Transcript: How do Investors Get THEIR Money? Business idea Long goals Short goals Market research Marketing plan Management Legal structure Financing plan . . . and lots more. The Basics of Venture Capital Who Typically Invests? Venture Capital Equation What Investors Look At by: Kolton L., Jacy C., Marsha M., and Bradley D. Venture Capital equation Business success Accountant What is Venture Capital? Focuses on young companies. Invests equity vs. debit. Higher risk. Higher returns. Longer investment horizon. Capital invested into a new business or expanding business. Wealthy business men and woman. Someone with money just to spend. Someone who may believe in the business. 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
Transcript: Venture Capital Project Especially before partying, when you have much better and more interesting to take care of easy way to communicate with our target customers .... ... But not the only one Oral Communication 1) Answer a real need 4) Adjustments Quick survey one week before Advertisment during the event Return on investment: +640% Félix Courtine Clément Guermonprez Pierre Marcolin Satisfied customers Let's wash your dishes for $1 ! Asking for other similar events Washing the dishes has always been something boring, even disgusting Before partying, everybody has change Dishwashing before partying 3) Competition Conclusion Thank you for your attention ! 2) Communication $37! Distinctive Strategy: GET DRESSED & PUT SOME MUSIC
Transcript: Venture Capital Justyna Fuchs, Tom Verbon What is Venture Capital? What is Venture Capital? * Phases Development Phase Start-up phase Survival phase Rapid-growth phase * Types of investors Venture capital firms Venture capitalists Business Angeles Characteristics Characteristics Long-term oriented Increase in value of investment is return for the investor Investors owns an equity share and has all the rights associated Advantages and disadvantages Advantages and disadvantages Start-up capital vs loss of ownership High profit margins vs high risks Help of experts vs too high required ROI Differences between privaty equity VC vs. private equity Investment phases Investment phases Idea and business plan Introductory meeting Due diligence Term sheet and funding Finance & support Exit Venture Capital in Europe Examples
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.
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
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.
Transcript: http://www.investopedia.com/terms/v/venturecapital.asp http://financetrain.com/characteristics-of-venture-capital-funding/ Work Cited Capital Markets Definition | Investopedia. (2003). Retrieved August 22, 2016, from http: www.investopedia.com/terms/c/capitalmarkets.asp Characteristics of Venture Capital Funding - Finance Train. (2012). Retrieved August 22, 2016, from http://financetrain.com/characteristics-of-venture-capital-funding/ How to Finance Your Business Growth. (n.d.). Retrieved August 22, 2016, from http://www.thehartford.com/business-playbook/in-depth/venture-capital Venture Capital Definition | Investopedia. (2003). Retrieved August 22, 2016, from http://www.investopedia.com/terms/v/venturecapital.asp What are some of the disadvantages to taking venture capital? | Investopedia. (2015). Retrieved August 22, 2016, from http://www.investopedia.com/ask/answers/011915/what-are-some-disadvantages-taking-venture-capital.asp If I were to start my own business, as my source of business funding I would go for venture capital. This is because my startup company would be in the hands of investors who have already succeeded in the business world, and who can advise me with the best decisions for the future of my company based on their experiences. But beyond the financial and advisory support, the connections they could provide my company and I with is what I find most beneficial, because networking and getting your name and ideas out there, especially through the medium of successful investors, is the best way to make a business successful. Government grants are hard to earn, because firstly, there is a lot of paperwork and time-costing effort involved in applying for a grant, but also there is a lot of competition in applying for a grant, since there are tons of startup companies out there in the market. Government loans are not a great option for several reasons, some including that they only tend to give a certain amount of money to you based on your financial standing and success rates/predictions (meaning you might not get the amount of money you initially wanted), and that you would not have access to the money you have repaid back to the bank (so the only way of getting more money is applying for more loans). Leasing is not any better because it is considered an expense to your company (and long term leases considered debts), and because of the debt to your company, it may be difficult to apply for loans in the future. Thus, venture capital is the best option in my opinion. Work Cited Bat - 4M How It Works Venture Capital Obtaining Venture Capital Loss of Control: since VC capital investors who tend to be aggressive, put a lot at stake with large amounts of capital investments, they will want to have a strong say in the company, leading to a loss of control Minority Ownership Status: VC firms whom could have more than 50% stake in a startup company, may lead to loss of management control and essentially, loss of ownership Delays in Funding: some VC firms may refuse to provide funding until after certain milestones are met Iiliquidity: venture capital investors will usually have to wait until the company can be bought out or issue their initial public offering (sell their first public share/stock), making it difficult for investors to get out of the investment if things do not go well Long-term commitment: investors will have to wait about 3-5 years for a start-up to turn into a viable business Lack of competitor knowledge: start-up entrepreneurs, due to lack of experience, may generally have limited knowledge of their competitors and competitive market valuations Vintage cycles: in poor/stressed market conditions, even good firms may have a tough time finding a VC investor Extensive operation analysis and advice: good VC investors must be knowledgeable about both operating and financial analysis, and skilled enough to advise on both matters What is Venture Capital Characteristics For most startup businesses, venture capital is provided by HNWIs (high net worth individuals), who are also known as "angel investors", or venture capital firms. They generally look to invest in businesses that are well-managed, have a detailed business plan, and are growth-oriented. Since most angel investors are entrepreneurs that have succeeded in the business world themselves, they also tend to invest in businesses involved in same/similar industries that they are familiar with. 1. submit a business plan to venture capital firm or angel investor 2. If interested, the investor will perform due diligence (thorough examination of business model, products, operating history, management, etc.) 3. Investor proposes investment in return of company equity 4. With an active role in the company, the investor makes sure milestones are met before the next round of capital 5. Investor exits company after certain period of time (generally 4-6 years after initial investment) through merger, acquisition, or initial public offering
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