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Transcript of Vcapital Confidential1 Startup Workshop Presentation to.
Vcapital Confidential 1
Startup WorkshopStartup Workshop
Presentation toPresentation to
Vcapital Confidential 2
Agenda
Secrets of Getting Funding (Top 7 steps)
The 4M’s of the Executive Summary
Vcapital Confidential 3
5,000 + Venture Capital Providers
Private Management FirmsCorporate Venture GroupsFinancial Institutions Venture GroupsFamily Funds
Capital Managed, Raised and Invested has skyrocketed
Venture Wire tells it all..millions daily
“Best Time To Be A VC & An Entrepreneur!”
Vcapital Confidential 5
Secrets of Getting Financed
1“Venture firms invest in the Jockey
– not the horse”
Vcapital Confidential 10
Secrets of Getting Financed
6Due diligence is not something only
the venture firms do
Vcapital Confidential 12
The 4 “M”s – What VCs really want to see
Management (Founders, Senior Managers, Directors & Investors)
Magic (Products/Services, Competitive Advantages, Operational Plan)
Market (Large Markets, Target Customers, Marketing/Sales Plan)
Money (Business Model, Financials, “The Deal”, “The Exit”)
Vcapital Confidential 16
VCapital Key Customers
High quality EntrepreneursAll rounds of financing, across all industries and all geographies
Venture Capitalists, corporate investors and organized groups of angel investors
Invest in variety of stages, industries and geographiesMust have deal funding history
Best of Breed Professional Service ProvidersHistory serving the entrepreneurial marketQuality reputation in discipline of services provided
Vcapital Confidential 17
Value Proposition - Entrepreneurs
Decrease front end of capital raising process from an average of 4-6 months to 4-6 weeks.
Increases chances of getting funded (currently by 8 times over the industry average) by providing expert advice, personalized service and targeted referrals to pre-qualified network of investors.
Ensures entrepreneurs maintain control over who sees their opportunity.
Vcapital Confidential 18
The “Right Touch” Approach
Not a listing serviceDeals are screened at various pointsEntrepreneur is in controlDeals are referred based on investment preferences
Not a hands-off approachFull services available
Not only a tech companyVenture and finance professionals leveraging cutting edge Internet and communications technology
Vcapital Confidential 20
Valuation
How much to raise?
What percent of Company to give up?
= Depends on the value (valuation) of the company
Vcapital Confidential 21
Elements affecting ValuationTotal Growth Opportunity
A company that can reach $5 billion in revenue should command a higher valuation than a similar opportunity that can reach $500 million
Risk ProfileThe higher the risk, the lower the valuation
• Technology Risk• Completeness of Management team• Number of Competitors
Investment Stage (consider in isolation)The earlier the stage, the lower the valuation As you grow, you decrease the risk, and increase valuation
Vcapital Confidential 22
How do I value my Company?
Valuation is… is the present value of all future cash flows discounted back at the required rate of return, usually called a discounted cash flow analysis
= valuation methodology is technically CORRECT = USELESS in raising your first couple of rounds of
venture capital = There is NO CORRECT answer
Vcapital Confidential 23
Comparing your business to a comparable business with similar elements can give you insight into your valuation. Find companies with similar growth opportunities, risk profiles, and investment stage. Talk to professional service providers such as lawyers and accountants who have assisted entrepreneurs in raising venture capital. Talk to entrepreneurs in venture-backed companies.
How do I value my Company?
Vcapital Confidential 24
Valuation – VC MethodologyVenture capitalists are concerned with getting above average returns to compensate them for the risk they are willing to take
Seed and early stage investors expect a return of 10 X original investmentlater stage investors target 3 to 5 X original investment
Venture capitalists focus on pre-money valuations, or the valuation of the company prior to a new round of venture funding. This allows for better comparability across companies without regard for the amount of capital being raised.
Vcapital Confidential 27
Sources of Capital
Angels
Friends, Family and Fools
Sophisticated Angel Investors
Family Venture Funds
Private Management Firms
Financial Institution Venture Funds
Corporate Venture Funds
Vcapital Confidential 28
Seed Stage (Pre-Venture) Financing
Company Development: Up to 1 year
Capital Range: Up to $1M
Primary Sources: FF&F, Angels, Seed-Stage VC Firms
Vcapital Confidential 29
Early Stage Financing
Company Development: 1-3 YearsCapital Range: $1Million - $5 Million (1-2 Rounds)Primary Sources: Private Management Firms, Corporations
Vcapital Confidential 30
Expansion Stage Financing
Company Development: 3-5 Years
Capital Range: $5 Million - $20 million (1-2 Rounds)
Primary Sources: Private Management Firms, Financial Institutions, Corporations