What are Investors Looking for when Evaluating your Business for a Potential Investment

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What are Investors Looking for when Evaluating your Business for a Potential Investment

  1. 1. The HVCFI / iCANny Entrepreneur’s Breakfast ForumJuly 11, 2012What Investors Look for When Evaluating YourBusiness for a Potential Investment
  2. 2. Stonehenge aims to catalyze rapid growth of companies inup-and-coming markets by backing passionateentrepreneurs solving business problems.Stonehenge is focused on finding investment opportunitiesin underserved markets, areas where there is an abundanceof entrepreneurship and innovation, but a relative shortageof locally available professionally managed capital.
  3. 3. Stonehenge’s Nationwide Footprint
  4. 4. Stonehenge is a Partner in the Communities we Serve
  5. 5. Why Entrepreneurship?
  6. 6. Why Entrepreneurship?
  7. 7. Why Entrepreneurship?YOURFACEHERE
  8. 8. Why Entrepreneurship?
  9. 9. Why Entrepreneurship?
  10. 10. Why Entrepreneurship?
  11. 11. Entrepreneurship for America’s FutureChart from NVCA Venture Impact report, 2011http://www.nvca.org/index.php?option=com_content&view=article&id=255&Itemid=103
  12. 12. What is Venture Capital?Chart from NVCA Venture Impact report, 2011http://www.nvca.org/index.php?option=com_content&view=article&id=255&Itemid=103
  13. 13. What is Venture Capital?Chart from NVCA Venture Impact report, 2011http://www.nvca.org/index.php?option=com_content&view=article&id=255&Itemid=103
  14. 14. What is Venture Capital?Chart from NVCA Venture Impact report, 2011http://www.nvca.org/index.php?option=com_content&view=article&id=255&Itemid=103
  15. 15. So, START YOUR COMPANY!
  16. 16. Where to Get Help EarlyHudson ValleyPleasantvilleSyracuse
  17. 17. But…How will I finance it?Making investments at the earlieststages of a company’s developmentinvolves extraordinary risk. Youngcompanies have little or no collateral tosecure bank loans, no assets or track recordsto attract financing from private equity firmsand no opportunities for short term gain tointerest hedge funds. Venture capitalists stepin and assume this risk by providing capital.
  18. 18. First…A Detour
  19. 19. Is Venture Capital Right for My Business
  20. 20. How Your Investor Sees It
  21. 21. How Your Investor Sees It
  22. 22. Back on Track
  23. 23. Is Your Company Appropriate for Venture Capital?
  24. 24. What Kinds of Companies Attract Venture Capital?
  25. 25. What Kinds of Companies Attract Venture Capital?
  26. 26. How to Find the Right Match
  27. 27. There exists a HUGE Capital Gap when you need it mostTypical starting pointat which venture capitalinvestment takes placeConceptSEED/Start-UpIndividual AngelsAngel GroupsEarly Stage VCMid/Later Stage VCCAPITAL GAPFriends/FamilyAchievingLiquidity Event"Capital Gap"15EARLY GROWTH LATERNegativeReturnsSTAGEFUNDER($ millions)Revenue2025Start-Up7Years5101 2 3 4 5 6
  28. 28. VC Financing is Increasingly Hard to Find
  29. 29. Regionally Active Early Stage Funding Assistance
  30. 30. Where does Stonehenge Growth Equity fit in?Growth Stage: Post product,revenue, market introduction• Mitigates technology risk• Mitigates market adoption risk• Mitigates financial riskMitigate risk, support rapid growth• Business model is proven and scalable• Capital invested is used to supportaccelerating growth• Significant upside with improved win/loss ratioTechnology-Enabled Businesses• Applying technology to solvebusiness problems• Typically recurring revenue models• No capital intensive R&D cycles• Usually software and/or services
  31. 31. Where does Stonehenge Growth Equity fit in?Stonehenge Focus• Intersection of Healthcare and IT• Post product development, early revenue,reference customers• $1 million investment (including match)What we won’t do• Drug Discovery• Medical Devices• Science Projects• Heavy hardware investmentInnovate NY• $5 million allocation + matching funds• Seed-stage fund• New York based companies
  32. 32. Active Partnership Promotes SuccessActive Board Participation• Strategic Planning• Sales & Marketing• Corporate GovernanceDeep Network of Relationships• Recruiting• Service Providers• Other InvestorsTrusted Advisors to Entrepreneurs• Support early stage companies• Honest feedback, timely response• Willing to talk before you’re ready for investment
  33. 33. Keys to Attract Capital: Management Team
  34. 34. Keys to Attract Capital: Solve a BIG Problem
  35. 35. Keys to Attract Capital: Generate Revenue
  36. 36. Keys to Attract Capital: Be Passionate
  37. 37. Thank YouBrian S. ModelManaging Director, Stonehenge Growth Capital152 West 57th Street, 20th Floor, New York, NY 10019(212) 265-9380 bsmodel@stonehengegc.com

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