Things early-stage startups need to know for an efficient pitching

With early-stage startups, what you already have may not be enough for investors to linger longer to “find out” your potential. So, show your team’s potential in the most impressive way at your PD. The article will give a simple guideline as well as some tips from a VC perspective to help teams have the most effective PD and pitching.

1. COVER

  • Introduce the product with a brief, impressive summary
  • Contact of CEO, founder

2. MARKET AND PAIN POINT

Key question: Is the market you selected big enough and has enough room for you?

  • Market: Briefly describe the market you choose
  • Market size: The size of the market with specific figures, demonstrating its potential
  • Key metrics: TAM (Total Addressable Market), SAM (Serviceable Available Marke), SOM (Serviceable Obtainable Market)

Pain points:

  • What is the size of the customer group that is having this problem?
  • What are they doing to deal with not using your product?
  • Why is the current solution of the customer group not optimal?

3. SOLUTIONS

Key question: How does your product solve the pain point of the market?

  • Summarize the solution that your product brings in the most understandable way.
  • Specify how your product solves the pain point.
  • Highlight the optimization of your solution. Is this optimization worth the money customers spend?

4. BUSINESS MODEL

Key question: How does your product make money?

  • How will the cashflows in/out of your product?
  • Clarify break-even point as well as expected profit growth of the product

5. COMPETITION

Key question: How do you outperform your competitors (directly and indirectly)?

  • A panoramic, objective view of your competitors and yourself in the market.
  • What is your competitive advantage over your competitors? Does this advantage make customers choose you over your competitors?
  • If there is a new player entering the market with a product similar to yours, what is your competitive advantage?

6. TRACTION AND FINANCIAL INDICATORS

Key question: How is your product performing?

  • Traction (Product performance): The indicators depend on your product. However, for early-stage startups, the most important metrics revolve around users: number, growth rate, return rate, paid rate:
    • Total user, MAU, DAU, PU
    • Growth rate:
    • Retention rate:
  • Financial indicators:
    • Profit and Loss in total and per user
    • Cost allocation: Operation cost, Acquisition Cost, etc.
    • Financial assumptions

7. GROWTH STRATEGY AND KEY MILESTONES

Key question: How do you develop strategies and specific plans to realize them?

Business expansion strategies typically include:

  • Product development strategy: develop, improve what features?
  • Customer strategy: How do you attract new customers and retain old customers?
  • HR strategy: Plan to develop personnel (in terms of skills, capabilities) or recruit more, etc. when the business expands.
  • Market expansion strategy: does the team plan to expand into another geographical area, another field?… However, with an early-stage startup, you should seriously consider including this factor. or not to avoid being judged that “standing in this mountain and looking at that mountain”, “distracted”. Mention this strategy when you can really convince the listener/reader.

Put the strategy into an Action plan with specific timelines and actions the team takes to realize it.

8. TEAM

Key question: Why should investors believe that you will do what you say?

This is one of the most important factors, because in the early stage, all the numbers are not certain and clear enough. At that time, a quality and enthusiastic team will be an extremely important factor for investors to believe.

  • Academic background and Past experience of key members: Presenting the most outstanding, most relevant, and special experiences of the founder, CEO, and CTO.
  • Team structure: Should list no more than 5 people in the founding team, should choose the most prominent and relevant experienced members to introduce.
  • Briefly share the team’s story (if any). It can be the inspiration, goal, vision that makes your team more cohesive, more determined to win this game.

9. FUNDING

Key question: How would you recommend investment cooperation?

  • Current cap table
  • Use of proceeds: How much do you want to call? With what form? Purpose of use of that money

Startup valuation: How to valuation and the back of it

Startup Valuation: Estimating the value and performance of a startup, is an important part of the fundraising process because it helps founders determine how much money should be offered to investors.

It is also a measure by which investors estimate future profits. So it’s not possible to come up with a random number and claim that’s your company’s valuation. It takes math and all the data to come up with a fair and acceptable valuation.

But valuation is NOT an exact figure, as a company’s true value cannot be known, and a lot of startups are yet to generate revenue and profits. Therefore, valuations are mostly conjectures agreed upon between the founder and the investor. The only thing it shows is how much the market is willing to pay for a startup and how willing the founders are to accept that number.

And since valuation is often determined when transactions like investments or acquisitions take place, much of the value also depends on how the founder and investor negotiate. And founders should be wary when a transaction appears to be undervalued or overvalued.

Being overvalued will make the next round of fundraising more difficult. So in case no one tells you this, just remember: If your startup is unbelievably overvalued, you might want to consider asking for less. “Meaning negotiate down?” “Yeah” “Can do that?” “YES”.

Still undervalued will be diluted in the previous rounds, but overall, this is a minor issue if the company is doing well. At the next stage, you can raise at a better valuation with less dilution later on.

Valuation is one of many indicators of success, not the only one. Getting caught up in business valuation will distract the founder from running a good business. Entrepreneurs need to focus on creating value. Focusing on business development will not lack investors. Above all, investment deals should not be seen as merely an opportunity to earn additional capital. Investor can also act as a mentor and advisor to the founder. There are many cases when founders and investors get stuck discussing valuation and forget that a potential partnership between them would be more profitable for the parties involved.

Finally, it’s important to remember that we’re in the long haul and there will be times when you’ll make mistakes and the company is going through a tough time. At that point, you’ll want to build a sufficient trust base with shareholders that they’ll be willing to bang the table for you before their IC committee or their fund because of their faith in you.

So no matter if it’s a VC or a startup founder, take a really long-term view of negotiating terms and pricing rather than pushing every penny, for money or those fringe terms, Honestly, it won’t work in the long run. But the relationship you build with your shareholders will be more helpful and impactful.

SOME METHOD OF STARTUP VALUATION:

1. Discounted Cash Flow (DCF): This method calculates a startup’s valuation based on the present value of expected future cash flows.

This method often focuses on the company’s numbers, without taking into account market factors such as investor enthusiasm, meaning that using this method can ignore market considerations. important. This model requires accurate figures for revenue and expense projections (recommended for startups in series D or higher, early stage startups will have a hard time predicting exact numbers).

2. Relative method: compare key business/financial metrics of the business with other companies in the industry. This method provides comparison and checkpoint for founders and investors, as it uses other companies in the industry as a benchmark.

However, it is susceptible to market hype, meaning the number could be overvalued or undervalued, depending on investor sentiment towards the industry in question.

3. Valuation Multiples Method: this method is the most favorite because it can be applied to almost any startup, any stage or industry. The first thing to do is determine the multiples.

Some common ways (The numerator is the inherent value of the company, and the denominator is the main business/financial metric):

  • Enterprise value/Revenue
  • Enterprise Value/EBITA
  • Price/Earnings

Once the multiples have been determined, the next step is to find the points of comparison. To do this, make a list of comparable companies (“comps”). Must be companies in the same industry, ideally at the same size and maturity level as your business. Compare with public companies, because they will make the data public. If you want to compare with other startups, check the latest funding rounds to get the right number.

If you’re valuing a startup’s next 12 months of revenue, you’ll also need to compare it to revenue next 12 months. Based on that, you can calculate the multiples of each comps. That leads to the final step – applying multiples. Based on the company multiples, you can apply the average to the numbers to calculate the value. However, because valuation is not an exact science, remember to stress test the numbers. You can also look at the 25th and 75th percentiles as guidelines to give you a range for your valuation.

In case you are a bit confused, let’s come to the example of Fancy Fintech Ltd. The startup is about to call a series A round, with $10 million in sales last year and growth forecasts this year.

Founder of Fancy Fintech decided to use Enterprise Value/Revenue as the main multiple because it is simple and easy to compare. Then find competing fintech businesses and come up with a list of 3 to 6 that are relative in terms of size, product, business model, and geography. Then calculate each ratio Enterprise ValueRevenue of the company. Finally, apply multiples.

For Fancy Fintech, their average Enterprise Value/Revenue ratio is 8x. So take the revenue of US$10 million multiplied by 8 to get a pretty viable amount of US$80 million.

In general, which valuation method you use largely depends on the original rationale. In addition to the method above, you can choose from other less common valuation calculations, each with different use-case applications such as:

If you are an investor and are looking to acquire a company, you can also consider duplicating pricing. Let’s say, as a company when buying a startup, how much does it cost me to recreate this startup.

A prime example was when Google acquired YouTube in 2006. At the time, Google had a competing video product, Google Video, but in its review, the tech giant determined that it was in order to start. keeping up YouTube will cost more than acquiring it.

In addition, how the value is determined will also depend on the stage of development of the company, mainly because investors look at different aspects of a business, depending on its maturity:

During the seed round, investors will consider whether the idea is a promising idea and business potential. So it depends a lot on the aspirations of the founders, as there are not many achievements or traction to judge.

  • In series A, there are many factors that go into whether you have said what your aspirations are? And how is the business? Will you be able to follow through on what was said?
  • In series B, they will determine if you are a market leader or not? Because if this industry and business is something right, there will be more than one player, and the question is are you a top player? Because the market leader has a higher chance of survival and a higher probability of success.
  • In series C, the focus is on profitability as a company.

After all, the above formulas are still just formulas. Since valuations are often determined when investments or acquisitions take place, the founders’ ability to negotiate throughout these processes is also important. It is for this reason that many people consider startup valuation to be both an art and a science.

Should I raise debt or equity?

Startups often raise their seed round by selling convertible debt instead of equity because debt is simpler and cheaper. Read Yokum Taku’s excellent series on convertible debt for a primer.

Seed stage convertible debt agreements are fairly simple, especially if your investors are angels. There isn’t a lot to hack into these agreements. You should be more careful if your debt investors are VCs, but these debt financings are still much easier to negotiate than equity financing.

Later stage convertible debt can get complicated and adversarial. We know companies that took convertible debt from a corporate investor and couldn’t pay the debt back on time—which triggered the corporate investor’s right to take over the company. Fun stuff.

If you are raising convertible debt, you should focus on negotiating simple and short documents, closing quickly and cheaply, and maintaining your options for Series A. But first…

Determine whether you should sell debt or equity.

Let’s say your seed investors purchase debt with a 20% discount off the Series A share price. If you eventually sell shares in Series A for $1 each, the seed investors will convert their debt to equity for $0.80/share.

Now, let’s say your seed investors are willing to buy equity for $0.90/share instead of buying debt. Should you sell debt or equity?

You should sell debt only if you can use the money to increase today’s share price by over 25% before the Series A financing. Otherwise, sell equity.

In this example, debt is worthwhile if you think you can sell Series A shares for over $0.90/share × 125% = $1.125/share.

Let’s say you decide to sell debt in your seed round and you raise a Series A at $2/share. After applying a 20% discount, your debt investors pay $1.60/share for their Series A shares. You were wise to sell debt to your seed investors in the seed round instead of selling them equity for $0.90/share.

But if you raise a Series A at $1/share, your debt investors pay $0.80/share for their Series A shares. You should have taken their offer to buy equity at $0.90/share in the seed round.

In general, you should sell debt only if you think it will increase your share price over today’s market price for your shares ÷ (1 – discount).

Selling debt is usually better than selling equity in a typical seed round.

If you are raising a typical seed round, say $50K-$500K, you probably want to sell debt instead of equity. If you raise enough seed debt to last 6-12 months, you should have enough time to increase your valuation by the 25%-100% required to overcome typical discounts of 20%-50%.

For example, if you raise $250K in a seed round in return for 15% of your equity, your seed round pre-money valuation will be $1.42M. You should raise debt instead if you expect your Series A pre-money valuation to be at least

$1.42M ÷ (1 – .2) = $1.77M (in the case of a 20% discount)

or

$1.42M ÷ (1 – .5) = $2.83M (in the case of a 50% discount).

In general, if you don’t think you can increase your share price and valuation by 2 to 3 times in every round of financing from Series A to Series C, you should probably pack up and go home. In fact, the company’s share price typically increases the most from the seed round to the Series A as the business goes from nothingness to product, users, or revenue.

Selling lots of debt may be worse than selling equity.

If you are raising a large seed round, say $1M, you may want to sell equity instead of debt.

For example, if you raise $1M in a seed round in return for 15% of your equity, your seed round pre-money valuation will be $5.67M. But if you raise $1M in return for debt at a 25% discount, your Series A pre-money will have to be at least

$5.67M ÷ (1 – .25) = $7.56M

for the debt to be worthwhile. $1M of seed financing may not take your Series A valuation above $7.56M—you may want to sell equity instead of debt in the seed round.

How have you decided to raise debt or equity?

How much capital should be raised for the next investment round?

SOME NOTES ON STARTUPS NEED TO PREPARE WHEN SENDING CAPITAL.

When approaching raising capital, investors will often be interested in certain issues when looking at the business plan of startups such as profit (Income), profit margin (Margin Profit), and costs. capital (CapEx – Capital Expenditure). But besides that and equally important, investors will need to know real, relevant data on cash-ins, cash-outs, and projected milestones. company’s vision for the future.

In a nutshell, venture capitalists want to know how much money startups need to raise, what is the purpose of use, and what is the duration of that money.

1. CASH IN

Here will be the number of capital startups want to raise; and VCs will often want to see the legitimacy of a given number. Some frequently asked questions might be: does the amount you call align with what the startup wants to achieve? Given the current needs of startups? With the company’s human resources and capabilities? The advice here would be to consider raising the right amount of capital over a 12, 18 or 24-month period.

“Don’t ask for more than the current need, but make a strategic plan to run your company.”

And when you get advice like this from investors, it’s a signal that they may not be interested in your company.

2. CASH OUT

This is the case when the startup uses up all the capital raised before the calculation deadline for the next round. The advice here would be not to draw up a plan with the amount of capital needed to keep the company operating for more than two years, even three years.

What investors always expect when pouring money into startups is liquidity through exit strategies to gain profits.

3. END

VCs will typically lead a round of capital and refer the startup to other funds on the next call. Some questions startups can prepare for next time are:

  • What are the milestones and achievements you need to achieve before your next fundraising?
  • Are those milestones and achievements enough to spark interest in other VCs?
  • Will, what you get will be enough to make VC spend a higher amount in the next capital call?
  • Have you made significant progress in recent years?

Planning a fundraising strategy is not a simple matter, the thing to consider here is the support of experts in tailoring the capital raising plan to suit the company’s situation, ensuring that the investors. The data number is accurate and effectively linked to the next fundraising.

12 questions Founders need to ask VC before “closing deal”

Entrepreneurs are often so focused on trying to “close the deal” with the VC – and always try so hard to answer any questions posed by the VC – that they forget to ask the VC any questions!

Here are 12 questions founders should ask potential investors more often:

1. Is there a CAPITAL DEPOSIT?

You want to start your fundraising process by finding a lead investor. If a certain VC refuses to take the lead, keep talking to them, but at the same time make it a priority to find another partner who is a better fit. Many fundraising processes were abandoned because the founders could not find primary investors.

It’s easy to find dozens of companies that want to fill a round, but most will want someone else to take the lead first. A lot of founders only discover this fact after having conducted more than 3 meetings for negotiation – this is a HUGE waste of time.

2. HOW MUCH % OF THE FUNDS IS THIS INVESTMENT?

In general, the larger the percentage, the better – that means the VC has more “flesh in the game”. Keep in mind, the larger the number, the more closely investors will monitor your progress!

3. DO YOU STAY ON THE BOARD OF DIRECTORS?

Here’s another question that gauges how important VCs are to your startup. Financial capital is easier to obtain and deploy, it is the reputation capital and time of VCs that are the real currency in today’s venture capital market.

4. HOW MUCH BETWEEN THE INITIAL AND CONTINUOUS INVESTMENT?

Most VCs make the initial investment and “reserve” the funds to maintain their ownership in future rounds or to help a struggling startup in need of cash.

This reserve is often described as a ratio, for example. 4:1. So if a VC invests $1 million in your #Seed round, they theoretically have $4 million available for your future rounds. But don’t be sure that they will, especially if you have a rough start…

5. HOW MUCH ONE TIME DO YOU INVEST IN THE NEXT?

VCs are not lifecycle funds, but they always make small investments in the startup’s next round of valuation to signal their support for the venture capital market. However, most funds make individual decisions about the companies in their portfolio, and that can create “signaling risk” for startups.

6. HAS VC LED ANY NEXT INVESTMENTS?

One benefit of having ample reserves is that VCs can “bridge you” if you don’t achieve breakout growth. However, some companies have policies against this, which also negates the benefit of a large reserve fund for your startup.

7. WHAT ARE THE FUTURE REPORTING REQUIREMENTS?

You should set expectations for the communication process from the start – some VCs like to visit you quarterly. Others may want you to stay updated by presenting at the annual partnership meeting.

8. DO WE COMMUNICATE WITH ANYONE ELSE ON THE TEAM?

Some VCs will introduce you in CEO forums, introduce you to cross-functional teams of experts, and cover all your needs. Others will write checks and dig until things start to work out.

9. HOW does the VC handle POTENTIAL COMPETITIVE SITUATIONS?

Ask VCs how to share information in their portfolio. What if a company appears to be #pitching for them or they receive a pitch deck from a competitor to your startup – what is their policy on how to handle these situations?

10. VALUATION ROUND OR CONVERTIBLE LOAN 

Each VC has a different preference. Today, most VCs will participate in both a valuation round and a convertible loan, depending on the situation. Find out which will happen and they will usually also ask for a side agreement.

A sub-agreement that enacts simple agreements on future equity. The sub-agreement includes a number of rights that are sometimes granted exclusively to investors, such as the right of first preference (or right of way), the “Major Investor” right, the right to reimburse expenses, the right to information, and observer rights.

11. HOW IS THE STARTUP ASSESSMENT PROCESS?

Each company has different standards, but generally, you should expect them to ask for references and access to a company’s financial and operating data. The later the funding round, the more detailed you should expect them to do.

12. HOW MUCH IS THIS INVESTMENT IN THE FUND?

This is a good question to ask if this VC is a new fund or outside of the traditional VC circle. It would be helpful to know if your potential VC will be around for the next few years. This is less of a concern with established funds.

This is not an exhaustive list. Of course, you want to ensure that you and your investors see firsthand the core aspects of your business, the product roadmap, the speed at which you plan to deploy capital, and so on.

A few more notes:

HISTORY IS BETTER THAN THEORY

It’s easy to talk about what you’re going to do; It’s more impactful to talk about what you’ve done. Be suspicious if reputable investors answer your questions abstractly rather than with concrete examples.

BE CLEAR

Don’t ask all of these questions in your first meeting. “Are you in the lead?” is the only question you should definitely ask first; The rest should be through email and meetings Monday and Tuesday when you feel interested.

DON’T JUST ASK VC

Do your own due diligence on the VC. Get in touch with founders that VC backs have been successful and, more importantly, those that have not! This is too big of a commitment to entrust completely to your intuition!

Don’t Raise VC Money Before You Understand Unit Economics

The coronavirus has not loosened these criteria. Commercial traction is not a magic phrase that gets you money. The quality of this traction and how that projects into the future matters even more.

Investors will ask questions such as:

  • How much money are you spending to get each client?
  • What is each client worth to you?
  • What percentages of your clients will churn?
  • When do you expect profitability?

These types of questions help investors create an economic health check, otherwise known as Unit Economics. The outcome will determine if you have the potential for sustainable growth and if your company has the potential to be valued at 8 or 10 times your revenues upon exit, meaning Enterprise Value (EV) / Revenue will be 8 or above.

Shift in the investor’s mindset

Unit Economics was not always in the investor’s mindset. Not long ago, investors rewarded high-growth companies, without looking at the costs. These companies survived and thrived for years, at the expense of their investors, and normally hit a wall when attempting an IPO and more conservative investors analyzed the numbers. We’ve witnessed a drastic pivot in the VC industry toward a more conservative result-based mindset. COVID-19 has made this even more apparent.

Basic requirement at any stage

Investors are looking for entrepreneurs who understand Unit Economics. Even if the economic indicators will straighten out in a few years, they want to know that you, the entrepreneur, know where you’re headed, and that you’re measuring the right economic indicators to steer the ship in the right direction.

The three main rules of Unit Economics

  • Rule of 3: The lifetime value (LTV) to customer acquisition cost (CAC) ratio is at least three. Lifetime value is calculated as the gross profit per user, multiplied by the lifetime. Lifetime is calculated as one divided by churn. Having a high LTV/CAC ratio may not be an advantage, as it could mean you are not spending enough on marketing and sales while your competitors are. Hence your growth will be slow and you will lose market share. If your LTV/CAC ratio is lower than three, investors will question the scalability of growth and spending needed to grow larger.
  • Rule of 40: EBITDA margin in percentages, plus annual growth in percentages should sum up to 40 percent or higher. Balancing profitability with growth is essential. As most SaaS-based tech startups are not profitable, they would require a growth rate of 40 percent or above to survive in the long term and provide a revenue multiple of eight or above. Profitability (EBITDA margins) of 10 percent means you can grow at 30 percent or higher.
  • Rule of 4: The growth to churn ratio should be four or higher. Churn is the percentage of people who leave in a period of time. So the growth of 40 percent allows for a churn of 10 percent, which is not easy to reach. It should be noted that churn figures are very hard to come by as companies tend to keep them a secret. Enterprise B2B SaaS companies can have a churn of 5 percent to 10 percent. Companies focusing on medium/small size businesses or B2C startups normally see a double-digit annual churn rate.


Summary

While you build your forecast and business plan, you should note the basic Unit Economic indicators. Beyond the numbers, the C-level executives have to create a culture of great customer service, of value-adding products that continuously evolve, with a good pricing strategy that makes sense to the end user, and that rewards long-term engagements. Adhering to the Unit Economic mentality could help you commercially as well as with your fundraising efforts.

What do venture capital funds seek for in an investment?

Venture capital is one of the options for early-stage companies and startups raising capital. To attract the fund, the company needs to prepare an excellent business plan. Before doing that, it is better to understand what a venture capital expects for new investment.

An attractive business plan will prove the following
The team and assets to be committed to the business can plausibly sustainable market power in a market large enough to justify the investment.
according to Dermot Berkery, author of Raising venture capital for the serious entrepreneur.

Market power is a key ingredient missing in most business plans. Hence, Dermot Berkery addresses three main propositions to examine if the business is worthy of investment from the view of venture capitalists. 

Potential for accelerated growth in a big, accessible market

Venture capital investors will generally invest in a company only where they can see a way to earning a 10 or higher multiple on the investment. Thus, VCs focus heavily on the size of the market. They want to be involved in a big market that the company can grow quickly to a large size. But they are just like one that is not well signaled to investment communities. The reason is the weight of capital pursuing opportunities through different investment vehicles might drown the prospects of achieving great return on capital. 

Ideally, they want to get involved in markets that rights on the cusp of takeoff that customers are yet willing to consider the product and there are no established competitors with good revenues. The business plan needs to outline how the early sales will be closed and how the sales model will scale over time, as well. They will assess whether the company will dominate in the industry, ranked 1 or 2. The dominance assures the ability to gain supernormal return as above mention. 

Achievable position of market power

The business must meet three requirements: convey huge value to customers relative to offerings of competitors; have a sustainable, defensible position; yield very high gross margins (at least 70%).

Capable, ambitious, trustworthy management

Quality of management execution has a significant impact on the success of a company. Venture capital fund tends to look for a superb team that owns good characteristics including a balanced team, deep domain knowledge, prior experiences and record, and ambition.

The team needs to be balanced with a mix of technical, sales, marketing, skills, etc. Investors don’t want to back an individual, they want to back a team. The team needs to possess knowledge and insight not only macro-level trends but also micro-level facts. The company has more opportunities to convince VCs if members own great highly relevant resumes. More importantly, VCs want to cooperate with trustworthy and passionate management, who adapt to changing the business environment.

Still curious and want to learn more? Here is a unique opportunity to meet and talk with Dermot Berkery. We’re pleased to host the event with his presence called Etalk Adventure to the Venture | Chat with VC Elite

  • Date: Saturday, 28.08.2021
  • Time: 03:00 PM – 4:30 PM (Vietnam Time)
  • Register here: https://www.facebook.com/events/573363153663564
  • Submit your Question before the event to get a chance to meet 1on1 with our speaker: https://bit.ly/VVCP-Etalk-Exclusive-Chapter-QnA

Writter: Hằng Thu – VVCC Project

Raising Venture Capital for Serious Entrepreneur at a glance!

Raising capital from venture capital funds becomes more popular in Vietnam. To succeed in raising new business capital on the most attractive terms, it is essential to understand how venture capitalists arrange the financing for a company, what they look for in a business plan, how they value a business, and how they structure the terms of an agreement. The Raising Venture Capital for Serious Entrepreneur written by Dermot Berkery, an internationally know venture capitalist with Delta Partners, is an excellent resource to meet these expectations. The book also matches the interests of the person who pursues a career in the venture capital industry. 

Dermot Berkery is a general partner with Delta Partners, a leading European venture capital company that invests in Ireland and the United Kingdom. He has led investments in early-stage companies in sectors such as software, electronics, mobile services, medical components, and security equipment. Mr.Berkery was formerly a senior Manager with McKinsey&Co., where he served clients across the U.S., Europe, Australia, and Asia, focusing mainly on financial services and energy. 

Using informative case studies, detailed charts, and term sheet exercises, the author discusses the basic principles of the venture capital method, strategies for raising capital, methods of valuing the early-stage venture, and proven techniques for negotiating the deal. These contents break down into 12 chapters:

  • Chapter 1 outlines how the long journey of building a valuable business should be broken into a series of stepping stones. Each stepping-stone comprises an integrated group of milestones (related to the product, market, customers, management, etc.). 
  • Chapter 2 focuses on the first of the stepping-stones.
  • Chapter 3 mentions 10 unique cash flows and risk dynamics. 
  • Chapter 4 covers how much capital a company should seek to raise in a round of funding and what it should spend the capital on. 
  • Chapter 5 describes how the structure of a fund and the compensation approach drives a venture capitalist’s behavior and thought process. 
  • Chapter 6 covers the blocks of evidence a typical investor will want.
  • Chapter 7 addresses the area fudged by other books on VC how to set a fair valuation for a new or early-stage company. 
  • Chapter 8 introduces the concept of term sheets. 
  • Chapter 9 talks about terms for splitting the rewards.
  • Chapter 10 enables investors to exercise control that is disproportionate to their level of shareholding. Retaining certain decision rights or appointing board members can achieve this. 
  • Chapter 11 helps to closely align the economic interests of the investor and the entrepreneurs through techniques such as vesting and warranties. 
  • Chapter 12 provides an exercise on term sheet negotiations.

Readers will find it valuable since the author uses plain language, simple explanations for jargon together with mini-cases throughout the book. The book will help you solve a lot of questions reasonably. 

Grab a chance to talk directly with him by joining this Saturday event called Etalk Adventure to the Venture hosted by Wiziin & Embassy of Ireland in Vietnam!

The review contributed by Hằng Thu – VVCC Project

The review of “Raising Venture Capital for the Serious Entrepreneur – Dermot Berkery” from Prof of Sacred Heart University

Raising Venture Capital for the Serious Entrepreneur là một hành trình đầy thú vị về thế giới của ngành đầu tư mạo hiểm. Cuốn sách mang lại một cái nhìn đầy cuốn hút về thế giới “bí ẩn”, nơi mà các nhà đầu tư mạo hiểm quyết định nên đầu tư vào công ty nào, với số tiền bao nhiêu và thu lại được những gì; đồng thời, giúp doanh nghiệp có được nhiều tips quan trọng về chiến lược gọi tài trợ bằng vốn chủ sở hữu (equity financing) và đàm phán với các quỹ đầu tư. 

Năm phần của quyển sách đưa chúng ta qua trọn vẹn hành trình huy động tài trợ bằng vốn chủ sở hữu.

Phần Một đưa ra những kiến thức căn bản về việc làm cách nào để doanh nghiệp chuẩn bị huy động vốn & bao quát nhiều đề tài liên quan, ví dụ như tạo lập bản đồ của những cột mốc (stepping-stones): Những cột mốc nào có thể đạt được và sẽ đạt được nhờ vào nguồn vốn tài trợ? Berkery chỉ ra cách nhà đầu tư mạo hiểm thường sẽ đầu tư từng phần, theo giai đoạn, và họ cho rằng các doanh nghiệp sẽ đạt được những mục tiêu cụ thể (stepping-stones) cho từng giai đoạn đầu tư. Cuốn sách cũng thảo luận về J-curves và những điểm đỉnh mà dòng tiền cần có, điều mà rất nhiều doanh nghiệp thậm chí còn chưa từng nghe đến để mà cân nhắc. 

Phần Hai của cuốn sách tập trung vào việc huy động vốn, bao gồm những chủ đề như làm sao để quyết định số tiền mà doanh nghiệp cần, làm cách nào để viết một kế hoạch kinh doanh thuyết phục. Phần Hai cũng mô tả cấu trúc công ty của các quỹ đầu tư mạo hiểm, những nhà đầu tư nào sẽ rót tiền vào những quỹ đầu tư này, và quan trọng hơn cả là các quỹ đầu tư này thu lợi như thế nào từ những nhà đầu tư vào quỹ và từ chính quỹ này. Phần này bao gồm rất nhiều thông tin quan trọng dành cho các chủ doanh nghiệp, vì việc hiểu rõ các quỹ đầu tư hoạt động như thế nào là vô cùng hữu dụng trước khi các doanh nghiệp tiếp cận một hoặc nhiều nguồn vốn tiềm năng.

Hầu hết mọi chủ doanh nghiệp đều lo lắng khi được hỏi về định giá trước khi góp vốn của doanh nghiệp mình là bao nhiêu. Đó gần như là một câu hỏi không thể trả lời được, và có rất nhiều điều mạo hiểm khi trở thành người đầu tiên đưa ra “một cái giá” cho doanh nghiệp. Phần Ba của cuốn sách trả lời nhiều điều bí ẩn về việc định giá này. Cuốn sách đưa ra lời giải thích hoàn hảo cho việc tại sao những cách định giá truyền thống mà chúng ta học trong sách vở không hề hữu dụng, cũng như đề ra cách để tối đa hoá giá trị của một công ty. Lời giải thích cho quá trình định giá là vô cùng bổ ích cho các chủ doanh nghiệp trong việc huy động vốn hoặc đơn giản là muốn bán đi doanh nghiệp của mình trong tương lai.

Một điều bí ẩn khác đối với các doanh nghiệp được giải thích kỹ lưỡng trong phần Bốn đó chính là những chi tiết khi đàm phán điều khoản đầu tư (term-sheets), bao gồm những thuật ngữ khó hiểu thường được đưa vào những bản điều khoản này. Rất nhiều chủ doanh nghiệp sẽ muốn làm quen với những thuật ngữ như quyền ưu tiên rút vốn (exit preferences), quyền chống pha loãng giá trị cổ phiếu (anti-dilution requirements), nới lỏng (ratchets), quyền bán theo (tag-along rights) và còn nhiều nữa. Phần này cung cấp rất nhiều thông tin về làm cách nào để phân bổ quyền kiểm soát giữa lãnh đạo công ty và nhà đầu tư, cũng như là cách nào để cân bằng quyền lợi đôi bên bằng những công cụ như “option pools”, “founder stock”, và những thỏa thuận khác.

Cuối cùng, phần Năm đưa ra các bài tập thực hành về thỏa thuận điều khoản đầu tư. Phần này là vô cùng hữu dụng cho những nhà quản lý chưa bao giờ nhìn thấy những điều khoản đầu tư, cho phép họ thử tìm cách để giành được nhiều quyền điều hành công ty nhất có thể khi làm việc với các nhà đầu tư. Việc này được thực hiện thông qua nhiều tình huống với những điều khoản tiêu biểu cho doanh nghiệp, và người đọc phải đưa ra câu trả lời cho những câu hỏi trong sách để hiểu rõ việc gì đang xảy ra, các bên đàm phán đang muốn đạt được điều gì, và điều khoản nào thì cần được thỏa thuận. 

Raising Venture Capital for the Serious Entrepreneur là một nguồn thông tin tuyệt vời cho các nhà doanh nhân cũng như những người muốn làm trong ngành đầu tư mạo hiểm. Rất nhiều tình huống thực tế được đưa ra xuyên suốt cuốn sách, không chỉ là ở phần cuối, để bạn đọc có thể giải quyết những vấn đề được đưa ra và hiểu rõ những khái niệm được trình bày. Sách cũng mang lại nhiều lời khuyên cho cách nhà doanh nhân. Cuốn sách mặc dù có rất nhiều khái niệm mang tính chuyên ngành, nhưng lại được tiếp cận theo cách mà bất cứ người làm kinh doanh nào cũng có thể hiểu được. Bởi vì tác giả cũng là một nhà đầu tư mạo hiểm, những điều được trình bày trong sách là rất đáng tin cậy.


 

Lời dịch giả: Sắp tới đây chúng ta có một cơ hội để trò chuyện trực tiếp cùng tác giả Dermot Berkery thông qua sự kiện trực tuyến Etalk – Adventure to the Venture |Chat with VC Elite vào ngày Thứ 7, 28.08.2021. Thông tin chi tiết vui lòng tham khảo tại đây: https://fb.me/e/12OnIxq0V


 

Bài viết được dịch bởi: Dung Trần

Nguồn dịch: Masterfano, M. K. (2010), Raising Venture Capital for the Serious Entrepreneur, [Review of the book Raising Venture Capital for the Serious Entrepreneur, by Dermot Kerbery], New England Journal of Entrepreneurship: Vol. 13 : No. 2 , Article 10, Retrieve from: https://digitalcommons.sacredheart.edu/neje/vol13/iss2/10