The ABC Dummy Guide to Venture Capital（一）.pptVIP

1 Content Definition Nature of Venture Capital Source of Funding Revenue Model Stages of Investment Geographical Preference Industry Preference Investment Process Past Development Competition VC looking for in return Classic Cases Points to Take Home General Information About JAFCO 1. Definition: What is Venture Capital U.S. – 30 years in existence Fairly new term in Asia (until the last 2-3 years) Earliest venture capital firm in Asia began in 1963 in Japan Refers to investments in young, rapidly growing companies (particularly high-tech related) in the U.S. Wider meaning in Asia ------- generally refers to equity investments in growing, unlisted companies. Private Equity Direct Investments Serves as an intermediary between investors looking for high returns and entrepreneurs in need of capital 2. Nature of Venture Capital VS Debt Financing VS Public Market Objective: generation of long term capital gains Horizon: 2-7 years Liquidity: low Risk: High Instruments: shares, convertible bonds, options, warrants Critical factor(s): Management team and market potential, rather than collateral Impact on Profit, Balance Sheet 3. Where does the money comes from? Fund investors: Insurance companies Pension funds University endowment funds Family trusts Government Treasury / Agencies Listed corporations / Private companies Wealthy high net worth individuals (US$1 million) 4. Revenue Model of Venture Capitalist Formation of the Fund : closed-end, structure: L.P./L.L.C. The Appointment of the Investment Manager Remuneration: ? Management Fees ? Carried Interests – hurdle rate No e-commerce for us! 5. Stages of Investment Stage One: Seed / Angel Round Stage Two: Start-up / Early stage Stage Three: Expansion / Development Stage Four: Mezzanine / Bridge Stage Five: Buyout / Buyin Stage Six: Turnaround / Restructuring Stage Seven: Others (pre-IPO, Privatization, straight punt) 6. Geographical Preference ?