venture financing class at duke 01 26 2012
DESCRIPTION
I presented these slides at Duke Law Professor Bill Brown's Structuring Venture Capital and Private Equity Transactions Class on January 26, 2012.TRANSCRIPT
![Page 1: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/1.jpg)
CONFIDENTIAL
Startup & Venture Lessons
Duke Law School
Jay Jamison
Partner, BlueRun Ventures
[email protected] | @jay_jamison | jayjamison.com
![Page 2: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/2.jpg)
CONFIDENTIAL
Agenda
Introduction
Early Stage Valuation Methods
Exiting
VC: Venture or Vulture Capital?
![Page 3: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/3.jpg)
CONFIDENTIAL 3
Introduction
• Duke, BA, English, 1992• Emory Law School, 1995-96• MBA, Wharton,1998• Microsoft, 1998-2007• Founder, Moonshoot, 2007-10• Partner, BlueRun Ventures, 2010-Present
![Page 4: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/4.jpg)
CONFIDENTIAL 4
About BlueRun Ventures
• Over $1.0B under management• Investing out of Fund IV ($240M)• Focus: Mobile & consumer internet• Seed & Series A
![Page 5: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/5.jpg)
CONFIDENTIAL 5
What is my job?
• Unearth great dealsFind
• Convince NewCo to take our $Close
• Help NewCo reach full potentialAssist
![Page 6: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/6.jpg)
CONFIDENTIAL 6
Early Stage Valuations
![Page 7: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/7.jpg)
CONFIDENTIAL
It’s a Golden Age for Entrepreneurs….Cheaper than ever to start a company.
Better resources• Incubators: Y-Combinator, 500Startups, … • Resources: Startup Digest, Lean Startup, TC, VB
Technology is easier to learn, access, &c.• Codecademy• RoR• AWS Driving valuations up
![Page 8: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/8.jpg)
CONFIDENTIAL
… And Investors Understand This.
I see lots of great companies that are:• Capital efficient• High velocity in coding and releasing• Product in market with traction• Clear customer insight on what works• Battle-tested founding teams• Clear, concrete ask on what $$$ they need
![Page 9: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/9.jpg)
CONFIDENTIAL
Implication
While we’re in a Golden Age for Entrepreneurs, it is raising the bar
for most very early stage companies…
You need to prove more on very little money, because so many other
start-ups are already doing so.
![Page 10: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/10.jpg)
CONFIDENTIAL 10
Early Stage Valuations
Plain vanilla Series A• VC: 20-30%• Option pool: 10-20%• Founders & Angels keep rest
Items we watch• Founder incentive must be very high• Maintaining a clean cap table is important
Founders & Angels
60%ESOP15%
VC25%
![Page 11: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/11.jpg)
CONFIDENTIAL 11
Exiting
![Page 12: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/12.jpg)
CONFIDENTIAL 12
Exits
Stuff beyond your control• The market• The corporate politics on the other side
Stuff in your control• Which founding teams you back• Staying focused on execution until deal is signed• Attracting alternative bidders
![Page 13: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/13.jpg)
CONFIDENTIAL 13
VC: Venture or Vulture?
![Page 14: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/14.jpg)
CONFIDENTIAL 14
Venture
• Unique and amazing form of capital
• Helped scale companies that have had massive impact
• And will continue to have an important role
![Page 15: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/15.jpg)
CONFIDENTIAL 15
But, VC is not…
Summer Camp
![Page 16: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/16.jpg)
CONFIDENTIAL 16
Our AspirationAdapted from Glenn Kelman, CEO Redfin, describing working w/ Pierre Lamond at his Plumtree.
Then Pierre Lamond, the Sequoia partner on the deal, began working out of our office, acting as the virtual CEO. Pierre made a point of being there the day one of his other companies went public. We looked at a news photo of all the smiling people, who seemed to be living in a gated community, on a planet I would never visit. Then Pierre said “that company was once even more screwed up than you are.”
![Page 17: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/17.jpg)
CONFIDENTIAL 17
Recommended actions
Investigate and reference check any investor• Past successes• Past failures
Assess the friendliness of terms• This tells you a lot about alignment w/ founders
![Page 18: Venture financing class at duke 01 26 2012](https://reader036.vdocument.in/reader036/viewer/2022070301/54646425af79594f398b674c/html5/thumbnails/18.jpg)
CONFIDENTIAL 18
Thanks & Q&A