Title: Venture Capital and Hispanic Entrepreneurship
1Venture Capital and Hispanic Entrepreneurship
- By Roberto Medrano
- Co-Founder and Board Member
- Hispanic-Net
2Roberto Medrano
- Professional Experience Skills
- Large Company Experience, Sr. Executive HP, VP
Avnet, Mgr SUN - Board membership of more than 10 companies
- Started at beginning of EDA, Open systems and
Security - Co-Founder/CEO, Hispanic-Net
- (www.hispanic-net.org)
- Education
- MBA UCLA, MSEE MIT, BSEE USC
- Start-up Experiences
- Daisy Systems- EDA, Employee 31, last round and
IPO - Milkyway Networks Firewall Software, Employee
11, IPO - Finjan- President, Malicious Code, Employee 18,
3rd Round Financing - SOA Software- Executive VP, Employee 50,
3rd Round Financing - Raised more than 100 Million since Sept 2003
3Introduction
- What is Equity Financing?
- InvestmentsThe VC Industry
- What is Missing in Mexico?
- Conclusion
4What is Equity Financing?
- Money at Risk
- Purchase Ownership
- High Growth Businesses
- Strong Management
- Realize a large ROI
- 7 to 10x within 5 years
5Equity Sources
- Personal
- Angels
- Partnerships
- Corporations
- SBICs
- Venture Capital Firms
6Investment Preference
- Stage of Financing
- Amount of Capital
- Geographic
- Industry Specialization
- Proven Management Team
- Strong Referrals
7Stages of Equity Financing
- Seed
- Start-up/First
- Second/Third
- Expansion
- Later Stage
- Mezzanine
8Venture Capitalists Look For
- Leadership
- Vision
- Experienced Team
- Target Market
- Customers
- Customers
- Customers
9Venture Capitalists Look For
- Corporate legal structure
- US accounting terms
- EXIT- IPO, Sell
- EXIT
- Customers
- Customers
- RETURN
10Basic Rules in Seeking Venture Capital Financing
- Concise Presentation
- Be Proactive
- Listen Carefully
- Showcase Paying Customers
- State the Positives and Negatives
- There is always Competition
11How to Approach a VC?
- Referral
- Referral
- Referral
12Get Some Help
- Colleagues
- Friends
- Advisors
- Investors
- Strategic Partners
- Law firms
- Auditors
- Bankers
13MoneyTree Total Investments1995 YTD Q1 2005
( in Billions)
Source PriceWaterhouse Coopers
14National Investments by Region(Q1 2005)
( in Millions)
of Deals
Change from Q4 04
(9.4) (24.7) (26) 27.1 6.7 (37.9) (18.5) (8
.0) 101.0 (63.5) 42.0 44.9 (47.8) NM 15.1 (
71.0) 22.1 (40.3)
204 87 56 41 37 50 36 37 17 32 30 19 14 5 4 1 3 1
(NM Not Meaningful)
Q1 2005 Totals 4,628
674 (14.9)
Source PriceWaterhouse Coopers
15National Investments by Industry(Q1 2005)
Change In Amount from Q4 '04
of Deals
( in Millions)
198 68 61 51 58 40 37 36 24 20 12 13 21 16 9 9
(18.6) (47.2) 7.9 (27.9) 13.7 7.9 57.8 (15.
0) (43.2) (1.0) 35.4 (17.1) (20.6) 44.8 (51
.8) (51.8)
Q1 2005 Totals 4,628
674 (14.9)
Source PriceWaterhouse Coopers
16Investments by Industry (Quarterly Percentage of
Total U.S. Investments)
( of Total Dollars)
Top 5 Industries Q1 04 to Q1 05
Source PriceWaterhouse Coopers
17National Investments by Stage of Development(Q1
2005)
Change in Amount from Q4 '04
of Deals
( in Millions)
267 175 200 32
(10.0) (16.1) (21.5) (32.4)
Q1 2005 Totals 4,628
674 (14.9)
Source PriceWaterhouse Coopers
18What is Missing in Mexico?
- Risk Takers with New Ideas
- Experienced Entrepreneurs
- Experience Management Teams
- Access to Capital for Businesses
19Why The Lack of Capital?
- Misperception of Mexican High Tech Businesses
- Not enough traction.
- Cultural Gap w/ Mainstream Financial Institutions
- Shortage of Key Managers and Network
- Lack Understanding of the Dynamics of Equity
Investment - Highly Leveraged Balance Sheet--Over Dependence
on Bank Debt
20Hispanic Net Beliefs Values
- Entrepreneurship Creates Wealth
- People Networks are required for Success
- Equal Access to Opportunity and Capital
- Entrepreneurs and Executives Benefit by Assisting
Others - Entrepreneurship Must be Nurtured
21Hispanic-Net Objectives
- Encourage Hispanic Entrepreneurship
- Collaborate on Business-Business Deals
- Advance Members within the Business World
-
- Promote Early Stage High-Tech Ventures
22Summary
- Best time to start companies
- Available people and resources
- Lots uninvested capital.
23www.hispanic-net.org
24There are no Fundable Business Plans
25Start-Up Funding Changes