1. 70-397 Venture Finance Fall 2002 Slide 1 Investment Models and Deal Filters Venture and Angel Panel The Venture Capitalist Case © Andrew W. Hannah

2. 70-397 Venture Finance Fall 2002 Slide 2 Agenda Assignments due tonight Info Card C The Venture Capitalist Venture and Angel Panel Jay Katarincic, Draper Triangle Paul Cohn, Mellon Ventures Jane Kirkpatrick, Angel Investor Investment frameworks and filters wind-up The Venture Capitalist Case © Andrew W. Hannah

3. 70-397 Venture Finance Fall 2002 Slide 3 Last Week’s Key Concepts Fundraising Most capital comes from pension funds Fundraising is a highly institutionalized process Harvesting Harvests generate liquid cash Bad exits (living dead, etc) must be avoided Most exits are sales or write offs Investing VIs need a plan as much as any entrepreneur Expressed by an investment model and deal filter © Andrew W. Hannah and William C. Hulley

4. 70-397 Venture Finance Fall 2002 Slide 4 The Portfolio What matters… Expected return profile How do deals usually do? Are strike outs common? Are home runs? Distribution of outcomes Can you limit losses? Do home runs matter? Time spans – how long to exit Shows the importance of loss management © William C. Hulley

5. 70-397 Venture Finance Fall 2002 Slide 5 The Venture Capitalist “The venture capitalist plays a role in the management of the companies receiving investment” – Is this true? Who really has control? What is most important to/from a venture capitalist? Role Power Impact What attributes make an effective venture capitalist? How dependent on the individual is this? What does this mean? Could this model work with a public company as we struggle as a financial community with governance? © Andrew W. Hannah

6. 70-397 Venture Finance Fall 2002 Slide 6 Next Week Gurus in the Garage Case Come prepared to discuss Deal Evaluation Question Card B - Entrepreneur WA pp 143 - 177