Venture Capital（三十一）.pptVIP

Venture Capital How to Sell Your Soul for a Buck VC Characteristics Usually early-stage equity or equity-linked financing Involves high risk Lacks liquidity or marketability Returns are primarily from capital gains Provided by patient investors - who may give value-added advice 9 Years of VC Funding Venture-Backed IPOsPerformance What do VC’s Want? “VCs simply want to believe that the valuation of a company – either public stock price or private valuation – will grow high and stay high long enough for them to sell their interest.” Source: Cliff Conneighton; Venture Management Handbook: An Entrepreneur’s Guide to Stock, Finance, and Contracts - pg 99 What do VC’s Want? 5X or better capital growth in 5 - 10 yrs. 25% annual capital gains at a minimum Eventual liquidity (3 - 5 years) Excitement! What do VC’s Get? What Kind of Company? At least $10M Revenue in 5 years At least 20%/Yr Revenue Growth At least 15% pretax profit margin Four Essential Questions for the Business Plan Does any large, definable, and identifiable group of people really need your product or service? Are they willing to pay someone (you or a competitor) considerably more than, perhaps twice, what it costs you to produce and deliver it? If the answer depends on volume, do you know what the volume/cost curve looks like? Is there some sustainable advantage you will have, in proprietary technology, cost, capability or marketing, over others who do or would compete in this market? Do you have the management team that can execute the plan successfully? Conneighton Pg. 100 Types of Ventures Life-Style Ventures 5 Yr Revenue projections $10 M Started by people with life-style motives 90% of all startups Zero interest to venture capitalists Types of Ventures Middle Market Ventures 5 Yr Revenue projections $10 - $50M Offer cash-out and capital gains opportunities The backbone of the entrepreneurial economy Rely heavily on bootstrap and individual financing About 10% of startups Types of Ventures High