VENTURE CAPITAL BOOTCAMP

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• VENTURE CAPITAL BOOTCAMP
• October 10, 2007

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Today Venture Capital October 10
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Student Experiences

• Joseph Dwyer 08
• Jonathan Miller 08

• 1. Introduction (Prior to Kellogg Goals at
  Kellogg Summer Internship Full-time). Why did
  you choose a VC internship?
• 2. Description of summer experience
  (responsibilities, interactions, deals etc.).
• 3. Two experiences that you really enjoyed and
  two experiences that you did not like in VC.
• 4. One thing that surprised you the most.
• 5. Your thoughts on skill-sets and experience
  needed to enter VC and to be successful in this
  career.

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What Is This VC Thing?PEEK Presentation10/10/07

• DFJ Portage Venture Partners, LLC
• One Northfield Plaza, Suite 530
• Northfield, IL 60093
• 847/ 446-9460

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DFJ Portage Global Network
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Private Equity Partnership Subclasses
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Current Trends

• Industry Consolidating Institutionalizing
• Brand Is Critical, LPs Have Top 25 List
• Mid-sized Firms under Pressure
• Hiring Trends Emphasizing Operational Experience
• Needs for active investing increasing
• Consumer Deals In Vogue, Enterprise Out
• Web 2.0, Social Nets, Commoditized
  Infrastructure, Low Cost of Entry
• Too many entrants, advertising based models
  vulnerable
• Promising Sectors
• Interactive Marketing, IPTV
• Content Marketing to Mobile
• Internet-enabled B2B, B2C (right idea, wrong
  decade)
• Digital Biology
• International Replication of US Models

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Four Venture Models Have Emerged
Regional/Sector Geographic/Sector focus Austin
Ventures (TX) OVP Ventures (WA) Sanderling
Ventures (CA) Tallwood Ventures (CA)
Institutional Large Corp Approach 3i
(various) Carlyle (various) JPMorgan/Chase (WA)
Network Affiliated Networks DFJ (CA) NEA
(CA/MD) Sequoia (CA) Village Ventures (MA)
Traditional 1-2 Locations, National Greylock
(MA) KPCB (CA) Matrix (MA)
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Investment LP Activity StabilizedLate Stage
Valuations Moving Sharply Up
Investment Activity
Median Pre- Valuation
New LP Capital Commitments
Source VentureOne and Venture Economics
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Returns Have Come Back With IPO/Public Markets
Rolling 3 Year Return
IPO Activity
Source VentureOne
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Seed/Early Stage Returns Driven By The Impact of
the Homerun Deal
Return Multiple At Distribution
Initial Investment
Past Portfolio Companies
404x
100k
Interwoven (IWOV)
175x
270k
Parametric Technology (PMTC)
157x
300k
Hotmail/Microsoft (MSFT)
98x
1.3m
TradeX /Ariba (ARBA)
94x
3.0m
Overture (OVER)
75x
150k
PLX Technology (PLXT)
57x
1.5m
Cyras/Ciena (CIEN)
33x
657m
411/Yahoo (YHOO)
23x
541k
C2B/Inktomi (INKT)
11x
795k
Medior/AOL Time Warner (AOL)
Note Return Multiple At Distribution
Distributions plus LPs share of remaining
portfolio based on current values.
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Sample of Portfolio Construction
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Firm Structure

• Anatomy of a VC firm/fund
• Fund structure, economics LPs (profile), GPs,
  80/20, 2 2.5 fee, 10 year life, 7 year
  investment life, etc. etc.
• Specific fund example (TCV?)
• Partnership structure partners, principals,
  associates?
• Deals per partner/fund (averages)
• Fund focus stage, industry, etc.
• Specialization of funds
• Stage-focus

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Vacuum Tube
Electro-Mechanical
Relay
Transistor
Integrated Circuit
Calculations per Second per 1000
Source Ray Kurzweil, each dot is a computing
machine
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Internet Hosts
Source Ray Kurzweil
The linear, intuitive view
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Accelerating Change

• Perpetual Future Shock
• No longer inter-generational
• Think of genetics
• Kurzweils conclusion
• The next 20 years of change will be equivalent
  to the past 100 years of change.

• So how much tech-driven change have we
  experienced in the past 100 years?

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Where Were We 100 Years Ago

• 144 miles of paved road
• 95 of births took place in the home
• 14 of homes had a bathtub
• 6 of homes had a telephone
• 6 of adults graduated from high school
• 10 of U.S. homes had reliable access to
  electricity

Sources TIME, April 13, 1998 genealogy
newsletter, http//ftp.rootsweb.com/pub/roots-l/me
ssages/01jan/141803
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QA
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Relevant Classes

• 1. Case Studies In Venture Investment and
  Management FINC 932
• 2. Entrepreneurial Selling ENTR 902-A
• 3. Marketing Channel Strategies MKTG 451
• 4. Entrepreneurial Finance FINC 446
• 5. VC and PE Investing FINC 445

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Entrepreneurs Perspective
Stefan Birrer, CTO, NeoKast Victor Kucek, CEO,
Tixem

• Questions for the Panel
• Introduction about yourself and your business.
• Please describe briefly your experience in
  starting your business. What were your
  motivations and why did you choose to do it now?
• What are your plans for raising funding?
  According to you, what is the right time for
  raising funding?
• What type of funding are you planning to raise?
  VC, convertible notes, angel funding? Why?
• If your plan is to raise funding from VCs, how do
  you choose the right VCs to target?
• What preparation is essential for the pitch to
  VCs?
• According to you, what skill-sets are essential
  to be a successful entrepreneur?
• What advise would you give students who are
  looking to either pursue VC or start their own
  business?