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Software Tools for Venture Capital Process

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Software Tools for Venture Capital Process

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Short presentation on "Software Tools for Venture Capital Process" discussing some of the innovations and developments in tools that support the venture capital process. Presented at ISBE 2012 conference in Dublin.

Short presentation on "Software Tools for Venture Capital Process" discussing some of the innovations and developments in tools that support the venture capital process. Presented at ISBE 2012 conference in Dublin.

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Software Tools for Venture Capital Process

  1. 1. Software Tools for Venture Capital Investment Process ISBE 2012 Conference
  2. 2. 300+ “software tools” documented Current effort classifies by decision process and stage of investment
  3. 3. Definition of stages of venture capital investment Seed – Financing that allows a business concept to be developed, perhaps involving the production of a business plan, prototypes and additional research, prior to bringing a product to market and commencing large-scale manufacturing. Startup – Financing provided to companies for use in product development and initial marketing. Companies may be in the Stage of process of being setup or may have been in business for a short investment time, but have not yet sold their product commercially. Expansion – Financing provided to companies that have reached a fairly stable growth rate; that is, not growing as fast as the rates attained in the early stage. These companies may or may not be profitable, but are more likely to be than in previous stages of development. [1] British Venture Capital Association, 2010. BVCA Private Equity and Venture Capital Report on Investment Activity 2010. Av ailable at: http://www.bvca.co.uk [2] National Venture Capital Association, 2011. NVCA Yearbook. Available at: http://www.nvca.org [3] European Venture Capital Association, 2011. EVCA Yearbook. Available at: http://www.evca.eu/
  4. 4. Decision process model of venture capitalist investment activity Origination – the processes by which deals enter into consideration as investment prospects Screening – involves a delineation of key policy variables which delimit investment prospects to a manageable few for in-depth evaluation Evaluation – involves the assessment of perceived risk and expected return on the basis of a weighting of several characteristics of the prospective venture and the decision whether or not to invest as determined by the relative levels of perceived risk and expected return Structuring – covers the negotiation of the price of the deal, namely the equity relinquished to the investor, plus the covenants which limit the risk of the investor Post-Investment Activities – assistance to the venture in the areas of recruiting key executives, strategic planning, locating expansion financing, and orchestrating a merger, acquisition or public offering [4] Tyebjee, T.T. & Bruno, A.V., 1984. A Model of Venture Capitalist Investment Activity. Management Science
  5. 5. Investment Networks Investment Networks are essentially social networks linking entrepreneurs and investors Examples: • AngelList • SeedSummit • Angel’s Den
  6. 6. Case Study: AngelList ―AngelList is a platform for startups to meet investors and talent.‖ Online pitching – Ability to pitch online to get connected with angel investors Database – 600+ angel investors, 100+ seed funds and 300+ VCs Key information - including investment history, criteria and contact details [5] AngelList, [Online], Available at: http://angel.co [9 June 2012]
  7. 7. Databases Popular Databases used in industry. Examples: • Dow Jones’ VentureSource • Standard & Poor’s Capital IQ • Bureau van Dijk’s FAME • Thomson Reuters’ ThomsonONE (formerly VentureXpert) • CB Insights • Duedil
  8. 8. Case Study: CB Insights ―CB Insights is an information platform tracking startups invested in by VCs, angel investors, incubators and university programs.‖ Advanced search – 80,000+ high growth private companies and 50,000+ funding events In-depth company profiles – with funding history, management team and competitors Tracking and alerts – track and receive alerts on companies and funding events “Funding Recommendation Engine (FRE)” – analyzes funding history in order to recommend relevant funding sources [6] CB Insights, [Online], Available at: http://www.cbinsights.com [9 June 2012]
  9. 9. Market Intelligence Market Intelligence platforms generally utilize large sets of data in order to give insight and provide information on market dynamics and participants. Examples: • Startup Intelligence • Quid
  10. 10. Predictive Valuation Tools that allow entrepreneurs to submit their application for funding to investors. Examples: • YouNoodle
  11. 11. Case Study: Younoodle ―Younoodle is a place to discover and support the hottest early-stage companies and university innovation.‖ Social network – a social networking platform focused on university entrepreneurship “Startup Predictor” – algorithmic prediction estimating company's expected future value “Podium” – a business plan competition platform [7] YouNoodle, [Online], Available at: http://www.younoodle.com [9 June 2012]
  12. 12. Markets Markets offer a marketplace to buy and sell shares in private companies. Examples: • Sharespost • SecondMarket (formerly Restricted Stock Partners) • NASDAQ’s BX Venture Market
  13. 13. Case Study: SecondMarket ―SecondMarket helps buyers and sellers transact in illiquid, restricted and alternative investments‖ Centralized online platform – 30,000+ participants, thousands of transactions, representing billions of dollars in assets Streamlined process – specialists streamline process from listing to settlement [8] SecondMarket, [Online], Available at: http://www.secondmarket.com [9 June 2012]
  14. 14. Benchmarking Benchmarking tools allow companies to benchmark their performance against their competition and peer-group. Examples: • Startup Genome Compass • SVB Analytics Benchmarking • CB Insights Mosaic
  15. 15. Deal Platforms Deal Platforms offer a solution for investors to manage their deal flow of prospective investments. Examples: • Gust (formerly Angelsoft) • Sevanta Dealflow • CapLinked • EquityNet
  16. 16. Case Study: Gust ―Gust provides a flexible, secure platform that helps investors and entrepreneurs seamlessly coordinate on funding decisions.‖ Investor search engine – to find investment from over 600 angel groups Common application – to apply for funding directly to one or more groups Investor Relations Site – allows companies to present all the information investors need to know [9] Gust, [Online], Available at: http://www.gust.com [9 June 2012]
  17. 17. A note on notoriety
  18. 18. Alternative Finance Alternative Finance tools, covering Crowdfunding and Peer-to-peer offerings, which don’t necessarily fit our tradition venture capital investment process but offer insight into new innovations and developments in relation to early-stage investment. Examples: • Kickstarter • GrowVC • Crowdcube • Seedrs • Funding Circle • MarketInvoice
  19. 19. Case Study: Seedrs ―Seedrs makes investing in startups simple and rewarding.‖ Equity-based – allowing investment between £10 and £100,000 through the platform in return for equity Investor Access – access capital from a wide range of investors up to £100,000 FSA Authorised – approved by the Financial Services Authority (FSA) [10] Seedrs, [Online], Available at: http://www.seedrs.com [9 June 2012]
  20. 20. E thomas.stone@ucl.ac.uk T @tstonez
  21. 21. Why? It’s all fiction… There is a tool for every task, and a task for every tool. — Tywin Lannister (Game of Thrones) For every task, there's a perfect tool. — Jihl Nabaat (Final Fantasy XIII)

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