Short presentation on "Software Tools for Venture Capital Process" discussing some of the innovations and developments in tools that support the venture capital process. Presented at ISBE 2012 conference in Dublin.

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]

22. E thomas.stone@ucl.ac.uk
T @tstonez

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)