Fundraising Fundamentals

Jennifer JonesCEO, Jennifer Jones & Partners

Jennifer JamesVP of Marketing and Investor Relations, Sofinnova

LPs’ Thoughts:

“Don’t bother to fundraise unless you have had some exits in your last fund-that

means at least one and hopefully two that provide

at least a 2x.”

“Many funds are not even interested at all in life sciences. It’s just taking too long to get

results.”

“Existing investors must come back and take 50% of the fund.

It shows commitment.”

“Make sure you have conversations with all

your LPs before you go out. Know where they stand as it relates to commiting to you.”

“I’m not sure I even LIKE venture capital as an asset class today. I can make a lot better

returns elsewhere. Venture just doesn’t have the returns.”

“Your fund returns are very good! Why don't I ever hear or read about you?”

Funds on the Road over Time: 1/2008-1/2012

JAN-08 JAN-09 JAN-10 JAN-11 APR-11 JUL-11 OCT-11 JAN-12

Source: www.preqin.com

Breakdown of Funds in Market by Fund Type

Real Estate Venture Capital

Buyout Growth Fund of Funds

Infrastructure DistressedPE

Mezzanine Natural Resources

Secondaries Other

Source: www.preqin.com

Average Time Spent Marketing Funds2004 to 2011

2004

Source: www.preqin.com

2005 2006 2007 2008 2009 2010 2011

Year of Final Close

Mo

nth

s

Top 5 Best Fundraising PracticesDevelop and communicate a compelling pitch for LPs Recognize the importance of standing out among similarly situated funds Weak 10 year VC performance numbers are making limited partners cautious Getting your pitch right is vital – make it tangible LPs are short on time—if it isn’t compelling, they are moving on

Best Practice

Take action: Get it right in 15 Slides Demonstrate your differentiation and an “edge” – with both words and numbers You must clearly explain what you do, how you do it, how it produces results — and

how it is repeatable in today’s markets Bring your passion to the page – and find a way to connect

Top 5 Best Fundraising PracticesBest

PracticeRecognize that the golden days of “Venture Allocation” are long past Most LPs have built out their portfolios—very few are trying to fill a

“venture bucket” Investors are absolute and opportunistic—you will be measured against all other

options LPs are not your LPs for life anymore—they are digging in and making hard choices

Take action Help your team show performance in its best light People are looking for diversifiers and things that are additive to what they already hold Define. Define. Define. Be specific about where you play and what your typical deal looks like Get beyond VC performance—how do you stack up against the public markets?

Top 5 Best Fundraising PracticesBest

PracticeGet your back office ready – it’s going to be a bumpy ride Investors have a lot of choices – don’t make diligence more work

than it has to be Take a hard look at your team’s strengths and weaknesses –

and address them Don’t assume you know what LPs want to cover – ask them Being ready for anything is a competitive advantage

Take action Make a check list You already know 80% of what you will be asked - get it ready Build a rock solid data room – in IntraLinks or another trusted web product Create a “slide library” Prepare specific agendas in advance of meetings Commit to quick turnaround times for LP requests and stay out in front

Top 5 Best Fundraising PracticesBest

PracticeGet your timing right LPs need more notice than ever about your raise Existing support is key to bringing in the new money Momentum must be built throughout—air traffic control The all important form D Manage the media

Take action Get into the weeds to know how and when you will cross the finish line Have we talked to existing LPs? What timeline can they agree to? When will we launch? Close? What will be on the cover? Form D strategy? Press strategy? Create an overall timeline to manage against

Top 5 Best Fundraising PracticesBest

PracticeBe Consistent and Transparent Throughout Your Process Are LPs hearing the same information and data from your team? Will your data hold up to detailed scrutiny? Is your story consistent with what LPs will hear out in the VC echo chamber?

Take Action Create planning docs that will keep your team on the same page Keep in contact with CEOs, existing LPs, and co-investing GPs to ensure a consistent message Know your weak spots and tough stories. Be prepared to address them in a straight forward,

honest (and quick!) manner. Meet weekly, every week, until the last LPA docs are signed

QUESTIONS AND ANSWERS

Jennifer JonesCEO, Jennifer Jones & Partners

Jennifer JamesVP of Marketing and Investor Relations, Sofinnova