Some Basics of Venture Capital（三）.pptVIP

Some Basics of Venture Capital Michael Kearns Chief Technology Officer Syntek Capital Outline The basics: how VC works Case study: DDoS defense companies What is Venture Capital? Private or institutional investment (capital) in relatively early-stage companies (ventures) Recently focused on technology-heavy companies: Computer and network technology Telecommunications technology Biotechnology Types of VCs: Angel investors Financial VCs Strategic VCs Angel Investors Typically a wealthy individual Often with a tech industry background, in position to judge high-risk investments Usually a small investment ( $1M) in a very early-stage company (demo, 2-3 employees) Motivation: Dramatic return on investment via exit or liquidity event: Initial Public Offering (IPO) of company Subsequent financing rounds Interest in technology and industry Financial VCs Most common type of VC An investment firm, capital raised from institutions and individuals Often organized as formal VC funds, with limits on size, lifetime and exits Sometimes organized as a holding company Fund compensation: carried interest Holding company compensation: IPO Fund sizes: ~$25M to 10’s of billions Motivation: Purely financial: maximize return on investment IPOs, Mergers and Acquisitions (MA) Strategic VCs Typically a (small) division of a large technology company Examples: Intel, Cisco, Siemens, ATT Corporate funding for strategic investment Help companies whose success may spur revenue growth of VC corporation Not exclusively or primarily concerned with return on investment May provide investees with valuable connections and partnerships Typically take a “back seat” role in funding The Funding Process: Single Round Company and interested VCs find each other Company makes it pitch to multiple VCs: Business plan, executive summary, financial projections with assumptions, competitive analysis Interested VCs engage in due diligence: Technological, market, competitive, business development Legal and accou