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VENTURE CAPITAL

Transcript: HISTORY Venture capital (VC) is financial capital provided to early-stage, high-potential, growth startup companies. The venture capital fund earns money by owning equity in the companies it invests in. J.H.Whitney & Company 1938 VENTURE CAPITAL Conclusion Gathering Funds Investing Profile with certain risk and rewards Goal- Make money more than invested Distributing back to investors Venture Capitalists In India Equity Participation High risk, High potential projects Availability for commercialization Share of Risk and Reward Continuous Involvement Invests in Small & Medium enterpises Management of organization 1933 Pioneer Pictures Venture Capital makes the optimum use of its business knowledge, expertise as well as experience to fund and help various companies nurture in order to produce a better-than-average return on the Venture Capitalist’s investment 2006 founded by ex-IBMer, Harshal J. Shah Previously known as Reliance Technology Ventures Ltd. Companies Invested : Yatra.com, Suvidhaa Infoserve, Stoke Inc, Pelago Inc, Sequans Communications, E-Band Communications, Seedfund and two MIT-startups, Dhama Innovations and Scalable Display Technologies. Ranked 30th in Red Herringtop 100 Global Venture Capital Firms THE END 1972 ARDC merged with Textron 1946 What is a Venture Capital? Modus Operandi Founded by Features 2005 $750 million Eastern Airlines Douglas Aircraft Notable Investors in Private Companies: The Vanderbilts The Whitneys The Rockfellars The Warbugs 1957 $70,000 in Digital Equipment Corporation 'Father of Venture Capitalism' 1st Half of 20th Century $355 million post IPO in 1968 Post World War II American Research And Development Corporation

Venture Capital

Transcript: What is Venture Capital?? Venture capital is "money provided by investors to start up firms and small businesses with perceived long-term growth... [and] a very important source of funding for start ups that do not have access to capital markets... [it's] high risk for the investor but ... potential for above-average returns." Venture Capital Funds The funding for venture capital is simple. It is basically money that is brought together by investors, such as banks or wealthy people. this money is invested to assist in business projects or financial assistance. Businesses that have venture capital are a higher risk for investors, and are usually not willing to pay the interest on loans or cannot afford to pay them off. Characteristics There are many different characteristics of venture capital. Four examples are; 1. Long-term commitment ~ Funds from venture capital must be committed for several years before they can be withdrawn. Investors who do not prefer liquidation will receive a premium to their funds, known as liquidity risk premium. If they can wait out the time horizon they will benefit from the premium. 2. Limited historical risk and return data and limited information ~ Venture capital funds are invested in new industries. There is little historical data and it is also difficult to estimate cash flows or the probability of success. 3. Entrepreneurial/management mismatches ~ Entrepreneurs may face difficulties when there is different of ownership and control. Entrepreneurs sometimes find it difficult to step up as the venture gains size. 4. Fund manager incentive mismatches ~Investors interested in well performing rather than large sized funds need to find managers who match their investment objectives. Advantages They can provide large sum of equity finance Able to bring wealth and expertise to your company Easier to secure future funding from other sources The business is not obligated to repay the money Disadvantages Lengthy and complex process, i.e needs detailed business plan, financial projections and etc. Legal and accounting fees will have to be paid in the deal negotiation stage Investors become part owners of your business - founder loss of independence or control Where To Get Venture Capital? Obtaining venture capital is different from raising debt or a loan from a lender. Venture capital is invested in exchange for an equity stake in the business. As a shareholder, the return is dependent on the growth and profitability of the business. This return is usually earned when the venture capitalist sells its shareholdings; this is when the business is sold to another owner. Venture capitalists select carefully what to invest in, a fund may invest in one in four hundred opportunities presented to it, looking for the extremely rare. Funds are most involved in ventures with exceptionally high growth potential, as only such opportunities are likely capable of providing the financial returns and successful exit event within the required time frame (typically 3–7 years). Venture capitalists typically assist at four stages in the company's development: •Idea generation; •Start-up; •Ramp up; and •Exit Funding Stages •Seed Money: Low level financing needed to prove a new idea, often provided by angel investors. •Crowd funding is also emerging as an option for seed funding. •Start-up: Early stage firms that need funding for expenses associated with marketing and product development •Growth (Series A round): Early sales and manufacturing funds •Second-Round: Working capital for early stage companies that are selling product, but not yet turning a profit •Expansion : Also called Mezzanine financing, this is expansion money for a newly profitable company •Exit of venture capitalist : Also called bridge financing, 4th round is intended to finance the "going public" process "Investopedia." Venture Capital. N.p.. Web. 5 Dec 2012. <http://www.investopedia.com/terms/v/venturecapital.asp "Investoword." Venture Capital. N.p.. Web. 5 Dec 2012. <http://www.investorwords.com/6721/venture_capital_fund.html>. Investment Opportunities . N.p.. Web. 5 Dec 2012. <http://www.msilimited.com/Downloads/FAQ.pdf>. Manish, . "Finance Train." Characteristics of Venture Capital Funding. N.p., 15 2012. Web. 5 Dec 2012. <http://financetrain.com/characteristics-of-venture-capital-funding/>. "Venture Capital." Wikipedia. N.p., 3 2012. Web. 5 Dec 2012. <http://en.wikipedia.org/wiki/Venture_capital> Works Cited Venture Capital Done by: Chelsea Olsheskie There are usually six stages of venture financing, which roughly correspond to these stages of a company's development.

Venture Capital

Transcript: Characteristics and mechanics of this Venture Capitalism Venture Capitalists are usually started by people who ave already become wealthy in business and have money available to risk on business investments along with the know how to invest in good companys.The investment in the business is expected to be long-term, generally three years or more, if the business becomes successful and profitable, the venture capitalist will “cash in” and move on to another opportunity. With the money they have earned from investing in the last company they were with they will usually make a bigger investment in the next company they choose to venture into in an effort to grow the company faster. Tanner Townsend BAF4M June 10, 2014 Mrs. Campbell Type of funding used in Venture Capital Unit 6 Activity 3 Pros and cons of venture capital To get venture capital, you first have to make a business pitch. Then you look around for venture capitalists who are willing to invest in your business. Venture capitalists may come in all forms. Five well known venture capitalists are on the TV show Dragon’s Den. Other venture capitalists include special investment firms, and private investors. How to obtain venture capital It is almost impossible for a new business to get a huge sum of money to start up by any other means, which is what makes venture capitalists very successful because there are always businesses looking for more money. On the other hand, the entrepreneur usually has to give up a pretty big portion of the business to get the money from the venture capitalist. This often means that if the business becomes successful, plenty of profit has to go towards the venture capitalist. Unsurprisingly, this is seen as an advantage to the venture capitalist. Additionally, giving up a large portion of the business could mean the entrepreneur loses control of the business, as the venture capitalist may own more than 50% of the business. This is a con to the entrepreneur. Another major disadvantage of venture capital is that the money invested by the venture capitalist can disappear if the business goes broke. This is a major disadvantage from the venture capitalist’s point-of-view, as venture capital itself is a very high risk investment. Losing your investment is never a good thing. Venture Capital Venture capital is illiquid, which says there is no easy or short-term path to pull out of the venture capital investment. Venture capital is a long-term investment, with possibility for huge profits or losses, you will either make it big or fall in this type of investment. Secondly, it is difficult to determine market values for the business and the investment. This goes hand-in-hand with the fact that there is limited historical risk and return data. There are also often mismatches between the investor and the entrepreneur. The investor is usually a wealthy person, and the investor usually got rich from good management skills. On the other hand, the entrepreneur may not be an expert in business, and this can cause a lot of problems after the business develops and gets bigger. Similarly, the entrepreneur may not know much about competitors in the same industry, which can cause additional issues. Works Cited http://en.wikipedia.org/wiki/Venture_capital http://www.investopedia.com/exam-guide/cfa-level-1/alternative-investments/venture-capital-investment-characteristics-npv-net-present-value.asp https://gedsb.elearningontario.ca/d2l/le/content/1427700/viewContent/38314412/View

Venture Capital

Transcript: Founding Team Fusar – A start-up sport helmet company Market Evaluation Distribution Channels what is a good vc? Founder: Team members Important Terms Co-founders: Competitive Advantage Technology involved High technologies – Android computer systems Business Model-1 Europe milestones Target Group Explore New Customers and Markets Distribution Channel Sales Expectation Ryan Shearman-CEO “ We are firmly committed to New Jersey. We were founded by a bunch of Jersey boys. “ Term Sheet Expand potential market size New technologies : 180-degree rear view camera Eyes-Up display innovation Black box recording system Dividend Provisions Thirteen Interns Clayton Patton-CFO Todd Rushing-Designer Ryan Snelson-Director suggestion for fusar company Intelligent helmet with computer system - digital rear view mirror - voice-activated - video recording Introducing the “GUARDIAN” --- the world's smartest motorcycle helmet EXIT ? OVER 4 MILLION HELMETS SOLD IN THE U.S. $900MM DOMESTIC MARKET 10 MILLION MOTORCYCLES IN USE IN THE U.S. 400 MILLION MOTORCYCLES IN USE GLOBALLY $2.6B MOTORCYCLE ACCESSORY MARK Venture Capital TIMING ? South America ExPECTED EXIT CHANNEL Areas need to improve Build partner Network MOTORCYCLE HELMET MARKET Anti Dilution Protection Timing and location Target groups - Motorcycle and cyclists enthusiasts Winning Hands in Venture Capital Areas need to improve - IPO - Acquisition 2014 New generation technology industry Patent for Street Smart™ System of Guardian smart helmet Introduction Price is higher ; target group is small Maintain customer Relationship - B2B, B2C Western Europe Indonesia Outstanding Products High-quality CEO and employees Think about company's future potential Assess the helmet market conditions Great growth strategies Fusar Technology - Video Target Customer Segments VALUATION OF THE COMPANY Question? Important Terms Consider different cultural backgrounds Areas need to improve In the U.S., riders who require to wear helmet ENT 6415 spring 2015 Distribution Channel High technology product Potential market Enhance the practical of the product Assure the marketing distribution channels Confirm the method of investment return Instructor: Lei Zhang Protect an investor's monetary investment First get a return of its dollar-for-dollar investment as a preference payment and Private Equity Guardian smart helmet is a new product Integrate a complete highly efficient system Full Ratchet Weighted Average Protect investors in the case of “down round” Business Model-2 Headquartered in Clifton, New Jersey in January 2013 Thank you! Areas need to improve Important Terms China India Vietnam Indonesia cONCLUSION Liquidation Provisions Maximize customer value Meng-Chieh Feng Hsiao-Jung Huang Yu-Chia Hsiao Jen-An Jou Jiangye Yi Kunal Jain A dividend is a payment or distribution by the corporation to its stockholders. Company is unable to pay all dividends, claims to preferred dividends take precedence over claims to dividends that are paid on common shares.

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