Effectively Navigating Venture Capital

09:00 - 09:15    Course introduction

In this opening session the Course Directors, Martin Raditsch and Claus Schulte shall outline what to expect from the days ahead and answer any queries you may have before starting out on three days of intense learning.

09:15 - 10:30    What is the VC for? The role of the VC within the finance structure

Venture capitalist (VC) is an investor, interested in private equity investments to startups that manifest a high growth ability in exchange for an equity stake. This could be funding start-up ventures or supporting small companies that wish to expand but do not have access and resources to equities markets.

Venture capitalists are prepared to take a risk by investing in such companies because there is a big probability to earn a massive return on their investments if invested companies reach success. However, VCs experience high rates of failure due to the uncertainty that is involved with new and unestablished companies. Understanding this requirements give you the starting point to create a win win situation.

10:30 - 11:00    Coffee Break

11:00 - 12:00    Where is the money coming from?

Committed capital represents money contributed to the investment fund. Committed capital is used to finance investments as well as administrative costs and failure to execute it can have negative consequences, such as the loss of future profits.

This concept is almost used with other types of investments, such as venture capital (VC) funds, private equity (PE) funds, and hedge funds.

12:00 - 13:00    Deal Flow

Deal flow is the estimated proportion of business proposals and investment pitches coming and are being received by investment bankers and venture capitalists.

Deal flow is composed of different types of proposals such as venture funding, syndication, private placements, initial public offerings (IPO), mergers, and acquisitions. And usually, it follows a cyclical pattern, and trends unfold throughout society and economic environments.

13:00 - 14:00    Lunch

14:00 - 15:00    When and how to approach VC

When is the right point in time to TRA your scientific project into a company project. What are the needs and the requirements. In this session we will discuss the different possibilities of dilutive and non-dilutive financing.

15:00 - 15:30    Coffee Break

15:30 - 16:00    Elevator Pitch

Elevator pitch is a commonly used term to describe a brief speech that summarizes an idea for a product, service or project. The duration of it is usually 20-30 seconds. An elevator pitch should include why your product, idea or project is worth investing in by explaining such things as your unique solution, differentiation points.

Venture capitalists use the quality level of the elevator speech as a way to make a decision whether the idea has profit potential and to continue with the idea or not.

16:00 - 17:00    Group exercise - Elevator pitch

In this group exercise, each group will be tasked to prepare a 3-minute pitch in front of VC panel.

19:45 - 22:00    Networking dinner

09:00 - 09:45    Due Diligence

Due diligence is considered to be a complete examination of the product and transaction before the actual deal-making. Its goal is to determine whether the information provided by the startup was accurate. The investor can oversee this type of analysis on any stock accessing easily available public information.

Due diligence investigation includes checking the cap table, finances, legal documents, team, clients and finally checking competitors and industries performances.

09:45 - 11:15    Anatomy of a Term Sheet I

Term sheet is a non-binding agreement, mostly associated with start-ups, which includes the basic terms and conditions under which an investment will be executed. Entrepreneurs find this document as being crucial for attracting investors, such as venture capitalists (VC) with capital to fund enterprises.

The most common items spelt out in the term sheet include the company valuation, investment amount, percentage stake, voting rights, liquidation preference, anti-dilutive provisions, and investor commitment.

11:15 - 11:45    Coffee Break

11:45 - 12:45    Anatomy of a Term Sheet II

12:45 - 13:45    Lunch

13:45 - 14:30    Capitalisation Table

Capitalisation table, also called the cap table is a spreadsheet or table that shows the equity capitalisation for a company. Information provided in a capitalisation table is most commonly utilised for startups and early-stage businesses but there are no restrictions in using capitalisation tables by all types of companies.

A basic capitalisation table places materials on each type of equity ownership capital, the individual investors, and the share prices. A more complex table may also include details on potential new funding sources, mergers and acquisitions, public offerings, and other hypothetical transactions.

14:30 - 15:30    CAP table group exercise

Delegates work in groups. Create a Cap table based on the given case of a seed financing round .

15:30 - 16:00    Coffee Break

16:00 - 17:15    Group presentation

Delegates present their CAP tables and discuss the different solutions

17:15 - 17:30    Round up of day 2

What did we learn today?

09:00 - 10:00    Dilution and its consequences

Dilution is the devaluation of shareholders’ equity positions due to the publication or creation of new shares. We know that a share of stock represents equity ownership in that company.

When a firm’s board of directors takes a decision of declaring their company public, through an initial public offering (IPO), they authorise the number of shares that will be offered on the stock market at the beginning. This initial amount of outstanding stock is commonly known as the “float.”

If that company later issues additional stock, it has increased the float and therefore diluted current stock, meaning that the shareholders who recently bought the original IPO of stocks now have a smaller ownership stake in the company compared to what they had prior to the new shares being released.

10:00 - 11:00    Anti-dilution provisions

Anti-dilution provision is an instrument that acts as a buffer to protect investors against their equity ownership positions from dilutive effect or depreciation. This can happen in the situation when there is an increase in the total number of shares outstanding, consequently, the percentage of the owner’s stake in the company slightly decreases.

Anti-dilution provisions are also applied to the anti-dilution clauses, subscription concessions, subscription rights or pre-emptive rights.

11:00 - 11:30    Coffee Break

11:30 - 12:30    Valuation Panel discussion

Valuation methods of your company. There are several valuation methods to evaluate the current and the future value of your enterprise.

In this session we will introduce some common methods

12:30 - 13:00    Course wrap-up

13:00 - 14:00    Lunch and farewell