1. Professor Sandeep Dahiya Georgetown University
Venture Capital
Professor Sandeep Dahiya
Georgetown University

2. ONSET Ventures
How would you compare ONSET to a more traditional source of capital such as a Bank? (Would TallyUp care if the money came from a bank instead of a VC?)

3. What is a VC?
(1) A VC is a financial intermediary, meaning that they take the investors’ capital and invest it directly in portfolio companies.
(2) A VC will only invest in private companies. This means that once the investments are made, the companies cannot be immediately traded on a public exchange.
(3) A VC takes an active role in monitoring and helping the companies in his portfolio.
(4) A VC’s primary goal is to maximize his financial return by exiting investments through a sale or an initial public offering (IPO).
(5) VCs invest in order to fund the internal growth of companies.
Angel
Investor
Mutual Fund
Corporate Investment
Buyout Fund

4. ONSET Ventures
How would you compare ONSET to a more traditional source of capital such as a Bank? (Would TallyUp care if the money came from a bank instead of a VC?)
Guiding principles of ONSET – Do they make sense?
Which type of entrepreneur is or is not a good fit for ONSET? Why?
Why is ONSET limiting itself to million range when there is a strong demand from investor?

5. This Course
No easy answers – Boot Camp (Up to 100+pages of reading before class!!)
Main Perspective
Key aspects and practices of industry
How these key features are a response to the difficult environment
Constant comparison of the US and European experience

6. We will follow the “Venture Capital Cycle”
Investing Capital
Exit
and returning capital
Fund raising

7. Raising Capital Highly complex and arcane legal issues
We shall focus on high level themes
Perspective of capital suppliers
Structure of rewards
Profound effect on behavior is important for everyone!

8. ONSET Ventures
The first fund (1984) – Do you find anything unusual about this fund?
Highlights from the Offering (Ex1) – If you were investing in ONSET III what would you focus on? Why?

9. Investing Capital Challenges Responses by VCs Uncertainty
Asymmetric Information
Nature of Firm’s assets
Conditions of relevant financial and product markets
Responses by VCs
Active Screening
Stage Financing
Syndication
Use of Stock options/grants with strict vesting requirements
Contingent control mechanisms – Covenants and restrictions
Strategic composition of Board of Directors

10. ONSET Ventures Revisit the guiding principles of ONSET
How are the applied/not applied to Tally Up investment?
Analyze Tally Up using the challenges/responses framework we just saw

11. Investing Capital Challenges Responses by VCs Uncertainty
Asymmetric Information
Nature of Firm’s assets
Conditions of relevant financial and product markets
Responses by VCs
Active Screening
Stage Financing
Syndication
Use of Stock options/grants with strict vesting requirements
Contingent control mechanisms – Covenants and restrictions
Strategic composition of Board of Directors

12. Exiting Investments Failure Success “Liquidity Event” Disappear
Zombie Companies “Living Dead”
Success “Liquidity Event”
Critical … yet controversial
Can cause severe heartburns for an entrepreneur
IPO
Sale to another company

13. Why Take this Course?
There are few VC related employement opportunities?
Broader perspectives
Would be entrepreneurs – know the other side
Would be investors – know the incentives and organizational issues
Would be professionals (Bankers) – know the dynamics

14. Grading
Class Participation 20%
Home Work/Quiz 30%
Final Exam 50%