This action might not be possible to undo. Are you sure you want to continue?
By: Lorenzo T Geraci L@TECorporation.com
then hockey stick Extremely high Becoming standard. Closing partners INFRASTRUCTU RE Databases. Market share Market Share First mover. Market Share Decreasing Risk and Reward . routers. outsourcers Low Rapid Depends Linear-ish High-moderate Continued customer satisfaction. payroll. PDA¶s.Types/Characteristics of IT Start-ups CORE TECHNOLOGY EXAMPLES INTELLECTUAL PROPERTY TIME TO MARKET EARLY CAPITAL REQ¶D REVENUE GROWTH LONG TERM VALUE IMPORTANT CRITERIA TO SUCCESS O/S. PC¶s Medium 12 to 24 months Moderate Hockey Stick High/Moderate SERVICES Consulting. telecom networks High Less long Moderate to High Hockey Stick Very High APP¶S & BOXES Software packages. Barcode Huge Long Low Sow. Chip Design.
VP Eng. & biz goals. CFO.The Phases NEEDS EARLY DEVELOPMENT TO PROTO/BETA (12 MONTHS) .100% dedication to customer satisfaction . Finance. VP¶s Sales. . some revenue Clear target market. CEO Customer approval.Excellent people . Marketing GM CEO CTO.Cheerleading and endurance HEADCOUNT MANAGEMENT MILESTONES 1 to 10 CTO and GM Working prototype. Marketing. Engineering. Dir¶s of Sales. Finance. real customers 1/3 to ½ of all new sales in target markets Clear #1 player MODERATE PENETRATION (36 MONTHS) Savvy Management 20 to 50+ RAPID PENETRATION (60 MONTHS) DOMINANCE Excellent Management Greed and ego Growth to 100¶s All VP¶s. COO if necessary Domestic and Worldwide Big . beta installations EARLY CUSTOMER DEPLOYMENTS (24 MONTHS) 5 to 20 CTO.Focus .Tight linkage between devel. Repeatability of business. real product.
iBanks . $1M to $4M $2M to $5M $5M to $15M $10M to $50M Execution: can you grow fast enough without loosing control? $0 to $100M $40M to $100M+ Dominance Complacency: with so much success can you continue being paranoid? Corp. etc.FFF .Venture Leasing -Corporate Investors .Early Stage Funds -Early Stage Funds -Later Stage Funds .Angels . Capital. finance Public Market .Mezzanine Funds .? < $1M usually <500K . develop.Leasing . when does it start? Technology: does it work in practice? Target market: is this the right first place? Timing: if a market.Questions.Corporate Investors . Valuations QUESTION TO ANSWER WITH CAPITAL SEED Early Development Proto/Beta 1st Round Early Customer Deployment 2nd and 3rd Rounds Moderate Penetration Mezzanine and IPO Rapid Penetration CAP REQ¶D SOURCES Valuatio ns (premoney) $100K to $1M Technology: does it work at all? Market: in there a market? Timing: if a market.Et al.Seed Funds -Angels -Seed Funds . manage.Commercial Banks .iBanks . when does it start? Market timing: is the market happening fast enough (or too fast)? Execution: can we grow. sell.
dumb and happy management Expected Returns 20% to 50% more than Series A 1st Round ³Series A´ 10x to 20x total investment over 5 to 7 years 2nd and 3rd Rounds ³Series B. manage. E. etc.Huge opportunity cost id enterprise develops slowly .´ 5x to 10x total investment over 2 to 5 years Execution: can you grow fast enough without loosing control? 2x within 12 to 24 months IPO Complacency: with so much success can you continue being paranoid? 15% per year? . C. when does it start? Market timing: is the market happening fast enough (or too fast)? Execution: can we grow. sell.Risks and Expectations BUSINESS RISKS SEED Early Development Proto/Beta Technology: does it work at all? Market: in there a market? Timing: if a market.Market perceptions impact stock price . D.Risk that there is NO market.Risk that there is NO value .Risk of public markets closing or changing rules .Opportunity cost if enterprise develops slowly .No ³dry power´ for more investment ..Big opportunity cost if enterprise develops slowly .Fat. etc. when does it start? Technology: does it work in practice? Target market: is this the right first place? Timing: if a market.Investment in marketing and sales yields no assets if done poorly . etc.? INVESTMENT RISKS . develop.´ Mezzanine and IPO Series D.High risk of total loss .High risk of total loss .. bad technology and NO value .
Later Rounds -If you really thing it¶s a big idea.Seed money should make a BIG return .Valuation means nothing if it¶s illiquid ± think about how investors get their return By: Lorenzo T Geraci L@TECorporation.Pretend it¶s your money that¶s being invested .com .Be realistic ± the less you have. don¶t sweat the percentage points on dilution ± worry that the value of your stock keeps increasing -Liquidity . the riskier it is .Taking friends¶ money is stressful ± don¶t promote to them (they¶re betting on YOU) . the less it¶s worth .Valuations The earlier the money.