Software Tools for Venture Capital Process
27 likes11,331 views
This document outlines the various software tools used in the venture capital investment process, categorizing them by investment stages such as seed, startup, and expansion, and detailing the decision-making process involved. It discusses investment networks, databases, market intelligence platforms, benchmarking tools, deal management platforms, and alternative finance options like crowdfunding. Case studies and examples illustrate the functionality and significance of these tools in facilitating connections between entrepreneurs and investors.
![Definition of stages of venture
capital investment
Seed – Financing that allows a business concept to be developed,
perhaps involving the production of a business plan, prototypes and
additional research, prior to bringing a product to market and
commencing large-scale manufacturing.
Startup – Financing provided to companies for use in product
development and initial marketing. Companies may be in the Stage of
process of being setup or may have been in business for a short investment
time, but have not yet sold their product commercially.
Expansion – Financing provided to companies that have reached a
fairly stable growth rate; that is, not growing as fast as the rates
attained in the early stage. These companies may or may not be
profitable, but are more likely to be than in previous stages of
development.
[1] British Venture Capital Association, 2010. BVCA Private Equity and Venture Capital Report on Investment Activity 2010. Av ailable at: http://www.bvca.co.uk
[2] National Venture Capital Association, 2011. NVCA Yearbook. Available at: http://www.nvca.org
[3] European Venture Capital Association, 2011. EVCA Yearbook. Available at: http://www.evca.eu/](https://image.slidesharecdn.com/stfvcip-121108111020-phpapp02/85/Software-Tools-for-Venture-Capital-Process-3-320.jpg)
![Decision process model of venture
capitalist investment activity
Origination – the processes by which deals enter
into consideration as investment prospects
Screening – involves a delineation of key policy
variables which delimit investment prospects to a
manageable few for in-depth evaluation
Evaluation – involves the assessment of perceived
risk and expected return on the basis of a weighting
of several characteristics of the prospective venture
and the decision whether or not to invest as
determined by the relative levels of perceived risk
and expected return
Structuring – covers the negotiation of the price of
the deal, namely the equity relinquished to the
investor, plus the covenants which limit the risk of
the investor
Post-Investment Activities – assistance to the
venture in the areas of recruiting key executives,
strategic planning, locating expansion financing, and
orchestrating a merger, acquisition or public offering
[4] Tyebjee, T.T. & Bruno, A.V., 1984. A Model of Venture
Capitalist Investment Activity. Management Science](https://image.slidesharecdn.com/stfvcip-121108111020-phpapp02/85/Software-Tools-for-Venture-Capital-Process-4-320.jpg)
![Case Study: AngelList
―AngelList is a platform for
startups to meet investors
and talent.‖
Online pitching – Ability to pitch online to get
connected with angel investors
Database – 600+ angel investors, 100+ seed funds
and 300+ VCs
Key information - including investment history,
criteria and contact details
[5] AngelList, [Online], Available at: http://angel.co [9 June 2012]](https://image.slidesharecdn.com/stfvcip-121108111020-phpapp02/85/Software-Tools-for-Venture-Capital-Process-7-320.jpg)
![Case Study: CB Insights
―CB Insights is an
information platform
tracking startups invested
in by VCs, angel
investors, incubators and
university programs.‖
Advanced search – 80,000+ high growth private
companies and 50,000+ funding events
In-depth company profiles – with funding history,
management team and competitors
Tracking and alerts – track and receive alerts on
companies and funding events
“Funding Recommendation Engine (FRE)” –
analyzes funding history in order to recommend
relevant funding sources
[6] CB Insights, [Online], Available at: http://www.cbinsights.com [9 June 2012]](https://image.slidesharecdn.com/stfvcip-121108111020-phpapp02/85/Software-Tools-for-Venture-Capital-Process-9-320.jpg)
![Case Study: Younoodle
―Younoodle is a place to
discover and support the
hottest early-stage
companies and university
innovation.‖
Social network – a social networking platform
focused on university entrepreneurship
“Startup Predictor” – algorithmic prediction
estimating company's expected future value
“Podium” – a business plan competition platform
[7] YouNoodle, [Online], Available at: http://www.younoodle.com [9 June 2012]](https://image.slidesharecdn.com/stfvcip-121108111020-phpapp02/85/Software-Tools-for-Venture-Capital-Process-12-320.jpg)
![Case Study: SecondMarket
―SecondMarket helps
buyers and sellers
transact in illiquid,
restricted and alternative
investments‖
Centralized online platform – 30,000+
participants, thousands of transactions, representing
billions of dollars in assets
Streamlined process – specialists streamline
process from listing to settlement
[8] SecondMarket, [Online], Available at: http://www.secondmarket.com [9 June 2012]](https://image.slidesharecdn.com/stfvcip-121108111020-phpapp02/85/Software-Tools-for-Venture-Capital-Process-14-320.jpg)
![Case Study: Gust
―Gust provides a flexible,
secure platform that helps
investors and
entrepreneurs seamlessly
coordinate on funding
decisions.‖
Investor search engine – to find investment from
over 600 angel groups
Common application – to apply for funding directly
to one or more groups
Investor Relations Site – allows companies to
present all the information investors need to know
[9] Gust, [Online], Available at: http://www.gust.com [9 June 2012]](https://image.slidesharecdn.com/stfvcip-121108111020-phpapp02/85/Software-Tools-for-Venture-Capital-Process-17-320.jpg)
![Case Study: Seedrs
―Seedrs makes
investing in startups
simple and rewarding.‖
Equity-based – allowing investment between
£10 and £100,000 through the platform in return
for equity
Investor Access – access capital from a wide
range of investors up to £100,000
FSA Authorised – approved by the Financial
Services Authority (FSA)
[10] Seedrs, [Online], Available at: http://www.seedrs.com [9 June 2012]](https://image.slidesharecdn.com/stfvcip-121108111020-phpapp02/85/Software-Tools-for-Venture-Capital-Process-20-320.jpg)
Software Tools for Venture Capital Process
- 1. Software Tools for Venture Capital Investment Process ISBE 2012 Conference
- 2. 300+ “software tools” documented Current effort classifies by decision process and stage of investment
- 3. Definition of stages of venture capital investment Seed – Financing that allows a business concept to be developed, perhaps involving the production of a business plan, prototypes and additional research, prior to bringing a product to market and commencing large-scale manufacturing. Startup – Financing provided to companies for use in product development and initial marketing. Companies may be in the Stage of process of being setup or may have been in business for a short investment time, but have not yet sold their product commercially. Expansion – Financing provided to companies that have reached a fairly stable growth rate; that is, not growing as fast as the rates attained in the early stage. These companies may or may not be profitable, but are more likely to be than in previous stages of development. [1] British Venture Capital Association, 2010. BVCA Private Equity and Venture Capital Report on Investment Activity 2010. Av ailable at: http://www.bvca.co.uk [2] National Venture Capital Association, 2011. NVCA Yearbook. Available at: http://www.nvca.org [3] European Venture Capital Association, 2011. EVCA Yearbook. Available at: http://www.evca.eu/
- 4. Decision process model of venture capitalist investment activity Origination – the processes by which deals enter into consideration as investment prospects Screening – involves a delineation of key policy variables which delimit investment prospects to a manageable few for in-depth evaluation Evaluation – involves the assessment of perceived risk and expected return on the basis of a weighting of several characteristics of the prospective venture and the decision whether or not to invest as determined by the relative levels of perceived risk and expected return Structuring – covers the negotiation of the price of the deal, namely the equity relinquished to the investor, plus the covenants which limit the risk of the investor Post-Investment Activities – assistance to the venture in the areas of recruiting key executives, strategic planning, locating expansion financing, and orchestrating a merger, acquisition or public offering [4] Tyebjee, T.T. & Bruno, A.V., 1984. A Model of Venture Capitalist Investment Activity. Management Science
- 6. Investment Networks Investment Networks are essentially social networks linking entrepreneurs and investors Examples: • AngelList • SeedSummit • Angel’s Den
- 7. Case Study: AngelList ―AngelList is a platform for startups to meet investors and talent.‖ Online pitching – Ability to pitch online to get connected with angel investors Database – 600+ angel investors, 100+ seed funds and 300+ VCs Key information - including investment history, criteria and contact details [5] AngelList, [Online], Available at: http://angel.co [9 June 2012]
- 8. Databases Popular Databases used in industry. Examples: • Dow Jones’ VentureSource • Standard & Poor’s Capital IQ • Bureau van Dijk’s FAME • Thomson Reuters’ ThomsonONE (formerly VentureXpert) • CB Insights • Duedil
- 9. Case Study: CB Insights ―CB Insights is an information platform tracking startups invested in by VCs, angel investors, incubators and university programs.‖ Advanced search – 80,000+ high growth private companies and 50,000+ funding events In-depth company profiles – with funding history, management team and competitors Tracking and alerts – track and receive alerts on companies and funding events “Funding Recommendation Engine (FRE)” – analyzes funding history in order to recommend relevant funding sources [6] CB Insights, [Online], Available at: http://www.cbinsights.com [9 June 2012]
- 10. Market Intelligence Market Intelligence platforms generally utilize large sets of data in order to give insight and provide information on market dynamics and participants. Examples: • Startup Intelligence • Quid
- 11. Predictive Valuation Tools that allow entrepreneurs to submit their application for funding to investors. Examples: • YouNoodle
- 12. Case Study: Younoodle ―Younoodle is a place to discover and support the hottest early-stage companies and university innovation.‖ Social network – a social networking platform focused on university entrepreneurship “Startup Predictor” – algorithmic prediction estimating company's expected future value “Podium” – a business plan competition platform [7] YouNoodle, [Online], Available at: http://www.younoodle.com [9 June 2012]
- 13. Markets Markets offer a marketplace to buy and sell shares in private companies. Examples: • Sharespost • SecondMarket (formerly Restricted Stock Partners) • NASDAQ’s BX Venture Market
- 14. Case Study: SecondMarket ―SecondMarket helps buyers and sellers transact in illiquid, restricted and alternative investments‖ Centralized online platform – 30,000+ participants, thousands of transactions, representing billions of dollars in assets Streamlined process – specialists streamline process from listing to settlement [8] SecondMarket, [Online], Available at: http://www.secondmarket.com [9 June 2012]
- 15. Benchmarking Benchmarking tools allow companies to benchmark their performance against their competition and peer-group. Examples: • Startup Genome Compass • SVB Analytics Benchmarking • CB Insights Mosaic
- 16. Deal Platforms Deal Platforms offer a solution for investors to manage their deal flow of prospective investments. Examples: • Gust (formerly Angelsoft) • Sevanta Dealflow • CapLinked • EquityNet
- 17. Case Study: Gust ―Gust provides a flexible, secure platform that helps investors and entrepreneurs seamlessly coordinate on funding decisions.‖ Investor search engine – to find investment from over 600 angel groups Common application – to apply for funding directly to one or more groups Investor Relations Site – allows companies to present all the information investors need to know [9] Gust, [Online], Available at: http://www.gust.com [9 June 2012]
- 18. A note on notoriety
- 19. Alternative Finance Alternative Finance tools, covering Crowdfunding and Peer-to-peer offerings, which don’t necessarily fit our tradition venture capital investment process but offer insight into new innovations and developments in relation to early-stage investment. Examples: • Kickstarter • GrowVC • Crowdcube • Seedrs • Funding Circle • MarketInvoice
- 20. Case Study: Seedrs ―Seedrs makes investing in startups simple and rewarding.‖ Equity-based – allowing investment between £10 and £100,000 through the platform in return for equity Investor Access – access capital from a wide range of investors up to £100,000 FSA Authorised – approved by the Financial Services Authority (FSA) [10] Seedrs, [Online], Available at: http://www.seedrs.com [9 June 2012]
- 23. Why? It’s all fiction… There is a tool for every task, and a task for every tool. — Tywin Lannister (Game of Thrones) For every task, there's a perfect tool. — Jihl Nabaat (Final Fantasy XIII)