21C Venture Capital

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A short introduction into venture capital, how to contact a VC, and how and what to present in a fundraising pitch.


<ul><li> 1. V E N T U R E C A P I TA L I N 2 1 CJUNE 2012 </li> <li> 2. OCTOPUS INVESTMENTSA SHORT INTRODUCTION 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% 2 </li> <li> 3. ALLIOTT COLEHOW TO CONTACT ME acole@octopusventures.com @alliott Alliott.co 3 </li> <li> 4. Agenda Venture capital in 21C Venture capital and YOU? Raising venture capital Key investment terms Resources Q&amp;A 4 </li> <li> 5. VENTURE CAPITAL IN 21C MULTI-DECADE LOW CAPITAL SUPPLY (UK) Net Bank Lending to SMEs Venture Capital Fund Raising 120 7m per working day 100 80 6 60 5 40 4 20 bn 3 0 -20 2 -40 1 0 Jan-08 Mar-08 Jan-09 Mar-09 Jan-10 Mar-10 May-08 May-09 May-10 Jul-08 Sep-08 Nov-08 Jul-09 Sep-09 Nov-09 Jul-10 Sep-10 Nov-10 00 01 02 03 04 05 06 07 08 09 Year 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 5 Source 1: Bank of England Source 2: NESTA </li> <li> 6. 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 6 </li> <li> 7. VENTURE CAPITALIS IT RIGHT FOR YOU AND YOUR BUSINESS? Very inefficient market: 3000 plans &gt;&gt;&gt; 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 7 </li> <li> 8. RAISING VENTURE CAPITAL (I)COMPETITIVE TENSION1. To get good terms, you need multiple offers.2. To get multiple offers, you need to tell a goodstory to multiple investors at the same time. 8 </li> <li> 9. RAISING VENTURE CAPITAL (II)APPROACHING VENTURE CAPITALISTS Endorsement from a trusted partner Treat a VC = Customer Short email with bullet points Rifle shot approach Dont cold callCf. Venture Hacks example email 9 </li> <li> 10. 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 10 </li> <li> 11. 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 11 </li> <li> 12. RAISING VENTURE CAPITAL (IV)HOW TO PRESENT GOLDEN RULES Meet In the Morning Arrive Early Dont 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&amp;A 12 </li> <li> 13. 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 13 </li> <li> 14. RAISING VENTURE CAPITALRESOURCES Surviving Fundraising Paul Graham Lines Not Dots Mark Suster AVC Fred Wilson A16Z.com FredDestin.com 14 </li> <li> 15. THANK YOU FOR LISTENINGANY QUESTIONS @Alliott acole@octopusventures.com 15 </li> </ul>