Venture Capital Considerations

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<p>Venture Capital Considerations</p> <p>David ShorePlease turn off cell phones and pagers.Presentation begins at 6:00pmDShore@StirlingMercantile.com604 484-0070</p> <p>Financing Growth</p> <p>Topics</p> <p>Who I AmDavid ShorePartner, Stirling Mercantile CorporationLocal Investment BankMid market M&amp;A, financingsMy focus is on private equity for growing companiesFormerly with CIBC, a few startupsBCAF investment committee, ASI BAB</p> <p>Topics</p> <p>Topics A La Carte</p> <p>Topics</p> <p>VC vs. IPO vs. Debt?</p> <p>Topics</p> <p>VC vs. IPO vs. Debt?</p> <p>Topics</p> <p>VC vs. IPO vs. Debt?</p> <p>Topics</p> <p>VC vs. IPO vs. Debt?</p> <p>Topics</p> <p>VC vs. IPO vs. Debt?</p> <p>Topics</p> <p>VC vs. IPO vs. Debt?</p> <p>Topics</p> <p>VC vs. IPO vs. Debt?</p> <p>Topics</p> <p>VC vs. IPO vs. Debt?-</p> <p>Topics</p> <p>What VCs look forA great team</p> <p>Market Size of $1 billion +Defendable IPWorld class domain expertiseMotivation</p> <p>Topics</p> <p>What you should look for from a VCBoard membersC-level managementSynergies with other investeesSales to other investeesMoney</p> <p>Topics</p> <p>Resources required for private financingsTime likely 6 to 12 monthsDedication to the processComplete business plan, model, HR planDue diligence binders</p> <p>Topics</p> <p>Preparation for the first pitchMake your introductory statement of what you do crystal clear (to anybody)Have a concise PPT that would take about 20 minutes to run through without interruptionsHave tight answers to typical questions and Gotcha questions</p> <p>Topics</p> <p>VC Term SheetsLiquidation preferencePreferred sharesVeto on fundamental changesNo shop</p> <p>Topics</p> <p>Valuations and Uses of FundsValuations are based on ROI of about 40% for the fund (but one in ten make up for the rest). $2 to $5 million, pre money is typical todayFunds for marketing - 50%, development -30%, working capital - 20%Not to take out debt or management</p> <p>Topics</p> <p>Elevator Pitch TipsEveryone in the company has to be able to give it to their grandmotherStart with a pain statement, like The [target market] is suffering from an inability to do [something], because of [this and that].Follow that with a value proposition, like Our team, with x0 years of experience in this have developed a solution that will be much better/faster/cheaper than existing solutions.Finish with a result like We are confident we can build a company with $x million in sales in five years.Focus on why the customer will need to buy</p> <p>Topics</p> <p>Typical QuestionsNumber 10How much funding is required and where will this round get you?Number 9How many clients do you need to get to profitability? What is your sales cycle?Number 8Who is your competition and why will you do better than them. (Dont simply say we are smarter than them!)Number 7How big is your market? What do you project sales to be in your 5th year?Number 6What are your key financial assumptions like price, take-up, client ROI, use of investment capital, etc?</p> <p>Topics</p> <p>Typical QuestionsNumber 5What is your intellectual property (IP) and barriers to competition? How will you sustain your competitive advantages?Number 4What are your greatest risks and how do you plan to mitigate them?Number 3What problem are you solving and how does the client measure the value of that solution?Number 2Who are your clients? (The only one with a vote as to whether or not a product has merit is the client.)Number 1Who is on your management team who has been there and done that?</p> <p>Gotcha questions</p> <p>Topics</p> <p>Financial ProjectionsTypically 60 month models with full set financialsHave all assumptions easy to find and testShow prior actuals if you have themFocus on first 2 years from a cash flow perspectiveExample</p> <p>Topics</p> <p>One in Ten40% return on a fund, which lasts about 7 to 10 years</p> <p>Topics</p> <p>One in TenSome make a break-even or make a modest gain. Others die. </p> <p>$40m$100m</p> <p>Topics</p> <p>Gotcha questionsWhat is your addressable market size?followed by questions about the revenues of competitors. Does it add up?Whos your competition?Dont say we dont have anyHow will you eat their lunch?Are you willing to step aside when the time is right?Plateaus, delegation, priorities</p> <p>Topics</p> <p>Topics</p> <p>Gents-Thanks for putting this together. My edits, limited to the end of the 2nd sentence and the addition of a new one to follow it, is to open up the topic a bit and to focus on a high-level discussion about if VC is a path to consider. If there is further interest, a "Do and Don't" topic would be valuable (it could be that no-one wants VC!).Cheers, D. Business Matters Obtaining Finance critical factors for your company.This seminar will present three solutions to the problem of raising capital for your company: venture capital, bank loans and the Canadian Youth Business Foundation (CYBF) loan program. The focus will be on Venture Capital, with David Shore, a partner in Vancouver based investment-banking firm Stirling Mercantile Corporation, bringing his extensive background and expertiseregarding financing for growing companies talking about the pros and cons of being funded by venture capitalists and what the process of raising private capital is like in this economy. The talk will be interactive with a choice of topics for the audience to choose from including VC vs. IPO vs. Debt? VC Term Sheets; What VCs look for and what you should look for from a VC; Preparation for the first pitch; Resources required for private financings; Valuations and Uses of Funds; and more. As well, representatives from the Royal Bank of Canada and the Canadian Youth Business Foundation will discuss the different financing options available through their organizations.Investment bankers - misnomer. We don't take deposits like banks and generally don't invest. And when we do, we're not call investment bankers, we become merchant bankers. Don't ask me to explain, I didn't come up with it.</p>