Loyola Guest Speaking
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Tim Flannery - @f1anneryJanuary 2014
Loyola Guest Speaking
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The Agenda• 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
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The Agenda• 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
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Background
• 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
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The Agenda• 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
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Venture Capital is Startup Rocket Fuel
• 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
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Here’s your history lesson
• VC popped up in 1960’s/70’s in Silicon Valley
• Firms like KPCB, Sequoia, NEA, Draper Fisher established
• Invest in companies like Fairchild, Genetech, Apple
• Industry explodes over coming decades
• Something Ventured Excellent documentary on Netflix
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Venture Capital Industry Today
• 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
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What about private equity?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
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So what’s Pilot Mountain Ventures?
• “Seed stage” venture capital• NYC / NC based• Activist investors• 80/20 :: technology / med device• Previous investments include
companies like The Ladders
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What I think is interesting
• Hardware• 3D Printing• Mobile• Consumer FinTech• Sharing Economy
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The Agenda• 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
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What is a startup?
• Small business doesn’t mean startup
• Startups = Growth• Doesn’t require
technology, funding, exit
• VC’s interested in $1 billion ideas
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Pop Culture Startup Life
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A better definition
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What’s it like founding a company?• 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, review, repeat
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Why would anyone do that?
• Do something you love
• Autonomy• Rewarding• Off chance at hitting it
big
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Easier than ever
• Costs are at all-time lows (cloud, etc.)• Easy access to resources– blogs, helpful community
• Supporting infrastructure in place
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The Agenda• 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
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Seeing Deals: The At-Bat’s Theory
Chase Utley hitting a home runDavid Wright striking out
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Deal Flow is the name of the game• 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
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The Agenda• 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
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From pitch to deal• Startup/investor introduction• Identify opportunity size • Track startup progress• Perform due diligence• Negotiate & close deal• Portfolio company management
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Contacting investors: Improving your oddsContact 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…
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Measuring the opportunity• Startup = Growth (remember?)• Total market size? Nope.• Total addressable market size!• Industry analysis• Appropriate need for money• Most importantly… TEAM
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Investing in Lines not Dots
Courtesy of Mark Suster…
• Track company performance• Watch team manage problems• Larger sample size to predict future results
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Due Diligence 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
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Do the deal. Finally.• Negotiate financing terms• Cut the check
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Manage the investment• 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)
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The Agenda• 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
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Kiva vs. VCDifferences• Investment goals• Social good vs. profit• Portfolio performance• Some evaluation criteria
Similarities• Belief in people & idea
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The Agenda• 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
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Loyola Venture Community
• 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…
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The Agenda• Background• What is Venture Capital?• Creating a Startup• Finding Investments• Evaluating Companies• How it relates to Loyola-Kiva
project• Q&A / Heckling
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Tim Flannery - @f1anneryJanuary 2014
Thank You