![When Is VC Wrong For You [continued] You Need to Move Fast Raising VC takes 3-6 months minimum You Are Dilution Sensitive You Need To Be In Control You Don’t Need It](https://image.slidesharecdn.com/powerpoint60/85/PowerPoint-8-320.jpg)
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- 1. Venture Capital When You Need It When You Don’t Union Square Ventures 915 Broadway New York, NY 212-994-7880
- 2. What Is Venture Capital? High Risk Capital Seeking 50%+ Annual Rates of Return Active Investors Who Will Step In and Make Changes to Protect Their Investment Experienced Investors Who Know How to Build Large Companies
- 3. The Venture Capital Process Find Deals Research Deals – A 3-6 Month Process Structure and Close Deals Manage The Investment Exit The Investment
- 4. Some Statistics 99%+ of All Startups Do Not Require Institutional Venture Capital VCs average initial investment is $3M+ Average Dilution from Initial VC Investment is 40%+ VCs look at over 100 business plans for every one they finance
- 5. When Is VC Good Heavy R&D Component of the business Seminconductors Biotech Datacomm Equipment Very Large Opportunity Requiring A Lot of Working Capital Federal Express Amazon.com
- 6. The Cost of Venture Capital Dilution Average founder who uses VC owns less than 10% of the business upon exit Liquidation Preference The VCs will want to take their money out first Control It is a marriage and divorce is messy. You don’t always get to take the kids
- 7. When is VC Wrong For You Too Early – You Don’t Have Enough to Show Yet (Revenues, Product, Team) Too Small – You Only Need A Couple Million to Get Profitable Not Proprietary – Your Business Has No Barriers to Entry. It is Just An Execution Game.
- 8. When Is VC Wrong For You [continued] You Need to Move Fast Raising VC takes 3-6 months minimum You Are Dilution Sensitive You Need To Be In Control You Don’t Need It
- 9. What Are The Alternatives? Bootstrap Self-Finance Friends and Family Find Partners To Share The Risk Don’t Start A Business, Buy A Business
- 10. Why Bootstrap? Get Going Fast – Don’t Wait For the VC Stay Lean and Mean – Cash In The Bank Makes You Soft Sell, Sell, Sell – The Customer is Your Best VC Learn On The Job Let Your Customers Write Your Business Plan
- 11. Bootstrapping What Comes Next? Profitability – Happiness is Positive Cash Flow Bankers – They’ve Got Cash and Are Willing To Lend Venture Capital – On Terms You Can Accept
- 12. Self-Financing Entrepreneurship Is Risk Taking – If You Won’t Take the Risk, Why Should Anyone Go Without A Salary Close Out Your Savings Account Mortgage Your House Sell Your Car
- 13. Friends And Family By Far, The Most Common Form of Startup Finance If Anyone Will Believe In You, They Will Tell Them That There Is A Good Chance They’ll Lose Their Money Try Your Hardest Not To
- 14. Partners A Team Is Always Better Than A Lone Wolf Misery Loves Company Four Savings Accounts, Mortages, and Cars Add Up To A Lot More
- 15. Summary VC money comes with a lot of strings attached. Make sure you can live with them Raising VC money is not a guarantee of success Seriously consider the alternatives to raising VC money