Mahendra Ramsinghani - The Business of Venture Capital

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The new edition of the definitive guide for venture capital practitioners—covers the entire process of venture firm formation & management, fund-raising, portfolio construction, value creation, and exit strategies Since its initial publication,
has been hailed as the definitive, most comprehensive book on the subject. Now in its third edition, this market-leading text explains the multiple facets of the business of venture capital, from raising venture funds, to structuring investments, to generating consistent returns, to evaluating exit strategies. Author and VC Mahendra Ramsinghani who has invested in startups and venture funds for over a decade, offers best practices from experts on the front lines of this business.
This fully-updated edition includes fresh perspectives on the Softbank effect, career paths for young professionals, case studies and cultural disasters, investment models, epic failures, and more. Readers are guided through each stage of the VC process, supported by a companion website containing tools such as the LP-GP Fund Due Diligence Checklist, the Investment Due Diligence Checklist, an Investment Summary format, and links to white papers and other industry guidelines. Designed for experienced practitioners, angels, devils, and novices alike, this valuable resource:
Identifies the key attributes of a VC professional and the arc of an investor’s career Covers the art of raising a venture fund, identifying anchor investors, fund due diligence, negotiating fund investment terms with limited partners, and more Examines the distinct aspects of portfolio construction and value creation Balances technical analyses and real-world insights Features interviews, personal stories, anecdotes, and wisdom from leading venture capitalists
is a must-read book for anyone seeking to raise a venture fund or pursue a career in venture capital, as well as practicing venture capitalists, angel investors or devils alike, limited partners, attorneys, start-up entrepreneurs, and MBA students.

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11 Chapter 16Exhibit 16.1 Framework for Values.

12 Chapter 18Exhibit 18.2 Sample Data Room Folders.Exhibit 18.3 GPs view of LP Behavioral Challenges.Exhibit 18.4 Key Risks in Fund Raise.

13 Chapter 20Exhibit 20.2 Sources of investment opportunity.Exhibit 20.5 The Exponential Growth of Techstars.

14 Chapter 21Exhibit 21.1 Due Diligence — Key Criteria.

15 Chapter 22Exhibit 22.2 Due Diligence Checklist.Exhibit 22.3 Key Due Diligence Questions for Consideration by Stage.

16 Chapter 23Exhibit 23.1 Due-Diligence Approaches

17 Chapter 25Exhibit 25.1 Differing Goals of Entrepreneur and Investor.Exhibit 25.2 Summary of Key Investment Terms: Preferred Stock.

18 Chapter 26Exhibit 26.1 Convertible Loan and Preferred Equity.Exhibit 26.2 Impact of Capped Conversion.

19 Chapter 27Exhibit 27.3 Enterprise Value Based on Future Projections.Exhibit 27.4 Sample Comparable Method (Private Companies).Exhibit 27.5 Sample Comparable Method (Publicly Traded Companies).Exhibit 27.6 Survival Rate of Firms.Exhibit 27.7 Liquidation Preference Stack and Its Impact on IRR.Exhibit 27.8 Impact of Antidilution Provisions on Ownership.Exhibit 27.9 Key Economic Terms and the Middle Path.Exhibit 27.10 Springing Warrants Can Be an Effective Way to Diffu...Exhibit 27.11 Key Governance Terms — Those That Impact Cont....

20 Chapter 29Exhibit 29.1 Attributes of Board Members Across Stages of Company.

21 Chapter 32Exhibit 32.1 Impact on Valuation When CEOs Gave Up Both Board Co...Exhibit 32.2 CEO Changes over Series of Investments.Exhibit 32.3 Triggers of Change and CEO Transition.

22 Chapter 33Exhibit 33.1 Frequency of portfolio outcomes.Exhibit 33.2 Returns: Or why an IPO is better.Exhibit 33.4 Exit methods.Exhibit 33.5 Preconditions for an exit.

23 Chapter 34Exhibit 34.1 Exit drivers.

List of Illustrations

1 Chapter 1 Exhibit 1.1 Venture capital business model. Exhibit 1.2 Limited partners. Exhibit 1.3 Fund organization chart.

2 Chapter 2 Exhibit 2.1 The perks of being a VC in Silicon Valley — reserved parking....

3 Chapter 8 Exhibit 8.1 Major asset classes in an investor portfolio. Exhibit 8.2 Typical mix of LPs in venture fund.Exhibit 8.6 (a) Average sovereign wealth fund size.Exhibit 8.6 (b) Asset Allocation - The shift to Private Equity.Exhibit 8.7 Asset allocation by mandate.

4 Chapter 9Exhibit 9.1 Fund of funds business model.

5 Chapter 10Exhibit 10.1 Limited partner investment criteria.

6 Chapter 11Exhibit 11.3 Midcontinent US attracts 12% of total VC spend. Mercury Fund's ...Exhibit 11.4 The power law of venture returns.

7 Chapter 12Exhibit 12.1 GP expertise.

8 Chapter 16Exhibit 16.2 Sequoia goes the extra mile to recruit a partner.Exhibit 16.3 Operational elements of a well-governed venture firm.

9 Chapter 17Exhibit 17.1 LP outlay varies by type of fund.Exhibit 17.2 What's hot and what's not — LP view of opportunities.Exhibit 17.3 LP portfolio — much more than VC.

10 Chapter 18Exhibit 18.1 Fundraising process.

11 Chapter 19Exhibit 19.1 Emerging managers — a pecking order.Exhibit 19.2 LPs' preference for investing in first-time funds.Exhibit 19.3 Fund-of-funds allocation for an emerging manager portfolio....Exhibit 19.4 Concentrating capital with top performers.

12 Chapter 20Exhibit 20.1 A venture fund's investment process.Exhibit 20.3 Sourcing funnel.Exhibit 20.4 Sourcing channels.

13 Chapter 22Exhibit 22.1 Most important factors for selecting investments.

14 Chapter 24Exhibit 24.1 Diffusion of innovation.

15 Chapter 27Exhibit 27.1 Factors for setting valuation.Exhibit 27.2 Financial metrics to analyze investments: Cash-on-cash matters ...Exhibit 27.12 Terms that matter: Frequency with which terms are used.Exhibit 27.13 Flexibility on terms: VCs rank these terms as least flexible....Exhibit 27.14 Most important factors leading to syndication.Exhibit 27.15 Most important factors for choosing syndicate partners.

16 Chapter 30Exhibit 30.1 Interaction with portfolio companies.

17 Chapter 31Exhibit 31.1 Value creation: VC activities in portfolio companies. Exhibit 31.2 Effective Board Meeting — From Big Picture to Deep Dives.

18 Chapter 33Exhibit 33.3 Lemons ripen faster than pearls — or losses often come before p...Exhibit 33.6 Diffusion of innovations — and the best exit window.

19 Chapter 34Exhibit 34.2 Liquidity events of VC-backed companies.Exhibit 34.3 Acquisitions — Mean deal values.Exhibit 34.4 Average time to exit in years.Exhibit 34.5 Typical trade sale process.

20 Chapter 35Exhibit 35.1 Steps to an IPO.

Guide

1 Cover Page

2 Table of Contents

3 Begin Reading

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