VC analysis by www.investmentslides.com

An insider look of a venture capital fundWhat it takes to successfully raise fundsKnowledge learned over years of working for one of the top tier VC fundswww.investmentslides.com : 

An insider look of a venture capital fundWhat it takes to successfully raise fundsKnowledge learned over years of working for one of the top tier VC fundswww.investmentslides.com Inside the mind of a VC

What’s it like to be a VC : 

What’s it like to be a VC Constant desire to find the next homerun… Over networking Being a generalist Need to make some difficult decisions However, It’s not so easy… Forefront of innovation Learn about new technologies Meet interesting people You get a lot of attention? Job security No accountability

How does it really work : 

How does it really work It’s all about referrals Good deals are hard to find… Funds partner and compete among themselves Investment climate is influenced by the Fear Vs. Greed cycle: Type I error (invest in a company and it fails) Type II error (don’t invest and the company succeeded Nose & gut feeling time

The Art of In-Decision : 

The Art of In-Decision Flawed Investment process No hurry mentality: The fund sets the pace (buyers market) Less than 10% of deals are competitive Aggressive terms

What characterizes a good fund : 

What characterizes a good fund Exits Ability to raise money Get the best deal-flow and being proactive about it Partner focus and fit as a group Open minded group / non-conformity Invest, commit, and build companies Managing conflicts of interests Creating incentives – generosity Avoiding the herd mentality

Very Rare… : 

Very Rare… Ability to break away of the pack… Opportunities in wireless networks

Investment Checklist : 

Investment Checklist Management team – industry and operational experience Well defined market potential and budgeted Must have vs. nice to have – customer feedback Competition: several players New paradigm / innovation Cash to general availability product Sales to positive cash flow – $15M in software, $30M in hardware Capital to positive cash flow: $20-30M Strong co-investors

Working with portfolio companies : 

Working with portfolio companies #1 priority getting the right people on board VCs don’t want to babysit… #2 value add is opening doors Savvy investors would let the company operate independently without too much intervention However, a good VC with strong strategic acumen can add value on the board

When things don’t go so well : 

When things don’t go so well The dark side of a VC: #1 Responsibility is to the funds’ limited partners Conflict of interests as VCs play both roles of investors and company board representatives Protection measures Liquidation Anti-dilution Voting rights

The entrepreneurs’ Point Of View : 

The entrepreneurs’ Point Of View Seek VC Branding A top tier fund validation Help attract and recruit team, customers, partners Want deep pocket investors… Most want “dumb” money

VC mindset : 

VC mindset It’s all about building relationships Most people still like to date before they get married The earlier the company the more emphasis on the founders VCs like to get in early to take credit for success Valuation vs. terms Clean cap table Sometimes VCs money is not right for you Capital needs (if you don’t need a lot of capital) Bootstrap (to reach some milestones)

How to increase chances of getting funded : 

How to increase chances of getting funded Have the right message Confidence is critical Need to be able to sing (strong advocacy) Written deliverables are less important Many people will come across – need targeting Get key people evolved… Play the game …

False prophecies : 

False prophecies Raise less money to avoid being diluted It is a zero sum game Valuation is most important in negotiations If Sequoia / KP funded me I must be very talented and on my way to striking it rich. A good fund can open the door to anyone “Dumb money” makes the entrepreneur much smarter

Thank You! : 

Thank You!