The business of venture capital : the art of raising a fund, structuring investments, portfolio management, and exits

Cover
Title Page
Copyright Page
Contents
Foreword
Preface
Acknowledgments
Part I The Making of a VC
	Chapter 1 The Business of Cash and Carry
		Introduction: An Operational Primer
		Roles, Responsibilities, and Compensation
	Chapter 2 Why Choose a Career in VC
		Creative Construction
		Intellectual Stimulation
		Mentor Capitalists
		Asymmetrical Rewards
	Chapter 3 Attributes of Successful VCs
		Strong Awareness of Tech Trends
		Ability to Pick Winners
		Optimism, Patience, and Stability
		Ability to Learn and Grow
		An Inherent Bias for Action
	Chapter 4 Welcome to the Land of Ad-Venture
		Roles and Responsibilities of a VC
		Internships and Campus Recruitment
		The Fellowship of Investors
		Adjacent Entry Points
		Getting Lucky — When Opportunity Meets a Prepared Mind
	Chapter 5 Developing Your Investment Career
		Building Your Strengths
		Beware: Bias and Psychology
	Chapter 6 A Business Where Enemies Accumulate 
		Challenges of a VC Career
		VC Career as a Calling
	Chapter 7 Generational Transfer and Succession
		Managing Succession - Now my work is done
		The Art of Letting Go
Part II Raising Your Venture Fund
	Chapter 8 LP Universe
		Pension Funds
		Endowments and Foundations
		Sovereign Wealth Funds
		Finance and Insurance Companies
		Family Offices and High-Net-Worth Individuals
		Corporate Operating Funds
		Comparison of Limited Partnerships
	Chapter 9 LPs of Choice: Fund of Funds
		Advantages of a Fund of Funds
		Fund of Funds Investment Strategies
	Chapter 10 How LPs Conduct Fund Due Diligence
		Primary and Secondary Investment Criteria
		Fund Selection Criteria
	Chapter 11 Defining Your Fund’s Investment Strategy
		Market Opportunity
		Competitive Advantages
		Case Study: Solo GP Goes Institutional
		Case Study: Oversubscribed First Fund — How a $30m Fund Ended Up With Over $100m in Commitments
		Case Study: Starting all Over. . .
		Case Study: Who has Time for This? I Don’t Need no LPs Anymore. . .
	Chapter 12 Investment Team Diligence
		Evaluating Fund Managers
		Team Dynamics: Stability, Skill Set, and Alignment
	Chapter 13 Fund Size and Portfolio Construction
	Chapter 14 Performance Analysis
		Individual Performance and Attribution
		Public Market Equivalents
		Fund-Level Performance
		Measuring Realized Returns
		Self-Selection Bias: Giants Among Midgets
	Chapter 15 Terms of Fund Investment: The Limited Partnership Agreement
		Key Terms
		Fund Financial Terms
		Fund Governance Terms
		What Institutional LPs Seek
		Offering Sweeteners to Attract LPs: A Double-Edged Sword
		Most Negotiated LP–GP Terms
		Why LPs Terminate Existing Relationships
	Chapter 16 The Venture Firm’s Ethos, Culture, and Values
		Ethos
		Culture and Values
		Governance of the Firm
	Chapter 17 Raising Your First Fund
		First Steps
		Targeting LPs
		Market Timing
		Fit Within the LP’s Current Portfolio
	Chapter 18 The Fundraising Roadshow
		Overview: The Fundraising Process
		Getting in the LP Door
		Locking Your Anchor Investor
		Sell, Sell, Sell
		Should You Warehouse Portfolio Companies?
		Your Biggest Fundraising Risks, and How to Manage them
	Chapter 19 Why LPs Seek First-Time Funds
		Creativity, Hunger, and Performance
		Ranking Emerging Managers
		A Futures Option
	Chapter 20 Sourcing Investment Opportunities
		Overview: The Sourcing Process
		Proactive Sourcing
		Network-Based Sourcing
		Accelerators
		Angel Networks
		Commercializing University Research
		Corporate Research
		Trade Conferences
		Investor Pitch Sessions
		The Agony of Missed Opportunities
Part III Building Your Portfolio
	Chapter 21 Due Diligence Cheat Sheet
	Chapter 22 Diligence
		The Checklist Manifesto
		Tailoring Diligence by Stage
		Checklists — Useful but Seldom Used
	Chapter 23 Management Team Diligence: Assessing the Intangible
		Overview
		Values and Integrity
		Can the Company Attract Giants?
		Can the CEO Execute? Lambs Versus Cheetahs
		Serial Entrepreneurs Versus First-Time Entrepreneurs
		Bias at Work: Seeking Attractive Men
		Background Checks: False MBAS and Criminal Histories
		Various Approaches to Management Diligence
	Chapter 24 Market, Product, and Business Model Analysis
		Evaluating the Product
		Assessing the Business Model
	Chapter 25 Terms and Conditions Apply: The Art of Structuring Investment Transactions
		The Spirit of the Term Sheet
		Negotiation Stress Points
	Chapter 26 Structure of the Term Sheet
		Overview
		Convertible Loans and Safe
		Keeping Term Sheets Simple
		Sample Summary Term Sheet
	Chapter 27 Buy Low, Sell High: Equity Preferred Stock
		Valuation Methods and Other Voodoo Arts
		The Drivers of Valuation
		Comparable Valuations of Similar Investments (Comps)
		Discounted Cash Flow Method
		Liquidation Preference
		Antidilution Protections
		Governance and Control: Protecting your Securities
		Exit-Related Provisions
		Other Important Terms
		Syndicating Investments
		Milestone-Based Financing: Risk Mitigation or Distraction
	Chapter 28 The Closing Process: After the Term Sheet
Part IV The Art of Value Creation
	Chapter 29 Serving on Boards
		Overview
		Legal Requirements of Board Service
		Self-Education: Preparing for your Board Role
		Roles and Responsibilities of a Board Member
	Chapter 30 Board Culture and Orientation
		Toward a Better Board Culture
		On-Boarding Checklist
	Chapter 31 Let Me Know How I Can Be Helpful: Value Creation
		Good Governance as the First Step Toward Value Creation
		The CEO’s Perspective on Venture Capitalist Value Add
	Chapter 32 Challenges in the Boardroom
		CEO Transitions
		Best Practices in Managing CEO Transitions
		Performance Challenges
		Alignment on Exit
		Board Evaluation
Part V Exits: Liquidity Events and Champagne
	Chapter 33 Exit Strategies
		Exit Options
		Preconditions for an Exit
	Chapter 34 Acquisitions
		The Primary Path to an Exit
		Putting the Company up for Sale
		Deal Killers
	Chapter 35 Initial Public Offering
		The IPO Process: The Long and Winding Road
		Steps to an IPO
		IPO Underpricing and Dutch Auctions
		Post IPO: Should VCs Stay Engaged?
	Chapter 36 Secondary Sales
Index
EULA