The Business of Venture Capital: Insights from Leading Practitioners on the Art of Raising a Fund, Deal Structuring, Value Creation, and Exit Strategies (Wiley Finance) PDF
Preview The Business of Venture Capital: Insights from Leading Practitioners on the Art of Raising a Fund, Deal Structuring, Value Creation, and Exit Strategies (Wiley Finance)
Contents Series Title Page Copyright Dedication Foreword Preface VENTURE CAPITAL IS A SMALL ASSET CLASS WITH A LOT OF PIZZAZZ ONLY A SMALL SUBSET ARE CONSISTENT PERFORMERS; THE REST IS NOISE ACCESS TO THE BEST-IN-CLASS IS LIMITED CAPITAL SUPPLY AND DEMAND THE CHALLENGES OF FUND PERFORMANCE MEASUREMENT COMPETITION FROM WITHIN IS HIGH A BUSINESS OF HOME RUNS DON'T BOTHER PRETENDING THAT THE BUSINESS IS SCALABLE FRONTIER CHALLENGES OF EMERGING MARKETS WHAT THIS BOOK COVERS, AND WHAT IT DRAWS ON Acknowledgments Part One: Raising the Venture Fund Chapter 1: The Universe of Limited Partners AN OVERVIEW OF ALTERNATIVE ASSETS SOURCES OF CAPITAL COMPARISON OF LIMITED PARTNERSHIPS SUMMARY Chapter 2: Fund Due Diligence SOURCING AND FIRST SCREENS FUND DUE DILIGENCE: HOW LPS EVALUATE VENTURE FIRMS EVALUATING THE FUND MANAGERS EMERGING MANAGERS: A PROMISE OF THE FUTURE THE QUEST FOR THE ELUSIVE TOP QUARTILE MANAGERS FUND INVESTMENT STRATEGY MARKET TIMING FUND SIZE AND PORTFOLIO CONSTRUCTION VIS-à-VIS FUND STRATEGY FIT WITHIN THE LP'S CURRENT PORTFOLIO WHY LPS TERMINATE EXISTING RELATIONSHIPS SUMMARY Chapter 3: Terms of Investment: The Limited Partnership Agreement SAMPLE TERMS IN A FUND'S PPM OTHER LP-GP TERMS WHAT MATTERS MOST SUMMARY Chapter 4: Fund Structure, Governance, and Operations KEY CONSTITUENTS OF THE GP TEAM FINDING SUITABLE PARTNERS FUND GOVERNANCE AND ECONOMICS GOVERNANCE OF MANAGEMENT SERVICES GP LLC SUMMARY Chapter 5: Getting to the First Close BUILD YOUR TARGET LIST OF INVESTORS FUND MARKETING MATERIALS PRESENTATION SLIDES MAKING THE PRESENTATION PITCH: DRINK YOUR OWN KOOL-AID ATTRACTING THE LEAD INVESTOR: YOUR “NUT” COMMUNICATE, CREATE, AND MAINTAIN MOMENTUM OFFERING SWEETENERS TO ATTRACT LPS: A DOUBLE- EDGED SWORD THE ROLE OF PLACEMENT AGENTS IN FUNDRAISING CAVEAT EMPTOR SUMMARY Part Two: The Investment Process Chapter 6: The Art of Sourcing Investment Opportunities THE BEST SOURCE: THE NETWORK THE FOUNTAINHEADS OF ACADEMIA AND RESEARCH CORPORATE RESEARCH VENTURE EVENTS AND TRADE CONFERENCES VENTURE FARMING ANGELS AND PLEDGE FUNDS BUSINESS PLAN COMPETITIONS COLD CALLING YOU WIN SOME, YOU MISS SOME SUMMARY Chapter 7: The Art of Conducting Due Diligence WHAT IS IMPORTANT: JOCKEY, HORSE, OR MARKETS? ATTRIBUTES OF THE JOCKEY SERIAL ENTREPRENEURS VERSUS FIRST-TIME ENTREPRENEURS WHAT ABOUT CHARISMA? MANAGEMENT TEAM DUE DILIGENCE: HOW TO ASSESS THE JOCKEY THE IMPORTANCE OF CONDUCTING BACKGROUND INVESTIGATIONS ASSESSING THE MARKET EVALUATING THE IDEA OR PRODUCT REVIEWING THE BUSINESS MODEL CONSIDERING THE FINANCIAL PROJECTIONS WEIGHING THE IMPORTANCE OF BUSINESS PLANS THE DUE DILIGENCE CHECKLIST SUMMARY Chapter 8: The Basics of Corporations, Ownership, and Control AUTHORIZED SHARES AND ISSUED SHARES SHAREHOLDER RIGHTS ROLE OF THE BOARD SUMMARY Chapter 9: Valuation Methods and Other Voodoo Arts THE DRIVERS OF VALUATION THE SIMPLIFIED FORM OF THE VC METHOD OF VALUATION COMPARABLE VALUATIONS OF SIMILAR INVESTMENTS (COMPS) DISCOUNTED CASH FLOW METHOD SUMMARY Chapter 10: Structuring Investment Transactions THE SPIRIT OF THE TERM SHEET NEGOTIATION STRESS POINTS MILESTONE-BASED FINANCING: RISK MITIGATION OR DISTRACTION STRUCTURING TERMS TO GENERATE TARGET RETURNS GOVERNANCE AND CONTROL: PROTECTING YOUR SECURITIES EXIT-RELATED PROVISIONS OTHER TERMS TOWARD A SIMPLER TERM SHEET FOR SMALLER INVESTMENTS SYNDICATING INVESTMENTS THE CLOSING PROCESS: AFTER THE TERM SHEET SUMMARY Chapter 11: Behind Every Successful CEO Stand a Few Good Board VCs THE NEED FOR DIRECTOR EDUCATION ROLES AND RESPONSIBILITIES OF A BOARD MEMBER BOARD COMPOSITION AND ORIENTATION BOARD PRACTICES GET THAT GAVEL: OVERVIEW OF ROBERT'S RULES OF ORDER VALUE CREATION: HOW TO SUPPORT YOUR PORTFOLIO COMPANY'S CEO THE CEO'S PERSPECTIVE ON VENTURE CAPITALIST VALUE ADD SETTING THE TONE THROUGH BOARD CULTURE IMPROVING THE BOARD GAME SUMMARY Chapter 12: Exit Strategies PRECONDITIONS FOR AN EXIT ACQUISITIONS: THE PRIMARY PATH TO AN EXIT THE SELL PROCESS WHEN AN ACQUIRER COMES KNOCKING THE BUY-SIDE ACQUISITION PROCESS DEAL KILLERS ACQUISITION CASE STUDY: MINT.COM GENERATES 5X CASH-ON-CASH RETURN IN TWO YEARS INITIAL PUBLIC OFFERING PRIVATE EXCHANGES: NECESSITY DRIVES LIQUIDITY SOLUTIONS SUMMARY Chapter 13: Summing Up APTITUDES AND ATTITUDES OF SUCCESSFUL PRACTITIONERS DRAWBACKS WHAT ABOUT LUCK? KEY TAKEAWAYS FOR PRACTITIONERS AS YOU GO FORWARD About the Companion Web Site Notes Suggested Reading BOOKS BLOGS WEB SITES VIDEOS ONLINE PUBLICATIONS AND DATA SOURCES JOURNALS About the Author Index Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding. The Wiley Finance series contains books written specifically for finance and investment professionals as well as sophisticated individual investors and their financial advisors. Book topics range from portfolio management to e- commerce, risk management, financial engineering, valuation and financial instrument analysis, as well as much more. For a list of available titles, visit our Web site at www.WileyFinance.com.
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