Show Me the Money: What are VC's investing in and why?

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Presentation from a Seminar at General Assembly in NYC discussing trends in VC investing in the last 12 months.

Text of Show Me the Money: What are VC's investing in and why?

Slide 1

Show Me the $$$$!Session 5: VCs: What are they investing in? Why?

Thursday, March 20, 2014

General Assembly Seminar Series

An insider perspective on fundraising from active venture investors

and fellow entrepreneurs

Thanks to all who attended the

session at GA last night.

My contact info is on page 19, and

additional resources and

presentations are now available on

www.RosePaul.com

confidential

1

Agenda

I. Kick-off and Introductions

II. Intro: Start-Up Fundraising

III. VC Presentations / Q&A

BREAK: Networking and Beverages

IV. More on VCs and Fundraising: Best Practices.

WRAP-UP: Networking and Beverages

confidential

2

I. Kick-Off and Introduction

Raising money is difficult.especially for early stage ventures.

Why? At least part of the answer is: The market for early stage investment is complex, nuanced

and can be bewildering.especially for 1st timers. Finding investors is difficultgetting investors to write a check

(can seem) nearly impossible: 1% of start-ups get funded Lots of noise no shortage of advice

What will help? Understand the marketplace, people and processes that are at

work

Improve / adapt your venture and approach. ..Become a student of the art and science of fundraising

Seminar Rationale: Why are we here?

Tonight: Get some insider perspective from VC investors aboutHow they operate?What they invest in? Why? With some specific examples.

confidential

3

Better understanding of fundraising and VCs in particular

A set of specific insights that will *change* your approach.

A to-do list: starting point(s), actions, things to try.

A set of recommended resources to consult and learn more

from.

A few new relationships with others in the NYC start-

up/fundraising ecosystem: fellow entrepreneurs, investors, etc.

Answers to specific questions about fundraising / VCs that you

might have.

What would I like you to walk away with?

confidential

4

After B-school: joined a start-up management consulting firm Mitchell Madison Group; focus on Strategy/Operations/IT for financial services, tech, outsourcing,

private equity/VC clients (1993 to 2000)

Walker Digital: helped set-up and run an early internet incubator (2000)

Independent Advisor / Turn-arounds: Advised VC and PE Firms on portfolio company strategy and new investments; joined the management team of two

companies

Currently: Early stage investor and advisor to start-ups Investor and advisor to VC and PE funds RosePaul Ventures is my proprietary fund Member and director at New York Angels

More on me and RosePaul Ventures: www.RosePaul.com

Tom Wisniewski: My background

Born in NYC; grew-up in Montclair, NJ

Physics and Philosophy major undergrad (Clark University); MBA at Tuck School

(Dartmouth)

1st Job: Programmer at Morgan Stanley then moved to Investment Banking

confidential

So.what questions do you have about VCs and Fundraising?

5

????

confidential

NYC Venture Activity: Significant Increase

6

Source: CB Insights: http://www.cbinsights.com/new-york-venture-capital#vc-and-angel-financing-trends-in-ny

II. Intro Start-Up Fundraising

confidential

NYC Venture Activity: Changing Mix More Seed

7

Source: CB Insights: http://www.cbinsights.com/new-york-venture-capital#vc-and-angel-financing-trends-in-ny

confidential

8

Sources of Investment: Seed Fundraising, Angels and VCs

Stage (Pre-Round):

Expected to have:

An idea, initial/rough b-plan

Initial founders, key advisors

Path to ???

Detailed b-plan, Key founders (bus & tech) full-time Prototype/alpha done and tested, Some piloting (paying?)

customers, some revenues?,

All legal documentation in place, board of directors

Path to break-even or next funding

Significant variation among firms but. Angel req. +:- Anchor clients on board, revenue

growth (B2B),

- Growing base of users, with strong

usage trends (B2C)

- ..Growth potential! Credible path to $100M Rev

Dont Expect: $ Rev, Customers, Minimum Viable

Product (MVP); full

legal documentation

Income (e.g. cash flow positive); all key management ; completely

developed business model (e.g.

understand it will change)

Income (e.g. cash flow positive)

Who/what are

they?

People you already know, that trust

you, and (maybe)

understand your

venture

Experienced early stage investors (individuals or a group)

Accredited Investors. Angel investing is not their job;

may not be F/T endeavor

E.g.: NY Angels, GoldenSeeds

Firm with multiple professionals that raises, invests and manages

individual funds (other peoples $) Working F/T (this is their job) E.g.: Greycroft, ffVC, Union Square

Angel InvestmentFriends and

FamilyVenture Capital

Youaka Bootstrapped

Earlier Stage Later Stage

Round Size $: $10s of K to $100K

$100s of K to $1M+

$500K to $1.5M

Investment Size $: $5K $10s of K $25K $75K $250K-$750K

Valuation (Pre-

Mon):

< $1 M $1 5 M $5-10 M

Seed VC Traditional Series A VC

$5M-$15M

$3M $5M

$10 25 M

Seed

confidential

III. VC Presentations / Q&A

9

John Frankel, ff Venture Capital

Ellie Wheeler, Greycroft Partners

confidential

IV. More on VCs and Fundraising: Best Practices

10

confidential

11

Sources of Investment: Seed Fundraising, Angels and VCs

Stage (Pre-Round):

Expected to have:

An idea, initial/rough b-plan

Initial founders, key advisors

Path to ???

Detailed b-plan, Key founders (bus & tech) full-time Prototype/alpha done and tested, Some piloting (paying?)

customers, some revenues?,

All legal documentation in place, board of directors

Path to break-even or next funding

Significant variation among firms but. Angel req. +:- Anchor clients on board, revenue

growth (B2B),

- Growing base of users, with strong

usage trends (B2C)

- ..Growth potential! Credible path to $100M Rev

Dont Expect: $ Rev, Customers, Minimum Viable

Product (MVP); full

legal documentation

Income (e.g. cash flow positive); all key management ; completely

developed business model (e.g.

understand it will change)

Income (e.g. cash flow positive)

Who/what are

they?

People you already know, that trust

you, and (maybe)

understand your

venture

Experienced early stage investors (individuals or a group)

Accredited Investors. Angel investing is not their job;

may not be F/T endeavor

E.g.: NY Angels, GoldenSeeds

Firm with multiple professionals that raises, invests and manages

individual funds (other peoples $) Working F/T (this is their job) E.g.: Greycroft, ffVC, Union Square

Angel InvestmentFriends and

FamilyVenture Capital

Youaka Bootstrapped

Earlier Stage Later Stage

Round Size $: $10s of K to $100K

$100s of K to $1M+

$500K to $1.5M

Investment Size $: $5K $10s of K $25K $75K $250K-$750K

Valuation (Pre-

Mon):

< $1 M $1 5 M $5-10 M

Seed VC Traditional Series A VC

$5M-$15M

$3M $5M

$10 25 M

Seed

confidential

Ea

rly

La

teVenture Capital

Mostly later stage

3,400 deals

$0.5-1.0B per

YearAngel Capital

49,000 deals

Mostly early-stage

$20B per Year

Deal Volume and Stage: VCs vs. Angels

12

confidential

Investor Profile: RosePaul Ventures, Tom Wisniewski www.rosepaul.com

Direct Angel Investor in Companies $25K-250K investments; Typical valuations: $1-5 Million, Typical Stage: at least some product done, some customer/sales traction Sector focus: Opportunistic generally within internet/software space;

- fair amount of Saas B2B, and consumer marketplace models, ecommerce enablers.- NOT (or not much?): hardware, heathcare/ pharma, cleantech

NYC based: 50% investments in NYC area companies; total of ~80% NE overall (e.gBoston, DC), 20% West Coast.

Examples:- Sociocast (social/behavioral big data analytics)

- LiveLook (Saas, live collaboration sales/service platform)

- Anvato (Ad insertion to live video streaming via proprietary machine vision)

- Moveline (Uber for the moving industry)

- Bizodo (Saas, paperwork automation; Adobe 2.0 internet document sharing) - Movio (Digital RedBox; content delivery via last 100 ft of wifi internet) - HeTexted (Relationship advice forum generating content, media opportunities)

- Wanderu (Kayak for ground transportation)

- DealFlicks (a Priceline or Hotel.com for movie theater tickets)- iCharts (tool that enables engaging, sharable, embedible chart content)

Investor in Funds In addition to direct investments in start-up