11. Fund Example: SoftBank Capital Focused on early stage high growth technology based businesses benefiting from the rapid deployment and adoption of broadband and mobile technologies Experienced Team(5 former CEOs) Select Historical Investments Select CurrentInvestments
13. Renewable Energy Renewables dominating “Green” VC investing and expected to grow with support of Obama administration Billions of dollars in loans and grants available for R&D for everything from new battery technologies to more efficient use of fossil fuels VC challenged by capital requirements for large green infrastructure deals Source: FastCompany/Chubby Brain
14. Fundraising Process You set the valuation. I’ll set the terms.* *Don’t be fooled by the cover price
35. Accepted term sheets followed by 2-6 weeks of final diligence and legal documentation
36. Average firm, in normal market, closes 8-12 new investments/yrNote: Graphic via NVCA; Industry statistics are approximations
37. Deal Evaluation Focus varies by firm, but key elements include: Concept What is the product or service? Why will customers buy it? Opportunity What is the market size and penetration strategy? What is the competitive landscape? Team Can they execute on development, sales and support?
38. Financial Projections Focus on key revenue and expense drivers Sensitivities important given model immaturity Viability of margins long term How much additional capital required? What is the potential dilution from later rounds? Focus on model details varies based on stage Seed stage may not yield revenue for 18-24 mos. Later stage deals may consider debt financing, requiring covenant maintenance
39. Term Sheet Price Pre vs. Post $ Valuation Option Pool implications Liquidation Preference Liquidation: Sale of company as opposed to IPO Multiples and Dividends Participation: Full, Capped and Non-Participating Stacked vs. pari passu Impact on management ownership and resulting motivation Board Configuration Option Pool: Pre vs. Post $ Dilution Anti-Dilution Rights: Weighted Avg. thru Full Ratchet Pro Rata Rights for future rounds Protective Provisions Term Sheet summary at www.AsktheVC.com
40. Term Sheet (cont’d) Board of Directors Investor Seats and Observers Founder and Independent Seats Protective Provisions Veto rights for overall preferreds or by class On changing rights of preferred class, selling existing or raising additional shares, change of control, board composition, raising debt Anti-Dilution Full Ratchet, Broad or Narrow-Based Wghtd Avg See term sheet series at www.AsktheVC.com
50. Exit Strategy Acquisition Strategic buyers Financial buyers for high cash flow business IPO Market appetite for venture-backed deals Sarbanes Oxley
Notes de l'éditeur
- Focus by sector, stage and geography
IT/Consumer had massive investment in late 90s. Volume and distribution has dropped significantly over time. Life Sciences has been more stable over time Industrial/Energy spiked more recently, although lack of capital efficiency scared some off in 2009- Retailing/Distribution has practically disappeared as a category- Financial Services has dropped as well
Anti-Dilution Full Ratchet reprices the existing preferred to match the price of the new investors, which can cause a spiraling price effect that wipes out management and common If Series A invested $5M in the last round, those shares must represent $5M of value in the new deal, so a $5M pre on the next round would give all of the value to the Series A shareholders Weighted average approach results in a more reasonable price adjustment New Conversion Price = Old Conversion Price * ((Common Outstanding + Common Issuable at Old Price)/(Common Outstanding + Common Issuable at New Price)) With Narrow-Based, Common Outstanding can include just preferred class, all preferreds, and common With Broad-Based, Common Outstanding can include all preferreds converted, common, options and warrants, which is better for Company
