loyola guest speaking

Tim Flannery - @f1anneryJanuary 2014

Loyola Guest Speaking

2

The Agenda• Background• What is Venture Capital?• Creating a Startup• Finding Investments• Evaluating Companies• How it relates to Loyola-Kiva

project• Loyola Venture Community• Q&A / Heckling

3



4

Background

• Loyola Undergrad (2008)

• JPMorgan (2008 – 2013)

• Co-founded Pilot Mountain Ventures (2013 – Now)

• NYC since 2008 via Allentown, PA• I’m not a writer, I just blog a lot: www.startupharbor.me

http://www.startupharbor.me/

5



6

Venture Capital is Startup Rocket Fuel

• Startups need fast growth

• VC funds invest money for growth

• VCs biggest value add: NOT MONEY

• VCs bring introductions

• “Exit” is the end goal (acquisition / IPO)

FYI: don’t raise money unless you have a compelling reason

7

Here’s your history lesson

• VC popped up in 1960’s/70’s in Silicon Valley

• Firms like KPCB, Sequoia, NEA, Draper Fisher established

• Invest in companies like Fairchild, Genetech, Apple

• Industry explodes over coming decades

• Something Ventured Excellent documentary on Netflix

8

Venture Capital Industry Today

• Internet bubble & shrinking industry

• SV leads, NYC and Boston follow

• New investing models

• Startups happen everywhere

FYI… Want more? Read blogs of Fred Wilson / Mark Suster / Paul Graham

9

What about private equity?Private Equity Venture Capital

Invests in more established companies

Invests in high growth startups

Mix of investing styles (i.e. leveraged buyout, debt, go-private)

Mainly cash-for-stock

Focus on optimizing cash flows Focus on growth

Investment review based on financials

Financials are meaningless until later stage

Makes money via dividend, income, IPO, sale, and other

Rarely makes money except for IPO and acquisitions

Funds and deals can be HUGE ($30B plus)

Funds vary, but investments max out in $100s of millions

Expect to make money on each investment

Portfolio performance follows “power law”

Funds have LLC/LP/GP legal structure

Funds have LLC/LP/GP legal structure

10

So what’s Pilot Mountain Ventures?

• “Seed stage” venture capital• NYC / NC based• Activist investors• 80/20 :: technology / med device• Previous investments include

companies like The Ladders

11

What I think is interesting

• Hardware• 3D Printing• Mobile• Consumer FinTech• Sharing Economy

12



13

What is a startup?

• Small business doesn’t mean startup

• Startups = Growth• Doesn’t require

technology, funding, exit

• VC’s interested in $1 billion ideas

14

Pop Culture Startup Life

15

A better definition

16

What’s it like founding a company?• Startup becomes only

priority• Vacation days? Haha.• Maxed out credit cards• Convince employees

you’re crushing it• Attempt to remain

convinced company will stay afloat

• THEN convince investors for money!

• Don’t forget about shipping product

• Build, test, release, review, repeat

17

Why would anyone do that?

• Do something you love

• Autonomy• Rewarding• Off chance at hitting it

big

18

Easier than ever

• Costs are at all-time lows (cloud, etc.)• Easy access to resources– blogs, helpful community

• Supporting infrastructure in place

19



20

Seeing Deals: The At-Bat’s Theory

Chase Utley hitting a home runDavid Wright striking out

21

Deal Flow is the name of the game• Inbound traffic • Outbound activity• Hosting community events• Participate in networking events• Leverage online resources (i.e.

AngelList)

FYI…VCs look at 1000’s of deals per year

22



23

From pitch to deal• Startup/investor introduction• Identify opportunity size • Track startup progress• Perform due diligence• Negotiate & close deal• Portfolio company management

24

Contacting investors: Improving your oddsContact Effectiveness Order• Warm Introduction• Cold email / phone call• Snail mail…seriously.

Intro Content• Quick sentences. Get to the point.• Be forwardable• Attach pitch deck or executive

summary• Provide call to action

Some other do’s & don’ts…

25

Measuring the opportunity• Startup = Growth (remember?)• Total market size? Nope.• Total addressable market size!• Industry analysis• Appropriate need for money• Most importantly… TEAM

26

Investing in Lines not Dots

Courtesy of Mark Suster…

• Track company performance• Watch team manage problems• Larger sample size to predict future results

27

Due Diligence Believe in opportunity size Believe in team Believe in industry direction

Time to execute due diligence• Fancy word for deep dive research• If all goes well, investment should

follow• Reference check employees• Call customers• Contact business development

partners• Contact industry experts• Review financials & cap table• Formality varies

28

Do the deal. Finally.• Negotiate financing terms• Cut the check

29

Manage the investment• Investors get involved at different

levels• Board seat / observer• Recruiting• Business partnerships• Getting your hands dirty• Continued fundraising

• Review performance with management

• Report back on performance to fund investors

• Things are great until they aren’t• Champagne wishes & caviar dreams

(hopefully)

30



31

Kiva vs. VCDifferences• Investment goals• Social good vs. profit• Portfolio performance• Some evaluation criteria

Similarities• Belief in people & idea

32



33

Loyola Venture Community

• Student-Faculty-Alumni community• Focused on tech/entrepreneurship• Connecting people with resources

(like getting you a job)• In-person monthly meetings in NYC• Group listserv hosting online

discussion• Private directory of members

Contact me for more details…

34


project• Q&A / Heckling

Tim Flannery - @f1anneryJanuary 2014

Thank You

loyola guest speaking

Technology