VENTURE CAPITAL

ANDREW FARQUHARSON

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• Actively investing money in young companies to catalyze their growth• Examples of VC-backed ventures:

What Is Venture Capital?

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Entrepreneurship: Hallucination or Vision?

If you can’t convince others to share your vision and to start allocating resources toward it, you’re wasting your time.

Probably.

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• No one builds a company alone • Innovation comes from the collision of ideas• It’s hard to win in business. A team of A players will be about 10X as

productive as a team of B players• Top performers have fun together• Marketing and engineering need to integrate

People Matter

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Operon: sold for $150M• Made-to-order custom DNA synthesis• No VC Funding – raised $200K from angels

Not every company needs Venture Capital

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What VCs Look For

•Opportunities that offer large returns

• Markets that are larger than $500M

•Credible founders

•Obvious commitment to the venture

•Competitive advantages

•Exit horizon makes sense

•Right corporate structure

•No surprises in diligence

•Good chemistry with entrepreneurs

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Entrepreneurs• Mindset: see no problems –

only opportunities• Unrealistic value expectations• Short-term view of financing• Do not prioritize investor returns• Want to maintain control• View the business personally

Investors• Mindset: focused on IRR and

multiples of capital• View management, clinical &

financing as major risks • Considers ownership important

for all parties• Control by outside board• Want early exits

Founders and VCs

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1. Valuation expectations

2. No skin in the game

3. Wrong team/advisors

4. Defensive, poor listeners

5. Overhype

6. Claim no competition

7. Paranoid about confidentiality

8. Fall in love with technology

9. See a milestone “just around the corner”

10. Sell the product, not the investment

Entrepreneur’s rose-colored glasses

Spectacles worn by a serial investor

Top Fundraising Mistakes By Founders

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Why Did I Enter Venture Capital?

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Today, billions sufferone or more chronic diseases

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Pharmacologic Therapy for Epilepsy

Treats underlying pathology without sedation

Senses and prevents seizure progression

Delivers drug over 5 years

Current drug market: $16B/year

Market3M patients suffer from Epilepsy in the US

Assuming $30,000/device and 100,000 patients/year:US market is about $2B

Similar market sizes exist outside of the US

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THANK YOU

ANDREW FARQUHARSON