I saw this presentation that Ben Holmes of Index Ventures gave at the FOWA Conference in London “Everything you need to know about Venture Capital“…
He put his slides on slideshare so take a look. (BTW, Slideshare rocks)
Here is an entrepreneur’s take on the slideshow:
Think of this as liner notes if an entrepreneur was giving this….
Slide 5 – “How the VC makes money” – This is great. It gives an entrepreneur an understanding on two levels. First, the VC has people they answer to, the Limited Partners, and must make money for them. Second, should an entrepreneur think that their investment should be part of the portfolio, know that they are more likely to be a part of the failure list and that they need to have a big play to help the VC make their numbers based on the failure rate.
Slide 6 – “Stages of Investment” – Many entrepreneur’s ask about what type of investment is right. This is usually when they are going out for the first time and looking at angel vs. series A.
Slide 7 – “What a good VC will add” – This is what so many claim yet so few deliver. This should be a list of requirements and a test against any VC firm. He actually included case studies so they put their money where their mouth is – literally.
Slide 10 – “Typical Deal Terms” – Every entrepreneur that is looking for VC should make no mistake that they are in this to make money. They may like you but they like how much money the company could make even better. This means putting certain terms in place to ensure their investment.
Slide 13 – “When NOT to raise VC” – If you take one slide away this is the one. Everyone looks at VC as the way to get to the finish line but most of the time a company is not a candidate. If you are any of these three or close to it, rethink your plan or find other ways to finance.
Slide 18 – “Sharing relevant information” – You can see from this slide that it is important to have documents but not the 100 page business plan in the beginning. In the end it will be about them checking on you, those interested in buying from you and the who and how of execution.
In the end this presentation has a bottom line – This is a partnership and there must be alignment on all sides in order to make it work. It is about relationships, communication and execution. If any one of those three are missing you will fail.