Venture Capital 101 - A Primer on Venture Capital

Venture Capital 101 - A Primer on Venture Capital

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Description: Vc Fund Organization Basics: are- GENERAL PARTNERS (GPs). GPs are the “Venture Capitalists” and they raise the capital from LPs, manage the funds, and make investment decisions. GPs are assisted by Principals, VCs, Associates, and Analysts who do the ‘heavy lifting’.VENTURE CAPITAL FUND.

GPs raise a fund from Limited Partners (investors) based on a unique strategy, expertise in a sector, investment track record. Fundraising takes months to a year plus LIMITED PARTNERS (LPs). LPs provide capital as needed (capital calls).

Typical venture LPs include Insurance Companies, Endowments, Pensions, and High Net Worth Individuals. 5-10% of a portfolio is allocated to alternative investments, including venture, which illiquid, risker assets with higher return potential.

 
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Contents:
Venture Capital 101
A Primer on Venture Capital

University Innovation, Realized.

Contact Us

50 Monument Rd, 201, Bala Cynwyd, PA 19004
+1.484.434.2255 • info@osagepartners.com
CONFIDENTIAL & PROPRIETARY

Louis P. Berneman, EdD, CLP, RTTP

Lou Berneman

Founding Partner, Osage University Partners
Lead Academic Advisor, HealthCare Royalty Partners
Managing Director, Texelerate, LLC
- Licensing transactions
- Expert witness services

Previously
• Managing Director, U Penn CTT
• Co-founder, 4 “academic” startups
• Past President, AUTM
• Former VP and Trustee, LES and LES Foundation
• Columbia University Teachers College, MA, MEd, EdD
• UC Santa Barbara, Teaching Credential
• Penn State, B.A.

CONFIDENTIAL & PROPRIETARY

2

FINANCING TRENDS: ACTIVE SECTORS

CONFIDENTIAL & PROPRIETARY

ACTIVE SECTORS: Software
Active Venture Funds

Accel, Andreessen, Bain, Bessemer, First Round, Foundry Group, General Catalyst,
Greylock, KPCB, Khosla, Lightspeed, NEA, North Bridge, Sequoia, Union Square, USVP,
Osage University Partners
Active Strategic Investors

What’s Hot

Artificial Intelligence, Mobile Payments, Messaging, Big Data, Cloud Computing, Cyber
Security, Network Infrastructure
Typical First Round Deal

Fundraising in Seed round flush with investors with substantial Series A crunch,
valuations through the roof, and substantial venture capital for later stage rounds

CONFIDENTIAL & PROPRIETARY

4

ACTIVE SECTORS: Healthcare IT
Active Venture Funds

Accel, Bessemer, Canaan Partners, Essex Woodlands, Highland, KPCB, MDV, NaviMed,
NEA, Psilos, Safeguard, USVP, Venrock, Firstmark, Osage University Partners
Active Strategic Investors

What’s Hot

Big Data, Hospital Efficiency, Payments, Telemedicine, Cyber Security, Insurance
Marketplaces, Revenue Cycle Management
Typical First Round Deal

Small series A with modest series B. Lots of companies and competition in the space,
investors looking for revenue/bookings traction

CONFIDENTIAL & PROPRIETARY

5

ACTIVE SECTORS: Hardware
Active Venture Funds

Andreessen Horowitz, CRV, General Catalyst, Felicis, Kleiner Perkins, Lux Capital, Matrix
Partners, Sequoia Capital, Spark Capital, True Ventures, Osage University Partners
Active Strategic Investors

What’s Hot

Internet of Things, Human Machine Interface, Drones, 3D Printing, Robotics, Virtual
Reality, Smartwatches, Wearables
Typical First Round Deal

Modest Series A followed by large Series B and C rounds. For consumer focused
hardware, Kickstarter performance is becoming an increasingly important factor for
institutional investment

CONFIDENTIAL & PROPRIETARY

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ACTIVE SECTORS: Cleantech & Industrial Chemicals
Active Venture Funds

Braemer Energy Ventures, Pangaea Ventures, Chrysalix Energy Ventures, Phoenix
Venture Partners, Google Ventures, First Green, Osage University Partners
Active Strategic Investors

What’s Hot

Oil & Gas, IT Connected Solutions, Internet of Things, Consumer project financing, Air
Quality Monitors
Typical First Round Deal

Very limited first round funding occurring right now - Generally, a single VC will fund a
modest amount, hoping to syndicate a larger next round. Corporate investors becoming
much more active in early rounds of financing

CONFIDENTIAL & PROPRIETARY

7

ACTIVE SECTORS: Therapeutics
Active Venture Funds

5AM, Arch, Atlas, Domain, Fidelity, Flagship, Frazier, Hatteras, MPM, NEA, OrbiMed,
Polaris, Sofinnova, Third Rock, Osage University Partners
Active Strategic Investors

What’s Hot

Gram-Negative Antibiotics, Gene Therapy, Immunotherapy, Oncology
Typical First Round Deal

Large, syndicated, multi-tranche rounds that include one or more corporate venture
groups

CONFIDENTIAL & PROPRIETARY

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ACTIVE SECTORS: Medical Devices
Active Venture Funds

Canaan Partners, Domain Associates, InterWest, LightStone, NEA, Orbimed, Versant,
Osage University Partners
Active Strategic Investors

What’s Hot

Not much, but ENT, Gastrointestinal, and Pulmonary are seeing some activity
Typical First Round Deal

Highly structured deals to minimize financing needs and risk. Headwinds remain strong
for this difficult sector

CONFIDENTIAL & PROPRIETARY

9

ACTIVE SECTORS: Diagnostics
Active Venture Funds

Domain Associates, InterWest, MPM, NEA, TPG Biotech, Osage University Partners

Active Strategic Investors

What’s Hot

Microbial and Cancer Diagnostics, Personalized Medicine
Typical First Round Deal

Small Series A to PoC. Series B to obtain FDA clearance. Challenge is reimbursement and commercial
traction

CONFIDENTIAL & PROPRIETARY

10

WHAT DO VENTURE CAPITALISTS DO?

CONFIDENTIAL & PROPRIETARY

TV VENTURE CAPITAL

CONFIDENTIAL & PROPRIETARY

12

VCs ARE FROM MARS

Venture Capitalists are from Mars

VC

Entrepreneurs are from Venus

CONFIDENTIAL & PROPRIETARY

13

VC BY THE NUMBERS

99% of all startups, and most academic
startups, do not require and will not get
venture capital
VCs look at 100s of businesses for one
investment
On average, VCs will initially invest $3M+
3 out of 4 venture backed companies fail
70-80% don’t deliver projected ROI
30-40% blow through investor money

CONFIDENTIAL & PROPRIETARY

14

COST OF VC TO ENTREPRENEURS AND FOUNDERS
CONTROL
VCs rarely want control when
company is performing against plan

LIQUIDATION PREFERENCE
Investors typically have rights to
get their money out first

DILUTION
At exit, founders and management
will typically own 10-20%

CONFIDENTIAL & PROPRIETARY

15

WHAT DO VCs DO?
DEAL
SOURCING

INVESTMENT
DECISION

PORTFOLIO
MANAGEMENT

EXIT
EVENT

Portfolio
Company

$

Networks, Demo Days, Calls,
Meetings, etc.

Deal
Deal
Deal
Deal

Portfolio
Company

Deal
Deal

SCREENING:

• GPs will look at
100s of deals to
invest in 1

DUE DILIGENCE:

• Technology, Market,
Team, Competition,
Finances, Legal

MANAGING:

LIQUIDITY:

• Liquidity typically occurs
• GPs typically sit on BoD
in an acquisition or IPO
• Given BoD time
• Valuation, Size of
• Even the most successful
commitment, one
Round, Lead Investor managing partner will sit
VCs have only ~ 1/3rd of
share, Terms of
their portfolio companies
on 5 - 6 boards
Investment
• VCs expect to make follow exit successfully
on investments in their
portfolio

TERM SHEET:

CONFIDENTIAL & PROPRIETARY

16

VC FUND STRUCTURE

CONFIDENTIAL & PROPRIETARY

VC FUND ORGANIZATION BASICS
GENERAL PARTNERS (GPs)

VENTURE
CAPITAL FUND

High Net
Worth Ind.

Family Offices

Pension Fund

Endowment

LIMITED PARTNERS
Insurance
Company

VENTURE FUND STRUCTURE

GENERAL PARTNERS

• GPs are the “Venture Capitalists” and they raise the
capital from LPs, manage the funds, and make
investment decisions
• GPs are assisted by Principals, VCs, Associates, and
Analysts who do the ‘heavy lifting’

VENTURE CAPITAL FUND

• GPs raise a fund from Limited Partners (investors)
based on a unique strategy, expertise in a sector,
investment track record
• Fundraising takes months to a year plus

LIMITED PARTNERS (LPs)

• LPs provide capital as needed (capital calls)
• Typical venture LPs include Insurance Companies,
Endowments, Pensions, and High Net Worth
Individuals
• 5-10% of a portfolio is allocated to alternative
investments, including venture, which are illiquid,
risker assets with higher return potential
CONFIDENTIAL & PROPRIETARY

18

VC COMPENSATION - ECONOMICS
MANAGEMENT FEES

2 – 2.5%
per year

• GPs receive an annual MANAGEMENT FEE, which is a
percentage of total capital committed to the fund
• Typical fees are 2-2.5% (i.e. on a $100M fund, $2-2.5M/year)
• MANAGEMENT FEES are used for fund administration
(salaries, operations, and everything else)

VC FUND
CARRIED INTEREST

20/80 SPLIT

OF PROFITS

• LPs receive all returns (profits from exits) until 100% of
committed capital, plus interest (often 6-8%), is returned to
LPs
• Thereafter, profits are split 80% to LPs and 20% to GPs
• the 20% going to GPs is called “Carried Interest”

CONFIDENTIAL & PROPRIETARY

19

FUND LIFE AND LIFE CYCLE
FUND LIFE
• Funds have 10 year lives, often able to extend for 2 years, after which they are liquidated
• Investments are typically made in years 1-4 allowing investments to mature and exit within the
10 year fund life, referred to as the Investment Period
• Investments requiring >4 years to mature and exit are likely to be made only in the first
few years of the Investment Period
INVESTMENTS
• Funds typically reserve $2-3 for every $1 they invest for future rounds of investment in each
company
• if a fund invests $2M in an early round, it will reserve $4-6M for follow-on rounds
SUBSEQUENT FUNDS
• Funds will typically raise additional capital, a new fund, once 80% of capital is committed and
reserved
• VCs are motivated to raise subsequent funds to make new investments and earn additional
management fees/greater potential for upside on carried interest

CONFIDENTIAL & PROPRIETARY

20

INTENSE SCRUTINY
BE PREPARED FOR A THOUROUGH EXAMINATION
• All stakeholders are beholden to intense scrutiny by vested
interests
• Successful, professional investors are very smart, analytical, and
deliberate

LPs Investing in VCs

VCs Investing in
Entrepreneurs

Entrepreneurs Licensing
from TLOs

TLOs Patenting
Disclosures

• The depth and duration of investors’ diligence, prior to making a
decision, can be extraordinarily frustrating
• In turn, scrutiny should go both ways – Entrepreneurs should
closely analyze and weigh the benefits of one investor over
another

CONFIDENTIAL & PROPRIETARY

21

LAUNCHING YOUR VENTURE

CONFIDENTIAL & PROPRIETARY

KEY INGREDIENT #1: TRANSFORMATIVE SCIENCE

It all starts with a key scientific breakthrough

CONFIDENTIAL & PROPRIETARY

23

KEY INGREDIENT #2: LARGE ADDRESSABLE MARKET

EARLY INVESTORS EXPECT TO BE COMPENSATED FOR RISK – MARKET POTENTIAL MUST JUSTIFY
COST AND RISK

• Early (independent, fiduciary) investors need 10x return potential
• Model dilution based on the capital requirements of the startup
• What does the market size need to be?

NOT EVERY IDEA ADDRESSES A $100M+ MARKET, BUT OPTIONS STILL EXIST








Pivot
Persevere
Non-dilutive capital (institutional grants, iCorps, SBA, etc.)
Crowd fund
Friends and family
Angels

CONFIDENTIAL & PROPRIETARY

24

FUNDING SOURCES
SOURCE

FUNCTION

STRATEGIC

GROWTH

VENTURE
CAPITAL

RAPID
SCALING

CROWDFUNDING

MARKET TRACTION

ANGELS AND
ACCELERATORS
VENTURE
PHILANTHROPY

High Net
Worth

PROOF OF
CONCEPT

FRIENDS AND
FAMILY

PRE-FUNDED
STARTUP

GRANTS

SCIENCE
PROJECT
CONFIDENTIAL & PROPRIETARY

25

RELATIONSHIPS MATTER
VC IS A RELATIONSHIP BUSINESS
• We know each other, invest together, share leads and due diligence
• VCs working and investing together (syndicates) reduce future financing risk
• Avoid ‘cold calling’ VCs – approach through a trusted friend/advisor
AVOID ‘COLD CALLING’ VCS
• Approach through a trusted friend/advisor
UNDERSTAND VCs INTERESTS
• VCs make investments in areas of strategic interest
• VCs time investments based on the fund’s life cycle
• Be prepared for rejection
ASK FOR ADVICE
• If you’re looking for money, ask for advice
• If you want advice, ask for money
WHERE TO BEGIN
• The TLO can help whether you’re interested in actively engaging in the entrepreneurial process
or continuing to focus on research while the TLO leads the process
CONFIDENTIAL & PROPRIETARY

26

CHOOSING THE RIGHT CO-FOUNDERS
FINDING YOUR CO-FOUNDER




Co-founders are very much like a marriage as the relationship
may span for a decade or more – choosing the right person
should be a careful and considerate process
Co-founders should complement one another’s skills, strengths,
and weaknesses

FROM OUR PORTFOLIO






AGTC – Sue Washer, a serial entrepreneur, approached the
University of Florida TTO for emerging opportunities. UF synced
her up with the scientists behind AGTC and they launched the
company, taking the company to IPO in 2014
RECEPTOS – Faheem Hasnain, a successful serial entrepreneur,
worked with previous team members from other startups to cofound Receptos, ultimately taking it to IPO in 2013
INFINIO – Arun Agarwal identified Vishal Mishra’s technology at
Columbia while interning at Lightspeed; a young energetic
entrepreneur, Arun helped Vishal start Infinio, joining on as CEO;
Arun and Vishal went on to raise $24M in venture capital from
the top enterprise firms: Lightspeed, Bessemer, Highland Capital

CONFIDENTIAL & PROPRIETARY

27

Personal Characteristics of a Great CEO
VISION
• Drive to be the leader in the space (2nd place isn’t acceptable)
• Thinking high level, but taking care of the details
REALISTIC/MODEST
• CEOs aren’t expected to have every skill necessary to build out a company
• The best CEOs identify what they lack and will hire better people around them to make the
company succeed
COMMUNICATION
• Build and drive an internal team
• Sell the vision externally – communicate succinctly and be able to sell
LOW AND HIGH EGO
• The best CEOs have a high ego to be irreverent about the industry they’re disrupting, firm in
their beliefs, and have significant grit when faced with problems
• They also have low enough ego to know that when they’re not the right person to run a
company or solve a problem, they step aside
ADAPTABILITY
• See what’s coming before everyone else and positions to take advantage of it
• The quicker CEOs admit they were wrong, the faster they can pivot
CONFIDENTIAL & PROPRIETARY

28

UNIVERSITIES ARE CATALYSTS FOR START UPS

900

900

818

800

800

700

CAGR = 7.8%

700

(‘94 – ’13)

600

600

500

500

400
300

651
553

555

595

671

705

596

2006 2007 2008 2009 2010 2011 2012 2013

200
100

UNIVERSITY ENTREPRENEURSHIP
INCREASINGLY IMPORTANT
Top down pressure from administrations to
foster entrepreneurship
Bottom up pressure from researchers that
want their work to be impactful

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

0
1994

Number of Start-Ups Formed

University Start-Ups Formed

University Start-Ups Formed
Between ‘06-’13

STRONG GROWTH AHEAD
University startup activity at an all
time high with 800+ new startups
formed in 2013 – the growth in
entrepreneurship activity at
universities remains strong

CONFIDENTIAL & PROPRIETARY

29

TECH TRANSFER OFFICES
FOR INVENTORS




TTOs succeed in licensing 50% of the patents they file
Provide guidance and services for patenting, business modeling, marketing and licensing
May provide venture creation services for startup development, mentoring, talent recruitment
and connections to economic development resources and public and private funding sources

FOR ENTREPRENEURS


Can match your expertise and objectives with emerging university technology concepts needing
development and emerging startups requiring professional management

FOR INVESTORS


Can introduce you to early startup projects for the future, emerging startups that match your
funding requirements and launched startups looking for growth capital

CONFIDENTIAL & PROPRIETARY

30

INNOVATION MATH:
A SMALL PIECE OF A BIG PIE…

CONFIDENTIAL & PROPRIETARY

PLANNING FOR DILUTION: SEED INVESTMENT

Founders
University
Angels
Series A Lead - VC
Series B Lead - VC
Series C Lead - VC
Option Pool
Total Shares

Founding
Common %ownership
900,000
60.0%
300,000
20.0%
0.0%
0.0%
0.0%
0.0%
300,000
20.0%
1,500,000
100%

Price/share
$Raise

$1
0

Seed
600,000
2,100,000

Price/share
$Raise

PostMoney $1,500,000

Seed Round
Cost$
%ownership
42.9%
14.3%
750,000
28.6%
0.0%
0.0%
0.0%
14.3%
750,000
100%
Multiple(x)
$Raise

1.25
$1.25
$750,000

Pre-Money 1,875,000
Post-Money $2,625,000

Ideally, a Seed Round would be in the form of a convertible note, and
would not have a valuation

CONFIDENTIAL & PROPRIETARY

32

PLANNING FOR DILUTION: VC ROUNDS

Founders
University
Angels
Series A Lead - VC
Series B Lead - VC
Series C Lead - VC
Option Pool
Total Shares

Series A Round - VC
Series A
Cost$
%ownership Option Pool %ownership
$
22.4%
20.6%
$
7.5%
6.9%
$
14.9%
13.7%
1,920,000 $ 3,000,000
47.8%
43.9%
$
0.0%
0.0%
$
0.0%
0.0%
$
7.5%
356,471
15.0%
4,020,000
3,000,000
100%
4,376,471
100%

Series B - VC
Series B
Cost$
%ownership
$
9.8%
$
3.3%
$
6.5%
2,105,806 $ 6,580,645
43.9%
2,694,194 $ 8,419,355
29.4%
$
0.0%
$
7.2%
9,176,471 15,000,000
100%

Multiple(x)
1.25
$/Share
$1.56
$Raise
$3,000,000

Multiple(x)
$/Share
$Raise

Pre-Money 3,726,838
Post-Money $6,726,838

Option Pool %ownership
9.5%
3.2%
6.3%
42.5%
28.5%
0.0%
290,196
10.0%
9,466,667
100%

Pre-Money $14,034,069
Post-Money $29,034,068.63

CONFIDENTIAL & PROPRIETARY

2.00
$3.13
$15,000,000

33

PLANNING FOR DILUTION: ACQUISITION

Founders
University
Angels
Series A Lead - VC
Series B Lead - VC
Series C Lead - VC
Option Pool
Total Shares

Series C
1,701,045
1,138,392
1,160,563
13,466,667

Cost$
$
$
$
$ 10,631,531
$ 7,114,948
$ 7,253,521
$
25,000,000

Series C - VC
%ownership
6.7%
2.2%
4.5%
42.5%
28.5%
8.6%
7.0%
100%

Multiple(x)
$/Share
$Raise

2.00
$6.25
$25,000,000

Option Pool %ownership
6.6%
2.2%
4.4%
42.1%
28.2%
8.5%
142,029
8.0%
13,608,696
100%

Acquisition/IPO
Proceeds
Return
$ 13,226,837
$ 4,408,946
$ 8,817,891 11.8x
$ 84,164,590 4.2x
$ 56,325,533 3.6x
$ 17,056,203 2.4x
$ 16,000,000
200,000,000
Sale Price $200,000,000

Pre-Money
$58,352,195
Post-Money $83,352,195.23

CONFIDENTIAL & PROPRIETARY

34

PARTNERING WITH OSAGE

CONFIDENTIAL & PROPRIETARY

WE INVEST IN DISRUPTIVE SCIENCE

Osage focuses on companies (or soon-to-be companies)
developing transformative technologies
solving major global challenges
led by passionate entrepreneurs
being (or likely to be) financed by top-tier venture investors.

CONFIDENTIAL & PROPRIETARY

36

AT THE INTERFACE BETWEEN ACADEME AND VENTURE CAPITAL

OUP Institutional Partners

OUP Co-Investors

z

Osage University Partner’s Fund I ($100M) and Fund II ($200M target) invests in
groundbreaking life science and technology start-ups via its proprietary relationships
with 70+ universities
CONFIDENTIAL & PROPRIETARY

37

INVESTMENT FOCUS
ALL STAGES OF NEW VENTURES

Seed

Early

Mature

$100,000 to $1,000,000

$1,000,000 to $3,000,000

$3,000,000 to $6,000,000

BROAD RANGE OF MARKET SECTORS

Cleantech & Energy

Information Technology

CONFIDENTIAL & PROPRIETARY

Life Sciences

Materials

38

OUR PORTFOLIO COMPANIES AND WHEN WE INVESTED
Seed

2nd Round

1st Round

3rd Round

4th Round +

Seismos

Exited

CONFIDENTIAL & PROPRIETARY

39

RECOMMENDED PARTICIPATION RIGHTS LANGUAGE

If the Company proposes to sell any equity securities or securities that are convertible into
equity securities of the Company, then the University and/or its Assignee (as defined below) will
have the right to purchase up to 10% of the securities issued in each offering on the same terms
and conditions as are offered to the other purchasers in each such financing. Company shall
provide thirty days advanced written notice of each such financing, including reasonable detail
regarding the terms and purchasers in the financing. The term “Assignee” means (a) any entity
to which the University’s participation rights under this section have been assigned either by the
University or another entity, or (b) any entity that is controlled by the University. This
paragraph shall survive the termination of this agreement.

CONFIDENTIAL & PROPRIETARY

40

VC 101: A PRIMER LES NOUVELLES

Louis P. Berneman and Christopher F. Wright,
"Venture Capital 101: Financing Mentality, Jargon,
Term Sheets, and Documents - Primer for Academic
Technology Transfer Managers and Industry Licensing
Executives," in les Nouvelles, the Journal of the
Licensing Executives Society, March, 2014

CONFIDENTIAL & PROPRIETARY

41

THE UNIVERSITY AS A VENTURE INVESTOR

Christopher F. Wright and Louis P.
Berneman, "The University as a
Venture Investor: Models and
Challenges for Equity Licensing,
Direct Investment and Partnering
Methods" in the American Bar
Associate Technology Transfer
Law Handbook, Elizabeth D.
Rodriguez and Sean D. Solberg,
Editors, 2014.

CONFIDENTIAL & PROPRIETARY

42

Contact Us
University Innovation, Realized.
SUMMARY

Osage University Partners (OUP) invests in startups that have licensed technologies from universities and research
institutions. OUP has partnered with 70 academic institutions to invest in pioneering technologies and visionary
entrepreneurs targeting large market opportunities. The Fund invests across a range of technology sectors and company
stages, and typically co-invests with other leading venture funds.

PERSONNEL
Name

Title

Email

Robert Adelson

Managing Partner

radelson@osagepartners.com

Kristen Albright

Associate

kalbright@osagepartners.com

Louis Berneman

Founding Partner

lberneman@osagepartners.com

Matt Cohen

Senior Associate

mcohen@osagepartners.com

William Harrington

Managing Partner

bharrington@osagepartners.com

Bryce Istvan

Analyst

bistvan@osagepartners.com

John Lee

Senior Associate

jlee@osagepartners.com

Marc Singer

Managing Partner

msinger@osagepartners.com

CONFIDENTIAL & PROPRIETARY

Contact Us

50 Monument Rd, 201
Bala Cynwyd, PA 19004
484.434.2255
www.osageuniversitypartners.com

43

THANK YOU

WHO HAS THE FIRST QUESTION?

CONFIDENTIAL & PROPRIETARY

CROWDFUNDING OPENS NEW FUNDING CHANNELS
ADVANTAGES

•Successful crowdfunding campaign demonstrates market
acceptance
•Opportunities for viral marketing

PRODUCT BASED CROWDFUNDING (KICKSTARTER)

• People buy your product for future delivery
• Demonstrates that people actually want your product – VCs
want to see this proof point before funding a company
• Most products won’t raise a million dollars – the average
crowdfunding campaign raises just $7,000

EQUITY BASED CROWDFUNDING

• Approved by the JOBS Act, allows anyone to invest small
amounts of capital ($2,000/year)
• Regulations are still being worked out; nobody is doing this yet

CONFIDENTIAL & PROPRIETARY

45