A useful overview of how VC's screen deals and how to get to a term sheet.

2. Venture Capital “ I was seldom able to see an opportunity until it had ceased to be one” Mark Twain C L E A R S T O N E V E N T U R E P A R T N E R S

4. Venture Capital Industry Overview Screening Venture Opportunities The Venture Capital Process The Business Plan Valuation Exit Getting in Touch C L E A R S T O N E V E N T U R E P A R T N E R S

9. Stage/Characteristic Stage Investment Characteristics Early $1MM - $3MM - Most of team in place - Limited revenues - Not profitable - Primary risk:execution Expansion $3MM - $10MM - Meaningful revenues - Achieving profitability - Growing customer base - Primary risk: competition C L E A R S T O N E V E N T U R E P A R T N E R S

10. Stage/Characteristic Stage Investment Characteristics Mezzanine/ $10MM - $20MM - Significant revenues Bridge - Profitable - Industry player - IPO in 6-12 months - Risk much lower C L E A R S T O N E V E N T U R E P A R T N E R S

14. Venture Capital Industry Overview Screening Venture Opportunities The Venture Capital Process The Business Plan Valuation Exit Getting in Touch C L E A R S T O N E V E N T U R E P A R T N E R S

21. Venture Capital Industry Overview Screening Venture Opportunities The Venture Capital Process The Business Plan Valuation Exit Getting in Touch C L E A R S T O N E V E N T U R E P A R T N E R S

23. Business Plan “ Madam, enclosed please find the novel you commissioned. It is in two volumes. If I had had more time I could have written it in one.” Voltaire C L E A R S T O N E V E N T U R E P A R T N E R S

36. Venture Capital Industry Overview Screening Venture Opportunities The Venture Capital Process The Business Plan Valuation Exit Getting in Touch C L E A R S T O N E V E N T U R E P A R T N E R S

44. Venture Capital Industry Overview Screening Venture Opportunities The Venture Capital Process The Business Plan Valuation Exit Getting in Touch C L E A R S T O N E V E N T U R E P A R T N E R S

45. Valuation Stage Criteria Methodology Range Seed - Mgmt. track record Comparables, $400K to $1.5MM - Market size/growth Whats the “going - Competition rate” in the region - Investment to date Start-up - Market size/growth Comparables $750K to $2.0MM - Working prototype? - Team complete? C L E A R S T O N E V E N T U R E P A R T N E R S

46. Valuation Stage Criteria Methodology Range Early - Market size/growth Comparables $1.5 to $5.0MM - Revenue run rate - Gross margin % - Performance to date Expansion - Revenue run rate - 1X sales Varies - Profitability ratios - EBIT multiple - Performance vs. plan C L E A R S T O N E V E N T U R E P A R T N E R S

47. Valuation Stage Criteria Methodology Range Mezzanine/ - Market share/size Multiples of Varies Bridge - IPO environment proxy companies - Performance Relative to plan C L E A R S T O N E V E N T U R E P A R T N E R S

48. Venture Capital Industry Overview Screening Venture Opportunities The Venture Capital Process The Business Plan Valuation Exit Getting in Touch C L E A R S T O N E V E N T U R E P A R T N E R S

52. Odds of Getting a Deal Done? Hurdle Likelihood of Occurring 5. Complete the due diligence - 7 in 10 process satisfactorily 6. Get a term sheet agreed to - 8 in 10 in principle 7. Find co-investors - if necessary - 9.9 in 10 8. Get legal documentation done - 9 in 10 9. Fund the company EQUATES TO 1% C L E A R S T O N E V E N T U R E P A R T N E R S

59. Venture Capital Industry Overview Screening Venture Opportunities The Venture Capital Process The Business Plan Valuation Exit Getting in Touch C L E A R S T O N E V E N T U R E P A R T N E R S

62. Venture Capital C L E A R S T O N E V E N T U R E P A R T N E R S