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TRANSCRIPT
Venture Capital The Business of Innovation
Kellogg‐Recanati International Executive MBATel Aviv, 12 March 2017 (SOSA)
Session 6
Izhar Shay
VC 101
Venture Capital
Returns
Investment
Year 1 Year 7
Shareholders’ Value Creation
Venture Capital Funding - CAP Table
Fund Management Timeline
Year 3 Year 6Year 1 Year 2 Year 4 Year 5 Year 7 Year 8 Year 9 Year 10
Follow On Investments
1st Investments Wind Down
Limited Partners
Great VC (GVC) GP L.P.
(Cayman Partnership) “GP”
Management Agreement
Great VC Management (M.C.) Inc.
(Delaware Company)
Portfolio Investments
Great VC (GVC) (Cayman), L.P.
(Cayman Partnership)
GP
LP
Manager130%
Manager215%
LP
LP Manager320%
Management Agreement
Manager420%
LP
Venture Capital Org Structure: Capital Flows
Carry
Great VC (GVC) (Cayman), L.P.
(Cayman Partnership)Great VC (GVC) (Cayman), L.P.
(Cayman Partnership)
Capital Calls
Distributions
Investmen
ts
Limited Partners
Manager610%
Manager55%LP
Venture Capital Funding - Deal Mechanics
Timeline:• Initial contact with investors• First Pitch to investors• Additional meetings and discussions• Business Due Diligence• Negotiations of Terms• Term Sheet• Exclusivity and No Shop Period• Final Contracts Negotiations• Legal / Financial Due Diligence• Legal Docs: SPA, IRA, AOA, DS, Legal Opinion• Signing and Closing
Day 0
Day 30 / 90 / 180
The life of a Venture Capitalist
Main Activities:• Meeting with entrepreneurs and potential investment targets• Managing Deal Flow• Making investments• Managing investments• Supporting portfolio companies• Board meetings• Managing fund• Raising capital for own fund• Limited partners relationships
Managing the Deal Flow
Every year, a Venture Capitalist will:
• Receive thousands of emails• Review ~1000• Meet ~250 teams• Deep dive into ~25 opportunities• Conduct Due Diligence on ~5
deals• Sign ~3 Term Sheets• Invest in ~2 companies
Investment Focus
Focus criteria:
• Stage of company (early, late, Mezzanine …)• Market Sectors (Healthcare, Cyber, Semiconductors…) • Geography (US, China, India, Israel…)
Example ‐ Early Stage Technology companies in Israel, with the following sector focus:
Investment Focus
Focus criteria:
• Stage of company (early, late, Mezzanine …)• Market Sectors (Healthcare, Cyber, Semiconductors…) • Geography (US, China, India, Israel…)
Example ‐ Healthcare companies in US, China, India, Israel (through affiliate funds):
Investment Focus
Focus criteria:
• Stage of company (early, late, Mezzanine …)• Market Sectors (Healthcare, Cyber, Semiconductors…) • Geography (US, China, India, Israel…)
Example ‐ Cleantech companies in US and China, focus on Energy and Environmental projects:
Investment Focus
Focus criteria:
• Stage of company (early, late, Mezzanine …)• Market Sectors (Healthcare, Cyber, Semiconductors…) • Geography (US, China, India, Israel…)
Example ‐ US based Consumer products and services
Investment Focus
Focus criteria:
• Stage of company (early, late, Mezzanine …)• Market Sectors (Healthcare, Cyber, Semiconductors…) • Geography (US, China, India, Israel…)
Example ‐ US / Hong Kong based Fin‐Tech products and services
VC 101
Venture Capital
Returns
Investment
Year 1 Year 7
Thank You!
January 2016
Focus helps!