Date post: | 21-Oct-2014 |
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January 28January 28thth, 2005 , 2005
Steve MontoyaSteve MontoyaAzul Venture PartnersAzul Venture Partners
Vice-President, Hispanic-NetVice-President, Hispanic-Net
Venture Capital Venture Capital FundingFunding
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 22
OutlineOutline
FundingFunding Equity FinancingEquity Financing Venture CapitalVenture Capital VC StatisticsVC Statistics AdviceAdvice
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 33
Financing AlternativesFinancing Alternatives
BootstrapBootstrap Debt Debt Customers/Partnerships Customers/Partnerships EquityEquity
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 44
Equity SourcesEquity Sources
PersonalPersonal Angel InvestorsAngel Investors Partnerships/CorporationsPartnerships/Corporations GovernmentGovernment Private Capital FirmsPrivate Capital Firms Venture Capital FirmsVenture Capital Firms
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 55
Equity Investment ModelEquity Investment Model
Purchase % of Ownership Purchase % of Ownership Risk CapitalRisk Capital High Growth BusinessesHigh Growth Businesses Strong ManagementStrong Management Realize a Large ROIRealize a Large ROI 7 to 10x Within 5 Years7 to 10x Within 5 Years
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 66
Stages of Equity FinancingStages of Equity Financing
SeedSeed Start-up/First Start-up/First Second/Third Second/Third ExpansionExpansion MezzanineMezzanine BuyoutBuyout
Seed
Angel
Series A
Series B, C, …
Mezzanine
Early Stage
Late StageHot Tip;Customer Commit
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 77
Venture CapitalVenture Capital
DefinitionDefinition
An investment in a start-up business that is perceived to have excellent growth prospects but does not have access to capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 88
Venture CapitalVenture Capital
Why Use Venture Capital?Why Use Venture Capital? Require substantial capital to develop the Require substantial capital to develop the
product or service.product or service. Must expand quickly to hit the market window.Must expand quickly to hit the market window. Need the contacts to grow the businessNeed the contacts to grow the business
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 99
Venture CapitalVenture Capital
What do Venture Capitalist Have?What do Venture Capitalist Have? Industry ExpertiseIndustry Expertise Industry ContactsIndustry Contacts Vast Experience in Starting, Growing, Selling Vast Experience in Starting, Growing, Selling
CompaniesCompanies Enjoy Working With Young CompaniesEnjoy Working With Young Companies They Want to Make Money !!!They Want to Make Money !!!
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 1010
VC Investment PreferenceVC Investment Preference
Stage of FinancingStage of Financing Amount of CapitalAmount of Capital Geographic Geographic Industry SpecializationIndustry Specialization Management TeamManagement Team Strong ReferralsStrong Referrals
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 1111
Venture Capitalists Look AtVenture Capitalists Look At
VisionVision LeadershipLeadership Experienced TeamExperienced Team Target Market PotentialTarget Market Potential Business ModelBusiness Model Revenues, Revenues, RevenuesRevenues, Revenues, Revenues
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 1212
How to Approach VCs?How to Approach VCs?
Option 1 - ReferralOption 1 - Referral Option 2 - ReferralOption 2 - Referral Option 3 - ReferralOption 3 - Referral
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 1313
Venture CapitalVenture Capital
Your Must Have’sYour Must Have’s Clear DifferentiationClear Differentiation High Barriers to EntryHigh Barriers to Entry Market ExpertiseMarket Expertise Business ModelBusiness Model FinancialsFinancials Strong Management TeamStrong Management Team
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 1414
Investments—VInvestments—VC IndustryC Industry
0
20
40
60
80
100
120
1997 1999 2001 2003
Total $ (Bil)
Source: Moneytree Survey (PWC)
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 1515
33rdrd Qtr 2004 – National Qtr 2004 – National Top 6 Investments by IndustryTop 6 Investments by Industry SoftwareSoftware 22%22% Biomedical, HealthBiomedical, Health 19%19% Telecomm., NetworkingTelecomm., Networking 17%17% Medical Devices & EquipmentMedical Devices & Equipment 11%11% SemiconductorsSemiconductors 8%8% Media, EntertainmentMedia, Entertainment 3%3%
Source: Venture Economics (www.ventureeconomics.com)Source: Venture Economics (www.ventureeconomics.com)
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 1616
33rdrd Qtr 2004 – National Qtr 2004 – National Top 6 Investments by RegionTop 6 Investments by Region
Silicon ValleySilicon Valley 33%33% New YorkNew York 11%11% New EnglandNew England 10%10% SoutheastSoutheast 6%6% NorthwestNorthwest 5%5% TexasTexas 4%4%
Source: Venture Economics (www.ventureeconomics.com)
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 1717
33rdrd Qtr 2004 – National Qtr 2004 – National Investments by RoundsInvestments by Rounds
SeedSeed 0.4%0.4% Early StageEarly Stage 21%21% ExpansionExpansion 49%49% Later StageLater Stage 30%30%
Source: Venture Economics (www.ventureeconomics.com)
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 1818
Overview 2004Overview 2004
Investments have stopped decliningInvestments have stopped declining 2003 Investments – $18.8B 2003 Investments – $18.8B 2004 Investments – $20.8B2004 Investments – $20.8B
1900 Companies funded – remains flat1900 Companies funded – remains flat $8.5M Average investment – remains flat$8.5M Average investment – remains flat Most $ still going into existing portfoliosMost $ still going into existing portfolios
Source: Pricewaterhouse Coopers (www.pwcmoneytree.com)
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 1919
AdviceAdvice
Venture CapitalVenture Capital It’s a Marriage, Not a Date It’s a Marriage, Not a Date One Opportunity for a First ImpressionOne Opportunity for a First Impression Seek Value-Added PartnerSeek Value-Added Partner Ask QuestionsAsk Questions
FundingFunding Understand Your OptionsUnderstand Your Options Best Time to Raise $$$ is When You Don’t Need ItBest Time to Raise $$$ is When You Don’t Need It Control Your Expenses, Understand FinancialsControl Your Expenses, Understand Financials
Jan 28Jan 28thth, 2005, 2005 Azul Venture PartnersAzul Venture Partners 2020
Thank YouThank You