rob siegel of x/seed capital management at ucsc baskin engineering
Post on 28-Nov-2014
3.593 Views
Preview:
DESCRIPTION
TRANSCRIPT
Venture Capital and Venture Capital and UniversitiesUniversities
A Match Made inA Match Made in……
Robert SiegelRobert SiegelX/Seed CapitalX/Seed Capital
20 January 200920 January 2009
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
Simple CreaturesSimple Creatures
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
Rob Siegel and X/SeedRob Siegel and X/Seed
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
What Do VCs Look for When They What Do VCs Look for When They Invest?Invest?
It depends on the It depends on the VCVC……–– Defendable market Defendable market
position (technology or position (technology or business model)business model)
–– Large market (ability Large market (ability to become a big to become a big company)company)
–– Ability to bring Ability to bring entrepreneurial talent entrepreneurial talent to a situationto a situation
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
Different Types of InvestorsDifferent Types of Investors
““EarlyEarly”” stagestage
Late stageLate stage
Private equityPrivate equity
Seed stageSeed stage Angels Angels Seed fundingSeed funding
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
What Makes a VC Tick?What Makes a VC Tick?
Economics of ventureEconomics of venture
Definition of termsDefinition of terms–– Limited partnerLimited partner
University endowments, University endowments, nonnon--profit foundations, profit foundations, insurance and retirement insurance and retirement fundsfunds
–– General partnersGeneral partners–– Management feeManagement fee–– ““CarryCarry””
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
How Venture Works*How Venture Works*
16%Management fee
Investment capital84%
$100 million
* For example only – your mileage may varyAssumes $100 million fund with eight year life
$300 million
Limited Partners($160 million)
General Partners($40 million)
$100 million
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
““When Talking to a VC, What Should I When Talking to a VC, What Should I Say in the First Meeting?Say in the First Meeting?””
Define the inventionDefine the invention–– PublicationsPublications–– Other research in the fieldOther research in the field–– Not too much detailNot too much detail……
Potential applicationsPotential applications–– Bigger is betterBigger is better
The teamThe team–– PostPost--docs, graduate students, docs, graduate students,
business teambusiness team
Simple slide deckSimple slide deck–– Think 20+ slidesThink 20+ slides
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
Then WhatThen What
Follow upFollow up–– More technical detail More technical detail
with the right partnerwith the right partner–– Any business Any business
analysisanalysisMay not need to be a May not need to be a
full planfull plan
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
What Does It Mean When He/She What Does It Mean When He/She WonWon’’t Call Me Back?t Call Me Back?
VCs have little VCs have little incentive to say incentive to say ““nono””
Someone might want to Someone might want to play with their toyplay with their toy
Innovation <> commercial Innovation <> commercial successsuccess
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
How Do I Know if it Is Going Well?How Do I Know if it Is Going Well?
First meeting leads to First meeting leads to follow up and more follow up and more meetingsmeetings
Ongoing due diligenceOngoing due diligence
Term sheetTerm sheet
Fund the dealFund the deal
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
What Should A First Round of What Should A First Round of Funding Look Like?Funding Look Like?
It dependsIt depends……
Things to considerThings to consider–– How much money goes inHow much money goes in–– How far along How far along
development isdevelopment is–– How the Board is How the Board is
comprisedcomprised–– Financial rights of Financial rights of
preferred shareholderspreferred shareholders–– VestingVesting
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
They Are Trying To Steal My They Are Trying To Steal My Company!!Company!!
It just feels that wayIt just feels that way–– They donThey don’’t sign t sign NDAsNDAs, ,
blah, blah, blahblah, blah, blah
Remember: VCs arenRemember: VCs aren’’t t operatorsoperators–– They canThey can’’t run the t run the
businessbusiness
ItIt’’s always easier when s always easier when things are going wellthings are going well–– What matters is when What matters is when
things arenthings aren’’t going wellt going well
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
Things to ConsiderThings to Consider
Take the Take the ““right amountright amount”” of moneyof money
You will be dilutedYou will be diluted
All men [people] are created equalAll men [people] are created equal–– But not all VC firms are created equalBut not all VC firms are created equal–– Not all partners in VC firms are created Not all partners in VC firms are created
equalequal
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
Things You Can Do to Help Things You Can Do to Help YourselfYourself
Mentors/advisors Mentors/advisors that you can trustthat you can trust–– Be careful that you Be careful that you
hook up with the right hook up with the right crowdcrowd
Understand the Understand the history of the venture history of the venture fund and partner with fund and partner with whom you are whom you are speakingspeaking
Do your own Do your own reference checkingreference checking
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
Common QuestionsCommon Questions Should I already Should I already
have a company have a company formed?formed?
How do I deal with How do I deal with the tech transfer the tech transfer office?office?
How long before a How long before a liquidity event?liquidity event?
©© Copyright, X/Seed Capital, 2009 Copyright, X/Seed Capital, 2009 All Rights ReservedAll Rights Reserved
top related