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Angels, Dragons and Vultures: How to Tame Your Investors And Not Lose Your Company

Book Description

Are you an entrepreneur who’s looking for funding, but daunted by the intricacies of venture capital? In this provocative and witty new book, learn about the inner workings of the venture capital industry and how its firms make their money. Discover how venture capitalists run their own businesses and the ways they can best help you run yours, as well as the alternatives to venture capital and how to make a successful exit.

Table of Contents

  1. Cover Page
  2. Title Page
  3. Copyright Page
  4. Contents
  5. Introduction: The Venture Capital Bestiary
    1. WHAT SORT OF BEAST SHOULD YOU BE TO READ THIS BOOK?
    2. A WORD OF WARNING
    3. ANOTHER DEFINITION
    4. A NOTE ABOUT GENDER
  6. 1 Venture Capital: Do You Really Want It?
    1. ALTERNATIVES
    2. THE 3CS
    3. WINDOWS OF OPPORTUNITY
    4. IT ISN’T JUST ABOUT THE MONEY…
    5. …BUT MONEY IS STILL IMPORTANT
  7. 2 Understanding Venture Capital Beasts
    1. THE VULTURES
    2. Fees
    3. Distributing proceeds
    4. Who is in charge?
    5. Profit shares
    6. Raising the next fund
    7. Portfolio construction
    8. Your own Mephistopheles
    9. The customer and the product
    10. THE ANGELS (AND DRAGONS)
  8. 3 Raising Money Successfully
    1. THE ODDS
    2. IMPROVING THE ODDS
    3. YOUR BUSINESS PLAN – FACT OR FICTION?
    4. THE FACT
    5. THE FICTION
    6. SANITY CHECKS
    7. LESSONS OF HISTORY
    8. HOW MUCH TO RAISE
    9. TO SYNDICATE OR NOT TO SYNDICATE?
    10. LOOK BEFORE YOU LEAP
    11. ADVISERS
    12. OTHER WAYS IN
    13. CHOOSING THE INVESTOR
  9. 4 Valuations and Tricks of the Trade
    1. TERM SHEETS
    2. SIMPLE VALUATIONS
    3. IT GETS MORE COMPLICATED… WITH DOWNSIDE PROTECTION
    4. AND THEN IT GETS MORE COMPLICATED STILL… WITH A LIQUIDATION PREFERENCE
    5. A FEW MORE BELLS AND WHISTLES (OR BILLS AND WHISTLING?)
    6. AND MORE COMPLICATED STILL… WITH SOME LOAN NOTES
    7. SHE WONDERS HOW IT EVER GOT THIS CRAZY
    8. ARE ANGELS AND DRAGONS NICER THAN VULTURES?
    9. OTHER THINGS THAT GO BUMP IN THE NIGHT AND AFFECT VALUATION
    10. Options
    11. Anti-dilution
    12. Milestones
    13. Ratchets
    14. COMPARING TERM SHEETS
    15. SIMPLE IS BEAUTIFUL
  10. 5 Your Deal Breakers
    1. LEGAL PRINCIPLES
    2. REPRESENTATIONS AND WARRANTIES
    3. CONTROLS AND VETO RIGHTS
    4. FIRST REFUSAL AND CO-SALE
    5. BOARD COMPOSITION
    6. VESTING, GOOD LEAVERS, BAD LEAVERS, AND OTHER EMPLOYMENT-RELATED PROVISIONS
    7. THE REAL POINT OF THE LEGAL PROCESS
  11. 6 Managing Your New Partner
    1. YOUR KEIRETSU
    2. TWO-WAY COMMUNICATION
    3. WHY YOU WANT A CHAIRMAN
    4. THE ANGEL CHAIRMAN
    5. DO YOU SOCIALIZE WITH VULTURES?
  12. 7 Board Meetings
    1. OH SHIT
    2. WHOSE MEETING?
    3. A FEW PRE-BOARD DOS AND DON’TS
    4. YOUR PLACE OR MINE?
    5. YOUR AGENDA
    6. WHO SHOULD COME TO THE MEETING?
    7. SOME ENTERTAINMENT
    8. THE CHAIRMAN AGAIN
    9. THE WORST MEETINGS OF ALL
  13. 8 Managing Expectations
    1. RELATIVE SUCCESS
    2. ABSOLUTE SUCCESS
    3. BAD HABITS
    4. ALTERNATIVE PLANS
    5. REBUDGETS
  14. 9 Remuneration
    1. JEALOUSY
    2. PROCESS
    3. SALARIES
    4. BONUS SCHEMES
    5. EXPENSES
    6. EQUITY AND OPTIONS
    7. CONVERSATIONS WITH A VULTURE (ON OPTIONS)
    8. TRANSPARENCY
    9. ACCURACY
  15. 10 People
    1. CAN YOU BEAR TO BRING IN YOUR OWN REPLACEMENT?
    2. THE DEVIL YOU KNOW, AND THE DEVIL YOU DON’T
    3. YOUR OWN NETWORK
    4. INTERNAL RECRUITMENT
    5. HIRING SUCCESSFULLY
    6. MEANWHILE… DO NOT PUT OFF IMPORTANT DECISIONS
    7. AFTER RECRUITMENT
    8. FIRING YOUR CO-FOUNDER
    9. BENEFIT OF THE DOUBT
  16. 11 Round Two, and Three, and Four
    1. ACLAND’S LAW AGAIN
    2. WHY LET ANOTHER PUGILIST INTO THE RING ANYWAY?
    3. INTERNAL ROUNDS
    4. BRIDGE ROUNDS
    5. SERIES B, OR ROUND N + 1
    6. RIDING ON YOUR VULTURE’S WINGS
    7. FOLLOW-ON INVESTMENT
    8. UP, DOWN, SHAKE IT ALL AROUND
    9. DOWN ROUNDS
    10. FLAT ROUNDS
    11. MANAGEMENT LEVERAGE AND THE “STACK”
    12. TRADE INVESTORS
    13. HOW DO YOU HANDLE A WHOLE NEST OF VULTURES?
  17. 12 Exits
    1. INVOLUNTARY EXITS
    2. MANAGEMENT BUY-BACKS
    3. TRADE SALE OR IPO?
    4. TRADE SALE
    5. Sales to financial buyers
    6. Achieving a trade sale
    7. Getting bought, not being sold
    8. IPOS
    9. BEING A PUBLIC COMPANY
  18. 13 The Next One
    1. LEARNING FROM EXPERIENCE
    2. PASSING THE EXPERIENCE ON
  19. Useful Resources
    1. Venture Capital Organizations
    2. Angel Associations
    3. Dragons
    4. Some Industry Publications
  20. Index
  21. Acknowledgments