Venture capital involves private equity funding for early stage, high-growth companies. Venture capital funds are typically structured as limited partnerships with general partners investing on behalf of limited partner investors. General partners earn management fees and carried interest based on fund performance. Venture capital funding rounds involve evaluating company teams, opportunities, financial projections, and negotiating term sheets that determine share prices, liquidation preferences, and board control between investors and companies. The goal is for funds to return 3 times their capital over 10 years through a small number of highly successful portfolio company exits through acquisition or IPO.

1. Venture CapitalFundraising Methodology

2. What Is Venture Capital?

3. What Is Venture Capital?Private equity class specialized in funding and building early stage, high growth potential enterprises

4. Typical VC Fund StructureGeneral Partners invest capital on behalf of Limited Partners

5. LPs include endowments, pension funds, charities, corporations, individuals, and fund of funds

6. GP contributes personal capital as well

7. GP earns 2% annual management fees & 20% carried interest, i.e., share of profits

8. Capital called as needed, with primary investing done in first 5 yrs of 10 yr fund cycle

9. Quality fund returns 3x capital, or 18-20% IRR

10. 1/3 of deals will likely fail, 1/3 will return amount invested, and 1/3 will drive majority of returnsWhere Do VCs Invest?InformationTechnologyLife SciencesClean Technology

11. Fund Example: SoftBank CapitalFocused on early stage high growth technology based businesses benefiting from the rapid deployment and adoption of broadband and mobile technologiesExperienced Team(5 former CEOs)Select Historical InvestmentsSelect CurrentInvestments

12. Industry Investment TrendsSource: MoneyTree Report – NVCA/PWC/Thomson Reuters

13. Renewable EnergyRenewables dominating “Green” VC investing and expected to grow with support of Obama administrationBillions of dollars in loans and grants available for R&D for everything from new battery technologies to more efficient use of fossil fuelsVC challenged by capital requirements for large green infrastructure dealsSource: FastCompany/Chubby Brain

14. Fundraising ProcessYou set the valuation. I’ll set the terms.**Don’t be fooled by the cover price

15. Why Raise Venture Capital?Guidance & Support

16. Board participants; Interim executives

17. Product management, business development and financial planning support

18. Access

19. Industry contacts

20. Leverage portfolio