• Aspen Ventures' investment criteria
• Trends in venture investing
• The financing process
• Business plans and company presentation

• Differentiated product/technology
• Huge market
• Strong competitive position
• Experienced management
• Multiple exit opportunities

Aspen Ventures' Investment/Criteria - Specific

• Information Technology
• Software and data communications
• Business-to-business (no content or consumer channels)
• Early Stage (no stage too early)
• Western U.S.
• Total capital requirement < $15 million

VC Industry: Current Trends

• Fund raising - all time high
• IPO market - very strong in most sectors
• Emergence of megafunds
• Increasing number of new funds
• What is means to entrepreneurs

Changes in the V.C. Industry

• Consolidation/emergence of megafunds
• Need to do larger deals
• New generation of funds
• Seed/early stage
• Increased specialization
• What it means to Entrepreneurs

Trends in Venture Investing

• Global trends in software
• Consumer/content
• Internet/intranet

Global Trends in Software
• Simplification (or at least centralization) of complexity
• Plug and play/standards
• Reduce effort to implement and manage
• Extracting value from information
• Leveraging information through distribution
• Managing information overload

Consumer/Content
• Huge and growing markets
• Many challenges
• "hits" business
• crowded distribution channels
• strength of existing market leaders

Internet/Intranet

• Moving from the sidelines to the mainstream
• Scalability
• Manageability
• Security
• Reliability

 

Internet/Intranet

• Need a reasonable revenue (and profitability) model
• Cannot be a me-too product
• Sustainable differentiation a must

The Financing Process
• Introduction/review of plan
• First meeting with fund representative
• Prepared presentation
• Get to know one another
• Initial due diligence
• Follow-on meetings
• In-depth due diligence
• Deal negotiation
• Partners' meeting/final decision

Closing the Deal
• Term sheet provides summary of key items
• Size of deal
• Pricing
• Protective provisions
• Governance
• Final legal documentation follows at closing

Business Plans and Company Presentations
• Be logical
• Be concise: get to the point early!
• High level summary with supporting details
• Describe capital requirements but don't propose deal pricing or terms

Business Plans and Company Presentations
• Specifically and credibly describe:
• The huge (or potentially huge)market
• The existing and potential competition
• Your edge over the competition
• The compelling reason why many customers will demand your product/service
• The management team's strength (and holes)

Tips on Dealing with the VC Industry

• Preparation
• What to expect (and not to expect)
• Do's and don'ts

 

Preparation

• Do your homework!
• Fund/partner experience and preferences
• Understand the market space
• Size and augmentation
• Competition
• Distribution
• Develop a business plan with projections
• Appropriate level of detail
• Assumptions clearly explained

Preparation (continued)
• Consider alternative sources of financing (especially at seed stage)
• Evaluate your personal commitment
• Network, network, network!

What to Expect from a VC
• Reasonable timely responses
• Candor about interest level
• No, never
• Not now
• Now
• Reasons for lack of interest

What Not to Expect from a VC

• Significant time early
• In-depth technical knowledge specific to your deal
• NDA, confidentiality agreements
• Quick decisions (plan accordingly)

 

Do's and Don'ts