Raising Venture Capital Boston College

1. Raising Venture CapitalBoston College • June 13, 2005 • Angelo Santinelli • General Partner • North Bridge Venture Partners

2. Introduction – Goals For This Class • Who should raise venture capital? • What should you know about the process? • Where to raise equity capital? • When to raise capital? • How to go about raising capital? • Why do you need venture capital? North Bridge Venture Partners 2005

3. Common Misconceptions • It’s too early to raise venture capital • The VCs will steal my idea • I will get ripped off financially • Only Angel investors do seed capital • Bootstrap is the safest way to keep control North Bridge Venture Partners 2005

4. Great People… With a Great Idea… Going after a Potentially Large Market Focus Commitment Credible Operating Plan What VCs Look For? First Principles: __________________________ Then: __________ North Bridge Venture Partners 2005

5. Great People • Plan and execute • Adapt to change and remain committed • Lead by example • Surround themselves with “A” Players and Domain Experts • Have a track record of success North Bridge Venture Partners 2005

6. Desire Emotional stamina Physical stamina Empathy Decisiveness Anticipation Timing Competitiveness Self-Confidence Accountability Responsibility Credibility Tenacity Dependability Stewardship Common Traits of Effective Leaders North Bridge Venture Partners 2005

7. Clear unity of purpose Clear roles Clear and demanding performance goals High level of interdependence Individuals carry their own weight Self-conscious about group’s operations Informal, comfortable atmosphere Open discussion with full participation Freedom of expression of ideas Disagreement is good Decisions made at point of general agreement Criticism is frequent, frank, but respectful and without personal attacks Mutual trust and respect for each members skills Effective at solving problems Team management is shared, Team leadership a necessity Characteristics of Effective Teams North Bridge Venture Partners 2005

8. When to Approach a VC? • When you’ve done enough work to convince yourself of the opportunity . . . before you’ve made mistakes that devalue your team or corrupt your capital structure • Get the Basics • Clear articulation of the problem and market opportunity • Easily understood value proposition • Informed opinion of market evolution/risks • Clear articulation of a credible plan • Sufficient customer validation North Bridge Venture Partners 2005

9. Who To Call? • Do Your Homework! • Determine who invests in seed/early stage • Determine who invests in your type of business • Know something about the players and the portfolio • Reputation and style • Know what to expect • Typical terms • Process • Develop and execute a strategy • Targets, timing, approach North Bridge Venture Partners 2005

10. A Foot In The Door . . . And Beyond • Get an introduction • Respected entrepreneur • Limited partner • Be selective • It’s all about the people • 60 second personal pitch • Where have you been? • What did you accomplish? • Why should anyone listen to your opinion? North Bridge Venture Partners 2005

11. Ask For The Order • Get specific feedback • Understand next steps • Efficient “no” better than a prolonged “maybe” North Bridge Venture Partners 2005

12. Checklist √ √ • Have you gained buy-in from your family? • Is the team committed, flexible and each expert in his/her position? • Do you have the right expectations? • Have you validated the idea with several potential customers? • Do you have an informed opinion of the opportunity, the players, and how the market might evolve? √ √ √ √ North Bridge Venture Partners 2005

13. Checklist (cont.) √ √ • Do you have a tight, believable presentation? • Do you have a believable operating plan? • Have you done your homework on the VC and obtained an introduction? • Have you done a shakedown cruise? √ √ √ North Bridge Venture Partners 2005

14. Raising Venture CapitalBoston College • June 13, 2005 • Angelo Santinelli • General Partner • North Bridge Venture Partners