venture capital the business of innovation · venture capital the business of innovation...
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![Page 1: Venture Capital The Business of Innovation · Venture Capital The Business of Innovation Kellogg-Recanati International Executive MBA Tel Aviv, March 2017 Session 4 Izhar Shay. VC](https://reader036.vdocuments.us/reader036/viewer/2022071015/5fce46b4a5e3ca34b149678d/html5/thumbnails/1.jpg)
Venture Capital The Business of Innovation
Kellogg-Recanati International Executive MBATel Aviv, March 2017
Session 4
Izhar Shay
![Page 2: Venture Capital The Business of Innovation · Venture Capital The Business of Innovation Kellogg-Recanati International Executive MBA Tel Aviv, March 2017 Session 4 Izhar Shay. VC](https://reader036.vdocuments.us/reader036/viewer/2022071015/5fce46b4a5e3ca34b149678d/html5/thumbnails/2.jpg)
VC 101
Venture Capital
Returns
Investment
Year 1 Year 7
![Page 3: Venture Capital The Business of Innovation · Venture Capital The Business of Innovation Kellogg-Recanati International Executive MBA Tel Aviv, March 2017 Session 4 Izhar Shay. VC](https://reader036.vdocuments.us/reader036/viewer/2022071015/5fce46b4a5e3ca34b149678d/html5/thumbnails/3.jpg)
VC 101
Venture Capital
Returns
Investment
Year 1 Year 7
![Page 4: Venture Capital The Business of Innovation · Venture Capital The Business of Innovation Kellogg-Recanati International Executive MBA Tel Aviv, March 2017 Session 4 Izhar Shay. VC](https://reader036.vdocuments.us/reader036/viewer/2022071015/5fce46b4a5e3ca34b149678d/html5/thumbnails/4.jpg)
Shareholders’ Value Creation
![Page 5: Venture Capital The Business of Innovation · Venture Capital The Business of Innovation Kellogg-Recanati International Executive MBA Tel Aviv, March 2017 Session 4 Izhar Shay. VC](https://reader036.vdocuments.us/reader036/viewer/2022071015/5fce46b4a5e3ca34b149678d/html5/thumbnails/5.jpg)
Syndicate Funding - CAP Table
![Page 6: Venture Capital The Business of Innovation · Venture Capital The Business of Innovation Kellogg-Recanati International Executive MBA Tel Aviv, March 2017 Session 4 Izhar Shay. VC](https://reader036.vdocuments.us/reader036/viewer/2022071015/5fce46b4a5e3ca34b149678d/html5/thumbnails/6.jpg)
Syndicate Funding - CAP Table
![Page 7: Venture Capital The Business of Innovation · Venture Capital The Business of Innovation Kellogg-Recanati International Executive MBA Tel Aviv, March 2017 Session 4 Izhar Shay. VC](https://reader036.vdocuments.us/reader036/viewer/2022071015/5fce46b4a5e3ca34b149678d/html5/thumbnails/7.jpg)
Syndicate Funding - CAP Table Example
![Page 8: Venture Capital The Business of Innovation · Venture Capital The Business of Innovation Kellogg-Recanati International Executive MBA Tel Aviv, March 2017 Session 4 Izhar Shay. VC](https://reader036.vdocuments.us/reader036/viewer/2022071015/5fce46b4a5e3ca34b149678d/html5/thumbnails/8.jpg)
Syndicate Funding - Distribution of Proceeds
Company sold for $$$ - who gets what?
![Page 9: Venture Capital The Business of Innovation · Venture Capital The Business of Innovation Kellogg-Recanati International Executive MBA Tel Aviv, March 2017 Session 4 Izhar Shay. VC](https://reader036.vdocuments.us/reader036/viewer/2022071015/5fce46b4a5e3ca34b149678d/html5/thumbnails/9.jpg)
Distribution of Proceeds - CAP Table Waterfall
Company sold for $$$ - who gets what?
Typical Waterfall:1. Loans and credit lines paid off2. Investors’ Preferred Shares, “LIFO” (Sometimes with interest)
1. (Example: B Shares A Shares Common)3. Common Shares and Preferred “As Converted”
Typical Preferred Terms:“Participating”, “Participating with a CAP”, “Non Participating”
![Page 10: Venture Capital The Business of Innovation · Venture Capital The Business of Innovation Kellogg-Recanati International Executive MBA Tel Aviv, March 2017 Session 4 Izhar Shay. VC](https://reader036.vdocuments.us/reader036/viewer/2022071015/5fce46b4a5e3ca34b149678d/html5/thumbnails/10.jpg)
CAP Table Comments
Different classes of shares:• Investors’ Preferred Shares• Common Shares• Employee Stock Options Plan (ESOP)
Investors:• Earlier investors pay less for higher ownership• Later investors pay more but their risk is reduced• Financial Preference can overpower CAP table holdings
Investors’ and Founders’ dilemmas:• Valuation - Shareholders Value• Dilution - “What’s in it for me by the end of the day?”• Control - “Who is going to call the shots here?”• Financial outcome of CAP table
![Page 11: Venture Capital The Business of Innovation · Venture Capital The Business of Innovation Kellogg-Recanati International Executive MBA Tel Aviv, March 2017 Session 4 Izhar Shay. VC](https://reader036.vdocuments.us/reader036/viewer/2022071015/5fce46b4a5e3ca34b149678d/html5/thumbnails/11.jpg)
VC 101
Venture Capital
Returns
Investment
Year 1 Year 7
![Page 12: Venture Capital The Business of Innovation · Venture Capital The Business of Innovation Kellogg-Recanati International Executive MBA Tel Aviv, March 2017 Session 4 Izhar Shay. VC](https://reader036.vdocuments.us/reader036/viewer/2022071015/5fce46b4a5e3ca34b149678d/html5/thumbnails/12.jpg)
Thank You!
January 2016
A small slice in a big pieis better
than a big slice of nothing…