The document discusses how venture capital funding will change due to the COVID-19 pandemic. It notes that VCs currently have $120 billion in cash reserves, but deals will be fewer and harder to raise early-stage funding. Valuations will drop 25% and term sheets will become more complicated. Certain "new normal" businesses will still receive funding. It also outlines qualities that VCs look for in investments and CEOs, such as coachability, market knowledge, leadership, and accountability. Traits like living values, setting direction, managing complexity, and driving performance help solidify relationships within the VC community.

1. MANAGING
INVESTMENT
CAPITAL
RELATIONSHIPS
André D. Harrell
Managing Principal

2. To date: “VCs are
quarantining with $120
billion in cash reserves…but
it won’t last forever”
Marker 2020

3. LANDSCAPE
CONDITIONS FOR
VC FUNDS
• Deals will be made, but there
will be fewer of them
• It will be much harder to raise
early-stage funding
• Valuations will drop by 25%
• Term sheets will get a lot more
complicated
• “New Normal” businesses will
still get funding
Marker 2020: 5 Ways Venture Funding Will
Radically Change In This New World
beyond the pandemic…

4. AGENDA
• Qualities investors look for in an
investment asset
• Understanding the VC Investor
• Traits that solidify relationships
within the investment community

5. 1. Qualities investors look for in an
investment asset

6. RELATIONSHIP
QUALITIES…investors
look for
• Coachable & Compatible Interests
• Market Knowledge
• Leadership
• “Numbers Savvy” - Business Acumen
• Accountability

7. COACHABLE &
COMPATIBLE
INTERESTS
Today’s investor care about
the ability to coach and
work side by side with the
CEO. This will help to
identify compatible
interests and more
importantly develop trust
as the partnership moves
forward.

8. MARKET
KNOWLEDGE
It’s not overstated that
Investors care about the
CEO’s understanding of the
market (e.g. Customers)
because that end-user
fuels the growth and
returns for that investor.

9. LEADERSHIP
It’s critical that investors
can identify and quantify
the leadership skills of the
CEO. Investors are
attentive to a well
functioning team because
they understand it’s the
backbone of a company’s
success.

10. “NUMBERS
SAVVY”…BUSINESS
ACUMEN
As the CEO of a company
looking for funding your
business acumen must be
at a centers of excellence
level. Investors expect their
money to be effectively
utilized to move the
business forward…and
realize a profitable return.

11. ACCOUNTABILITY
After competence, passion,
focus, strategic and all those
usual attributes…investors
want a CEO who is
accountable and takes
accountability seriously.

12. 2. Understanding the VC Investor

13. VENTURE CAPITAL
INVESTMENT
OBJECTIVES
• Like to have a
specialized strategy or
focus
• Wants to know the
“MMF” (Market-Market
Fit versus Product-
Market Fit (“PMF)
• Motivated on having the
ability and reputation to
pick “Winners”
• Will consistently drive
equity position
MONEY2020: MANAGING VENTURE RELATIONSHIPS

14. VENTURE CAPITAL
GENERAL
OBSERVATIONS
• Generally fund managers like
to be organized
• Most will require “Check-In’s”
or briefing’s
• Some Managers become
obsess over fund quality (e.g.
Money Out)
• Most fund managers will want
to have in place milestones
• Remember fund managers are
fundraisers themselves…so
they understand “The Game”.
MONEY2020: MANAGING VENTURE RELATIONSHIPS

15. VENTURE
CAPITAL
INVESTMENT
PROCESS

16. VENTURE CAPITAL
INVESTMENT
EXPECTATIONS
• Investing at low
valuation (through
multiple rounds at
increasing valuations)
• Exit (a/k/a liquidity
dynamic) at a higher
value
v Initial Public Offering
(IPO)
v Merger into a Public
Company
v Acquisition

17. 3. Traits that solidify relationships
within the investment community

18. Traits that solidify
relationships within the
investment community
• Lives The Values
• Sets Direction and Strategy
• Manages Business Complexity
• Fosters Innovation and Continuous
Improvement
• Drives Performance

19. LIVES THE VALUES
The CEO fosters and promotes
integrity values in all business
activities. He/She communicates,
and role models the values; sets an
example for others to follow.
Respectfully and constructively
challenges the thinking and actions
of others on the team. Adheres to
investment partnership
agreements/confidentiality,
relevant laws, regulations, and
commitments. Maintains a
balanced focus on the business
results that include economic
viability, environmental
sustainability, and social
responsibility.

20. SETS DIRECTION
AND STRATEGY
CEO can create and clearly
communicate a shared vision for
the future consistent with the
values and mission of the
organization. Leads and promotes
customer-focused strategies, and
ensures strategic imperatives are
transformed into executable
business plans. Maintains a
balanced perspective between
short- and long-term priorities.
Leads/Manages the dynamic
tension between stretch goals
and realistic plans. Can adapt
quickly to new situations and
changes in the broader business
environment.

21. MANAGES
BUSINESS
COMPLEXITY
CEO can make timely,
insightful decisions based on
the best information available,
and takes effective action
incorporating reasoned risk-
taking. Establishes and ensures
adherence to investment
partnership agreements and
processes within and across
company/market functions
while maintaining an
entrepreneurial spirit. Plans for
growth and expansion, and
acts as a catalyst for positive,
constructive change.

22. FOSTERS INNOVATION
AND CONTINUOUS
IMPROVEMENT
CEO assembles information
and leverages the diversity of
others’ experience,
backgrounds, and expertise
when problem solving.
Develops new insights and
formulates innovative solutions
by analyzing, synthesizing,
and integrating data and
information in the context of
overall goals and objectives.
Encourages and promotes
creative problem-solving and
breakthrough ideas,
development of new systems,
programs, and processes.

23. DRIVES
PERFORMANCE
CEO consistently sets clear
and challenging expectations
and holds self and others
accountable for meeting or
exceeding them. Consistently
delivers on commitments.
Develops and applies new
and unique methods and
thinking to executing plans
and strategies. Continues to
drive performance until
objectives are met – does not
back down in the face of
adversity or obstacles.

24. CAPITAL
FUNDRAISING
THEORY
“Successful fundraising is accomplished
when you DON’T need the money…and
there’s a hyper focus on building the
relationship”
André Harrell
Managing Principal

25. THANK YOU!