The Business of Venture Capital. Mahendra Ramsinghani
TERM SHEETS SIMPLE SAMPLE SUMMARY TERM SHEET NOTES 27 Buy Low, Sell High VALUATION METHODS AND OTHER VOODOO ARTS THE DRIVERS OF VALUATION COMPARABLE VALUATIONS OF SIMILAR INVESTMENTS (COMPS) DISCOUNTED CASH FLOW METHOD LIQUIDATION PREFERENCE ANTIDILUTION PROTECTIONS GOVERNANCE AND CONTROL: PROTECTING YOUR SECURITIES EXIT-RELATED PROVISIONS OTHER IMPORTANT TERMS SYNDICATING INVESTMENTS MILESTONE-BASED FINANCING: RISK MITIGATION OR DISTRACTION NOTES 28 The Closing Process
11 Part Four: The Art of Value Creation 29 Serving on Boards OVERVIEW LEGAL REQUIREMENTS OF BOARD SERVICE SELF-EDUCATION: PREPARING FOR YOUR BOARD ROLE ROLES AND RESPONSIBILITIES OF A BOARD MEMBER NOTES 30 Board Culture and Orientation TOWARD A BETTER BOARD CULTURE ON-BOARDING CHECKLIST NOTES 31 Let Me Know How I Can Be Helpful: Value Creation GOOD GOVERNANCE AS THE FIRST STEP TOWARD VALUE CREATION THE CEO'S PERSPECTIVE ON VENTURE CAPITALIST VALUE ADD NOTES 32 Challenges in the Boardroom CEO TRANSITIONS BEST PRACTICES IN MANAGING CEO TRANSITIONS PERFORMANCE CHALLENGES ALIGNMENT ON EXIT BOARD EVALUATION NOTES
12 Part Five: Exits: Liquidity Events and Champagne 33 Exit Strategies EXIT OPTIONS PRECONDITIONS FOR AN EXIT NOTES 34 Acquisitions THE PRIMARY PATH TO AN EXIT PUTTING THE COMPANY UP FOR SALE DEAL KILLERS NOTES 35 Initial Public Offering THE IPO PROCESS: THE LONG AND WINDING ROAD STEPS TO AN IPO IPO UNDERPRICING AND DUTCH AUCTIONS POST IPO: SHOULD VCs STAY ENGAGED? NOTES 36 Secondary Sales NOTES
13 Index
List of Tables
1 Chapter 1Exhibit 1.4 The Advantages of Shorter Holding Periods.Exhibit 1.5 Fund Portfolio Returns.
2 Chapter 4Exhibit 4.1 Entry Points in Venture Capital.
3 Chapter 8Exhibit 8.3 Alternative Investments.Exhibit 8.4 Yale Endowment's Asset Allocation.Exhibit 8.5 Sovereign Wealth Funds — A Growing Opportunity for Venture.Exhibit 8.8 Comparing the LP Universe.
4 Chapter 9Exhibit 9.2 Fund of Funds Strategies: A Comparison.
5 Chapter 10Exhibit 10.2 Fund Selection Criteria.
6 Chapter 11Exhibit 11.1 Drucker's Seven Sources for Innovative Opportunity.Exhibit 11.2 Variations on a Theme: How Strategy Differs in Venture Firms.Exhibit 11.5 Switch Ventures.Exhibit 11.6 Growth of Base 10 Ventures.
7 Chapter 12Exhibit 12.2 Sample Format: Assessing Alignment of Interest.Exhibit 12.3 Complementary Skills in a Venture Firm.
8 Chapter 13Exhibit 13.1 Factors Determining Fund Size.Exhibit 13.2 Portfolio Assumptions.Exhibit 13.3 Ownership Assumptions.Exhibit 13.4 Portfolio Construction.Exhibit 13.5 Exit Values.Exhibit 13.6 Exit Range Assumptions and Distribution Waterfall.Exhibit 13.7 Fund Size and Gains.
9 Chapter 14Exhibit 14.1 Sample Format: Individual Performance.Exhibit 14.2 Do VC Funds Outperform Public Markets?Exhibit 14.3 Sample Fund Performance: Stand-Alone Format.Exhibit 14.4 Sample Fund Performance: Benchmarked Format.Exhibit 14.5 Performance Analysis: Slicing the Data a Hundred Different Ways. ...Exhibit 14.6 Sample Fund Performance: Benchmarked Format.Exhibit 14.7 Measuring What Matters.Exhibit 14.8 The Best versus the Worst: IRR Performance Variance i...Exhibit