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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?
North Bridge Venture Partners 2005
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
North Bridge Venture Partners 2005
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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North Bridge Venture Partners 2005
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
North Bridge Venture Partners 2005
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
North Bridge Venture Partners 2005
Common Traits of Effective Leaders
Desire Emotional stamina Physical stamina Empathy Decisiveness Anticipation Timing Competitiveness
Self-Confidence Accountability Responsibility Credibility Tenacity Dependability Stewardship
North Bridge Venture Partners 2005
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
North Bridge Venture Partners 2005
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
North Bridge Venture Partners 2005
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
North Bridge Venture Partners 2005
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?
North Bridge Venture Partners 2005
Ask For The Order
Get specific feedback Understand next steps Efficient “no” better than a prolonged “maybe”
North Bridge Venture Partners 2005
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
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