Venture Capital（四）.pptVIP

Venture Capital Investing A Primer William Quigley Managing Director Clearstone Venture Partners william@ Venture Capital “I was seldom able to see an opportunity until it had ceased to be one” Mark Twain Venture Capital Industry Overview Screening Venture Opportunities The Venture Capital Process The Business Plan Valuation Exit Getting in Touch Industry Snapshot 400+ institutional VC firms in the U.S. Geographically concentrated Stage/Industry focused General partners/Limited partners 10 year investment horizon Co-investment with other VC’s common Typical Firm Profile 3 to 4 investment professionals Review 1000+ business plans a year Manage $50 to $200 million in capital Buy equity (preferred stock) - rarely make loans Investment horizon - 3 to 6 years Sources of capital: - Pension funds - Corporations - College endowments - Wealthy individuals Investment Stages Five Stages: Seed Start-up Early Expansion Mezzanine/Bridge Stage/Characteristic Stage Investment Characteristics Seed $50-500K - Founder(s) only - No product - No customers - Primary risk: RD Start-Up $500K to $1MM - Mgmt. team incomplete - Prototype or beta product - No revenues - Limited customer interest - Some capital invested - Primary risk: market accept. The Role of the VC Board involvement Management recruitment Future capital raising Access to business network Strategy development Patience! Targeted Industries Information Technology Medical Services/Devices Communications Biotechnology Some Retail How Do VC’s Make Money? Collect management fees from L.P.’s - 2 1/2% annually Share profits with L.P.’s - 20/80 split on investment gains What Do VC’s Want to See? Areas of Focus: Management Marketplace Competition Business Economics Risks Management VC Focus: DIRECT sales experience? Prior P/L responsibility? Personal financial stake? Willingness to share equity “Fire in the belly”? Functional areas covere