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Venture Capital Investing: The Complete Handbook for Investing in Private Businesses for Outstanding Profits

  • By David Gladstone, Laura Gladstone
  • Published Aug 13, 2003 by FT Press.
    • Copyright 2004
    • Dimensions: 6 x 9
    • Pages: 528
    • Edition: 1st
    • Book
    • ISBN-10: 0-13-101885-X
    • ISBN-13: 978-0-13-101885-3
    • eBook (Watermarked)
    • ISBN-10: 0-13-204474-9
    • ISBN-13: 978-0-13-204474-5

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Product Author Bios

DAVID GLADSTONE founded Gladstone Capital and serves as its CEO and Chairman. He previously served as Chairman of American Capital Strategies, the largest public-traded leveraged buyout fund, and was past Chairman of Allied Capital, the largest public-traded mezzanine debt fund. With Laura Gladstone he wrote the classic book on obtaining financing for small- and medium-sized businesses, Venture Capital Handbook: An Entrepreneur's Guide to Raising Venture Capital. David Gladstone holds an MBA from Harvard Business School.

LAURA GLADSTONE is a Principal of Gladstone Capital. Before joining the firm, she worked in equity research at ING Barings and Salomon Smith Barney, and she was a Syndication Lender at HSBC. She has also served as Marketing Director for Allied Capital Corporation.

In his classic bestseller Venture Capital Handbook, leading venture capitalist David Gladstone showed thousands of companies how to get funding and work with early stage investors. Now, in his revision of the classic, Venture Capital Investing, he looks at venture capital through the eyes of the investor. Gladstone shows all of you VC investors and angels exactly how to weed through scores of business proposals and find the gem that will deliver outstanding returns, especially in these soft economic times. You will learn what to look for in a business proposition; how to assess entrepreneurs and their management teams; how to evaluate financial statements, market niches, competitive environments, and product innovations; how to investigate a business that's already operating; and how to build effective partnerships with existing portfolio companies.

Customer Reviews

16 of 16 people found the following review helpful
4.0 out of 5 stars VC Investing Basics, July 13, 2004
By 
EquesNiger (Koeln, Germany) - See all my reviews
This review is from: Venture Capital Investing: The Complete Handbook for Investing in Private Businesses for Outstanding Profits (Paperback)
Much updated from previous editions, David Gladstone's useful text provides a very cursory survey of deal and investment techniques, albeit for slightly later than "sexy" stage deals. However, as this book is designed for the novice, and as Lipper's text has fallen out of print, this sadly remains the only general text on VC investing for the inexperienced, and is useful in context of the level which it is designed to educate. While the many checklists may be somewhat annoying to seasoned VCs, they are probably indispensable to the novice investor, since they provide a summary framework when working through deal and business terms. And while the book is designed more for later stage (through certainly not LATE stage, as some have alluded to) deals, the book is, again, designed to educate the novice venture investor, who really shouldn't be doing high tech start-ups anyway. Irrespective of that, anyone who presumes to write a text on investing in high tech start ups would likely find... Read more
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8 of 9 people found the following review helpful
4.0 out of 5 stars Insightful!, April 29, 2004
By 
Rolf Dobelli "getAbstract" (Switzerland) - See all my reviews
(TOP 1000 REVIEWER)    (HALL OF FAME REVIEWER)    (REAL NAME)   
This review is from: Venture Capital Investing: The Complete Handbook for Investing in Private Businesses for Outstanding Profits (Paperback)
This book is a thorough, practical guide to the nitty-gritty of venture capital investing. This comprehensive, well-organized instruction manual summarizes the homework you should do before you make a venture capital investment, the paperwork needed to carry out the investment and the ongoing work you will have to undertake to have a prayer of seeing your investment pay off. If it is a little plodding, you can understand why. It covers a lot of ground. The authors compare venture capital investing to a partnership at one point, to a marriage at another. They don't attempt to sell you on venture investing. In fact, by telling you how difficult and labor intensive it is, they may even drive you away. We believe this book definitely belongs in the library of anyone who has ever taken a serious interest in venture investing. It will also help entrepreneurs who need venture capital financing by showing them how to evaluate their companies according to the criteria that serious investors... Read more
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1 of 1 people found the following review helpful
5.0 out of 5 stars Review - Venture Capital Investing by Gladstone, February 15, 2009
This review is from: Venture Capital Investing: The Complete Handbook for Investing in Private Businesses for Outstanding Profits (Paperback)
This is a fantastic book to read. Simple and comprehensive with lots of good examples and discussions, good for novices as well as finance professionals.
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Online Sample Chapter

Keys to Successful Venture Capital Investing: Due Diligence

Table of Contents



Introduction.


1. Keys to Successful Investing.

What Are the Basic Items to Look for in a Business Proposition? It's Not an Investment, It's a Partnership. Prepare a Written Summary before You Begin to Invest. What Does A Summary Look Like? Some Words about Franchising. Summary—Quick Standards of Venture Capital Investing.



2. Analysis of Management.

The Study of Entrepreneurs. Characteristics of Entrepreneurs. How We See Entrepreneurs. Interviewing Entrepreneurs. Assessment of Entrepreneurs. What Venture Capitalists Look for in Entrepreneurs. Characteristics of Small Business Managers versus Entrepreneurs. Conclusions on Entrepreneurs. Developing Background Information. Final Judgment.



3. Reviewing Personnel and Compensation.

How Is the Company Organized? How Are People Compensated? What Employment Contracts Exist? What Is the Workforce Structure? What Personnel Records Are Maintained? Major Strengths and Weaknesses.



4. Analysis of Marketing and Sales.

Who Are the People Who Market and Sell? What Are They Selling? Who Buys the Product or Service? What Is Said to the Customer? What Is the Marketplace for the Product or Service? How Is Price Determined? What Internal Reports Are Made? What External Information Is Available? Basic Information. What Are the Strengths and Weaknesses?



5. Investigating Production.

The Facility. Equipment. Production Capacity. Production Employees. Regulatory Agencies. Subcontracting Work. Inventory. Quality Control. Production Costs. Production Levels. Back to Capacity. Strengths and Weaknesses of the Production Process. Purchasing Process. Receiving. Shipping. Customer Service. Research and Development. Basic Information. Conclusions about Production.



6. Analysis of the Financial Statements and Projections.

Personnel. Analysis of the Numbers. Budgeting and Control. Past Financings. Use of Proceeds. Projections. Basic Information. Conclusions on the Financial Area.



7. Reference Information.

Corporate Identification. Corporate Structure. Management Questions. Professional References. Credit Information. Conclusions on Reference Information.



8. Negotiating the Deal and Commitment Letter.

Pricing the Deal. Commitment Letters. An Investment Memorandum. Conclusions about the Commitment Letter.



9. The Legal Closing.

First Type of Closing: Loan with Options. Second Type of Closing: Legal Documents for the Purchase of Stock. Lawyers as Investors or Business Owners. Experienced Lawyers Are Best. Procedures for Reviewing Documents. Legal Fees Keep Going Up. How Lawyers Run up Your Legal Bill. The Closing: A Moment of Truth. What to Remember About Lawyers. Documentation.



10. Monitoring the Investment.

Involvement. Major Policy Decisions. Monthly Reports. Board Meetings/Investor Meetings. Other Discussion Items. Maintaining Good Records. Warning Signs. Why Entrepreneurs Have Financial Problems. Why Entrepreneurs Have People Problems. What to Do with Problems. Secret of a Successful Relationship. Degree of Involvement by the Venture Capitalist. Venture Capitalist Objectives.



11. The Exit.

Exit One: Going Public. Exit Two: Sale to a Strategic or Financial Buyer. Exit Three: Sale Back to the Company. Exit Four: Sale to Another Investor. Exit Five: Reorganizing the Company. Exit Six: Liquidation. When You Are in a Workout. Save Your Investment.



12. Finding Good Investments.

Developing an Investment objective. Originating Investment Opportunities. Proactivity. Handling Investment Opportunities. Using Brokers. Final Word.



Appendix A: Questions Used in Venture Capital Investigations.


Appendix B: Actual Documents.


Appendix C: List of Traits for Analysis of People.


Appendix D: Evaluation of an Entrepreneur by an Industrial Psychologist.


Index.

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