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Published byThomas O’Connor’ Modified over 8 years ago
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P roviding early and growth stage venture capital to: Experienced entrepreneurial teams with Excellent business propositions and Great market opportunities that will Generate significant investment returns.
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2 Background Newly minted MBA thwarted by the 80’s bust Frustrated banker What’s an economist to do? Determined, focused, energetic Hard work = luck Sure I can build a new generation of network processors and create a new product category in telecommunications Thank you Austin Ventures for kicking me out of my first start-up
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3 The Idea Experience Research Logic
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4 Experience Leverage what you know Who can help
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5 Research Build relationships –Talk to industry participants – they will indicate problems they are wrestling with Observe what the ‘players’ are doing –IP voice – reality –Cisco’s big bet –Next generation devices –Venture investment Industry analyst may be no real help on strategy but can confirm market size (VoIP not VoIP applications) It’s all about the customer – get to them, understand their needs and drive product requirements with their input
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6 Logic Vision – vision is toughest part but industry participants can lead you there – market indicators – what is the research telling you – the usual mistake is being too early – the other big mistake is being technology driven Strategy – how quickly can product be defined? – what is good enough? Execution – confirmation of market and product as quickly as possible. You need customer input
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7 The Company Team Product Market
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8 Team Relevant domain expertise Blended experience Positive environment – stay focused on what is ‘real’ “It’s been three months and I can’t pay my rent.” Balance and patience relieves stress: Term sheet on my back Championship baseball team at exit
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9 Market Size matters – must be able to define a Total Addressable Market – your case for building a reasonably sized company in three to five years has to be plausible Competition – what is happening with the existing vendors – are there any new start-ups funded Go-to-market – how do you launch the product – how do you get known – how do you sell, service and support
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10 Product Input from channel partners, existing players and most importantly customers drive necessary features – use caution in early stages – Goldilocks syndrome Create a product requirements document – constantly adapt it and use it to manage development progress – don’t skip this step, but be like Jack – nimble and quick Open standards, broadest market (i.e. call control in the SIP world) Pricing is a nightmare – you just have to live through it
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11 The Deal Cash flow Investment Structure Exit
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12 Cash Flow My favorite part – creating the score card What is needed and when – what is truly relevant Don’t be stingy when it comes to support and test Don’t be oversold on marketing and sales infrastructure Measurable milestones, meaningful results – build value
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13 Investment Structure Get critical input on your pitch from a friendly source Find a good equity partner Fear versus Greed What was old is new again – investment climate is relevant (boom vs. bust) – paying customers are gold – managing cash is critical – provide alternative paths at every critical point – well researched plan will indicate funding needs and milestones which drive investment type
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14 Exit Begin with the end in mind – most exits are strategic acquisitions – Sarbanes Oxley and you Number 109 (research again) Less than 30 days to close $4,170.20 My suggestion: sell if the offer is over 38 times trailing twelve month revenue Warning – never open the mail on closing day
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