Tim Flannery - @f1annery
January 2014
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Background
What is Venture Capital?
Creating a Startup
Finding Investments
Evaluating Companies
How it re...
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Background
What is Venture Capital?
Creating a Startup
Finding Investments
Evaluating Companies
How it re...
• Loyola Undergrad (2008)

• JPMorgan (2008 – 2013)

• Co-founded Pilot Mountain Ventures
(2013 – Now)

• NYC since 2008 v...
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Background
What is Venture Capital?
Creating a Startup
Finding Investments
Evaluating Companies
How it re...
• Startups need fast growth

• VC funds invest money for
growth
• VCs biggest value add:
NOT MONEY
• VCs bring introductio...
• VC popped up in
1960’s/70’s in Silicon
Valley
• Firms like
KPCB, Sequoia, NEA, Dr
aper Fisher established
• Invest in co...
• Internet bubble &
shrinking industry
• SV leads, NYC and
Boston follow
• New investing models
• Startups happen
everywhe...
Private Equity

Venture Capital

Invests in more established
companies

Invests in high growth startups

Mix of investing ...
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“Seed stage” venture capital
NYC / NC based
Activist investors
80/20 :: technology / med device
Previous invest...
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Hardware
3D Printing
Mobile
Consumer FinTech
Sharing Economy

10
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•

Background
What is Venture Capital?
Creating a Startup
Finding Investments
Evaluating Companies
How it re...
• Small business doesn’t
mean startup
• Startups = Growth
• Doesn’t require
technology, funding, exit
• VC’s interested in...
13
14
• Startup becomes only
priority
• Vacation days? Haha.
• Maxed out credit cards
• Convince employees
you’re crushing it
• ...
•
•
•
•

Do something you love
Autonomy
Rewarding
Off chance at hitting it big

16
• Costs are at all-time lows (cloud, etc.)
• Easy access to resources
– blogs, helpful community
• Supporting infrastructu...
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•
•
•
•
•
•
•

Background
What is Venture Capital?
Creating a Startup
Finding Investments
Evaluating Companies
How it re...
David Wright striking out

Chase Utley hitting a home run

19
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•
•
•

Inbound traffic
Outbound activity
Hosting community events
Participate in networking events
Leverage online res...
•
•
•
•
•
•
•
•

Background
What is Venture Capital?
Creating a Startup
Finding Investments
Evaluating Companies
How it re...
•
•
•
•
•
•

Startup/investor introduction
Identify opportunity size
Track startup progress
Perform due diligence
Negotiat...
Contact Effectiveness Order
• Warm Introduction
• Cold email / phone call
• Snail mail…seriously.
Intro Content
• Quick se...
•
•
•
•
•
•

Startup = Growth (remember?)
Total market size? Nope.
Total addressable market size!
Industry analysis
Approp...
• Track company performance
• Watch team manage problems
• Larger sample size to predict future results

Courtesy of Mark ...
 Believe in opportunity size
 Believe in team
 Believe in industry direction
Time to execute due diligence
• Fancy word...
• Negotiate financing terms
• Cut the check

27
• Investors get involved at different levels
• Board seat / observer
• Recruiting
• Business partnerships
• Getting your h...
•
•
•
•
•
•
•
•

Background
What is Venture Capital?
Creating a Startup
Finding Investments
Evaluating Companies
How it re...
Differences
• Investment goals
• Social good vs. profit
• Portfolio performance
• Some evaluation criteria
Similarities
• ...
•
•
•
•
•
•
•
•

Background
What is Venture Capital?
Creating a Startup
Finding Investments
Evaluating Companies
How it re...
• Student-Faculty-Alumni community
• Focused on tech/entrepreneurship
• Connecting people with resources (like
getting you...
•
•
•
•
•
•
•

Background
What is Venture Capital?
Creating a Startup
Finding Investments
Evaluating Companies
How it rela...
Tim Flannery - @f1annery
January 2014
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Loyola Guest Speaking

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This is an overview of venture capital, from startups to finding deals to investing to working with those companies. I've borrowed some ideas from Mark Suster and Dave McClure. Thanks to those two.

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Loyola Guest Speaking

  1. 1. Tim Flannery - @f1annery January 2014
  2. 2. • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 1
  3. 3. • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 2
  4. 4. • Loyola Undergrad (2008) • JPMorgan (2008 – 2013) • Co-founded Pilot Mountain Ventures (2013 – Now) • NYC since 2008 via Allentown, PA • I’m not a writer, I just blog a lot: www.startupharbor.me 3
  5. 5. • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 4
  6. 6. • Startups need fast growth • VC funds invest money for growth • VCs biggest value add: NOT MONEY • VCs bring introductions • “Exit” is the end goal (acquisition / IPO) FYI: don’t raise money unless you have a compelling reason 5
  7. 7. • VC popped up in 1960’s/70’s in Silicon Valley • Firms like KPCB, Sequoia, NEA, Dr aper Fisher established • Invest in companies like Fairchild, Genetech, Appl e • Industry explodes over coming decades • Something Ventured  Excellent documentary on Netflix 6
  8. 8. • Internet bubble & shrinking industry • SV leads, NYC and Boston follow • New investing models • Startups happen everywhere FYI… Want more? Read blogs of Fred Wilson / Mark Suster / Paul Graham 7
  9. 9. Private Equity Venture Capital Invests in more established companies Invests in high growth startups Mix of investing styles (i.e. leveraged buyout, debt, go-private) Mainly cash-for-stock Focus on optimizing cash flows Focus on growth Investment review based on financials Financials are meaningless until later stage Makes money via dividend, income, IPO, sale, and other Rarely makes money except for IPO and acquisitions Funds and deals can be HUGE ($30B plus) Funds vary, but investments max out in $100s of millions Expect to make money on each investment Portfolio performance follows “power law” Funds have LLC/LP/GP legal structure Funds have LLC/LP/GP legal structure 8
  10. 10. • • • • • “Seed stage” venture capital NYC / NC based Activist investors 80/20 :: technology / med device Previous investments include companies like The Ladders 9
  11. 11. • • • • • Hardware 3D Printing Mobile Consumer FinTech Sharing Economy 10
  12. 12. • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 11
  13. 13. • Small business doesn’t mean startup • Startups = Growth • Doesn’t require technology, funding, exit • VC’s interested in $1 billion ideas 12
  14. 14. 13
  15. 15. 14
  16. 16. • Startup becomes only priority • Vacation days? Haha. • Maxed out credit cards • Convince employees you’re crushing it • Attempt to remain convinced company will stay afloat • THEN convince investors for money! • Don’t forget about shipping product • Build, test, release, rev iew, repeat 15
  17. 17. • • • • Do something you love Autonomy Rewarding Off chance at hitting it big 16
  18. 18. • Costs are at all-time lows (cloud, etc.) • Easy access to resources – blogs, helpful community • Supporting infrastructure in place 17
  19. 19. • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 18
  20. 20. David Wright striking out Chase Utley hitting a home run 19
  21. 21. • • • • • Inbound traffic Outbound activity Hosting community events Participate in networking events Leverage online resources (i.e. AngelList) FYI…VCs look at 1000’s of deals per year 20
  22. 22. • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 21
  23. 23. • • • • • • Startup/investor introduction Identify opportunity size Track startup progress Perform due diligence Negotiate & close deal Portfolio company management 22
  24. 24. Contact Effectiveness Order • Warm Introduction • Cold email / phone call • Snail mail…seriously. Intro Content • Quick sentences. Get to the point. • Be forwardable • Attach pitch deck or executive summary • Provide call to action Some other do’s & don’ts… 23
  25. 25. • • • • • • Startup = Growth (remember?) Total market size? Nope. Total addressable market size! Industry analysis Appropriate need for money Most importantly… TEAM 24
  26. 26. • Track company performance • Watch team manage problems • Larger sample size to predict future results Courtesy of Mark Suster… 25
  27. 27.  Believe in opportunity size  Believe in team  Believe in industry direction Time to execute due diligence • Fancy word for deep dive research • If all goes well, investment should follow • Reference check employees • Call customers • Contact business development partners • Contact industry experts • Review financials & cap table • Formality varies 26
  28. 28. • Negotiate financing terms • Cut the check 27
  29. 29. • Investors get involved at different levels • Board seat / observer • Recruiting • Business partnerships • Getting your hands dirty • Continued fundraising • Review performance with management • Report back on performance to fund investors • Things are great until they aren’t • Champagne wishes & caviar dreams (hopefully) 28
  30. 30. • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 29
  31. 31. Differences • Investment goals • Social good vs. profit • Portfolio performance • Some evaluation criteria Similarities • Belief in people & idea 30
  32. 32. • • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Loyola Venture Community Q&A / Heckling 31
  33. 33. • Student-Faculty-Alumni community • Focused on tech/entrepreneurship • Connecting people with resources (like getting you a job) • In-person monthly meetings in NYC • Group listserv hosting online discussion • Private directory of members Contact me for more details… 32
  34. 34. • • • • • • • Background What is Venture Capital? Creating a Startup Finding Investments Evaluating Companies How it relates to Loyola-Kiva project Q&A / Heckling 33
  35. 35. Tim Flannery - @f1annery January 2014

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