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9:00 - 9:45
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Roadmap to Venture Investing
Paul Leboffe and Mark White, Partners, White & Lee LLP.
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9:45 - 10:15
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Current Trends in the Venture Industry
John Gabbert, Director of Research, Venture One
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— 15 Minute Break —
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10:30 - 11:30
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Panel of Mainstream Venture Capital Firms
Scott Sandell, New Enterprise Associates
Michel Wendell, Nexit Ventures
Peter Buhl, Nokia Venture Partners
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11:30 - 12:15
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Inside the Head of the Venture Capital
Susan Mason, Onset Ventures
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— 30 Minute Lunch Break —
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12:45 - 1:15
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Alternative Funding Sources
Philip Korn, Silicon Valley Bank
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1:15 - 2:00
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Panel of Major Strategic Investors
James Yu, Hewlett-Packard
Brian Bonazzoli, Compaq
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— Paul Leboffe and Mark White, Partners, White & Lee LLP
Paul and Mark discussed legal issues and Valley trends as they relate to startup and emerging growth companies in the context of financing their ventures in the current economy. Mark provided an overview of key business issues, with a particular emphasis on a discussion of the changes occurring in private capital markets between last year, this year, and current Valley trends in the venture community, including a discussion of valuations. Paul explained key rights, such as redemption, liquidation preferences, anti-dilution provisions, and how the scope and use of these rights has changed in financing deals over the last year.
Available for download:
Private Equity Fundings - Paul Leboffe
Financing Trends - Mark Cameron White
— John Gabbert, Director of Research, Venture One
John addressed the following issues: (a) general trends in 2000 and 2001 regarding how the venture community is changing in light of the retrenchment taking place, (b) the profile of companies that are being funded (e.g, market sectors) and how has that changed in the past year, (c) the range of funds being raised in the 1st, 2nd and 3rd round – and the valuation parameters, (d) the technology sectors that seem to attract the most money and whether this will change during the coming year, (e) the direction of future venture money in 2001, with particular emphasis on two issues: (i) to what extent are venture firms investing their funds only in existing porfolio companies versus new ventures, and (ii) if and when idle fund dollars, if any, will be put to work in new companies, and (g) to what extent, if any, companies are looking to off-shore (e.g., Europe and Asia) funding sources, due to the reluctance of American VCs to fund new ventures, and (g) the good sources of information on what funds invest in what type of companies, and the stage of maturity at what valuations. John described how Venture One works, what reports entrepreuners can purchase, how these reports are structured, and what do they cost. What other organizations provide customized reports.
Available for download:
Fundraising - John Gabbert
— Scott Sandell, New Enterprise Associates
— Michel Wendell, Nexit Ventures
— Peter Buhl, Nokia Venture Partners
The panel was comprised of first-tier venture capital firms that actively fund early stage technology startups in the Silicon Valley. The three panelists briefly spoke about their firms to identify recent investments their firms have made that exemplify what firms look for in technology startups, current financing trends or developments they see in the Valley, and how their firms are reacting, or positioned, relative to these trends. Each panelist distinguished his own firm by briefly addressing the number of seed financings it expected to complete in 2001, the average size 1st-round investment, and how a young company can get an introduction to the firm and be noticed. You may choose to use presentation materials, if you wish.
Avaiable for download:
Nexit Ventures - Michel Wendell
Nokia Venture Partners - Peter Buhl
— Susan Mason, Onset Ventures
Susan conducted a mock negotiation between a venture capitalist and an entrepreneur. Susan covered two scenarios. The first scenario was "First Impressions": What it is like for a VC to conduct its first interview with an entrepreneur who is giving a pitch? What does the VC look for in a pitch? In the individual delivering the pitch? Does the VC categorize the business or the individual into "buckets?" Are there key buzz words that a VC likes or does not like? Is there double-speak that a VC must tranlate? If so, what are the translations? The second scenario was "The Negotiation": how a VC approaches discussions regarding valuation, and how term sheets are negotiated. With regard to valuations: what are the key drivers for valuation – product, market, management team, competition from other VCs for a "hot" deal? What are the benchmarks for valuation that VCs find credible and not-so-credible (e.g., growth of Amazon as an indicator of how an e-commerce company will fare). What, if any terms, are deal-breakers for VCs (e.g., liquidation preference, anti-dilution protection, board rights, participation rights?). Susan also addressed the following questions: What are the signals that a VC sends if they are really interested in a deal versus when they are not interested in a deal? How are those signals communicated to entrepreneurs?
— Philip Korn, Silicon Valley Bank
Philip focused on how SVB assists early stage companies in identifying, finding or managing funds. Some specific issues Philip covered were: (a) how SVB is set up (e.g., the different departments) and how an entrepreneur knows where to go for various services, (b) whether QuickStart is still a viable alternative for companies today, (c) how SVB values assets of companies when determining how much to lend, (d) when personal guarantees are required, (e) ways to secure debt without a personal guaranty, (f) forms of collateral SVB accepts, particularly IP collateral (e.g., domain names), (g) the types of investment banking services SVB offers, (h) when a startup should engage SVB (i) the importance of the "banker" as opposed to the "bank", (j) how can SVB can assist with cash management, once a round of financing is closed, (k) how SVB charges for their services, and whether SVB accepts stock in lieu of services, (l) how SVB can assist startup companies with international growth and expansion opportunities, (m) how a startup can use factoring of receivables and off-balance sheet financing to get additional funds for growth, (n) the types of leasing products that are available (e.g., vendor financing and direct leasing), (o) whether SVB invests directly in startups.
Available for download:
Debt Financing - Philip Korn
— James Yu, Hewlett-Packard
— Brian Bonazzoli, Compaq
James and Brian are development officers from major strategic investors. James and Brian generally compared the investment needs of corporate partners to those of strictly financial investors. James and Brian covered the following issues: (a) what are your strategic needs, what kind of companies you are investing in, and what percentage equity interest do you require in your early-stage investments, (b) how large is your fund, how is it managed, and what is the process and timeline you follow in making investments, (c) what are the customary commercial/strategic relationships that you put in place with companies in which you invest, (d) how you feel about financial investors, whether you are comfortable setting valuation or whether you want financial investors to set valuation, (e) any special voting rights, Board representation, or other control requirements that you have in their portfolio companies, and (f) what technologies you find particularly interesting. They also addressed how companies that are interested in both a strategic and equity relationship can introduce the idea without losing credibility and the proper channels for doing this. The speakers also commented on which competitive companies each wished to see as investors or partners in early-stage companies in which funds are considered for a strategic investment.
Available for download:
Corporate Venture Capital - Brian Bonazzoli
