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Venture Capital

Transcript: 5. Always act like a committed, supportive team. Do not argue with or interrupt your teammates while they are speaking. 2. Dress professionally for the pitch. A good first impression is key! Marketing Flyer Printing: $30 Banner Printing: $40 Sample Chocolate: $15 Booth Rentals Valentines Day Craft Sale: $18 Wedding Convention: $65 Production Costs 785 Units x $1.08/unit = $847.80 Total Projected Costs: $1,015.80 1. Your product story 2. Your target market 3. Your competition 4. Your financials 1. Each member of the team should attend the meeting, and have some part in the pitch. Your product won't be right for everyone in the world. Tell the investor what type of person will want to buy your product? Key # 3 - Your Competition 4. Be honest with the venture capitalist. If you do not have a good answer to a question, don't make up an answer or lie. Engage the investor by starting with a story. Tell your investor about a real world problem that could be solved by using your product. Explain why your product is the best option for solving this dilemma. Final Tips for Your Business Team Chocolate Bar Wrapper Average Printing Total Total Expected Units Sold: 785 Recommended Price per Unit: $3.00 Total Expected Revenue: $2,355 Your investor will want to know why you need her money to launch your business and what exactly you plan to spend it on. Show the investor that you understand your competition and that you have a superior product. Directly compare your product to competitors' products and explain why your product will better address consumer needs. -$1.08 $3.00 $1.92 Everyone Loves a Good Story! $0.54 $0.22 $0.32 $1.08 3. Practice, practice, practice! Each member of the team should know the presentation inside and out. If a presenter is sick or unexpectedly delayed, there must be someone ready to step in and deliver. Final Tips for the Team! Breakeven Point: Total Costs $1,016 Profit Margin 1.92 Four Key Elements to a Successful Venture Capital Pitch What is Venture Capital? = 530 chocolate bars Men Women Fashionistas Foodies Athletes Tree Huggers Musicians Show Your Funding Needs and Expected Profits Show Your COGS Acquiring Customers From Your Target Market Venture Capital Funding Your Small Business Who Will Your Customers Be? Total Projected Revenue: $2,355 Total Projected Costs: - $1,016 Total Projected Profit: $1,339 Total COGS Unit Price Profit Margin Children Teenagers Parents Business People Elderly Thrifty Wealthy Venture Capital Your investor will want to see how you calculated your Cost of Goods Sold, and your profit margin. Show Your Expected Revenue Key # 2 - Your Target Market Beating the Competition! Key # 4 - Your Financials Money provided by investors to startup firms and small businesses with perceived long-term growth potential. - Investopedia In other words: If an investor believes your business will succeed, she will give you money (venture capital) to help start or grow your business. In return for this money, the investor usually gets partial ownership of the company. Once you have identified your target market, explain to the investor how you will reach your customers. Where will you sell your product? Where will you advertise your product? What will your hook be to bring in first time customers? Your investor will want to see how you calculated your expected revenue so use clear charts and data. Include pricing and sales expectations. Key # 1 - Your Product Story

Venture Capital

Transcript: 2. Venture Capitalist The one who funds/lends money to the starting business. When a business plan is written and submitted for financing considerations, most finance companies will agree to sign a non-disclosure agreement. This is not the case in most venture capital firms. Venture capital firms will nearly always refuse to sign a non-disclosure agreement due to the legal ramifications of doing so. This can put ideas from an entrepreneur at risk. Scott Sandell is approaching two decades at NEA, but the former Microsoft product manager hasn't lost his touch. He posted big wins with enterprise software firm Workday (IPO 2012) and Nicira (acquired by VMWare in 2012 for $1.26 billion). Reid Hoffman, the most connected man in Silicon Valley, has had a hand in creating its two most successful social networks. He is chairman and cofounder of LinkedIn, which now forms the bulk of his wealth, and backed Facebook, putting money into the Mark Zuckerberg and co. production alongside friend Mark Pincus in the company's startup days. 1. Know your audience 1. Strong Management Team Top 10 Venture Investors of 2014 Many venture capital firms have consultants on their staff that are well versed in specific markets. This can help a start up firm avoid many of the pitfalls that are often associated with start-up business ventures. Andreessen was a seed investor in Twitter and LinkedIn and a later-stage investor in Skype (acquired by Microsoft in 2011), Groupon (IPO 2011) and Zynga (IPO 2011). He now sits on the board at eBay, Hewlett-Packard, Facebook, Anki and Oculus VR, the maker of the groundbreaking virtual reality headset Oculus Rift. In many cases, a venture capital firm will want to add a member of their team to the start up company's management team. This is generally to ensure that the company can be successful, though this can also create internal problems. Objectives: Major Players Founders: Starting a new business is fraught with concerns about legal matters, payroll matters, and tax issues. It is not unusual for a venture capital firm to take an interest in providing these resources since they have a vested interest in the success of the company. Instagram's founding investor Steve Anderson backed the company long before it was known as the hip, filtered-photo sharing social network. 4. Management Consultations 1. Enables company expansion that would not be possible through bank loans or other methods. 1. Management Position Venture Capital Forbes It was the first institutional private equity investment firm that raised capital from sources other than wealthy families although it had several notable investment successes as well. Focus on highlighting the business, the market segment opportunity, and why you will succeed. This is typically a four-page-document (or less) that can be sent by e-mail and should not cover any confidential information. Top 2 - Marc Andreesen Early Facebook investor Peter Thiel has another huge winner with big-data consultancy Palantir Technologies, which he also cofounded. Significance: Top 4 - Accel Partners Top 2 - Kleiner Perkins Caufield & Byers 3. Value your business and set your negotiating boundaries Jim Breyer lost his perch atop the Midas List but still ranks highly thanks to his early 2005 investment in Facebook (for Accel and for himself), a bet that helped make him a billionaire. Disadvantages of Venture Capital 2. It provides valuable expertise, advice, and industry connections. 3. Decision Making 2. Good company in rapidly growing market segment Top 6 - Doug Leone What is Venture Capital ? 2. Equity Position History: Process in seeking Venture Capital 4. Business Plans Venture Capitalist's consideration when selecting proposals ARDC was founded by Georges Doriot with Ralph Flanders and Karl Compto. To encourage private sector investments in businesses run by soldiers who were returning from World War II. In terms of finding the best talent for start up firms, venture capital firms often provide consultants who are specialists in hiring. This can help a start up firm avoid the pitfalls of hiring the wrong people for their company. Top 8 - Steve Anderson Top 5 - Jim Breyer Jerwin Madrid 6. Additional Resources 3. Clear vision of the future History Defintion Major Players Process in seeking VC proposal Considerations in selecting proposals Advantages and Disadvantages of VC Forbe's Top 10 VC Investors of 2014 A type of funding in which money is provided by investors (venture capitalists) to start up firms and small businesses with perceived long-term growth potential. Paul Madera founded late-stage venture firm Meritech in 1999 and helped build it into one of the most successful firms in Silicon Valley. A sales guru from his experience at Sun Microsystems and Hewlett-Packard, Doug Leone is now the face of Sequoia Capital, managing the firm after co-leading it for years with partner Michael Moritz. Goal: Top 7 - Reid Hoffman He backed the 140-character microblogging service

VENTURE CAPITAL

Transcript: VENTURE CAPITAL 2.STARTUP CAPITAL: Early stage firms that need funding for expenses associated with marketing and product development. ECONOMIC ORIENTED CAPITAL FEATURES OF VENTURE CAPITAL VENTURE VENTURE CAPITAL IN INDIAN CONTEXT MEANING OF VENTURE CAPITAL HOW FUNDING WORKS-CUTTING THE PIE: Amount invested by the person to carry out the newly established business. Low levelfinancing needed to prove a new idea. Everyone we give it to becomes a co-owner of our company. We require another person. so, we start looking for a co-founder. "Piece of our company"-EQUITY. 2.START-UP: 4.EXPANSION CAPITAL: An undertaking involved risk To give uncle the 5%, we registered the company. We issued some common stock; gave him his 5% and set aside another 20% for our future investors-"OPTION POOL" VENTURE CAPITAL If we run out of money, our start up dies, so we look out for other option. ADVANTAGES OF VENTURE CAPITAL TYPES OF FUNDING 1.SPLITING THE PIE: venture capital is the financial support to young, rapidly growing companies/ individuals that have potential to develop into significant economic contributors by the business men to create a product or service which has a unique idea. The movement we started working OPTION POOL BECAUSE: Future investors will want an option pool that stock is safe from you and your co-founders from doing anything with it. Blume ventures is the live venture capital organisation in India located in Mumbai Industries:Mobile applications, Telecommunications equipment, data infrastructure, media, search and development etc. Startups funded:Carbon Clean Solution, EKI communications, Audio compass, Exotel, Printo. Karthik reddy and Sanjay nath are the founders of blume ventures in 2010. We have built our first version. we approach the venture capitalists. They contribute a little. At some point either of those three things will happen to us. 3.REGISTERING THE COMPANY: Dare to do or say something. 4.THE ANGEL ROUND: Modus operandi is to take money from new investors to create the appearance that the old investors are earning a return. CO-FOUNDER STAGE: IS DILUTION GOOD OR BAD? Equity The main goal of this stage is for the venture to go public so that investors can exit that venture with a profit commensurate with the risk that they have taken. ACCREDITED INVESTORS: $1 Million in the bank or make $2,00,000 anually- SOPHISTICATED INVESTORS. FAMILY AND FRIENDS: 5% of the company in exchange for $15,000 cash. It is a type of private equity investment, usually a minority investmet , in relatively mature companies that are looking for capital to expand, enter new markets or finance a significant acquisition without a change of control of the business. HEMA SHREE ADUPA SUBHASHREE REDDY ANEESHA.VN RACHANA AMANI PRATHYUSHA K.POOJITHA According to SEBI, Venture capital means a fund established in the form of a company or trust which raises money through issue of securities or loans and makes investment in accordance with its regulations. 3.EARLY STAGE CAPITAL: 6.FOURTH ROUND: It is GOOD because my pie is getting bigger with each investment. It is also BAD because we are loosing control of our company. LOSS OF EQUITY STAKE ENTERPRENEUR ORIENTED 4.SECOND ROUND: 5.third round: 5.Last stage capital: It refers to the money required to start a new business Here we realise that we have to start looking for our next funding sources. With venture capital you can sometimes obtain large quantities of money and this money can help business with big start up expenses or business that we want to grow very quickly. MODUS OPERANDI Initially our pie is really small. We offer equit in exchange of work Early sales and manufacturing funds. VENTURE CAPITAL ROUND Working capital for early stage companies that are selling produvt, but not yet turning a profit. The initial capital used to start a business. HOW START UP FUNDING WORKS? DISADVANTAGES OF VENTURE CAPITAL Well managerial skills Well knowledgeable Sophisticated investors-comes forward to take risk. Decision making ability Analyzing skills Technology back ground-scientist/researchers. Also called bridge financing, it is intended the "going public process." Icubators, Accelators, and Excubators: These places often povide cash, working space and advisors. Provided at earlier stage. Finance to smaller and less mature companies. Finance to new and rapidly growing companies High risk To bridge the gap between capital and knowledge. IDEA STAGE: 1.SEEDING CAPITAL: Financing provided by a venture capital firm to a company after it has recieved its initial financing. TEAM ZENITH STAGES IN VENTURE CAPITAL Term used to describe an individual or groups habitual way of operating. (or) DELAYS IN FUNDING Outside investment-bigger pie Also called Mezzanine financing, this is expansion money for a newly profitable company. What about me? co-founder and the uncle? how much are we left with? all our stakes will be diluted. 1.SEED MONEY: TEAM ZENITH Basic idea behind equity-spliting the pie.

Venture Capital

Transcript: - Ontario Venture Capital Fund is a good example: government managed fund that provides money to firms that invest in strong start up companies - Large venture capital firms invest in high potential start up companies - Dragon's Den is an example of a method of finding financing through venture capital: panel of venture capitalists/entrepreneurs are pitched potential start up ideas http://www.thebusinessangel.org/difference-businessangel-venturecapital.html http://www.entrepreneurship.org/emed/pros-and-cons-of-venture-and-angel-investing.aspx http://www.entrepreneur.com/article/242702 http://ovcf.com/ http://mashable.com/2013/05/06/startup-venture-capital/ Venture Capital in Business What is 'venture capital'? Works Cited Ashley Cadoret Difference Between Angel Investors & Venture Capitalists 1. Unique idea with high barriers to entry 2. Develop a compelling value proposition 3. Demonstrate market traction 4. Assemble the perfect team Best Tips on How to get Venture Capitalists Interested in your Startup - Andreessen Horowitz - $1,020,000,000 invested in USA (consumer products, software) - Khosla Ventures - $809,000,000 invested in China/USA (software) - SV Angel - $736,000,000 invested in Silicon Valley, NYC, San Francisco (commercial services, software) - Accel Partners - $721,000,000 invested in Europe & USA (communications, networking, healthcare technology, media) - NEA - $690,000,000 invested in Asia, Brazil, USA (energy services, IT services, pharmaceuticals, biotechnology, software) - Venture capitalists' investments are usually larger - Angel investors are not as heavily involved with management, while venture capitalists can take on management roles - Angel investors are individuals with their own successful business endeavors and have contacts for start up companies - Both invest to get high rates of return Venture Capital: Capital invested in a project in which there is a substantial element of risk, typically in a new or expanding business. These new or expanding businesses are thought of to have great potential by investors, and they see a positive long term future for the companies. Definition Pros and Cons of Venture Capital - Large investments made by firms: typically between $500,000 and $5,000,000 - Provide great resources: consultants, management, etc. - Want the best for the companies to ensure success and high rates of return on investment - Contacts and connections through venture capitalists can be made, potentially more investments in good start up companies Cons End Venture Capital Top Venture Capital Firms (2014) Examples: - Stress the important aspects of your business, such as customer service - Have a business that will "fill a void in the market." - Perfect team = best first impression - Companies may not produce a big return on investment, VC firms may expect large returns on their investments - Timeline may be extensive before an official investment is made - Many individuals and companies will make the investment for partial ownership in the company, may ask for controlling majority (51% of the company) Where to get Venture Capital - Typically wealthy investors are involved primarily in the transaction - The return the investors get depends on the success on the business - High risk associated with investing money into a new business; with internal and external threats potentially harming the company and losing money - Many Venture Capital Firms invest money, which becomes equity they own in the company - Angel investors are similar to venture capitalists; although angel investors are only one individual, while venture capitalists can be large companies PROS "Venture capitalists are looking to fund projects that are unique and can't be easily replicated."

VENTURE CAPITAL

Transcript: Features It is long term risk capital to finance high technology projects which involve risk but at the same time has strong potential for growth Origin in India Venture capitalist joins the entrepreneur as a co promoter in projects and share the risks and rewards of the enterprise. There is a continuous involvement in business after making an investment by investor. CONCEPT In narrow sense ,it refers to , investment in new & tried enterprises that are lacking a stable record of growth In broader sense , it refers to the commitment of capital as shareholding for the formulation and setting up of small firms specialising in new ideas or new technologies Definition VENTURE CAPITAL Features After reaching the full potential the venture capitalist disinvests his holdings . Investment is usually made in small and medium scale enterprises. VENTURE CAPITAL Features In 1973 , R.S.Bhatt committee recommended formation of Rs 100 crores venture capital fund. The SEVENTH FIVE YEAR PLAN emphasised the need for developing a system of funding venture cpital. The research and development Cess Act was enacted in may 1986 which introduced a cess of 5% on all payments made for purchase of technology from abroad It is defined as “ a financing institution which joins an entrepreneur as a co promoter in a project and shares the risks and rewards of the enterprise” Meaning In the form of an equity participation. Investment is made only in high risk but high growth potential projects . It is available only for commercialisation of new ideas or new technologies and not for enterprises which are engaged in trading , booking , financial services , agency , research and development TATA IRON and STEELS and EMPRESS MILLS were able to raise equity capital from the investing public. Later TATAs also intiated a managing agency house ,named INVESTMENT CORPORATION INDIA IN 1937 which by acting as venture capitalist, successfully promoted hi-tech enterprises such as CEAT TYRES NATIONAL RAYON etc

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