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Approaching a VC Fund Points for discussion July 2007 Erez Ofer Greylock partners

Approaching a VC Fund Points for discussion July 2007 Erez Ofer Greylock partners. Agenda. What is a Venture Capital Fund Stages and Sizes of Investments Approaching an Investor The process Financing structures Valuations The BOD and working with Investors. What is a Venture Capital Fund.

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Approaching a VC Fund Points for discussion July 2007 Erez Ofer Greylock partners

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  1. Approaching a VC FundPoints for discussionJuly 2007Erez OferGreylock partners

  2. Agenda • What is a Venture Capital Fund • Stages and Sizes of Investments • Approaching an Investor • The process • Financing structures • Valuations • The BOD and working with Investors

  3. What is a Venture Capital Fund • A Partnership • Investing over a time frame • With GP’s and LP’s • Usually with a specific focus

  4. Stages and Sizes of Investments • Pre-Seed • Seed • A-Rounds • In the middle ….. • Expansion rounds • Venture Lending

  5. Approaching an Investor • The Team • The Executive Summery • The Investor Presentation • The Business Plan • Depending on stage: • Customer References • Partner References • Advisors and people in the Eco-system

  6. What does an investor look at? • Team • Quality of Team • Do they know the space? • Market • How unique is the offering • Product or Feature? • Technology / Barrier / IP • Market Eco-system • Competition • Large players • Exit environment • Expected Valuation

  7. The Process • The larger the investment the longer it will take • Getting to know each other • Investor presentation • Biz Plan etc. • Back and Forth • Some initial checks • DD Plan • Market research • Customer and Partner references • Experts opinion • Personal references (If established firm – HR aspects) • Company plans, financials, contracts • Agreeing on company direction. Are we thinking alike ? • Who are other investors ? • Exit scenarios • Back and forth • Term Sheet

  8. Financing structures • Equity • Bridge Loans

  9. Valuations • Early stage – • Very subjective, Perceived value • What assets does the company have ? • Team, IP, Barrier, have they done it before? Competition on deal? • Later stage • Multiple on Revenue • Pipeline, strategic deals in the works • All of the above in Early stage • Deal structure (Number of investors, current holdings, etc.) could have an effect on valuation

  10. The BOD - working with Investors • Choose carefully, be comfortable with the partners you choose. Not just the fund, but also the people involved. • It goes both ways. • It’s like a ‘marriage’. There will be good times and hard times. Make sure you think about the hard times.

  11. What to look for in a fund • People – Experience, approach, chemistry • Resources – Recruiting, Customer connections, large company connections, etc. • Fund Brand – A top tier brand will help with recruiting, getting first customers, future financing. • Can it support the company throughout its life ? • Will the BOD member be the first you go to - sun or rain ? • Will they be there in hard times?

  12. Thank You eofer@greylock.com

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