Raising Venture CapitalBoston College

November 30, 2005Angelo SantinelliGeneral Partner

North Bridge Venture Partners

Introduction – Goals For This Class

Who should raise venture capital? What should you know about the process? Where to raise equity capital? When to raise capital? How to go about raising capital? Why do you need venture capital?

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Common Misconceptions

It’s too early to raise venture capital The VCs will steal my idea I will get ripped off financially Only Angel investors do seed capital Bootstrap is the safest way to keep control

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What VCs Look For?

Great People… With a Great Idea… Going after a Potentially Large Market

Focus Commitment Credible Operating Plan

First Principles:

Then:

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Great People

Plan and execute Adapt to change and remain committed Lead by example Surround themselves with “A” Players and Domain

Experts Have a track record of success

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Characteristics of Effective Teams

Clear unity of purpose Clear roles Clear and demanding

performance goals High level of interdependence Individuals carry their own

weight Self-conscious about group’s

operations Informal, comfortable

atmosphere Open discussion with full

participation

Freedom of expression of ideas Disagreement is good Decisions made at point of

general agreement Criticism is frequent, frank, but

respectful and without personal attacks

Mutual trust and respect for each members skills

Effective at solving problems Team management is shared,

Team leadership a necessity

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Common Traits of Effective Leaders

Desire Emotional stamina Physical stamina Empathy Decisiveness Anticipation Timing Competitiveness

Self-Confidence Accountability Responsibility Credibility Tenacity Dependability Stewardship

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Who Should Raise Venture Capital?

Entrepreneurs who want to build a large, successful business

Entrepreneurs looking to maximize their probability for success

Entrepreneurs looking for more than money Entrepreneurs who are planning for a large exit

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When to Approach a VC?

When you’ve done enough work to convince yourself of the opportunity . . . before you’ve made mistakes that devalue your team or corrupt your capital structure

Get the Basics- Clear articulation of the problem and market

opportunity- Easily understood value proposition- Informed opinion of market evolution/risks- Clear articulation of a credible plan - Sufficient customer validation

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Who Ya Gonna Call?

Do Your Homework!- Determine who invests in seed/early stage- Determine who invests in your type of business- Know something about the players and the portfolio- Reputation and style- Know what to expect

- Typical terms- Process

- Develop and execute a strategy- Targets, timing, approach

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A Foot In The Door . . . And Beyond

Get an introduction- Respected entrepreneur- Limited partner

Be selective It’s all about the people

- 60 second personal pitch- Where have you been?- What did you accomplish?- Why should I listen to your opinion?

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Ask For The Order

Get specific feedback Understand next steps Efficient “no” better than a prolonged “maybe”

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Checklist

Have you gained buy-in from your family?

Is the team committed, flexible and each expert in his/her position?

Do you have the right expectations?

Have you validated the idea with several potential customers?

Do you have an informed opinion of the opportunity, the players, and how the market might evolve?

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Checklist (cont.)

Do you have a tight, believable presentation?

Do you have a believable operating plan?

Have you done your homework on the VC and obtained an introduction?

Have you done a shakedown cruise?

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North Bridge Venture Partners 2005

Raising Venture CapitalBoston College

November 30, 2005Angelo SantinelliGeneral Partner

North Bridge Venture Partners