Chapter1.Introduction.21Aug2013

Chapter1.Introduction.21Aug2013 - Venture Capital and...

Info icon This preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
© Cumming & Johan (2013) Venture Capital and Private Equity Contracting Venture Capital and Private Equity Contracting: An International Perspective Douglas Cumming B.Com.(Hons), M.A., J.D., Ph.D., CFA York University Schulich School of Business Sofia Johan LL.B., LL.M., Ph.D. York University Schulich School of Business Tilburg Law and Economics Centre (TILEC) 1
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
© Cumming & Johan (2013) Venture Capital and Private Equity Contracting Materials Textbook: Cumming, D.J., and S.A. Johan, 2013. Venture Capital and Private Equity Contracting: An International Perspective, 2 nd Edition, Elsevier Science Academic Press. Web: 2
Image of page 2
© Cumming & Johan (2013) Venture Capital and Private Equity Contracting 3
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
© Cumming & Johan (2013) Venture Capital and Private Equity Contracting Chapter 1 Objectives Introduction Venture Capital & Private Equity Main Issues Addressed in this course Summary Introduction Venture Capital and Private Equity Definitions Issues addressed in course and textbook 4
Image of page 4
© Cumming & Johan (2013) Venture Capital and Private Equity Contracting Sources of Funds for Entrepreneurial Firms Introduction Venture Capital & Private Equity Main Issues Addressed in this course Summary Sources of funds What do VC/PE Managers Do? Possible Misconceptions? There are various sources of funds Characteristics of other sources are very briefly provided on the next slide Our focus in this course is on Venture Capital (VC) and Private Equity (PE) 5
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
© Cumming & Johan (2013) Venture Capital and Private Equity Contracting Table 1.1. Greatly Oversimplified Typical Characteristics of Funds Providers Source Investment Motivation Focus of Attention Cash Typically Available Source of Funds Biggest Drawbacks Biggest Advantages Security Required Subject to Market Conditions? Internal Operations Reinvestment Execution Unlimited Earnings Slow Non-Dilutive None Some Founders Ambition Varies $100,000 Savings Personal Risk Non-Dilutive None Little Friends and Family Relationships Support $250,000 Savings Relationships Easy Sell None Some Private ‘Angel’ Investors The Entrepreneur Varies $500,000 to $1.5M Previous Successes Varying Commitment Brings Credibility None Considerable Venture Capital Funds Business Plan, Team, Market, Trajectory Contracts, Liquidity Event, Valuation $1M to $20M Limited Partners, Institutions Time Consuming, Expensive Brings Help, Credibility Contractual Terms and Conditions Greatly Private Equity Funds Mezzanine, Buyout, Turnaround Contracts, Liquidity Event, Valuation $20M to $500M Limited Partners, Institutions Time Consuming, Expensive Brings Help, Credibility Contractual Terms and Conditions Greatly Commercial Banks (& Venture Banks) Risk versus Return Two Repayment Sources 80% of A/R, 50% of inv. Deposits Regulatory Agencies Advice, Clean, Straight-forward, Businesslike A/R, Inventory, IP Little Bridge Funds Risk versus Return Low Risk $500K to $5M Limited Partners, Institutions Warrants Speed (5 days to get a loan) All Assets Including IP Greatly Leasing Companies Risk versus Return Liquidation Values 80% of value Company
Image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern