Origin of Venture Capital - 1(风险投资创新与金融的结合,刘曼红).ppt

Origin of Venture Capital - 1 It did not exist as a profession before WWII American Research Development, the first VC firm, 1946, General George Doroit of HBS. 1953, SBA, 1958, SBIC originally, SBIC could get up to $300,000 government money for each $150,000 PE. Half of the money in subordinated debentures, half in reduced int. loans. Other benefits… taxes, losses... History of Venture Capital-2 Successful story: SBIC invested in CEIR $900,000, 9months later, became 7 million by 1961, 250 SBIC gone public 1964, pick of 722 SBIC, 1967 only 250 left. 1968, first time private VC SIBC ARD invested in DEC, $70,000 in 1957, got 52.7 million in 1967. 1974, DOW fell to 600, NASDAQ to 54.87 1969, capital gain tax up. VC down. 1965-1980, avg vc return 25% History of Venture Capital - 3 Sources: 1981, 23% pension, 23% families 1977, 105 private VC, 66 Corp vc, 66 SBIC typically, expected return 50% for startups, 30-40% for second stage, 25-30% for expansion stage IPO 1981, 448 co. 3.2 billion, 1983, 884 co. 12.9 billion the supply and demand of VC: the delta factor seed, early stage, later stage, conventional… 1980s, small firms 322 innovations per million employees, big firms only 225. Sources of Funds Angels: 250,000 individuals investing $20-30 billion, $100,000 each investment pension funds and ERISA ‘prudent man’ Taxes: 1969, 49.5%, 1978, 28%, 1981, 20% 1980, 25% of VC in seed and early stage projects, 1988, reduced to 12.5% Elements of VC investment Amount and timing of the investment forms of investment (convertible, preferred…) terms of investment (conversion price, liquidation preference, dividend rate, etc.) put and call rights registration rights options pools vesting schedule, employment contracts board director representation FVP: background The existence of intermediaries b/w GP,LP Angels investing $2-30 billion Venture Capital Partnerships why families would like this idea: tax benefits: 39% income tax, but 28% capital gain tax, 14% if invested into sm