Foreword.
Preface.
Acknowledgments.
Part One: Raising the Venture Fund.
Chapter 1: The Universe of Limited Partners.
An Overview of Alternative Assets.
Sources of Capital.
Comparison of LPs.
In Summary.
Chapter 2: Fund Due Diligence.
Sourcing and First Screens.
Fund Due Diligence: How LPs Evaluate Venture Firms.
Evaluating the Fund Managers.
Emerging Managers: A Promise of the Future.
The Quest for the Elusive Top Quartile Managers.
Fund Investment Strategy.
Market Timing.
Fund Size and Portfolio Construction vis-à-vis Fund Strategy.
Fit within LP’s Current Portfolio.
Why LPs Terminate Existing Relationships.
In Summary.
Chapter 3: Terms of Investment: The Limited Partnership Agreement.
Sample Terms in a Fund’s PPM.
Other LP-GP Terms.
What Matters Most.
In Summary.
Chapter 4: Fund Structure, Governance, and Operations.
Key Constituents of the GP Team.
Finding Suitable Partners.
Fund Governance and Economics.
Governance of GP LLC.
In Summary.
Chapter 5: Getting to the First Close.
Build Your Target List of Investors.
Fund Marketing Materials.
Presentation Slides.
Making the Presentation Pitch: Drink Your Own Kool-Aid.
Attracting the Lead Investor: Your “Nut”.
Communicate, Create, and Maintain Momentum.
Offering Sweeteners to Attract LPs: A Double-Edged Sword.
The Role of Placement Agents in Fund Raising.
Caveat Emptor.
In Summary.
Part Two: The Investment Process.
Chapter 6: The Art of Sourcing Investment Opportunities.
The Best Source: “The Network”.
The Fountainheads of Academia & Research.
Corporate Research.
Venture Events and Trade Conferences.
Venture Farming.
Angels and Pledge Funds.
Business Plan Competitions.
Cold Calling.
You Win Some, You Miss Some.
In Summary.
Chapter 7: The Art of Conducting Due Diligence.
What Is Important: Jockey, Horse, or Markets?
Attributes of the Jockey.
Serial Entrepreneurs versus First Time Entrepreneurs.
What About Charisma?
Management Team Due Diligence: How to Assess the Jockey.
The Importance of Conducting Background Investigations.
Assessing the Market.
Evaluating the Idea or Product.
Reviewing the Business Model.
Considering the Financial Projections.
Weighing the Importance of Business Plans.
The Due Diligence Checklist.
In Summary.
Chapter 8: The Basics of Corporations, Ownership, and Control.
Authorized Shares and Issued Shares.
Shareholder Rights.
Role of the Board.
In Summary.
Chapter 9: Valuation Methods and Other Voodoo Arts.
The Drivers of Valuation.
The Simplified Form of the VC Method of Valuation.
Comparable Valuations of Similar Investments (“Comps”).
Discounted Cash Flow (DCF) Method.
In Summary.
Chapter 10: Structuring Investment Transactions.
The Spirit of the Term Sheet.
Negotiation Stress Points.
Milestone-Based Financing: Risk Mitigation or Distraction.
Structuring Terms to Generate Target Returns.
Governance and Control: Protecting Your Securities.
Exit-Related Provisions.
Other Terms.
Toward a Simpler Term Sheet for Smaller Investments.
Syndicating Investments.
The Closing Process: After the Term Sheet.
In Summary.
Chapter 11: Behind Every Successful CEO Stand a Few Good Board VCs.
The Need for Director Education.
Roles and Responsibilities of a Board Member.
Board Composition and Orientation.
Board Practices.
Get that Gavel: Overview of Robert’s Rules of Order.
Value Creation: How to Support Your Portfolio Company's CEO.
A CEO's Perspective on Venture Capitalist Value Add.
Setting the Tone through Board Culture.
Improving the Board Game.
In Summary.
Chapter 12: Exit Strategies.
Pre-Conditions for an Exit.
Acquisitions: The primary path to an exit.
The Sell Process.
When an Acquirer Comes Knocking.
The “Buy-Side” Acquisition Process.
Deal Killers.
Acquisition Case Study: Mint.com generates 5X Cash-on-Cash return in two years.
Initial Public Offering.
Private Exchanges: Necessity Drives Liquidity Solutions.
In Summary.
Chapter 13: Summing Up.
Aptitudes and Attitudes of Successful Practitioners.
Drawbacks.
What about Luck?
As You Go Forward.
Appendix A: Case Studies.
Appendix B: What’s on the Companion Website.
Notes.
About the Author.
Index.
