Diana M. Benedikt

di@advanceventures.com

“Demystifying” the VC Process

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A Little About Advance Ventures

Unique Blend of Experienced Professionals– Entrepreneurs– Investment Bankers– Venture Investors

Proven Track Record – Current team since 1999:

• Over $150 million of capital raised• Over $75 million in M&A transactions,

divestitures and strategic partnerships• Over $100 million in venture valuation increases• Served as board member or board advisors for 15+ companies

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A Little About Diana

Over the past ten years, Diana has consulted with more than 60 notable Internet, software and network equipment companies on strategic finance, marketing, business and infrastructure development issues.

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What Motivates VCs?

Building Value: Able to increase shareholder value

Traction: Proof that the company can accelerate business growth at a meaningful pace

Expectations: Ability to set and achieve critical milestones for investors.

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What an Investor Is Looking For

• Strategic Business Development and Planning

• Management, Directory and Advisory Board Composition

• Technology Infrastructure Development

• Strategic Partnerships and Business Development Alliances

• Strategic Positioning and Competitive Understanding

• Financial, Legal and Accounting Plans

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What to Expect During the Initial Pitch

Lets walk through a typical meeting

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• Large VC’s Vs. Small

• A and B lists

• Do your homework

Working With Differing VC Personalities

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How to Make the Most of the Meeting

• Check your timing regularly

• Stay calm

• Don’t be afraid to say “I Don’t Know”

• Assign someone to take notes

• Write down every question you get

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Why Tracking Investor Feedback Is Important

• Every venture meeting is a learning opportunity

• You will get the same questions over and over and over

• You need a standard set of answers to these standard questions

– “The Mantra”

• The VC personalities will begin to stratify into specific groups – be sure you sign up with someone from a group that works for you

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Due Diligence: A Sample Legal Due Diligence List

 

1. Corporate Records

2. Business Contracts

3. Legal/Financial

4. Property

5. Intellectual Property

6. Management/Employees

7. Litigation

8. Insurance

9. Legal-Regulations and Filings

10.Miscellaneous

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Business Contracts: A Deeper Sample

• a.                  Any partnership, joint venture, distributorship, franchise, licensing, management, research and development, or similar agreements or contracts to which the Company is a party.

• b.                  Any form engagement letters or other form agreements or contracts used in connection with the Company's business, including without limitation purchase orders, sales orders, quotation forms, and other standard forms.

• c.                  List of significant acquisitions or dispositions of the Company's assets, mergers, equity financings, and other material transactions completed within the last three years and all documentation relating thereto.

• d.                  Any other contract or agreement (or forms of related or similar contract) that: (i) involves payments by or to the Company of in excess of $1,000 in any one year or (ii) is significant to the operation of the Company's business.

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Term Sheets Basics

There are many more important terms than valuation alone– Liquidation Preferences

– Conversion

– Employee Stock Vesting

– Anti-Dilution

– Management Replacement

Remember: You will be in bed with these people for the next 3-7 years or more – make sure you can agree with them – you have to live with them!!

Diana M. Benedikt

di@advanceventures.com

“Demystifying” the VC Process