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Venture Capital Handbook: An Entrepreneur's Guide to Raising Venture Capital, Revised and Updated Edition

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  • Description
  • Sample Content
  • Updates
  • Copyright 2002
  • Dimensions: F
  • Pages: 448
  • Edition: 1st
  • Book
  • ISBN-10: 0-13-065493-0
  • ISBN-13: 978-0-13-065493-9
  • eBook (Watermarked)
  • ISBN-10: 0-13-148064-2
  • ISBN-13: 978-0-13-148064-3

In Venture Capital Handbook: Revised and Updated Edition, leading venture capitalist David Gladstone and Laura Gladstone walk you step-by-step through the entire VC funding process, showing exactly how to get funded fast -- without the trauma. This end-to-end update of the classic VC guide covers the latest techniques, tax rules -- and, above all, marketplace realities.

Online Sample Chapter

Creating a Proposal for Raising Venture Capital

Table of Contents



Introduction.


Acknowledgments.


1. Anyone Can Raise Ventura Capital.

I'll Back You. What Is Venture Capital? When Did Venture Capital Begin? Types of Venture Capital. Where Can You Find Venture Capital? How Do Venture Capital Companies. What Types of Business Do VCs Back? Which Industries Do Venture Capitalists Prefer? What Types of Products or Services Do Venture Capitalists Prefer? How Much Venture Capital Is Available? Opportunities Available for Entrepreneurs. Can You Raise Venture Capital? How Much Money Should You Seek? What Type of Funds Are You Seeking? How Will the Venture Capitalist Be Involved? How to Select a Venture Capital Company. Should You Phone the Venture Firm? Other Questions for the Venture Capitalist. How Long Does It Take to Get the Money? Myths About Venture Capital.



2. Summary Presentation.

What Does a Summary Look Like? Why Is the Venture Capitalist Interested? How to Complete a Summary. Type of Business. What Kind of Cover Letter Is Needed? Strategic Use of Summary. Another Kind of Venture Capital. Perspective for Your Summary. What Do Venture Capitalists Think About Summaries? Confidentiality of Your Great Idea. Objective.



3. The Proposal.

Should You Use a Broker or Consultant? Most Important Quality of a Business Proposal. Do You Really Need All of This? What Is the Venture Capitalist Really Looking For? How to Package Your Proposal. How Many Venture Capitalists Should Be Contacted? Syndication's. Objective.



4. A Thousand Questions.

What Are the Major Questions? Business Proposal Questions. Other Information the Venture Capitalist Will Need. Will the Venture Capitalist Ask All These Questions? Objective.



5. Meetings and Negotiations.

The Office of the Venture Capitalist. What Do Venture Capitalists Look Like? How Long Will the Meeting Last? What Is the Object of the Meeting? What Happens in a Typical Meeting with a Venture Capitalist? What Type of Presentation Should Be Made? What is The Primary Characteristic the Venture Capitalist Is Seeking in an Entrepreneur? What Are the Other Characteristics of the Entrepreneur? Know Your Stuff. Things You Do Not Say to the Venture Capitalist. Things Not to Do in the Meeting. How to Negotiate in the First or Subsequent Meetings. How to Cut the Deal. Ownership by the Venture Capitalist. How Do Venture Capitalists Price Investments? Downside Risk. After the Negotiations. Objective.



6. The Commitment Letter.

Commitment Letters. What Is In the Commitment Letter? Comments on the Commitment Letter. What Is An Investment Memorandum or Term Sheet? Consulting Agreement. Nonlegal Commitment Letter. Arguing Over Minor Points. Items You Should Not Sign in the Commitment Letter. Objective.



7. Due Diligence.

What to Expect From a Visit to Your Business. How to Give a Good Cook's Tour. Investigating the Individuals. Venture Capitalists Are Paranoid. Other Aspects of the Background Check. Do They Have a Test for Entrepreneurs? Experience Is the Watchword. Investigating the Entrepreneur and the Team. Questions for Other People in the Organization. Investigating the Business, the Product, and the Industry. When the Venture Firm Finds Something Wrong. Questions for the Venture Capitalist. Background Information on the Venture Capital Company. Timing Questions for the Venture Capitalist. Objective.



8. The Closing.

First Closing: Legal Documents For Loans With Options. Simple Is Good. Unethical Venture Capitalist. Second Closing: Legal Documents for the Purchase of Preferred Stock. Lawyers as Businesspeople. Experienced Lawyers Are Best. Legal Fees Keep Going Up. How Lawyers Run Up Your Legal Bill. Syndications and Lawyers. The Closing: A Moment of Truth. Closing Fees That You Pay. What to Remember About Lawyers. Objective.



9. Working Together.

Major Policy Decisions Should Be Joint Ones. Monthly Financials. Hold Board or Investor Meetings at Least Monthly. Other Discussion Items for the Venture Capitalist. You Are Building Confidence. Warning Signals to the Venture Capitalist. Why Entrepreneurs Have Financial Problems. Why Entrepreneurs Have People Problems. The Protean Entrepreneur. When You Have Problems. Analysis of the Situation. What the Venture Capitalist Will Do. Ten Things Not to Say. Secret of a Successful Relationship. Venture Capitalist as Board Member. Degree of Involvement by the Venture Capitalist. Objective.



The Exit.

It's All a Matter of Price. First Method: Going Public. Second Method: Purchase by the Company or Entrepreneur. Purchase by Employee's Stock Ownership Trust. Exit by Puts and Calls. Third Method: Sale of the Company to Another Company. Fourth Method: Finding a New Investor. Fifth Method: Liquidation of the Company. Negotiating with the Venture Capitalist. Objective.



11. Using Brokers.

Accountants: How to Use Them. Investment Bankers: What They Can Do. Lawyers: Are They O.K. as Financial Brokers? Independent Financial Brokers: What Do They Want? Qualities to Look for in a Broker. Agreement with the Broker. Some Tips on Dealing with Brokers. Amount and Type of Fees. Who Should Present the Plan to the Venture Capitalist? Objective.



Advice From Us to You.

Keeping Up With Venture Capitalists. Selecting a Venture Firm. Venture Capital Process. Venture Capitalists as Human Beings. Problem Companies Looking for Financing. Financing for Your Job or Your Ego. Too Much Information. Do You Understand Credibility? Ten Commandments for an Entrepreneur. Parting Shot.



Glossary.


Actual Documents.

Commitment Letter. Legal Document 1. Legal Document 2. Legal Document 3. Legal Document 4. Legal Document 5.



Index.

Preface

Introduction

This book has been great fun to write, and, with this revision, it is ready for another 15-year run. One of the teachers currently using the book in her class calls it a classic. When the book was written almost 20 years ago, there was no indication that Venture Capital Handbook would become a classic. But with the tremendous increase in venture capital and the many new and young businesses looking for VC, the book has proved its worth by filling a need for guidance in this field.

The chief strength of the book is that it is a "nuts and bolts" approach on how to raise venture capital. It talks about the process in straight talk without a lot of theory or war stories. It shows the reader how to win the game of raising venture capital.

It has been gratifying to see Venture Capital Handbook be so useful to so many entrepreneurs and small business owners. Some entrepreneurs, in letters to the author have claimed to have raised great sums of money using this book. It is wonderful that there are so many business schools that use the book today, and it is gratifying to know that so many people are studying how to raise venture capital. It would be fun to know how many billions of dollars have been raised by venture capital firms by using this book. It would be quite a rush to know exactly how many businesses came into existence because of this book.

We know the book is having an impact because our venture capital friends make snide comments to us about "giving away the secrets of the business." It seems that we have made it more difficult for them to gain the advantage over the entrepreneur. But we are sure that this book has also made it easier for them to work with some of the entrepreneurs who have read it because the book gives the reader some insight into the world of the venture capitalist.

In this second edition, we have a father-daughter team doing the revision and updating the book for the current times. It has been easy to update the book because so much of the business of raising venture capital has not changed. We both work at a new fund we created called Gladstone Capital Corporation. Our Web page is www.gladstonecapital.com. Come visit our Web page and learn about our fund and more about venture capital.

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