A primer on the fundamentals of venture capital. All ideas are primarily to make students understand the concept of VC

1. An Introduction to Venture Capital

2. Agenda for the next 2 hours Introductions What is Venture Capital Why VC? Types of Funding Process What VC’s Look for Exit strategy Discussions

3. Edventures1 A Learning and Development organisation Experimentors Over 100 years of combined experience

4. Facilitator – Pradeep Yuvaraj Goal for the session Rules for the session About

5. Where do I get money from? To start new business Grow a business Put a new factory Revive a dying company ?

6. Possible sources: Non-equity Personal funds Personal debt Grants and awards Customer pre-sales Venture leasing Receivables financing Business loans In-kind contributions Joint ventures or

7. Sources: Equity Angels The “4Fs” – Friends, Family Father in law and Fools Corporate direct investment

8. or Hero of the day: Venture Capital

9. What is Venture Capital Type of Equity investment Above average or High returns Story of the man with the idea and the man with the money

10. In other words … It is the business of employing capital ‘patiently’ to ‘maximizereturns’ while managing risks in a relatively high-risk venture Versus Simply ‘minimising risks’ for a surer fixed return

11. Why take risk?

12. Why is it better than all other sources Spirit of partnership Risk - Reward sharing Active participation and value addition Long term perspective Investment and not assistance Returns linked to performance Expects high returns

13. Who become VC’s? Individuals Corporations Private firms

14. How a VC company runs? General partners (GPs) manage the fund Capital comes from institutional “limited partners” (LPs) Singularly focused: ROI GPs get an annual fee Once LPs get investment back, GPs get a portion of the profits LPs get the remaining profits

15. Venture Capital Economics GP LP 3 2% LP 1 LP 4 LP 2 Management $100 VC Fund IX, L.P. $10 $10 PortfolioCompany 1 PortfolioCompany 10 $10 $10 PortfolioCompany 2 PortfolioCompany 9 $10 $10 PortfolioCompany 3 PortfolioCompany 8 $10 $10 $10 $10 PortfolioCompany 4 PortfolioCompany 7 PortfolioCompany 5 PortfolioCompany 6

16. Venture Capital Economics GP LP 3 LP 1 LP 4 LP 2 $20 $180 VC Fund IX, L.P. PortfolioCompany 1 PortfolioCompany 10 $100 $35 PortfolioCompany 2 PortfolioCompany 9 PortfolioCompany 8 PortfolioCompany 3 $40 $25 PortfolioCompany 4 PortfolioCompany 7 PortfolioCompany 5 PortfolioCompany 6

17. When will VC’s Fund? Seed Capital Only ideas No product Small amounts Capital used Market research Sample Product Set-up costs

18. Startup Capital Product development completed Sample is already available Initial marketing has been done <2 years

19. Early stage 2-3 years in business Management in place Sales on rise VC could increase sales Improve productivity Improve efficiency

20. Expansion capital Company is established Next level of growth Enter new markets Specialized VC’s

21. Late stage/Mezzanine Impressive sales and revenues Broken even/profitable Second level of management Capacity increase Ramp up marketing

22. Other types Restructuring Bridge capital Turnaround Acquisition Merger

23. The process

24. The process….

25. Fundraising time line Investor Presentations FinalDocumentation 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Business Plan Submissions Term Sheet Negotiations Funding Budget 4-5 months, or more

26. After funding Monitoring Board seat Financial Performance After 3-7 years: Exit IPO Sale back M&A Sale to strategic investors

27. Fundraising Lessons Network to gains access to VCs Don’t get hung-up on confidentiality Be persistent Be humble yet confident, and always courteous and professional Embrace and learn from rejection Be greedy in the long-run (any % of something > 100% of nothing!)

29. Closing thoughts… Focus on the long-run What goes around comes around Friendships last longer than jobs Don’t let greed blind the objective Make the most of the experience Listen & learn Failure or rejection is what you make of it

30. Entrepreneurship… Entrepreneurship is a lifestyle choice Balance your risk & return Seize opportunities Life’s short, have fun

31. Discussions…

33. www.edventures1.com