Venture financing class at duke 01 26 2012

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Startup & Venture Lessons

Duke Law School

Jay Jamison

Partner, BlueRun Ventures

jjamison@brv.com | @jay_jamison | jayjamison.com

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Agenda

Introduction

Early Stage Valuation Methods

Exiting

VC: Venture or Vulture Capital?

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Introduction

• Duke, BA, English, 1992• Emory Law School, 1995-96• MBA, Wharton,1998• Microsoft, 1998-2007• Founder, Moonshoot, 2007-10• Partner, BlueRun Ventures, 2010-Present

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About BlueRun Ventures

• Over $1.0B under management• Investing out of Fund IV ($240M)• Focus: Mobile & consumer internet• Seed & Series A

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What is my job?

• Unearth great dealsFind

• Convince NewCo to take our $Close

• Help NewCo reach full potentialAssist

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Early Stage Valuations

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It’s a Golden Age for Entrepreneurs….Cheaper than ever to start a company.

Better resources• Incubators: Y-Combinator, 500Startups, … • Resources: Startup Digest, Lean Startup, TC, VB

Technology is easier to learn, access, &c.• Codecademy• RoR• AWS Driving valuations up

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… And Investors Understand This.

I see lots of great companies that are:• Capital efficient• High velocity in coding and releasing• Product in market with traction• Clear customer insight on what works• Battle-tested founding teams• Clear, concrete ask on what $$$ they need

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Implication

While we’re in a Golden Age for Entrepreneurs, it is raising the bar

for most very early stage companies…

You need to prove more on very little money, because so many other

start-ups are already doing so.

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Early Stage Valuations

Plain vanilla Series A• VC: 20-30%• Option pool: 10-20%• Founders & Angels keep rest

Items we watch• Founder incentive must be very high• Maintaining a clean cap table is important

Founders & Angels

60%ESOP15%

VC25%

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Exiting

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Exits

Stuff beyond your control• The market• The corporate politics on the other side

Stuff in your control• Which founding teams you back• Staying focused on execution until deal is signed• Attracting alternative bidders

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VC: Venture or Vulture?

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Venture

• Unique and amazing form of capital

• Helped scale companies that have had massive impact

• And will continue to have an important role

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But, VC is not…

Summer Camp

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Our AspirationAdapted from Glenn Kelman, CEO Redfin, describing working w/ Pierre Lamond at his Plumtree.

Then Pierre Lamond, the Sequoia partner on the deal, began working out of our office, acting as the virtual CEO.  Pierre made a point of being there the day one of his other companies went public. We looked at a news photo of all the smiling people, who seemed to be living in a gated community, on a planet I would never visit. Then Pierre said “that company was once even more screwed up than you are.”

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Recommended actions

Investigate and reference check any investor• Past successes• Past failures

Assess the friendliness of terms• This tells you a lot about alignment w/ founders

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Thanks & Q&A