V E N T U R E C A P I TA L I N 2 1 CJUNE 2012
OCTOPUS INVESTMENTSA SHORT INTRODUCTION     We back teams rather than sectors     Invest £100k to £5m     £2.8bn FUM  ...
ALLIOTT COLEHOW TO CONTACT ME  acole@octopusventures.com  @alliott  Alliott.co                              3
Agenda Venture capital in 21C Venture capital and YOU? Raising venture capital Key investment terms Resources Q&A   ...
VENTURE CAPITAL IN 21C                MULTI-DECADE LOW CAPITAL SUPPLY (UK)                                              Ne...
VENTURE CAPITAL IN 21CEVOLVING INDUSTRY   Imprecise term: wide array of investors   Funds: geography, stage, sector and/...
VENTURE CAPITALIS IT RIGHT FOR YOU AND YOUR BUSINESS?   Very inefficient market: 3000 plans >>> 8 investments   Can your...
RAISING VENTURE CAPITAL (I)COMPETITIVE TENSION1. To get good terms, you need multiple offers.2. To get multiple offers, yo...
RAISING VENTURE CAPITAL (II)APPROACHING VENTURE CAPITALISTS Endorsement from a trusted partner Treat a VC = Customer Sh...
RAISING VENTURE CAPITAL (III)WHAT TO PRESENT   Sell the vision and excitement.   Short 10 Slide Deck      Team      Pr...
RAISING VENTURE CAPITAL (III)WHAT TO PRESENT   Appendix      Very clear milestones / deliverables      Explicit tech ro...
RAISING VENTURE CAPITAL (IV)HOW TO PRESENT – GOLDEN RULES Meet In the Morning Arrive Early Don’t hang out in reception...
RAISING VENTURE CAPITAL (V)KEY TERMS   Valuation      25% dilution for £x      Competitive tension is key   Structure ...
RAISING VENTURE CAPITALRESOURCES Surviving Fundraising – Paul Graham Lines Not Dots – Mark Suster AVC – Fred Wilson A1...
THANK YOU FOR LISTENINGANY QUESTIONS @Alliott acole@octopusventures.com                              15
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21C Venture Capital

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A short introduction into venture capital, how to contact a VC, and how and what to present in a fundraising pitch.

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21C Venture Capital

  1. 1. V E N T U R E C A P I TA L I N 2 1 CJUNE 2012
  2. 2. OCTOPUS INVESTMENTSA SHORT INTRODUCTION  We back teams rather than sectors  Invest £100k to £5m  £2.8bn FUM  100# Octopus Venture Partners  [Always] Open Office  Early Stage – Realised IRR of 39% +  Growth – Realised IRR of 28% 2
  3. 3. ALLIOTT COLEHOW TO CONTACT ME acole@octopusventures.com @alliott Alliott.co 3
  4. 4. Agenda Venture capital in 21C Venture capital and YOU? Raising venture capital Key investment terms Resources Q&A 4
  5. 5. VENTURE CAPITAL IN 21C MULTI-DECADE LOW CAPITAL SUPPLY (UK) Net Bank Lending to SMEs Venture Capital Fund Raising 120 7£m per working day 100 80 6 60 5 40 4 20 £bn 3 0 -20 2 -40 1 0 Jan-08 Mar-08 Jan-09 Mar-09 Jan-10 Mar-10 May-08 May-09 May-10 Jul-08 Sep-08 Nov-08 Jul-09 Sep-09 Nov-09 Jul-10 Sep-10 Nov-10 00 01 02 03 04 05 06 07 08 09 Year  The Equity Gap is continuing to widen  Banks’ depressed lending to SMEs is likely to be prolonged  Lack of VC fundraising is exacerbating the effects of the banking crisis 5 Source 1: Bank of England Source 2: NESTA
  6. 6. VENTURE CAPITAL IN 21CEVOLVING INDUSTRY Imprecise term: wide array of investors Funds: geography, stage, sector and/or “thesis” New entrants:  Full time Angels  Crowd platforms  Incubators  Accelerators Stage of investment determines return requirement  Seed – 15x  Series A – 10x  Series B – 5x 6
  7. 7. VENTURE CAPITALIS IT RIGHT FOR YOU AND YOUR BUSINESS? Very inefficient market: 3000 plans >>> 8 investments Can your business be worth £100m - £1bn? Really? Several alternatives:  Friends Family Fools (FFF)  Angels  Family Offices  Grants  Your customers Adopt a rifle approach – and then listen to feedback 7
  8. 8. RAISING VENTURE CAPITAL (I)COMPETITIVE TENSION1. To get good terms, you need multiple offers.2. To get multiple offers, you need to tell a goodstory to multiple investors at the same time. 8
  9. 9. RAISING VENTURE CAPITAL (II)APPROACHING VENTURE CAPITALISTS Endorsement from a trusted partner Treat a VC = Customer Short email with bullet points Rifle shot approach Don’t cold callCf. Venture Hacks example email 9
  10. 10. RAISING VENTURE CAPITAL (III)WHAT TO PRESENT Sell the vision and excitement. Short 10 Slide Deck  Team  Product  Traction  Market Sizing  Route to market  Competitive landscape  Barriers to entry  Bottom up, assumptions led forecast  Acquirer landscape  Funding and allocation 10
  11. 11. RAISING VENTURE CAPITAL (III)WHAT TO PRESENT Appendix  Very clear milestones / deliverables  Explicit tech road map  Clean and recent sales pipeline  Relevant KPIs  Share capital table 11
  12. 12. RAISING VENTURE CAPITAL (IV)HOW TO PRESENT – GOLDEN RULES Meet In the Morning Arrive Early Don’t hang out in reception Assume no knowledge of your sector or business Always speak to a slide deck 10 Slides Maximum 25 Minutes Video Kills the [pitch] Remember their Q&A 12
  13. 13. RAISING VENTURE CAPITAL (V)KEY TERMS Valuation  25% dilution for £x  Competitive tension is key Structure  Understand the differences: simple, participation  Anti- dilution – walk away Option Pool  Structure against specific hires Reverse Vesting  Founder friendly  Leaver Provisions Portfolio Due Diligence 13
  14. 14. RAISING VENTURE CAPITALRESOURCES Surviving Fundraising – Paul Graham Lines Not Dots – Mark Suster AVC – Fred Wilson A16Z.com FredDestin.com 14
  15. 15. THANK YOU FOR LISTENINGANY QUESTIONS @Alliott acole@octopusventures.com 15

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