kbs+ ventures fellows #4: raising capital - introduction to vc 12.12.14

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FELLOWS CLASS #4DECEMBER 12TH, 2014

Friday, December 12, 14

• LAST WEEK’S READING / VIDEO• INTRODUCTION TO RAISING CAPITAL: PART 1• REAL WORLD PERSPECTIVE: MARVIN LIAO, PARTNER, 500 STARTUPS• QUESTIONS• HOMEWORK ASSIGNMENT #2 PRESENTATIONS

IN TODAY’S CLASS...2


RAISING CAPITAL: PART 13

PART 1: PART 2: PART 3:

FUNDRAISING OVERVIEW

VC MATH / DEAL

STRUCTURINGPITCHING INVESTORS


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STARTUPS BY THE NUMBERS

http://www.entrepreneur.com/dbimages/article/where-startup-funding-really-comes-from-infographic.jpgFriday, December 12, 14

http://www.entrepreneur.com/dbimages/article/where-startup-funding-really-comes-from-infographic.jpg


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ACCORDING TO THE SMALL BUSINESS ADMINISTRATION, ~565,000 STARTUPS ARE LAUNCHED IN THE US EACH MONTH...

6.7M LAUNCHED IN THE US PER YEAR




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...<1% GET VENTURE FUNDING


ACCORDING TO THE SMALL BUSINESS ADMINISTRATION, ~565,000 STARTUPS ARE LAUNCHED IN THE US EACH MONTH...

6.7M LAUNCHED IN THE US PER YEAR




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FUNDRAISING OVERVIEW


WHERE ELSE CAN YOU FIND FUNDING?6


WHERE ELSE CAN YOU FIND FUNDING?6

• PERSONAL SAVINGS / CREDIT• SIDE CONSULTING JOBS• BANK LOANS• GRANTS• CUSTOMERS• FRIENDS & FAMILY• ANGEL INVESTORS• CROWD-FUNDING


FUNDRAISING OVERVIEW7


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HOW MUCH ARE YOU LOOKING TO RAISE?

BOOTSTRAPPEDF & F /

BANK LOANS / GRANTS

ANGEL INVESTORS

EARLY STAGEVENTURE

FUNDS

LATE STAGEVENTURE

FUNDS

~$0-$25K ~$25-$150K ~$150-$1M ~$1M-$10M ~$10M+

ROUGHLY ESTIMATED:


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HOW MANY GET FUNDED?

~57% OF STARTUPS

~38% OF STARTUPS

~0.91% OF STARTUPS

~0.25%OF STARTUPS

~0.05%OF STARTUPS

~$0-$25K ~$25-$150K ~$150-$1M ~$1M-$10M ~$10M+

BOOTSTRAPPED FAMILY & FRIENDS ANGELS EARLY STAGE VC LATE STAGE VC

IT’S TOUGH OUT THERE:





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BY THE NUMBERS





FUNDING ROUNDS11

EARLY LATE

BOOTSTRAP

FAMILY & FRIENDS

ANGEL

ACCELERATORS

SEED

SERIES A

SERIES B

GROWTH EQUITY (SERIES C AND BEYOND)

PRIVATE EQUITY


FUNDING ROUNDS11

EARLY LATE

BOOTSTRAP

FAMILY & FRIENDS

ANGEL

ACCELERATORS

SEED

SERIES A

SERIES B

GROWTH EQUITY (SERIES C AND BEYOND)

PRIVATE EQUITY

RAISING< $2M

RAISING~$2-10M

RAISING~$10-20M

RAISING~$20M+


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ANGEL INVESTORS

ANGEL INVESTORS (ACCREDITED) -• HIGH NET WORTH INDIVIDUALS• OFTEN SUCCESSFUL ENTREPRENEURS OR BUSINESS PEOPLE• PASSIONATE ABOUT PEOPLE AND IDEAS• EARLY SUPPORTERS• OFTEN OFFER HANDS ON SUPPORT, MENTORING, *ACCESS*• CURIOUS BY NATURE• DEVELOPING A CLOSE RELATIONSHIP IS KEY

WRITE 16X MORE CHECKS THAN VCS


ACCELERATORS13

ACCELERATORS• COMPETITIVE SELECTION• SPECIFIC PROGRAM WITH A DESIGNATED AMOUNT OF TIME (E.G. 3 MONTHS)• PROVIDES SEED CAPITAL• ADDS CREDIBILITY• ACCESS TO LARGE MENTOR NETWORK OF ENTREPRENEURS AND INVESTORS• PROVIDES PRODUCT AND STRATEGIC DEVELOPMENT SUPPORT


HOW VC WORKS14

VC FIRM(GENERAL PARTNERS)

LIMITED PARTNERS (“LPs”)• Public/Corporate pension funds• High net worth individuals, Family offices• Endowments, foundations, insurance companies

VC FUND (LIMITED PARTNERSHIPS)2% MANAGEMENT FEE + 20% OF PROFITS

$$ FUND MANAGEMENT

$$ FUND OWNERSHIP

INVESTMENT(OWNERSHIP %)



$$ $$ $$


EARLY STAGE15

EARLY STAGE VCS• INVEST AT THE EARLIEST PHASES (SEED / SERIES A)• OFTEN INVEST IN THE TEAM, OR MARKET TRENDS• OFTEN HAVE AN INDUSTRY FOCUS (E.G. AD TECH, MOBILE)• OFTEN PROVIDE SUPPORT SERVICES, BUSINESS FEEDBACK, TALENT RECRUITMENT, ETC.• SMALL TEAMS


LATE STAGE VC 16

LATE STAGE VCS• INVEST IN PRODUCTS OR SERVICES THAT HAVE GAINED TRACTION• OFTEN SERIES B AND BEYOND (THOUGH THEY MAY INVEST EARLIER)• FOCUSED ON EXIT / SERVICE LPS• OFTEN PROVIDE SUPPORT SERVICES, TALENT RECRUITMENT, MARKETING, M&A


WITH VC... KEEP IN MIND:17

AVERAGE EXIT TAKES ~6 YEARS, AND A LOT OF MONEY

YOU’RE ESSENTIALLY HIRING YOUR OWN BOSS...

PICK THE RIGHT PARTNERS!


VENTURE CAPITAL: POWER LAWS18

~15 COMPANIES WILL GENERATE 95% OF ALL ECONOMIC RETURNS... EVEN TOP VCS WRITE OFF HALF THEIR DEALS

POWER LAW:

http://a16z.com/2014/07/21/a-dozen-things-ive-learned-from-marc-andreessen/




POWER LAWS19

THE MOST BREAKTHROUGH TECHNOLOGIES SEEM CRAZY AT FIRST

THINK ABOUT THE VALUE PROPOSITION

LEARN THINGS MOST PEOPLE DON’T

SEE THINGS DIFFERENTLY

“ENTER AS CLOSE AS YOU CAN TO A ZEN-LIKE BLANK STATE OF HUMILITY AT THE BEGINNING OF THE MEETING AND SAY, “TEACH ME...”

-MARC ANDREESSEN


REAL WORLD PERSPECTIVE20

MARVIN LIAO• PARTNER, 500 STARTUPS• SF BASED• MENTOR AT 16 ACCELERATORS ACROSS 10 COUNTRIES• YAHOO VETERAN

PARTNER SPOTLIGHT!


• OFFICE HOURS: TUESDAY AFTERNOON• SPECIAL REPORT! INTERNET OF THINGS• KATE STONE, TED SPEAKER AND FOUNDER OF NOVALIA• KEEP WORKING THROUGH DISCOVERY, HOMEWORK #3! (DUE 1/16)

NEXT WEEK...21


CONTACT:

JESSICA PELTZ, INVESTMENT [email protected]

JOSH ENGROFF, MANAGING [email protected]

QUESTIONS?22


mailto:[email protected]




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