21c venture capital
DESCRIPTION
A short introduction into venture capital, how to contact a VC, and how and what to present in a fundraising pitch.TRANSCRIPT
VENTURE CAPITAL IN 21CJUNE 2012
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We back teams rather than sectors Invest £100k to £5m £2.8bn FUM 100# Octopus Venture Partners [Always] Open Office Early Stage – Realised IRR of 39% + Growth – Realised IRR of 28%
OCTOPUS INVESTMENTSA SHORT INTRODUCTION
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Agenda
Venture capital in 21C Venture capital and YOU? Raising venture capital Key investment terms Resources Q&A
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VENTURE CAPITAL IN 21CMULTI-DECADE LOW CAPITAL SUPPLY (UK)
The Equity Gap is continuing to widen Banks’ depressed lending to SMEs is likely to be prolonged Lack of VC fundraising is exacerbating the effects of the banking crisis
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08Jan
-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09Jan
-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
-40-20
020406080
100120
Net Bank Lending to SMEs
£m p
er w
orki
ng d
ay
'00 '01 '02 '03 '04 '05 '06 '07 '08 '090
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2
3
4
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Venture Capital Fund Raising
Year
£bn
Source 1: Bank of EnglandSource 2: NESTA
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VENTURE CAPITAL IN 21CEVOLVING INDUSTRY Imprecise term: wide array of investors Funds: geography, stage, sector and/or “thesis” New entrants:
Full time Angels Crowd platforms Incubators Accelerators
Stage of investment determines return requirement Seed – 15x Series A – 10x Series B – 5x
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VENTURE CAPITALIS IT RIGHT FOR YOU AND YOUR BUSINESS?
Very inefficient market: 3000 plans >>> 8 investments Can your business be worth £100m - £1bn? Really? Several alternatives:
Friends Family Fools (FFF) Angels Family Offices Grants Your customers
Adopt a rifle approach – and then listen to feedback
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RAISING VENTURE CAPITAL (I)COMPETITIVE TENSION
1. To get good terms, you need multiple offers.
2. To get multiple offers, you need to tell a good story to multiple investors at the same time.
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RAISING VENTURE CAPITAL (II)APPROACHING VENTURE CAPITALISTS
Endorsement from a trusted partner Treat a VC = Customer Short email with bullet points Rifle shot approach Don’t cold call Cf. Venture Hacks example email
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RAISING VENTURE CAPITAL (III)WHAT TO PRESENT Sell the vision and excitement. Short 10 Slide Deck
Team Product Traction Market Sizing Route to market Competitive landscape Barriers to entry Bottom up, assumptions led forecast Acquirer landscape Funding and allocation
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RAISING VENTURE CAPITAL (III)WHAT TO PRESENT
Appendix Very clear milestones / deliverables Explicit tech road map Clean and recent sales pipeline Relevant KPIs Share capital table
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RAISING VENTURE CAPITAL (IV)HOW TO PRESENT – GOLDEN RULES
Meet In the Morning Arrive Early Don’t hang out in reception Assume no knowledge of your sector or business Always speak to a slide deck 10 Slides Maximum 25 Minutes Video Kills the [pitch] Remember their Q&A
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RAISING VENTURE CAPITAL (V)KEY TERMS Valuation
25% dilution for £x Competitive tension is key
Structure Understand the differences: simple, participation Anti- dilution – walk away
Option Pool Structure against specific hires
Reverse Vesting Founder friendly Leaver Provisions
Portfolio Due Diligence
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RAISING VENTURE CAPITALRESOURCES
Surviving Fundraising – Paul Graham Lines Not Dots – Mark Suster AVC – Fred Wilson A16Z.com FredDestin.com
