Vcapital Confidential1 Startup Workshop Presentation to

Vcapital Confidential2 Agenda Secrets of Getting Funding (Top 7 steps) The 4M’s of the Executive Summary

Vcapital Confidential3 5,000 + Venture Capital Providers Private Management Firms Corporate Venture Groups Financial Institutions Venture Groups Family Funds Capital Managed, Raised and Invested has skyrocketed Venture Wire tells it all..millions daily “Best Time To Be A VC & An Entrepreneur!”

Vcapital Confidential4 Secrets of Getting Financed Steps 1 – 7 “The Essentials”

Vcapital Confidential5 Secrets of Getting Financed 1 “Venture firms invest in the Jockey – not the horse”

Vcapital Confidential6 Secrets of Getting Financed 2 Don’t be paranoid

Vcapital Confidential7 Secrets of Getting Financed 3 Less is more

Vcapital Confidential8 Secrets of Getting Financed 4 Acknowledge your Enemies

Vcapital Confidential9 Secrets of Getting Financed 5 Look for Value, not Valuation

Vcapital Confidential10 Secrets of Getting Financed 6 Due diligence is not something only the venture firms do

Vcapital Confidential11 Secrets of Getting Financed 7 Listen to the experts

Vcapital Confidential12 The 4 “M”s – What VCs really want to see Management (Founders, Senior Managers, Directors & Investors) Magic (Products/Services, Competitive Advantages, Operational Plan) Market (Large Markets, Target Customers, Marketing/Sales Plan) Money (Business Model, Financials, “The Deal”, “The Exit”)

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Vcapital Confidential14 Venture Capital Has Changed The World

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Vcapital Confidential16 VCapital Key Customers High quality Entrepreneurs All rounds of financing, across all industries and all geographies Venture Capitalists, corporate investors and organized groups of angel investors Invest in variety of stages, industries and geographies Must have deal funding history Best of Breed Professional Service Providers History serving the entrepreneurial market Quality reputation in discipline of services provided

Vcapital Confidential17 Value Proposition - Entrepreneurs Decrease front end of capital raising process from an average of 4-6 months to 4-6 weeks. Increases chances of getting funded (currently by 8 times over the industry average) by providing expert advice, personalized service and targeted referrals to pre-qualified network of investors. Ensures entrepreneurs maintain control over who sees their opportunity.

Vcapital Confidential18 The “Right Touch” Approach Not a listing service Deals are screened at various points Entrepreneur is in control Deals are referred based on investment preferences Not a hands-off approach Full services available Not only a tech company Venture and finance professionals leveraging cutting edge Internet and communications technology

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Vcapital Confidential20 Valuation How much to raise? What percent of Company to give up? = Depends on the value (valuation) of the company

Vcapital Confidential21 Elements affecting Valuation Total Growth Opportunity A company that can reach $5 billion in revenue should command a higher valuation than a similar opportunity that can reach $500 million Risk Profile The higher the risk, the lower the valuation Technology Risk Completeness of Management team Number of Competitors Investment Stage (consider in isolation) The earlier the stage, the lower the valuation As you grow, you decrease the risk, and increase valuation

Vcapital Confidential22 How do I value my Company? Valuation is… is the present value of all future cash flows discounted back at the required rate of return, usually called a discounted cash flow analysis = valuation methodology is technically CORRECT = USELESS in raising your first couple of rounds of venture capital = There is NO CORRECT answer

Vcapital Confidential23 Comparing your business to a comparable business with similar elements can give you insight into your valuation. Find companies with similar growth opportunities, risk profiles, and investment stage. Talk to professional service providers such as lawyers and accountants who have assisted entrepreneurs in raising venture capital. Talk to entrepreneurs in venture-backed companies. How do I value my Company?

Vcapital Confidential24 Valuation – VC Methodology Venture capitalists are concerned with getting above average returns to compensate them for the risk they are willing to take Seed and early stage investors expect a return of 10 X original investment later stage investors target 3 to 5 X original investment Venture capitalists focus on pre-money valuations, or the valuation of the company prior to a new round of venture funding. This allows for better comparability across companies without regard for the amount of capital being raised.

Vcapital Confidential25 Choose Value over Valuation

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Vcapital Confidential27 Sources of Capital Angels Friends, Family and Fools Sophisticated Angel Investors Family Venture Funds Private Management Firms Financial Institution Venture Funds Corporate Venture Funds

Vcapital Confidential28 Seed Stage (Pre-Venture) Financing Company Development: Up to 1 year Capital Range: Up to $1M Primary Sources: FF&F, Angels, Seed- Stage VC Firms

Vcapital Confidential29 Early Stage Financing Company Development: 1-3 Years Capital Range: $1Million - $5 Million (1-2 Rounds) Primary Sources: Private Management Firms, Corporations

Vcapital Confidential30 Expansion Stage Financing Company Development: 3-5 Years Capital Range: $5 Million - $20 million (1-2 Rounds) Primary Sources: Private Management Firms, Financial Institutions, Corporations

Vcapital Confidential31 Mezzanine Stage Financing Company Stage: Months Prior to IPO Capital Range: $ Million Primary Sources: Private Management Firms, Financial Institutions, Corporations