FIN310 - Venture Capital - Investing in early stage growth companies – Lecture 1
Brendon Blacker
Monday 24 March
Introduction to your guest lecturer
Brendon Blacker
Vice President
Macquarie Capital Sydney
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Agenda
Lecture 1 – Monday 24 March 2014
1. Introduction to Macquarie Capital
Lecture 2 – Monday 31 March 2014
— Review questions
— Quick recap
2. Introduction to venture capital
— What is venture capital? How does it work?
3. Investing in early-stage growth companies (continued)
— Who are the main players globally and in Australia?
— What do venture capitalists look for in an investment?
— And… the difference between venture capital and private equity
— How do they make investment decisions?
3.
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2.
Fund Raising
Typically takes six months to a year to obtain capital commitments
Capital can come from state and corporate pension funds, public and private endowments and personal investors
Investment Sourcing
Can take between three and six years and is comprised of:
— Sourcing investments: identify and source opportunities
— Due diligence: extensive research and analysis is done on the company and in the market it operates in
— Initial investment
— Often, venture capital firms preserve an appropriate percentage of their funds to participate in follow-on fund raisings for their portfolio companies
3.
4.
Portfolio Management
The aim of this stage is to help the portfolio companies grow
Venture capital firms typically appoint representatives on the company’s board and offers strategic advice to the management team
Closing
Often funds are 10 year closed-end funds in which it is expected that all investments will be exited and the fund wound up in
10 years
Exit of investments by way of IPO, sale to a third party (eg trade sale) or wind-up
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How do VC’s add value?
Network: providing a network of potential clients and partners to help build relationships
Recruitment: assisting and identifying, interviewing and assessing talent for the business and for the Board
Financing: assist in raising additional equity, debt or lines of credit
Domain knowledge: specialist knowledge of industries
and
It gives the opportunity to provide structured feedback and reflection and recognise ay achievements as well as identify any performance issues.
Embrace new technologies to improve efficiency, maintain environmental stewardship through green practices and sustainable operations, support continuous improvement of the business processes, develop employees’ capability, and provide excellent customer services.” (Hillsborough County, 2015)
After reviewing the Balance sheet I have a concern regarding the Current and short term liabilities. Creditors/ trade payable is payment yet to be made for goods already received, if this continues to rise then it will effect the business profit and less stock will have to be ordered so repayments can be made. Bank overdrafts also continued to rise and in the long-term the business will be paying greater interest, which will again eat into the profit. Both increased quite a great deal from the last year-end. If this continues then the business will get into bad debts and owe too much that it will end up having to sale its assets to survive. Finally I can see that due to the above issues and other issues the net current assets/ working capital has decreased so therefore the business is less value then it was a year ago. If the business is worth £1 million now, this could soon decrease within another year.
Usually, Apex sought to be the leading investor whatever the stage in order to have one of its representatives join the board of the financed companies. Furthermore, Apex pursues to balance its investments between start-up and
·It would take a lot of time to talk with unfamiliar company from a fresh start
The Joint Commission is scheduled to visit Nightingale Community Hospital for its triennial accreditation survey within the next 13 months. The purpose of this document is to provide senior leadership with an outline of the hospital’s current compliance status in the Priority Focus Area of Communication. Recommendations for corrective action are included in this document which are designed to bring the organization into full compliance in the areas where deficits have been identified.
This structure may perhaps serve to keep sufficient equity available for a subsequent venture capital injection, but given the dynamics of the agreement with Telerate, the prospects of the company should be fairly obvious after only a few months, and, in the event of a successful marketing program, net-profitable within only six. Therefore, it is unclear what the
The five partners of Capstone Accountants will invest $20,000 each to the start-up of the business. In addition to the initial $100,000, the firm will need an additional $200,000 towards the startup costs. To gain these additional funds, the firm will explore outside funding options.
Checklists may sound well and fine for business flying and solution however business is much excessively complex for Checklists, making it impossible to be practical. Indeed, consider the universe of money where investors are continually underweight to purchase stock in the following huge thing before it really gets to be effective. This is the challenge which confronts "Value Investors" who are not attempting to time the business sector or coattail any theoretical air pocket which may be preparing in the business sectors. These investors are essentially attempting to purchase offers in under perceived, underestimated organizations and to remain contributed for the long run.
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Venture capital, as we use the term, refers to one type of private equity investing. Private equity investments are investments by institutions or wealthy individuals in both publicly quoted and privately held companies. Private equity investors are more actively involved in managing their portfolio companies than regular, passive retail investors. The main types of financing included in private equity investing are venture capital and management and leveraged buyouts.
In year 2000 was shaping up to be a record breaking period for venture fund raising between 1998 and 2001, over $200 billion had been raised by venture groups, more than the total of the previous 40 years.
Traditional avenues to secure financing have historically been through commercial banks (Types of Financing, 1996). The economic turmoil during the
Venture capital (VC) refers to financial intermediary between institutional investors and private companies, often to finance new ventures or growth of private companies. Venture capital is a subset of the larger private equity industry, which refers to equity investments in privately-held enterprises. VCs are different from angel investors, who are often erroneously considered the same as VC, in that VCs rely on raising a pool of capital from limited partners (LP), and invest on their behalf as general partners (GP), via a limited partnership that is the actual fund (VC firms often manage several funds). The limited partnership model define certain characteristics of VC
Private Equity (PE) investment is an asset class that is bought and sold in a privately negotiated transaction and is not publicly traded on a stock exchange. This investment is normally completed by private equity firm, venture capital firm, or an informal investor named business angel. They raise funds and invest it on behalf of their investors. There are four most well-known investment strategies, i.e. venture capital (VC), leveraged buy-out (LBO), mezzanine debt and distressed debt investments. It is distinguishable that VC usually targets the start-up firms while LBO purchases majority control in a developed and mature firm. The total global PE assets under management (AUM) in 2013 has climbed up to $3,466 billion, the highest value to date and has remained a steadily growth throughout the past 6 years after financial crisis (Appendix figure 1). This is partially attributed to a sharp decline of exit activity resulted from crisis, led to more capital calls, improved fundraising and thus expansion of AUM.