entrepreneurship & venture capital (vc) investment

Hampton Consulting Ltd. [email protected]

Entrepreneurship & Venture Capital (VC) Investment

A Risky Business?


Experience – Before MBA (03-04) 13 years in mobile telecoms & IT

Co-founder / CEO of CopperEye High performance indexing for databases Raised c. £6M institutional funding Catalyst: MIT’s Entrepreneurship competition

Prior to CopperEye: I was a “corporate career person” Stagnating in operational senior management Overworked, under-challenged, under-rewarded


Experience – Post MBA Co-founder / MD of Hampton Consulting

Advice to start-up technology companies Consultancy to mobile telecoms companies

Co-founder / Non-exec director of Aquantra Specialist Bath-based technology recruitment company Self-funded (a little!) plus organic growth

Co-founder / CEO of Zenulta Providing enterprise event correlation solutions Delivered 2 rounds of funding

Co-founder / CEO of iRooms Providing enhanced utilisation of space Self-funded by founders – relationship with electronics

manufacturer


Entrepreneurial Motivation Reduced bureaucracy

Ability to take decisions Speed to market

Share in the fruits of your labour

Unlimited upside potential. Downside potential?

Faster career progression Less rigid role definitions


Recipe for Success? Experienced team

Diverse skill sets “Stand on the shoulders of giants” (I. Newton)

Find a unique angle on a business problem

Network like crazy http://www.linkedin.com

Build strong reference customers


Funding a Business Bank loans

Secured loan Often matched by personal investment High personal risk

Venture Capital (& angel) investment Can provide “value added” operational skills

Low personal risk


Why is Venture Capital the Lower Risk Route? No personal financial risk

Just warranties & disclosures

Job security in large companies? Yeah right!! Funding gives run of at least 1 year Follow on funding Longer notice periods (6 months)

Saleable commercial experience


How do you get VC Funding? (1) Find a good idea – a solution to a problem Network with individuals in different vertical markets

“Know your onions” Exit value £60M -> £300M

Do market research Know your competitors Build a business plan


How do you get VC Funding? (2) Draw up a shortlist of VCs who invest in your marketplace http://www.bvca.co.uk

“Value added” investment, or “dumb money”?

Try to get personal introductions / referrals

Choose your professional advisors carefully


MBA Summer Project “Leveraging the VC Relationship – The Entrepreneurs’ Perspective”

Interviewed 6 entrepreneurs in areas of: Relationship with VCs Legal & commercial terms used in investment agreements

Board balance & composition Control within the relationship


Earlier Research Relationship between entrepreneur & VC MUST be balanced & cooperative for a company to be successful

If an entrepreneur loses influence due to poor performance or greedy investors, the company will fail


Project Findings (1) Entrepreneurs have most influence at first funding round Negotiate then “play the long game”

Board structure has no effect on entrepreneur’s influence within relationship

Founder mentoring is a good idea


Project Findings (2) Choose a VC with entrepreneurial experience if this is your first company Fairer terms

Fairer terms promote trust and cooperative behaviour Greater chance of success


Project Findings (3) Entrepreneurs should raise more capital than they think they need

Maintain influence by recognising “domain expertise”


What’s next for me? Developing my current businesses

Helping others grow theirs Advisor capacity on strategy & investment

Conducting venture capital “due diligence”


QUESTIONS

entrepreneurship & venture capital (vc) investment

Documents