Vcapital Confidential1 Startup Workshop Presentation to.

Vcapital Confidential 1

Startup WorkshopStartup Workshop

Presentation toPresentation to

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Agenda

Secrets of Getting Funding (Top 7 steps)

The 4M’s of the Executive Summary


5,000 + Venture Capital Providers

Private Management FirmsCorporate Venture GroupsFinancial Institutions Venture GroupsFamily Funds

Capital Managed, Raised and Invested has skyrocketed

Venture Wire tells it all..millions daily

“Best Time To Be A VC & An Entrepreneur!”


Secrets of Getting Financed

Steps 1 – 7“The Essentials”



1“Venture firms invest in the Jockey

– not the horse”



2Don’t be paranoid



3Less is more



4Acknowledge your Enemies



5Look for Value, not Valuation



6Due diligence is not something only

the venture firms do



7Listen to the experts


The 4 “M”s – What VCs really want to see

Management (Founders, Senior Managers, Directors & Investors)

Magic (Products/Services, Competitive Advantages, Operational Plan)

Market (Large Markets, Target Customers, Marketing/Sales Plan)

Money (Business Model, Financials, “The Deal”, “The Exit”)


Venture Capital Has Changed The World


VCapital Key Customers

High quality EntrepreneursAll rounds of financing, across all industries and all geographies

Venture Capitalists, corporate investors and organized groups of angel investors

Invest in variety of stages, industries and geographiesMust have deal funding history

Best of Breed Professional Service ProvidersHistory serving the entrepreneurial marketQuality reputation in discipline of services provided


Value Proposition - Entrepreneurs

Decrease front end of capital raising process from an average of 4-6 months to 4-6 weeks.

Increases chances of getting funded (currently by 8 times over the industry average) by providing expert advice, personalized service and targeted referrals to pre-qualified network of investors.

Ensures entrepreneurs maintain control over who sees their opportunity.


The “Right Touch” Approach

Not a listing serviceDeals are screened at various pointsEntrepreneur is in controlDeals are referred based on investment preferences

Not a hands-off approachFull services available

Not only a tech companyVenture and finance professionals leveraging cutting edge Internet and communications technology


Valuation

How much to raise?

What percent of Company to give up?

= Depends on the value (valuation) of the company


Elements affecting ValuationTotal Growth Opportunity

A company that can reach $5 billion in revenue should command a higher valuation than a similar opportunity that can reach $500 million

Risk ProfileThe higher the risk, the lower the valuation

• Technology Risk• Completeness of Management team• Number of Competitors

Investment Stage (consider in isolation)The earlier the stage, the lower the valuation As you grow, you decrease the risk, and increase valuation


How do I value my Company?

Valuation is… is the present value of all future cash flows discounted back at the required rate of return, usually called a discounted cash flow analysis

= valuation methodology is technically CORRECT = USELESS in raising your first couple of rounds of

venture capital = There is NO CORRECT answer


Comparing your business to a comparable business with similar elements can give you insight into your valuation. Find companies with similar growth opportunities, risk profiles, and investment stage. Talk to professional service providers such as lawyers and accountants who have assisted entrepreneurs in raising venture capital. Talk to entrepreneurs in venture-backed companies.

How do I value my Company?


Valuation – VC MethodologyVenture capitalists are concerned with getting above average returns to compensate them for the risk they are willing to take

Seed and early stage investors expect a return of 10 X original investmentlater stage investors target 3 to 5 X original investment

Venture capitalists focus on pre-money valuations, or the valuation of the company prior to a new round of venture funding. This allows for better comparability across companies without regard for the amount of capital being raised.


Choose Value over Valuation


Sources of Capital

Angels

Friends, Family and Fools

Sophisticated Angel Investors

Family Venture Funds

Private Management Firms

Financial Institution Venture Funds

Corporate Venture Funds


Seed Stage (Pre-Venture) Financing

Company Development: Up to 1 year

Capital Range: Up to $1M

Primary Sources: FF&F, Angels, Seed-Stage VC Firms


Early Stage Financing

Company Development: 1-3 YearsCapital Range: $1Million - $5 Million (1-2 Rounds)Primary Sources: Private Management Firms, Corporations


Expansion Stage Financing

Company Development: 3-5 Years

Capital Range: $5 Million - $20 million (1-2 Rounds)

Primary Sources: Private Management Firms, Financial Institutions, Corporations


Mezzanine Stage Financing

Company Stage: 12-18 Months Prior to IPO

Capital Range: $3 - 10 Million

Primary Sources: Private Management Firms, Financial Institutions, Corporations

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