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The Little Book of Venture Capital Investing: Empowering Economic Growth and Investment Portfolios

Book Description

A little book full of enormous value for novices and seasoned venture capitalists alike

After having been thrown for a loop by the bursting of the tech bubble more than a decade ago, the venture capital industry suddenly has come roaring back to life over the past two years. In 2011 alone, more than $7.5 billion in venture capital was invested—representing more than a 19% increase over the previous year—in more than 966 companies. A majority of these companies reside in the life sciences, Internet, and alternative energy sectors.

In today's weak job market, VC is more important than ever, since financing new tech, alternative energy, media, and other small to mid-sized companies is vital to creating new jobs. Written by Lou Gerken, a noted international authority on venture capital and alternative investments, this book tells you everything you need to know about the venture capital industry's important role in enhancing economic growth and employment. It is also the perfect go to primer on making venture capital investments to enhance portfolio returns.

  • Highly accessible explanations of the ins and outs of venture capital for would-be investors and experienced VCs

  • Highlights the historical VC track record, and offers expert advice and guidance on venture capital exposure, investment options, sourcing opportunities and due diligence

  • Provides proven strategies for successful investment selection, timing, monitoring, and exiting for optimum returns

  • Features endorsements from luminaries of the VC world, including Kleiner Perkins Caufield & Byers co-founder Frank Caulfield, and Dr. Art Laffer, among others

Table of Contents

  1. Cover
  2. Contents
  3. Title
  4. Copyright
  5. Dedication
  6. Acknowledgments
  7. An Introduction to Venture Capital Investing
  8. Chapter One: An Historic Overview of Venture Capitalism
    1. In the Beginning
    2. The Roots of Venture Capital
    3. The First VCs
    4. Shockley Chooses Silicon
    5. The Traitorous Eight
    6. Why Was the Venture Capital Method of Investing Chosen?
    7. Past Is Prologue
  9. Chapter Two: The VC Industry Today
    1. Adventures in VC Investing
    2. How It All Began
    3. The MoneyTree Report
    4. Geographical Definitions
    5. Industry Classifications
    6. Sector Definitions
    7. Cooking the Soup
    8. Outstanding Venture Capital Firms
    9. If It Was Easy . . .
  10. Chapter Three: The Value Proposition
    1. The Multiplier Effect of Venture Capital
    2. Water, Water Everywhere
    3. Economy and Jobs Impact
    4. More Economic Benefits
    5. Start-Up Business Benefits
    6. Social Benefit of New Technology and Innovation
    7. Medical Innovations
    8. Casual Games
    9. 3D Printing
    10. Orbital in Orbit
    11. Social Media
    12. Cyborgs
    13. Future of the Car
    14. The Cashless Society
    15. Robodiptera
    16. Financial Benefits to Investors
    17. The Power of VC’s Multiplier Effect
    18. Sowing the Seed
  11. Chapter Four: Prevailing Investment Climate
    1. View of Prevailing Investment Climate
    2. The Size of Government Debt
    3. The Deficit
    4. Simpson-Bowles
    5. Discretionary Caps
    6. Federal Health Spending
    7. Additional Spending Cuts
    8. Tax Reform
    9. Accountability
    10. Give Us Only What We Need
    11. Changing with the Times
    12. How Investment Climate Affects Start-Ups and Job Creation
    13. Why Is Entrepreneurship Still Declining in the United States?
    14. Policies for a Vibrant VC Sector
    15. Tax Policy for Long-Term Investments
    16. A Vibrant Capital Markets System
    17. Research Funding for America’s Innovation Economy
    18. Immigration and Workforce Recruiting
    19. Health Care and Medical Innovation
    20. Energy and Clean Technology
    21. Cyber Security and Intellectual Property Protection
    22. Summary
  12. Chapter Five: Field Guide for VC Investing Options—Nonlisted
    1. Alternative Investments and Venture Capital
    2. Traditional Stages of Venture Capital Financing
    3. The Seed Stage
    4. The Start-Up Stage
    5. Expansion Stage—Second Round Financing
    6. Expansion Stage—Third Round Financing
    7. The Bridge/Pre-Public Stage
    8. Traditional VC Funds Active in 2012
    9. The Common Denominator
    10. Alternatives to Traditional Venture Capital Funds
  13. Chapter Six: Investment Options—Listed
    1. Private Equity Exchanges
    2. PIPEs—Private Investments in Public Equities
    3. Corporate Venture Capital (CVC)
    4. Listed Spin-Offs
    5. Listed Venture Capital Funds
    6. Tradable Venture Capital Mutual Funds
    7. Listed PE Funds or BDCs
  14. Chapter Seven: Investment Process—Sourcing and Screening
    1. Private Placement Memorandum (PPM)
    2. Relationships Really Do Matter
    3. The GP’s Network
    4. What a VC Wants
    5. Searching High and Low
    6. It Starts at “Hello . . .”
  15. Chapter Eight: Investment Process—Due Diligence and Selection
    1. LP Due Diligence of the VC
    2. Dimensions of a Great GP
    3. The Truth and Nothing but the Truth
    4. Getting to the First Close
    5. The Limited Partnership Agreement (LPA)
    6. Subscription Agreement
    7. Best Intentions
    8. What Do You Have under the Hood?
    9. Business Plan or Business Model?
    10. The Stark Reality of the Post-2008 Landscape
    11. What’s It Worth?
    12. A Seat at the Table
    13. The Paperwork
    14. Final Word
  16. Chapter Nine: Investment Process—Portfolio Construction, Monitoring, and Monetizing
    1. Some Important Words on Portfolio Construction
    2. Monitoring
    3. Duties of a Board of Directors
    4. Communication
    5. Processes, Systems, Roles, and Responsibilities
    6. Course Adjustments
    7. Cut Losses Early
    8. Methods of Monetization
    9. Conclusion: Is VC Still Alive?
  17. Appendix: Resources
  18. About the Authors