Assess Your Need and Readiness For Venture Capital Content provided by Gazelles Systems Content by Gazelles Systems Session Objectives After completing this session you will be able to Determine whether your business is in need of venture capital ID: 293795
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Slide1
Money Day
Assess Your Need and Readiness For Venture Capital
Content provided by Gazelles Systems
Content by Gazelles SystemsSlide2
Session Objectives
After completing this session, you will be able to:
Determine whether your business is in need of venture capital
Complete a gap analysis to determine your business’s funding readiness
Conduct due diligence on potential VC partners
Conduct internal due diligence to determine whether you are ready to make the pitch
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Positive Result
Venture Capital
Questions to
Consider
Do
I
need capital
?
How
do
VC’s
decide?
How
do I
prepare
?
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Venture Capital
Question 1: Do I need capital?
Is it time to inject some capital into my business?
What can I expect to gain from it?
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Purpose of Venture Capital
Capital Raised
Opportunity Capital (take advantage of unforeseen
opportunities)
Fudge Factor (because Murphy’s Law is a law)
R&D Capital
Debt
Repayment (as approved)
Day-to-Day Operating Capital
Project-Specific Capital
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What are the key points VC’s consider in their decision- making process?
Venture Capital
Question 2: How do venture capitalists decide?
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Balancing Competing Interests
THE DEAL
(meeting of the minds/compromise)
ENTREPRENEUR WANTS/NEEDS
INVESTOR
WANTS/NEEDS
COMMON
OBJECTIVES
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Balancing Competing Interests
COMMON OBJECTIVES
THE DEAL
(meeting of the minds/compromise)
Maximum
return
Mitigate risk/downside protection
Input on future and growth of the business/control
Maximum capital/valuation
Avoid dilution/control
Affordable cost of capital
Relationships and introductions
ENTREPRENEUR WANTS/NEEDS
INVESTOR
WANTS/NEEDS
Growth in the value of the business
Additional rounds of funding at more favorable valuations
Mutually beneficial exit strategy
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Types of Investors
Angels
Strategic
Commercial Lenders
Venture Capitalists
Private Placement Investors
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Sources of Venture Capital
Typical institutional venture capital firms
Corporate venture capital divisions
Small Business Investment Companies (SBIC’s)
Private equity funds
Hedge funds
Super angels and angel investing clubs
Strategic investors
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Management Team
Background, knowledge, skills, and abilities of team members
Individual roles and responsibilities
How risks and problems are identified, managed, and eliminated
Entrepreneurial personality traits of management team Products and Services
Stage of development
Specific opportunity
Unique, innovative, and proprietary
Level of control of the means of production
Technological breakthrough or low-tech
Components of Investment Decisions
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Markets
Stage in the life cycle
Size and projected growth rate of targeted market
Marketing, sales, and distribution methods
Strengths and weaknesses of competitorsNew markets, and barriers to entry
Characteristics of typical consumer
Return on Investment
Current and projected valuation and performance
Personal investment in the business
Financial acuity
Capital required
Projected return on investment (ROI)
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Components of Investment DecisionsSlide13
Share successes and pitfalls in raising capital
Discuss the toughest questions you’ve had to answer and how you dealt with them
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Experience SharingSlide14
10 Minutes
BreakSlide15
Venture Capital
Question 3: How do I prepare?
Presenting and negotiating
Checklists
Managing your VC partner after the deal is done
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Presentation Tips
from
Guy Kawasaki
10 Slides
20 Minutes
30-point font minimum
The 10/20/30 Rule
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10 Slides: What to Cover
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Checklists (Right Tools)
Funding
readiness
Due diligence on VC
Due diligence on
you
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Managing VC’s After the Deal
Over-communicate
P2P (People-to-People)
Board meetings
Provide financial reports early
Dashboard handful of KPI’s
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What can you share about presenting to VC’s?
What was your experience during due diligence?
How did you communicate with your board and VC’s on your board?
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Experience SharingSlide21
Summary & Wrap-Up
Being prepared to make the pitch to a prospective investor is one of the most critical parts of the process.
Almost all businesses will need an infusion of capital at some point in their life cycle.
Your due diligence needs to focus on these three questions:
Is your business funding ready?
Do you know which investors are the right fit for your business and the opportunity?
Is everything in place to meet the potential investor’s expectations?
After the deal, be sure to communicate frequently to keep your investor informed and ready to help when needed.
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