Professional Documents
Culture Documents
Accelerator
Confidential
Vesalius Ventures Accelerator
Confidential
Venture Capital Accelerators
Industry Medical Devices Medical Devices Health Care Medical Informatics &
Focus Biotech Technology
Timex
Clients
Air Products
ChaseCom
Confidential
Overview of the Venture Capital
Value Chain and
the Fund Raising Process
Confidential
Agenda
Confidential
Venture Capital Value Chain
Venture Capital Value Chain
Others: I-Banks, Law
Firms, PR Firms
Limited Venture
Start-up Exit
Partner Capital
Pension funds, Early Stage, Either through:
Endowments, Late Stage,
• Merger or
Corporations Mezzanine,
Acquisition
Corporate
E.g.
• IPO
Foundations, E.g.: Traditional
State Pension and Corporate • bankruptcy
Programs,
University
endowments
Confidential
How are VCs paid?
Compensation
• Management Fee usually 2.5%
• Carried Interest (“Carry”)
• 80/20
• 70/30
• GPs are always Limited Partners
• Measured on IRR and compensated on ROI
Confidential
50,000 Foot Overview
2-5 yrs
2-4.5yrs
Sustainable
1.5-3yrs Customers Financials
1-1.5yrs Customers Public Profile Predictability
6m-1yr investor
Step up in value
Value Product Road map Cross-over
Concept Capital Structure Team inputs players
Value Proposition
Management team Customer
1-2 people Market definition discussions
Hope, smoke, Positioning strategy Less risk tolerant
fire? Beta customers investor
Biz Plan Technology Executing
marketing plan
R/D Team
Product Development
Product to Mkt. New Investors
Full Mgmt. Val. Increase
Business Plan
Team Execution
CEO Revenue Start
Management Team
Expansion
Distribution Prepare IPO
Business Model
“Viable Start-up” “Story”
“Business”
Confidential
Seed
• Sources – Accelerators, Angels, Friends & Family (Avoid too much
of the latter)
• Deliverables:
– Founders commit IP to company
– Crisp, clear exec summary
– Defined & executable milestones & timeline
– Managed Burn rate
– Product prototype
– Employment agreements in place
• Do Not:
– Value company at this stage preferably
– Give out “%” of company - Absolute shares are preferred
– Have anti-dilution clauses
– Have complex cap tables
Confidential
Series A
• Deliverables/VC Process requirements
– Investor Pitch
– Executive summary
– Business Plan
– Business Model: 3-5 years max
– References
• Board very important – investor collaborated
– Odd # - 5 preferably at this round
– Balanced: Common, investors and domain experts
• Raise as much as needed plus one more quarter to get to next
best funding point
• Investors ask for 30-50%
• Employee Pool – 20-25% approx
• Highly capitalized companies – raise more @ first round
Confidential
Series A – cont’d.
Confidential
Series B
• Transitional Funding
• Proven Business Model
– Acquired customers
– On path to profitability
• Management team/Board – complete
• Proven Technology
– Well-defined Product Road Map
– Marketing strategy set
• Market Conditions important
Confidential
Series C
• Mezzanine typically
• Final private placement
– Qualified Invt. Banker involved
• $$ primarily for sales/marketing to financial
community
• Profitability (at least 3Qs)
• Market Conditions drive $$ raised
– Raise more if bad, less if good
Confidential
Exit: IPO
• Retention
• Integration Issues
• Accelerated Vesting
• Lock-up Period
• Employment Agreements
Confidential
Venture Capital…..
”Real World”
Confidential
Fundamentals of the Deal
1. Disruptive Technology
2. Superior Management Team
3. Market need
4. Valuation
5. Term Sheet/Capital Structure
6. Financing
7. Exit
Confidential
Entrepreneurial “Real World”
Confidential
What Entrepreneurs Should be
Demanding of Their Boards/VC’s
• Customer Contacts
• Recruiting Contacts
• Interviewing/Selecting Management Team
• Scars, Experience
– mistakes to avoid, and why
– methods that worked, and why
Confidential
VC “Real World”
Confidential
This Is A “People Game”
Confidential
What to Expect After
You Are Funded
Confidential
Its All About Execution
Confidential
Get To The Next Inflection Point
Confidential
Conclusion
Confidential
Downside of working with VC’s
Confidential
Upside of working with VC’s
1. Plan #350
2. I don’t know what you do after reading the
exec summary
3. Small market niche that is not growing
4. “No competition”
5. Non-disruptive Technology
6. Superficial financial projections
7. Thin margins
8. Inexperience management team
9. No references
10. Messy capital structure
Confidential
Thank You!
Confidential
For The Entrepreneur
Confidential
For The Entrepreneur
Confidential