SlideShare une entreprise Scribd logo
1  sur  12
Télécharger pour lire hors ligne
January 2015
Introduction to Venture Financing
Douglas Abrams
2
6XXXX
Douglas Abrams
About the facilitator
 Wharton MBA
 JP Morgan – Vice President
IB Technology, GM Internet Marketing
 Parallax Capital Mgmt – Co-founder and MD
Private Equity
 Extream Ventures – Co-founder and MD
S$20 million seed fund
 Expara – Founder and MD
IDM Ventures Incubator, advisory, training
 NUS – Adjunct Associate Professor, Business
School, Entrepreneurship, Sasin – Visiting
Professor, Venture Capital
3
6XXXX
Douglas Abrams
VC mindset
 Risk and return are highly correlated
 You cannot increase return without taking more risk
Return
Risk
Potential outcomes
4
6XXXX
Douglas Abrams
Key elements for success
• Solving a painful problem for customers – Value proposition
• Developing an innovative product – Innovation
• Customers and competitors – Market identification and analysis
• Reaching customers – Marketing, sales and distribution strategy
• Competing when others enter - Sustainable competitive advantage
• Make money – Business model and financial plan
• Team – A team or B team
5
6XXXX
Douglas Abrams
Key venture finance terms
 Business model
 Financial projections
 Valuation
 Funding required and equity offered
 Use of Proceeds
 Exit Strategy and ROI
 Cap table
6
6XXXX
Douglas Abrams
Company valuation methods
 Price to earnings (p/e)
 Dividend yield
 Multiple of book value
 Comparables
 Discounted Cash Flow (DCF)
 VC method
7
6XXXX
Douglas Abrams
How much equity does the investor receive?
 Pre-money valuation
– Amount invested by VC ÷ (Agreed pre-money value of business
+ Amount invested by VC)
– $3MM pre + 1 MM VC = 25% VC equity
 Post-money valuation
– Amount invested by VC ÷ post-money valuation
– $4MM post = 25% VC equity
8
6XXXX
Douglas Abrams
How do VCs make money?
 Trade sale – sell to
another company
 IPO – sell to the
public through listing
on an exchange
9
6XXXX
Douglas Abrams
Stages and sources of funds
Founder’s
Capital
Seed/
Angel
Series
A, B, C
Mezzanine Pre-IPO IPO
VC hurdle rates 60-100% 40-60% 20% Why are these rates so high?
OM
F,F&F
Incubators
corporations
government
Customers, suppliers,
strategic partners
VCs, Banks for VC loans
10
6XXXX
Douglas Abrams
Calculate investor’s ROI including dilution
11
6XXXX
Douglas Abrams
Key elements of a venture deal
 Board of directors
 Protective provisions
 Drag-along agreement
 Conversion
Control
 Price-per-share
 Valuation
 Amount of financing
 Liquidation preference
 Vesting
 Options pool
 Anti-dilution
 Pay-to-play
Economics
12
6XXXX
Douglas Abrams
Contact us
 Douglas Abrams
 Expara, Expara IDM Ventures
– dka@expara.com
– www.expara.com
 Block 71 Ayer Rajah Crescent
 #$02-10/11 S139951
 65-9780-5381

Contenu connexe

Tendances

Acceleration Best Practices
Acceleration Best PracticesAcceleration Best Practices
Acceleration Best PracticesExpara
 
Sasin Master Class - "Venture Capital in Southeast Asia: At A Turning Point?"
 Sasin Master Class - "Venture Capital in Southeast Asia: At A Turning Point?"  Sasin Master Class - "Venture Capital in Southeast Asia: At A Turning Point?"
Sasin Master Class - "Venture Capital in Southeast Asia: At A Turning Point?" Expara
 
Expara Business Canvas Workshop
Expara Business Canvas WorkshopExpara Business Canvas Workshop
Expara Business Canvas WorkshopExpara
 
Sasin October Sundowner - Venture Capital in Southeast Asia
Sasin October Sundowner - Venture Capital in Southeast AsiaSasin October Sundowner - Venture Capital in Southeast Asia
Sasin October Sundowner - Venture Capital in Southeast AsiaSasin Entrepreneurship Center
 
Expara accelerator program
Expara accelerator programExpara accelerator program
Expara accelerator programExpara
 
VC Workshop - two days
VC Workshop - two daysVC Workshop - two days
VC Workshop - two daysExpara
 
Venture Capital and the Finance of Innovation 2nd Edition Metrick Solutions M...
Venture Capital and the Finance of Innovation 2nd Edition Metrick Solutions M...Venture Capital and the Finance of Innovation 2nd Edition Metrick Solutions M...
Venture Capital and the Finance of Innovation 2nd Edition Metrick Solutions M...ruwakyz
 
Things startups need to know if they want to raise capital from Silicon Valley
Things startups need to know if they want to raise capital from Silicon ValleyThings startups need to know if they want to raise capital from Silicon Valley
Things startups need to know if they want to raise capital from Silicon ValleyJeff Clavier
 
500 Startups #Batch17 #DemoDay: "Beauty and the GEEK"
500 Startups #Batch17 #DemoDay: "Beauty and the GEEK"500 Startups #Batch17 #DemoDay: "Beauty and the GEEK"
500 Startups #Batch17 #DemoDay: "Beauty and the GEEK"Dave McClure
 
Introduction to Business Angel Investing
Introduction to Business Angel InvestingIntroduction to Business Angel Investing
Introduction to Business Angel Investing'Tomi Davies
 
#NFIM18 - Heather Henyon - Founding General Partner, Mindshift Capital
#NFIM18 - Heather Henyon - Founding General Partner, Mindshift Capital#NFIM18 - Heather Henyon - Founding General Partner, Mindshift Capital
#NFIM18 - Heather Henyon - Founding General Partner, Mindshift CapitalMinc
 
Building innovation ecosystem
Building innovation ecosystemBuilding innovation ecosystem
Building innovation ecosystemMaher Hakim
 
Angel Investing in Africa; Why it matters now!
Angel Investing in Africa; Why it matters now!Angel Investing in Africa; Why it matters now!
Angel Investing in Africa; Why it matters now!'Tomi Davies
 
Aban in Africa 2016
Aban in Africa 2016Aban in Africa 2016
Aban in Africa 2016'Tomi Davies
 
Tech and Venture Capital in the Time of Corona
Tech and Venture Capital in the Time of Corona Tech and Venture Capital in the Time of Corona
Tech and Venture Capital in the Time of Corona Dave McClure
 
WS @ Toronto Tech Meetup
WS @ Toronto Tech MeetupWS @ Toronto Tech Meetup
WS @ Toronto Tech MeetupWealthsimple
 
Egypt Startups Ecosystem 101 - Country Overview Dec 2015
Egypt Startups Ecosystem 101 - Country Overview Dec 2015Egypt Startups Ecosystem 101 - Country Overview Dec 2015
Egypt Startups Ecosystem 101 - Country Overview Dec 2015Ameer Sherif
 
Why should you consider moving to Silicon valley? - Baris Aksoy - Innovation ...
Why should you consider moving to Silicon valley? - Baris Aksoy - Innovation ...Why should you consider moving to Silicon valley? - Baris Aksoy - Innovation ...
Why should you consider moving to Silicon valley? - Baris Aksoy - Innovation ...Innovation Nest VC
 
Risk dg 19 may 2016 presentation slides
Risk dg 19 may 2016 presentation slidesRisk dg 19 may 2016 presentation slides
Risk dg 19 may 2016 presentation slidesNabila Gimadi
 

Tendances (19)

Acceleration Best Practices
Acceleration Best PracticesAcceleration Best Practices
Acceleration Best Practices
 
Sasin Master Class - "Venture Capital in Southeast Asia: At A Turning Point?"
 Sasin Master Class - "Venture Capital in Southeast Asia: At A Turning Point?"  Sasin Master Class - "Venture Capital in Southeast Asia: At A Turning Point?"
Sasin Master Class - "Venture Capital in Southeast Asia: At A Turning Point?"
 
Expara Business Canvas Workshop
Expara Business Canvas WorkshopExpara Business Canvas Workshop
Expara Business Canvas Workshop
 
Sasin October Sundowner - Venture Capital in Southeast Asia
Sasin October Sundowner - Venture Capital in Southeast AsiaSasin October Sundowner - Venture Capital in Southeast Asia
Sasin October Sundowner - Venture Capital in Southeast Asia
 
Expara accelerator program
Expara accelerator programExpara accelerator program
Expara accelerator program
 
VC Workshop - two days
VC Workshop - two daysVC Workshop - two days
VC Workshop - two days
 
Venture Capital and the Finance of Innovation 2nd Edition Metrick Solutions M...
Venture Capital and the Finance of Innovation 2nd Edition Metrick Solutions M...Venture Capital and the Finance of Innovation 2nd Edition Metrick Solutions M...
Venture Capital and the Finance of Innovation 2nd Edition Metrick Solutions M...
 
Things startups need to know if they want to raise capital from Silicon Valley
Things startups need to know if they want to raise capital from Silicon ValleyThings startups need to know if they want to raise capital from Silicon Valley
Things startups need to know if they want to raise capital from Silicon Valley
 
500 Startups #Batch17 #DemoDay: "Beauty and the GEEK"
500 Startups #Batch17 #DemoDay: "Beauty and the GEEK"500 Startups #Batch17 #DemoDay: "Beauty and the GEEK"
500 Startups #Batch17 #DemoDay: "Beauty and the GEEK"
 
Introduction to Business Angel Investing
Introduction to Business Angel InvestingIntroduction to Business Angel Investing
Introduction to Business Angel Investing
 
#NFIM18 - Heather Henyon - Founding General Partner, Mindshift Capital
#NFIM18 - Heather Henyon - Founding General Partner, Mindshift Capital#NFIM18 - Heather Henyon - Founding General Partner, Mindshift Capital
#NFIM18 - Heather Henyon - Founding General Partner, Mindshift Capital
 
Building innovation ecosystem
Building innovation ecosystemBuilding innovation ecosystem
Building innovation ecosystem
 
Angel Investing in Africa; Why it matters now!
Angel Investing in Africa; Why it matters now!Angel Investing in Africa; Why it matters now!
Angel Investing in Africa; Why it matters now!
 
Aban in Africa 2016
Aban in Africa 2016Aban in Africa 2016
Aban in Africa 2016
 
Tech and Venture Capital in the Time of Corona
Tech and Venture Capital in the Time of Corona Tech and Venture Capital in the Time of Corona
Tech and Venture Capital in the Time of Corona
 
WS @ Toronto Tech Meetup
WS @ Toronto Tech MeetupWS @ Toronto Tech Meetup
WS @ Toronto Tech Meetup
 
Egypt Startups Ecosystem 101 - Country Overview Dec 2015
Egypt Startups Ecosystem 101 - Country Overview Dec 2015Egypt Startups Ecosystem 101 - Country Overview Dec 2015
Egypt Startups Ecosystem 101 - Country Overview Dec 2015
 
Why should you consider moving to Silicon valley? - Baris Aksoy - Innovation ...
Why should you consider moving to Silicon valley? - Baris Aksoy - Innovation ...Why should you consider moving to Silicon valley? - Baris Aksoy - Innovation ...
Why should you consider moving to Silicon valley? - Baris Aksoy - Innovation ...
 
Risk dg 19 may 2016 presentation slides
Risk dg 19 may 2016 presentation slidesRisk dg 19 may 2016 presentation slides
Risk dg 19 may 2016 presentation slides
 

Similaire à Introduction to Venture Funding

Avoid The High Valuation Trap To Bcit Nov 09 Beta Draft
Avoid The High Valuation Trap To Bcit Nov 09 Beta DraftAvoid The High Valuation Trap To Bcit Nov 09 Beta Draft
Avoid The High Valuation Trap To Bcit Nov 09 Beta DraftDavid Shore
 
VC Bootcamp By DFJ Gotham Ventures and Wilson Sonsini Goodrich & Rosati
VC Bootcamp By DFJ Gotham Ventures and Wilson Sonsini Goodrich & RosatiVC Bootcamp By DFJ Gotham Ventures and Wilson Sonsini Goodrich & Rosati
VC Bootcamp By DFJ Gotham Ventures and Wilson Sonsini Goodrich & RosatiMark Davis
 
What VCs Want, What Companies Want In A VC For UBC Ace
What VCs Want, What Companies Want In A VC For UBC AceWhat VCs Want, What Companies Want In A VC For UBC Ace
What VCs Want, What Companies Want In A VC For UBC AceDavid Shore
 
Venture Capital Primer Rev6
Venture Capital Primer Rev6Venture Capital Primer Rev6
Venture Capital Primer Rev6jamerine
 
Understand All of Your Funding Options
Understand All of Your Funding OptionsUnderstand All of Your Funding Options
Understand All of Your Funding OptionsThe Capital Network
 
Venture Capital Primer Rev2 101309
Venture Capital Primer Rev2 101309Venture Capital Primer Rev2 101309
Venture Capital Primer Rev2 101309jamerine
 
"Funding a Startup" by Jayan Ramankutty
"Funding a Startup" by Jayan Ramankutty"Funding a Startup" by Jayan Ramankutty
"Funding a Startup" by Jayan RamankuttyAbhilash Ravishankar
 
IWD19 - AWS, Barclays Rise & TechStars
IWD19 - AWS, Barclays Rise & TechStarsIWD19 - AWS, Barclays Rise & TechStars
IWD19 - AWS, Barclays Rise & TechStarsAmazon Web Services
 
Atlanta Black Chamber Women's Retreat March 26, 2021 Yvonne Gamble CEO SanPet...
Atlanta Black Chamber Women's Retreat March 26, 2021 Yvonne Gamble CEO SanPet...Atlanta Black Chamber Women's Retreat March 26, 2021 Yvonne Gamble CEO SanPet...
Atlanta Black Chamber Women's Retreat March 26, 2021 Yvonne Gamble CEO SanPet...Yvonne Gamble
 
Neri Capital Overview
Neri Capital OverviewNeri Capital Overview
Neri Capital OverviewEric Togneri
 
Early Stage Capital and Valuation
Early Stage Capital and ValuationEarly Stage Capital and Valuation
Early Stage Capital and ValuationDan Janes
 
VC from the inside - a techie's perspective - Adrian Colyer
VC from the inside - a techie's perspective - Adrian ColyerVC from the inside - a techie's perspective - Adrian Colyer
VC from the inside - a techie's perspective - Adrian ColyerJAXLondon_Conference
 
Death of a Salesman: Broker Dealer/Platform/Advisor Trends - Executive Summar...
Death of a Salesman: Broker Dealer/Platform/Advisor Trends - Executive Summar...Death of a Salesman: Broker Dealer/Platform/Advisor Trends - Executive Summar...
Death of a Salesman: Broker Dealer/Platform/Advisor Trends - Executive Summar...Gretchen Wilson
 
Venture Clinic 29 30 Apr2008 Roydean
Venture Clinic 29 30 Apr2008  RoydeanVenture Clinic 29 30 Apr2008  Roydean
Venture Clinic 29 30 Apr2008 RoydeanRoydean Osman
 
Nile Basic Presentation
Nile Basic PresentationNile Basic Presentation
Nile Basic Presentationmlecca
 
BergTec Associates Corp Deck April 2015 DBDB
BergTec Associates Corp Deck April 2015 DBDBBergTec Associates Corp Deck April 2015 DBDB
BergTec Associates Corp Deck April 2015 DBDBDave Berg
 
Death of a Salesman:The Value of Information in Lieu of Sales - Executive Su...
Death of a Salesman:The Value of Information in Lieu of Sales  - Executive Su...Death of a Salesman:The Value of Information in Lieu of Sales  - Executive Su...
Death of a Salesman:The Value of Information in Lieu of Sales - Executive Su...Gretchen Wilson
 

Similaire à Introduction to Venture Funding (20)

Avoid The High Valuation Trap To Bcit Nov 09 Beta Draft
Avoid The High Valuation Trap To Bcit Nov 09 Beta DraftAvoid The High Valuation Trap To Bcit Nov 09 Beta Draft
Avoid The High Valuation Trap To Bcit Nov 09 Beta Draft
 
VC Bootcamp By DFJ Gotham Ventures and Wilson Sonsini Goodrich & Rosati
VC Bootcamp By DFJ Gotham Ventures and Wilson Sonsini Goodrich & RosatiVC Bootcamp By DFJ Gotham Ventures and Wilson Sonsini Goodrich & Rosati
VC Bootcamp By DFJ Gotham Ventures and Wilson Sonsini Goodrich & Rosati
 
What VCs Want, What Companies Want In A VC For UBC Ace
What VCs Want, What Companies Want In A VC For UBC AceWhat VCs Want, What Companies Want In A VC For UBC Ace
What VCs Want, What Companies Want In A VC For UBC Ace
 
Venture Capital Primer Rev6
Venture Capital Primer Rev6Venture Capital Primer Rev6
Venture Capital Primer Rev6
 
Understand All of Your Funding Options
Understand All of Your Funding OptionsUnderstand All of Your Funding Options
Understand All of Your Funding Options
 
Washington Defense Corporation Formal Business Proposal 11.23.16
Washington Defense Corporation Formal Business Proposal 11.23.16Washington Defense Corporation Formal Business Proposal 11.23.16
Washington Defense Corporation Formal Business Proposal 11.23.16
 
Venture Capital Primer Rev2 101309
Venture Capital Primer Rev2 101309Venture Capital Primer Rev2 101309
Venture Capital Primer Rev2 101309
 
"Funding a Startup" by Jayan Ramankutty
"Funding a Startup" by Jayan Ramankutty"Funding a Startup" by Jayan Ramankutty
"Funding a Startup" by Jayan Ramankutty
 
IWD19 - AWS, Barclays Rise & TechStars
IWD19 - AWS, Barclays Rise & TechStarsIWD19 - AWS, Barclays Rise & TechStars
IWD19 - AWS, Barclays Rise & TechStars
 
Atlanta Black Chamber Women's Retreat March 26, 2021 Yvonne Gamble CEO SanPet...
Atlanta Black Chamber Women's Retreat March 26, 2021 Yvonne Gamble CEO SanPet...Atlanta Black Chamber Women's Retreat March 26, 2021 Yvonne Gamble CEO SanPet...
Atlanta Black Chamber Women's Retreat March 26, 2021 Yvonne Gamble CEO SanPet...
 
Entrepreneurship Chap 7
Entrepreneurship Chap 7Entrepreneurship Chap 7
Entrepreneurship Chap 7
 
Neri Capital Overview
Neri Capital OverviewNeri Capital Overview
Neri Capital Overview
 
Early Stage Capital and Valuation
Early Stage Capital and ValuationEarly Stage Capital and Valuation
Early Stage Capital and Valuation
 
VC from the inside - a techie's perspective - Adrian Colyer
VC from the inside - a techie's perspective - Adrian ColyerVC from the inside - a techie's perspective - Adrian Colyer
VC from the inside - a techie's perspective - Adrian Colyer
 
Death of a Salesman: Broker Dealer/Platform/Advisor Trends - Executive Summar...
Death of a Salesman: Broker Dealer/Platform/Advisor Trends - Executive Summar...Death of a Salesman: Broker Dealer/Platform/Advisor Trends - Executive Summar...
Death of a Salesman: Broker Dealer/Platform/Advisor Trends - Executive Summar...
 
Pfizer Plan
Pfizer PlanPfizer Plan
Pfizer Plan
 
Venture Clinic 29 30 Apr2008 Roydean
Venture Clinic 29 30 Apr2008  RoydeanVenture Clinic 29 30 Apr2008  Roydean
Venture Clinic 29 30 Apr2008 Roydean
 
Nile Basic Presentation
Nile Basic PresentationNile Basic Presentation
Nile Basic Presentation
 
BergTec Associates Corp Deck April 2015 DBDB
BergTec Associates Corp Deck April 2015 DBDBBergTec Associates Corp Deck April 2015 DBDB
BergTec Associates Corp Deck April 2015 DBDB
 
Death of a Salesman:The Value of Information in Lieu of Sales - Executive Su...
Death of a Salesman:The Value of Information in Lieu of Sales  - Executive Su...Death of a Salesman:The Value of Information in Lieu of Sales  - Executive Su...
Death of a Salesman:The Value of Information in Lieu of Sales - Executive Su...
 

Dernier

Expense Management Maximizing Efficiency for Business Success
Expense Management Maximizing Efficiency for Business SuccessExpense Management Maximizing Efficiency for Business Success
Expense Management Maximizing Efficiency for Business SuccessManagry
 
Preventing Timesheet Fraud Strategies for Ensuring Accuracy and Compliance
Preventing Timesheet Fraud Strategies for Ensuring Accuracy and CompliancePreventing Timesheet Fraud Strategies for Ensuring Accuracy and Compliance
Preventing Timesheet Fraud Strategies for Ensuring Accuracy and ComplianceManagry
 
Institutions Supporting Small Business Enterprises.pptx
Institutions Supporting Small Business Enterprises.pptxInstitutions Supporting Small Business Enterprises.pptx
Institutions Supporting Small Business Enterprises.pptxshrinivas kulkarni
 
Analysis Of FaarmTech | BBA | Business Plan
Analysis Of FaarmTech | BBA | Business PlanAnalysis Of FaarmTech | BBA | Business Plan
Analysis Of FaarmTech | BBA | Business Planmohsinrai101
 
What is the Best Way to Track Employee Vacation Time?
What is the Best Way to Track Employee Vacation Time?What is the Best Way to Track Employee Vacation Time?
What is the Best Way to Track Employee Vacation Time?Managry
 
How to track billable hours - a step-by-step guide
How to track billable hours - a step-by-step guideHow to track billable hours - a step-by-step guide
How to track billable hours - a step-by-step guideManagry
 
Path to Traditional Pub - BookFest 2024 presentation - 03-23-2024.pdf
Path to Traditional Pub - BookFest 2024 presentation - 03-23-2024.pdfPath to Traditional Pub - BookFest 2024 presentation - 03-23-2024.pdf
Path to Traditional Pub - BookFest 2024 presentation - 03-23-2024.pdfContent Strategy Inc.
 
How To Get Rich With Bitcoin Even If You Have No Clue About Technology
How To Get Rich With Bitcoin Even If You Have No Clue About TechnologyHow To Get Rich With Bitcoin Even If You Have No Clue About Technology
How To Get Rich With Bitcoin Even If You Have No Clue About Technologyzaidashadali00
 
Establishing An Enterprise and Project Management.pptx
Establishing An Enterprise and Project Management.pptxEstablishing An Enterprise and Project Management.pptx
Establishing An Enterprise and Project Management.pptxshrinivas kulkarni
 
HDPE Pipe Fittings Manufacturer and Supplier
HDPE Pipe Fittings Manufacturer and SupplierHDPE Pipe Fittings Manufacturer and Supplier
HDPE Pipe Fittings Manufacturer and SupplierBhavin Kanani
 

Dernier (10)

Expense Management Maximizing Efficiency for Business Success
Expense Management Maximizing Efficiency for Business SuccessExpense Management Maximizing Efficiency for Business Success
Expense Management Maximizing Efficiency for Business Success
 
Preventing Timesheet Fraud Strategies for Ensuring Accuracy and Compliance
Preventing Timesheet Fraud Strategies for Ensuring Accuracy and CompliancePreventing Timesheet Fraud Strategies for Ensuring Accuracy and Compliance
Preventing Timesheet Fraud Strategies for Ensuring Accuracy and Compliance
 
Institutions Supporting Small Business Enterprises.pptx
Institutions Supporting Small Business Enterprises.pptxInstitutions Supporting Small Business Enterprises.pptx
Institutions Supporting Small Business Enterprises.pptx
 
Analysis Of FaarmTech | BBA | Business Plan
Analysis Of FaarmTech | BBA | Business PlanAnalysis Of FaarmTech | BBA | Business Plan
Analysis Of FaarmTech | BBA | Business Plan
 
What is the Best Way to Track Employee Vacation Time?
What is the Best Way to Track Employee Vacation Time?What is the Best Way to Track Employee Vacation Time?
What is the Best Way to Track Employee Vacation Time?
 
How to track billable hours - a step-by-step guide
How to track billable hours - a step-by-step guideHow to track billable hours - a step-by-step guide
How to track billable hours - a step-by-step guide
 
Path to Traditional Pub - BookFest 2024 presentation - 03-23-2024.pdf
Path to Traditional Pub - BookFest 2024 presentation - 03-23-2024.pdfPath to Traditional Pub - BookFest 2024 presentation - 03-23-2024.pdf
Path to Traditional Pub - BookFest 2024 presentation - 03-23-2024.pdf
 
How To Get Rich With Bitcoin Even If You Have No Clue About Technology
How To Get Rich With Bitcoin Even If You Have No Clue About TechnologyHow To Get Rich With Bitcoin Even If You Have No Clue About Technology
How To Get Rich With Bitcoin Even If You Have No Clue About Technology
 
Establishing An Enterprise and Project Management.pptx
Establishing An Enterprise and Project Management.pptxEstablishing An Enterprise and Project Management.pptx
Establishing An Enterprise and Project Management.pptx
 
HDPE Pipe Fittings Manufacturer and Supplier
HDPE Pipe Fittings Manufacturer and SupplierHDPE Pipe Fittings Manufacturer and Supplier
HDPE Pipe Fittings Manufacturer and Supplier
 

Introduction to Venture Funding

  • 1. January 2015 Introduction to Venture Financing Douglas Abrams
  • 2. 2 6XXXX Douglas Abrams About the facilitator  Wharton MBA  JP Morgan – Vice President IB Technology, GM Internet Marketing  Parallax Capital Mgmt – Co-founder and MD Private Equity  Extream Ventures – Co-founder and MD S$20 million seed fund  Expara – Founder and MD IDM Ventures Incubator, advisory, training  NUS – Adjunct Associate Professor, Business School, Entrepreneurship, Sasin – Visiting Professor, Venture Capital
  • 3. 3 6XXXX Douglas Abrams VC mindset  Risk and return are highly correlated  You cannot increase return without taking more risk Return Risk Potential outcomes
  • 4. 4 6XXXX Douglas Abrams Key elements for success • Solving a painful problem for customers – Value proposition • Developing an innovative product – Innovation • Customers and competitors – Market identification and analysis • Reaching customers – Marketing, sales and distribution strategy • Competing when others enter - Sustainable competitive advantage • Make money – Business model and financial plan • Team – A team or B team
  • 5. 5 6XXXX Douglas Abrams Key venture finance terms  Business model  Financial projections  Valuation  Funding required and equity offered  Use of Proceeds  Exit Strategy and ROI  Cap table
  • 6. 6 6XXXX Douglas Abrams Company valuation methods  Price to earnings (p/e)  Dividend yield  Multiple of book value  Comparables  Discounted Cash Flow (DCF)  VC method
  • 7. 7 6XXXX Douglas Abrams How much equity does the investor receive?  Pre-money valuation – Amount invested by VC ÷ (Agreed pre-money value of business + Amount invested by VC) – $3MM pre + 1 MM VC = 25% VC equity  Post-money valuation – Amount invested by VC ÷ post-money valuation – $4MM post = 25% VC equity
  • 8. 8 6XXXX Douglas Abrams How do VCs make money?  Trade sale – sell to another company  IPO – sell to the public through listing on an exchange
  • 9. 9 6XXXX Douglas Abrams Stages and sources of funds Founder’s Capital Seed/ Angel Series A, B, C Mezzanine Pre-IPO IPO VC hurdle rates 60-100% 40-60% 20% Why are these rates so high? OM F,F&F Incubators corporations government Customers, suppliers, strategic partners VCs, Banks for VC loans
  • 11. 11 6XXXX Douglas Abrams Key elements of a venture deal  Board of directors  Protective provisions  Drag-along agreement  Conversion Control  Price-per-share  Valuation  Amount of financing  Liquidation preference  Vesting  Options pool  Anti-dilution  Pay-to-play Economics
  • 12. 12 6XXXX Douglas Abrams Contact us  Douglas Abrams  Expara, Expara IDM Ventures – dka@expara.com – www.expara.com  Block 71 Ayer Rajah Crescent  #$02-10/11 S139951  65-9780-5381