Introduction

1
Introduction Goals For This Class

• Who should raise venture capital?
• What should you know about the process?
• Where to raise equity capital?
• When to raise capital?
• How to go about raising capital?
• Why do you need venture capital?

2
Common Misconceptions

• Its too early to raise venture capital
• The VCs will steal my idea
• I will get ripped off financially
• Only Angel investors do seed capital
• Bootstrap is the safest way to keep control

3
What VCs Look For?
First Principles
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• Great People
• With a Great Idea
• Going after a Potentially Large Market

Then
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• Focus
• Commitment
• Credible Operating Plan

4
Great People

• Plan and execute
• Adapt to change and remain committed
• Lead by example
• Surround themselves with A Players and Domain
  Experts
• Have a track record of success

5
Who Should Raise Venture Capital?

• Entrepreneurs who want to build a large,
  successful business
• Entrepreneurs looking to maximize their
  probability for success
• Entrepreneurs looking for more than money
• Entrepreneurs who are planning for a large exit

6
When to Approach a VC?

• When youve done enough work to convince yourself
  of the opportunity . . . before youve made
  mistakes that devalue your team or corrupt your
  capital structure
• Get the Basics
• Clear articulation of the problem and market
  opportunity
• Easily understood value proposition
• Informed opinion of market evolution/risks
• Clear articulation of a credible plan
• Sufficient customer validation

7
Who Ya Gonna Call?

• Do Your Homework!
• Determine who invests in seed/early stage
• Determine who invests in your type of business
• Know something about the players and the
  portfolio
• Reputation and style
• Know what to expect
• Typical terms
• Process
• Develop and execute a strategy
• Targets, timing, approach

8
A Foot In The Door . . . And Beyond

• Get an introduction
• Respected entrepreneur
• Limited partner
• Be selective
• Its all about the people
• 60 second personal pitch
• Where have you been?
• What did you accomplish?
• Why should I listen to your opinion?

9
Ask For The Order

• Get specific feedback
• Understand next steps
• Efficient no better than a prolonged maybe

10
Checklist
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• Have you gained buy-in from your family?
• Is the team committed, flexible and each expert
  in his/her position?
• Do you have the right expectations?
• Have you validated the idea with several
  potential customers?
• Do you have an informed opinion of the
  opportunity, the players, and how the market
  might evolve?

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11
Checklist (cont.)
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• Do you have a tight, believable presentation?
• Do you have a believable operating plan?
• Have you done your homework on the VC and
  obtained an introduction?
• Have you done a shakedown cruise?

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