1. Venture Capital Professor Sandeep Dahiya Georgetown University

2. Opdendyck Recipe for Entrepreneurial Success Right VC Mentor Business Model CEO hiring Investment Objectives Market People

3. 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?) Where does ONSET gets its money from? Why is ONSET raising another fund when they still have $22 million left to invest from an earlier fund? What do ONSET’s partners do? How do ONSET’s partners make a living? What size should the new fund be?

4. VC for Economists Screening –ONSET’s concept of pre-seed phase Monitoring –ONSET’s concept of post-seed phase

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. 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. Investing capital Critical Issues –Uncertainty –Asymmetric Information –Nature of Firm’s assets –Conditions of relevant financial and product markets Responses by investors –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

9. Exiting Investments Critical … yet controversial Can cause severe heartburns for an entrepreneur –IPO –Sale to another company

10. Why Take this Course? There are few VC related 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

11. Grading Class Participation 20% Home Work/Quizz 30% Final Exam 50%

12. Tomorrow Yale Investment Office How is return of a fund measured? Consider a fund that raised 100 million – Drew down 50 million at start of year 1 and Year 2. Distributed 100 million at the end of year 7 and 80 million at the end of year 10. -50 012345678910 -5010080 IRR=7.87% What is distribution? How does the VC get paid? What about funds that are only a few years old? Multiple 1.8x

13. Basics Of Fund Performance Simple calculations have ignored fees/expenses to be paid