Raising Venture Capital Boston College November 30, 2005 Angelo Santinelli General Partner North Bridge Venture Partners

Introduction – Goals For This Class  Who should raise venture capital?  What should you know about the process?  Where to raise equity capital?  When to raise capital?  How to go about raising capital?  Why do you need venture capital? North Bridge Venture Partners 2005

Common Misconceptions  It’s too early to raise venture capital  The VCs will steal my idea  I will get ripped off financially  Only Angel investors do seed capital  Bootstrap is the safest way to keep control North Bridge Venture Partners 2005

What VCs Look For?  Great People…  With a Great Idea…  Going after a Potentially Large Market  Focus  Commitment  Credible Operating Plan First Principles: Then: __________________________ __________ North Bridge Venture Partners 2005

Great People  Plan and execute  Adapt to change and remain committed  Lead by example  Surround themselves with “A” Players and Domain Experts  Have a track record of success North Bridge Venture Partners 2005

Characteristics of Effective Teams  Clear unity of purpose  Clear roles  Clear and demanding performance goals  High level of interdependence  Individuals carry their own weight  Self-conscious about group’s operations  Informal, comfortable atmosphere  Open discussion with full participation  Freedom of expression of ideas  Disagreement is good  Decisions made at point of general agreement  Criticism is frequent, frank, but respectful and without personal attacks  Mutual trust and respect for each members skills  Effective at solving problems  Team management is shared, Team leadership a necessity North Bridge Venture Partners 2005

Common Traits of Effective Leaders  Desire  Emotional stamina  Physical stamina  Empathy  Decisiveness  Anticipation  Timing  Competitiveness  Self-Confidence  Accountability  Responsibility  Credibility  Tenacity  Dependability  Stewardship North Bridge Venture Partners 2005

Who Should Raise Venture Capital?  Entrepreneurs who want to build a large, successful business  Entrepreneurs looking to maximize their probability for success  Entrepreneurs looking for more than money  Entrepreneurs who are planning for a large exit North Bridge Venture Partners 2005

When to Approach a VC?  When you’ve done enough work to convince yourself of the opportunity... before you’ve made mistakes that devalue your team or corrupt your capital structure  Get the Basics -Clear articulation of the problem and market opportunity -Easily understood value proposition -Informed opinion of market evolution/risks -Clear articulation of a credible plan -Sufficient customer validation North Bridge Venture Partners 2005

Who Ya Gonna Call?  Do Your Homework! -Determine who invests in seed/early stage -Determine who invests in your type of business -Know something about the players and the portfolio -Reputation and style -Know what to expect -Typical terms -Process -Develop and execute a strategy -Targets, timing, approach North Bridge Venture Partners 2005

A Foot In The Door... And Beyond  Get an introduction -Respected entrepreneur -Limited partner  Be selective  It’s all about the people -60 second personal pitch -Where have you been? -What did you accomplish? -Why should I listen to your opinion? North Bridge Venture Partners 2005

Ask For The Order  Get specific feedback  Understand next steps  Efficient “no” better than a prolonged “maybe” North Bridge Venture Partners 2005

Checklist  Have you gained buy-in from your family?  Is the team committed, flexible and each expert in his/her position?  Do you have the right expectations?  Have you validated the idea with several potential customers?  Do you have an informed opinion of the opportunity, the players, and how the market might evolve? √ √ √ √ √ √ North Bridge Venture Partners 2005

Checklist (cont.)  Do you have a tight, believable presentation?  Do you have a believable operating plan?  Have you done your homework on the VC and obtained an introduction?  Have you done a shakedown cruise? √ √ √ √ √ North Bridge Venture Partners 2005

Raising Venture Capital Boston College November 30, 2005 Angelo Santinelli General Partner North Bridge Venture Partners