & Angels 60% ESOP 15% VC 25%
  11. 11. CONFIDENTIAL Exiting 11
  12. 12. CONFIDENTIAL Exits Stuff beyond your control • The market • The corporate politics on the other side Stuff in your control • Which founding teams you back • Staying focused on execution until deal is signed • Attracting alternative bidders 12
  13. 13. CONFIDENTIAL VC: Venture or Vulture? 13
  14. 14. CONFIDENTIAL Venture • Unique and amazing form of capital • Helped scale companies that have had massive impact • And will continue to have an important role 14
  15. 15. CONFIDENTIAL But, VC is not… 15 Summer Camp
  16. 16. CONFIDENTIAL Our Aspiration Adapted from Glenn Kelman, CEO Redfin, describing working w/ Pierre Lamond at his Plumtree. Then Pierre Lamond, the Sequoia partner on the deal, began working out of our office, acting as the virtual CEO. Pierre made a point of being there the day one of his other companies went public. We looked at a news photo of all the smiling people, who seemed to be living in a gated community, on a planet I would never visit. Then Pierre said “that company was once even more screwed up than you are.” 16
  17. 17. CONFIDENTIAL Recommended actions Investigate and reference check any investor • Past successes • Past failures Assess the friendliness of terms • This tells you a lot about alignment w/ founders 17
  18. 18. CONFIDENTIAL Thanks & Q&A 18

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