Sunday, March 25, 2012

Venture Investment

VENTURE INVESTMENT

KEY POINTS

· Estimating Market & Revenue

o Delphi or Jury Methods

o Expert or Market Research Reports (Gartner etc.,)

o Comparable Companies

o Use Probabilistic modeling such as Monte Carlo Analysis

o Decision Tree analysis

o Apply Porter’s 5 forces model to review qualitatively

· Rsik Mitigation

o Use of High Discount Rates (around 50%)

o Portfolio of products ( Not all the eggs in one basket)

o Staggering of Investment

· Management of the Investment

o To be more constructive

· Anti dilution rights & drag along rights

· Exit Strategy

o GREED IS GOD

VC PROCESS

· Business Plans

· Initial Price Indication

· Term Sheet

o Basic conditions & exclusivity

· Due diligence

o Projections

o Detailed Business plans

o Pricing

o All other terms

· Documentation

o Negotiation of documents

STRUCTURING

· Equity

· Convertible Debuntures

o Rate of Interest

o Conversion period

o Basis of conversion

· Convertible preference

o Rate of Interest – Tax implications

o Conversion period

o Basis of conversion

· Equity with performance linked warrants

· Issues

o Legal

o Effect of structure on exit options

o Structuring of the fund

No comments:

Post a Comment