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Demystifying the VC term sheet: Redemption rights July 28, 2011

Posted by Ian Cheng in Funding.
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Scott Edward Walker

For the past few months, I’ve been exploring some of the more confusing terminology in VC term sheets. In my last post, I discussed conversion provisions, which address the right (or obligation) of the investors to convert their shares of preferred stock into shares of common stock. Today, I examine redemption rights of the investors.

What are redemption rights? A redemption right is another feature of preferred stock. It lets investors require the company to repurchase their shares after a specified period of time. In essence, it’s a “put” right – that is, the investors may elect to put their shares back to the company. As a practical matter, however, redemption rights are rarely exercised and, according to Fenwick & West’s recent VC survey, only 20 percent of the Bay area deals during the first quarter of included such rights.

Redemption rights are principally designed to protect investors from a situation where, after a period of time, their portfolio company is just moving “sideways” and, accordingly, is not an attractive acquisition target or IPO candidate. Investors are thus given the opportunity to exit their investment by exercising their redemption rights – which is particularly important because venture capital funds have limited lives (typically 10 years).

The problem, of course, is that a so-called “walking dead” company rarely has the cash to buy-back the investors’ shares. Moreover, there are significant restrictions under applicable State law regarding redemptions if the company does not have the legally available capital.

What does a redemption rights provision look like? A redemption rights provision will typically look like this in the term sheet:

“Unless prohibited by [Delaware] law governing distributions to stockholders, the Series A Preferred shall be redeemable at the option of holders of at least [__ ]% of the Series A Preferred commencing any time after the [fifth] anniversary of the Closing, at a price equal to the Original Purchase Price [plus all accrued but unpaid dividends]. Redemption shall occur in [three] equal annual portions. Upon a redemption request from the holders of the required percentage of the Series A Preferred, all Series A Preferred shares shall be redeemed [(except for any Series A holders who affirmatively opt-out)].”

What are the key issues for founders? There are several issues founders should focus on in connection with redemption rights. First, founders should push back to knock them out entirely because, as noted above, they are not the norm and rarely implemented.

If the investors insist on redemption rights, only agree if those rights cannot be exercised until at least five years after the closing. Founders should also try to limit the redemption price to an amount that is equal to the investment — and push back hard on any cumulative dividends.

Investors will sometimes try to add enforcement provisions to give their redemption rights some teeth. For example, the investors may require that if the company defaults (cannot pay the redemption price in cash), then the investors will have the right to elect a majority of the Board of Directors until the redemption price is paid in full and/or the Company will be required to pay the redemption price via the issuance of promissory notes. Again, the founders should push back hard.

Finally, founders should watch-out for unusual redemption rights, such as a “MAC” redemption, which gives investors the right to redeem their shares if the company “experiences a material adverse change to its business, operations, financial position or prospects.” This is a non-starter.

(Missed previous installments in this ongoing series? Click to learn more about the following issues:)
dividends
price-based anti-dilution provisions
exploding term sheets and no shop provisions
valuation
liquidation preferences
stock options
Board control
protective provisions
drag-along rights
pay to play provisions
conversion rights

Startup owners: Got a legal question about your business? Submit it in the comments below or email Scott directly. It could end up in an upcoming “Ask the Attorney” column.

European VC Needs Revolution, Not Evolution July 18, 2011

Posted by Ian Cheng in Funding.
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Fred Destin

My motion is simple: the European venture capital industry deserves a B- at best, and is unlikely as a whole to capitalize on the opportunities presented.

It is generally very average, sometimes downright ugly and only sporadically brilliant. Rather than go macro, I am going to go micro and focus on the quality of our ecosystem at a grassroots level to illustrate this statement.

Entrepreneurs are pissed off

Great entrepreneurs talk amongst themselves about their experience with venture capitalists, and I never miss an occasion to listen hard. Unfortunately, the feedback is almost universally negative; entrepreneurs typically have had a bad experience with Euro VC’s and are generally wary of taking their money.

There are usually three types of issues at work:

• Too many VC’s look at everything though the lens of the budget and are unable to go deep on product, tech or strategy. A few examples: the CEO of a social gaming startup laments the fact that none of his five investors uses twitter or facebook and none has ever tried one of his games, yet the success of his companies relies entirely on gameplay and social distribution. A senior VC tells the CEO of a company in an insanely fast moving segment: “I am not here to talk strategy, and no one else around this table has any clue about strategy, I am here to check what you do with my money every month”.

• There’s very little empathy with the management team and in the end boards become threatening or cumbersome reporting environments which are formulaic and useless instead of being a work session where the future of the company is being discussed and honed in a collaborative manner. I wrote a long evidence-based post about this a while back entitled “the Arrogant VC” if you want more depth.

• Too many VC’s are, simply put, afraid of failure. It makes it very difficult for the entrepreneur to discuss openly when the model is struggling and a significant pivot or strategy shift is required. I have been involved with one company a while back where the lead VC response to a fundamental go-to-market and single customer dependency issue was to review every line of spending at every board, one-by-one. Including travel, IT, and so on. Unfortunately, I am neither kidding nor exaggerating. I also had a case with Zoopla where in the early days we used to run ourselves lean on fast iteration 3-months budgets and roadmaps. We were raising money and had few alternatives, and ended up with one investor insisting on a 2-year budget being appended to the legal docs. In the end, Alex and I had the appetite for neither building that budget nor dealing with that investor and turned them off, even though that meant we had to fund Zoopla internally: the incoming VC was just barking up the wrong tree, asking for security and comfort where they could be none, since the numbers were clearly not worth the paper they were written on. I have written on the need to embrace ignorance before, though now of course you could think of that as being Lean.

In general, VC’s are not considered evil by euro entrepreneurs; they’re just the least-worst form of capital, perceived to be a necessary burden that comes with reporting obligations, oversight and very little value-add. It is too rare to hear an entrepreneur praise a VC he’s worked with for great help and insight, even though this is a common occurrence stateside.

I could of course write a companion post about how many Euro entrepreneurs need to toughen up, stop looking at VC as the root of all their failings, and generally think more ambitiously too, but that will be for another day. And on balance, I have to say I find the VC ecosystem is letting even our best hopes down too often, and that’s that.

Limited Partners are pissed off

The reason why I think we’re well past the complacency stage is that the situation within the LP community (“Limited Partners” or LP’s are the institutions who give money to venture capitalists) are even more dispirited than the entrepreneurs are. Seriously. Many top tier LP’s have written off Europe and don’t even have a “Europe venture allocation” anymore. Those that do are either focused on their top 5 funds list or are looking for (very few) emerging managers. All of them are concentrating money in the hands of fewer managers.

Why do you think every national venture capital association is reviving the debate around the “funding gap” and the need for the government or the EIF to get involved? Solace lies close to home and thanks to a network of government agencies, local banks and funds and so on many funds are managing to stay alive. The point is, we’ve managed to piss off our funding base, or at the very least make them extremely wary of backing us.

What’s wrong with us?

What I stated before is based on tens of conversations with investors and entrepreneurs. What I am going to be stating now is my personal opinion of what we do wrong, my diagnosis of why, on average, we suck.

• For some, wrong incentives: there are too many guys out there who have no incentive to either lose or make real money. To them being a venture capitalist is a job. Allow me for a second to paint a different picture of that VC you were very impressed by at the cocktail drinks. He talked a good talk but he’s actually employed by a regional financial institution that gives him money to invest every year. He does not make that much, he enjoys the perks and the feeling of importance and the Beamer but he really has no incentive to do things that are too great, rather make sure he doesn’t drop the ball on any of his investments. He really enjoys when his boss tells him he negotiated great, harsh terms. He’ll never go against his partnership for a company he believes in but that’s in serious trouble. He does not invest in his own fund, or very little. He does not really care that much as long as you get him cash back, because that’s probably enough for him to survive inside his organisation.

• For too many, wrong DNA: following up on the above, I am convinced that many folks involved in Euro VC are just in the wrong industry. They’re not entrepreneur champions and they never will be. They’re not risk takers, willing to embrace failure as the unavoidable counterpoint of attempting to be great. This is partly why I think we need new entrants, a revolution rather than an evolution, as so much of what we have currently is just wrong and non fixable. One company I was involved with was on the wrong track, because the investment thesis was turning out to be flawed. I remember the reaction of my co-investors to what was obviously an extremely hard to solve product/market fit problem, and here is what they told the CEO: “fight for as many years as you need to bring us money back, any money back”. A perverted form of “earn your stripes by salvaging a wreck” that was going to cost the CEO years and not allow a talented guy to move on to the next project. I resigned from the board after we hired a banker and told the CEO to take 12 months to try and sell and otherwise do an orderly shut down. The company somehow survived two more years after that but failed anyway; I bet the CEO did not get as much as a thank you for trying.

• Lack of depth: I cannot count the number of times I have heard entrepreneurs lament the fact that they cannot go into any level of detail on product or tech. Of course we have grandiose exceptions (most of the hardware investors in the UK would qualify) but boy, I have certainly witnessed first hand my share of shallow commentary. It’s extremely difficult to be subtle about say, pricing levels and go-to-market strategy where you have no real insights into the underlying products you are selling. Funny anecdote: this other VC sits next to me at dinner and comments on a product the CEO is demo’ing: “neat, is that from google ?”. CEO responds: “huh no, we’ve had it for two years”. No comment.

• Lack of accessibility: ever wondered why every single deal seems to come with a banker attached these days? Again, ask the entrepreneurs. The pain and friction in running a European fundraising process is such that hiring a fundraising agent is considered not only prudent but also necessary. Too many VC’s are hard to get to, non-responsive, too slow. Again there are glorious exceptions of course: Errol at Wonga had at least 4 term-sheets on the table in a matter of a few weeks from starting to fundraise for his series B, and that’s before they took off. But this is where the delta with the Americans is so huge. When Shafqat at Newscred got sponsored onto Angellist, his endless and soul-sucking European fundraising process turned into a 2 week whirlwind of investor interest and a brisk move to New York.

• Still treating legal terms as an upside mechanism: I could go on for hours here. Yes, major progress has been made, including with the Seedsummit terms that Seedcamp, Tina Baker and co. designed. But whereas legals should really be considered an insurance policy against bad behaviour, they are often used as a way to juice returns, applying what are mostly private equity techniques to young companies that should really be free to iterate fast in search of the perfect way to scale. For example:

– taking founder shares into escrow and having confusing good / leaver bad leaver language inserted (Yee Lee comes to mind more often that you’d think !), or severely restricting exercise periods for employee options.

– putting performance ratchets in place for a Series A or B company that only have a few million in revenues (including EBIT targets, as if you could know at that stage whether you should be gunning for profitability or growth ?)

– Participating preferred of course, which although they are a legitimate way to trade-off price/returns profiles when you “get” finance, are rarely well understood by founders … with VC’s obligingly leaving them in the dark

– And of course full ratchet and multiple liquidation preferences, which are not yet a thing of the past. The equivalent of the Iron Maiden for entrepreneurs I suppose, delivered at a VC shop near you.

Who are you again ?

I may piss some people off coming for a first guest post on TC with a broad brush critique of the venture community. Yes, I am a Belgian who recently deserted Europe, and whose fund was a good example of raising too much in 2000 and trying to expand too far, and I am far from perfect. Yes, I have pulled from a deal after a signed term-sheet once (sorry G), yes I failed to tell an entrepreneur for weeks I was not investing in him even though I was pursuing a business in the same field (sorry R), and yes I have been involved in two founders being removed from the post of CEO, though both times I fought hard to make them successful first.

If you come out of reading this thinking I’m a lesson giver who’s left the building, you’re missing the point. If we want to fix ourselves, we first need a harsh and intellectually honest look at how we are operating, and what our key constituents think of us. You cannot fix what you do not accept is broken.

I have frankly seen my share of odd or bad behavior directly. Whilst the blackberry obsessed distracted board member with the gorgeous soft leather daybag is by no means a European invention, we’ve added our own garden variety of venture gnome that only wakes up for the last ten minutes of the board when the monthly financials are being reviewed.

The Times They Are A-changin’

The good news is of course that our ecosystem is changing fast (and has been improving since the dawn of venture). We know strong ecosystems take time and consistency to build, and we have more and more of the ingredients coming into place:

First and foremost are great entrepreneurs building awesome successes. Skype transformed Estonia (ASI, ERPLY, Grabcad and many others), gave us a great new VC firm (Atomico) and a bunch of awesome offshoots (Spotify). And we have many more brewing, such as Wonga, Soundcloud, Gameforge etc. Every success spawns smart angels, repeat entrepreneurs, and more importantly a sense of confidence.

We’ve always had some strong VC’s (a minority in my book), we’ve had one homegrown tier I brand name with Index Ventures, a bunch of strong ones in the making often with a US heritage (Accel, Balderton, Northzone, Wellington etc), a number of exciting emerging managers (Mangrove, ISAI Notion, Passion etc, see Rise of The SuperAngel), at least one super-optionality fund (Kima) and, finally, initiatives that are truly focused on technical founders (Seedcamp, hackfwd etc)

A Revolution in mindset required, still

Whilst change is happening, I am still thinking we need a bit more of a revolution than Jos’ more gentle evolution. I would not want to suggest all VC’s are dinosaurs like my anything-but-boring friend Dave McClure, but I do hope the LP community funds the VC marsupials selectively and aggressively stops funding the VC dinosaurs.

It’s OK to shrink ourselves back to health … and we do NOT need some mis-allocated Government money introducing bias into VC selection. The government should focus on giving tax breaks to angels and lowering operating costs and red tape for startups.

On the current model, European VC’s too often think of a “deal” as an agreement with an entrepreneur about hitting a set number of milestones and financial objectives, i.e. what they perfectly rationally think of as “building a business”.

Whilst it sounds reasonable, are you more excited about doing the above or “backing exceptional people to go do exceptional things” even if that means investing with a much higher level of risk and accepting a very uncertain path to success?

If we want to avoid seeing too many of our entrepreneurs sucked by the Valley Vortex or funded by travelling Yankee fans, we better get our act together and improve the quality of our offering to the best entrepreneurs out there. They’re a finite population! Yes, the US market may be frothy and delusional, but let’s not take that as a comfortable excuse to not raise our game yet again. Onward.

如何做创业项目的陈述和展示 July 18, 2011

Posted by Ian Cheng in Funding.
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Gary Yang

从产生一个好想法,到成为一门好生意,一直到成就一家好公司,这其间必不可少的一件事情,就是你要到处去宣讲、陈述,或者说是推介。作为创业者,你要日复一日地向人们陈述宣讲,由于讲的很多,有时你可能都忘记了自己在推介:挑剔的投资者、热心的业内前辈、爱说话的网友粉丝、前来打探消息的媒体、办理执照要讨好的主管部门、不请自来的顾问、亦敌亦友的同行、为你兴奋又担心的朋友家人、租用办公室的房东 … … 甚至包括劝你早点回家休息的清洁工阿姨,你都会跟他们说你在做的是怎么样一件事情。

在所有陈述和推介的对象中,你可能最重视那些投资机构了。因为他们可能会为你生意注资,往往这刚好是你生意能否做起来的决定性力量。除此之外,投资机构也能从生意的大视角和过往的经验中为你的事业提出指导和建议,这也显得难能可贵。

那么,我们怎么样做好创业项目的陈述和展示呢?

开宗明义

如果说只能提一个建议,我会建议创业者陈述自己的项目能做到“开宗明义”。

寻找开宗明义的那句话有时真的很难。但在这个事情上花的所有精力,都将得到丰厚的回报。

我们知道,即使象IBM、Intel、Sumsung、Philips这样的大公司,在提出新理念或者换一个新口号的时候,都是一件非常既费神又昂贵的任务。本质上说,他们也在为自己找一句“开宗明义”的一句话。这句话能为整个生意带来不同凡响的效果。做这个事的成本当然不低,多数还会演变成一场公司内部声势浩大的运动。公司还会寻求外部支持,所以,寻找“开宗明义”那句话也是很多营销顾问的谋生手段,是很多广告公司的赚钱业务。

一般说来,好生意都有简明的逻辑。把事情的逻辑和因果关系弄的错综复杂也是有的,不过那通常是阴谋和诈骗,不是生意,至少不是个好生意。

所以创业者应该能在开场的2分钟之内,就把自己的项目说清楚。找到言简意赅的一两句话,把自己项目说明白。现在,“请用一句话来描述一下你的项目”,这几乎是一个众所周知的要求了。但是我发现,创业者们虽然也能用一两句话说了,但是一点也不明白,听众在那两句话里面抓不到什么实质性的信息。

这是个问题,很明显,这还不是“开宗明义”的那句话。那怎么办?回家继续想继续找呗。跟语文能力好的师友对话并探讨,我相信你一定能为自己的项目找到一个好说法。

简洁明了

简洁明了是人人都赞同的优点,但知易行难。创业者为自己的陈述多做准备,加之临场经验的积累,会越来越好。

如果我们去观察两个怀抱婴儿的妈妈会聊些什么,就会发现“语句散漫”的现象。通常那是一种极为琐碎和零散的对话。几乎见不到概括、提要、小结,全都是细节,而且话题随性又漂移不定。这种常见于社区的草地边和公园的长椅上的对话,可以让两个新任妈妈在午后的闲适时光里享受好一阵温馨情调。但是把这种说话方式拿到商务场合就不行了。

不难理解,新任妈妈太爱自己的宝贝了,也许就是这种强烈的爱,导致了“语句散漫”。那么对于创业团队来说,会不会因为太爱自己的项目,而导致陈述演示的时候也“语句散漫”呢?嗯!这还是一个很普遍的现象呢。

当创业者的陈述演示不够利落,铺排了很多才进入正题,然后又让听众左等又盼,才能听到对项目实质性的陈述,很明显,这就是进入了“语句散漫”的状态。

这样不仅会把有限的陈述时间耗掉,而且也在挑战投资者聆听耐心的极限。同时,这会让人怀疑你对项目的理解是否足够深入,甚至干脆认为你是在努力把一个简单想法编造为一个神奇的故事,在忽悠人。

其实我们在陈述演示的准备阶段,就应该自问:是不是由于太喜爱自己的项目 ── 这个自己的“亲骨肉”,而一头扎进了细节里去了?说的最多最细的部分,是不是仅仅因为自己对它最熟悉最热爱?

简洁,是“用心割舍”的结果。而“用心割舍”,代表着良好的判断力。

每一位讲者都认为自己的说话听众是喜欢聆听的。不幸的是,这只是一厢情愿的想法。只有让自己对项目的爱保持警惕和克制,才能把听众放在心上,认真考虑听众要听的是什么。这样,你的陈述才可能保持简洁。

除此之外,说一些大家已知的东西,或者拿些网上的通用数据资料来讲些大道理,都是对听众缺乏了解,也是造成不够简洁的原因。

不能叫卖

陈述演示(Presentation)总体上说都是一种行销行为。但是不同类型Presentation的差异还是很大。比如:
•销售演示 (Sales presentation)
•向投资演示 (Investor presentation)

我们通常会缺乏向投资者演示的经验,但是很熟悉销售演示。但是两者不能简单等同,这是两种截然不同的演示。

销售演示就是要卖东西,难免有鼓吹和自夸的成份。而鼓吹和自夸是在向投资演示中应该避免的。面对一个创业阶段的项目,你总体上要保持诚恳和客观的态度。

一般来说,如果凭借吹嘘和引诱的花招来向顾客推销点什么东西,大家还能勉强接受(也可能是我们见怪不怪了)。但是面对经验老道的投资者做陈述和演示,创业者的诚意和项目的真实面貌是打动他们的力量。

叫卖的方式行不通,所以我们无需为项目进行不必要的包装,无需为项目起个名不副实的华丽名称。也不要在演示过程中为自己的产品“上大词”,这都是为沟通设置了障碍。

有些词汇很常见,但是它们的份量很重,尤其是真正的生意人都觉得它们的份量很重,比如:“平台”、“解决方案”、“一站式服务”等等。要仔细掂量一下你的项目是不是能用得上这样的词汇。

如果投资者用浅白的语言来解释项目的时候,比如,他说:“你的项目本质上就是… …嘛!” 听起来项目好像“被贬低”了。如果是这样,我们应该检查一下,是不是在描述项目的时候“用词过猛”了。

没有胜负

投资者可以为创业者的项目做点评,给与或高或低的评价,投资或不投资,但他们仍然不是创业者的裁判。你真正的裁判是市场。

36Kr这样的创业交流会,不是项目评审会,也不是大专辩论会。创业团队和投资者以及各方来宾,会就某一个问题产生异议和争论,通常这也是难免的事情。争论来源于对问题的认知程度的不同,或者仅仅是因为他们的角色不一样。这样的争论有助于对事实的理解,本身并没有胜负的结果,而且多数争论的话题可能根本就没有标准的答案。

所以,没有裁判,不是辩论会,没有标准答案,更没有胜负输赢。

当然,从我们的本性上看,人家在指出自己“宝贝项目”的不足和缺陷,可能还带着质疑和挑剔的语气,这让人不爽。于是,反驳甚至强有力的反击语言就会脱口而出。这让讨论会变成了辩论会。

我们都知道大专辩论会已经演变成为一场游戏了,一场纯粹的口舌之争。谁又会把他们的辩论结果拿来成为自己的观念和行事准则呢?

那么,我们就不要为此争口头胜负。

虽然大家都说创业交流会是一个平等的对话交流。但是客观上看,创业的年轻人对投资者,社会地位、经验、资源都处于下风,创业者与投资者两方的博弈也是普遍而不争的事实。那么我们怎么能做到平等对话呢?

我的建议是可以把这种交流当成一次相亲,或者仅仅是一次“出来喝一杯”的约会。婚礼和洞房之类的事还很遥远,那就保持一种不求不败的心境,把这次见面当成你认识一个朋友的机会吧。

如果你想通了这是一次约会。那么现场你就不会显得“太紧”。如果你的项目还达不到令人震惊和肃然起敬的标准,那么就拿出欢乐的心态来和大家对话。

与此对应的是,一个创业投资者,如果不能从内心里理解和喜爱创业者的青涩和的个性,不能理解项目的不足和欠缺,那么他一定不是个好的创业投资者。那么我们有理由相信他的视野太狭窄,急功近利,缺乏放眼未来的胸怀和眼光。

如果你哪天遇到了这样的一位创业投资人,就好比你的约会对象根本就不是一位美女,而是一只恐龙。那么,请专心品尝完那杯咖啡,然后走人。

真实应答

你一定要知道,这世界上的问题太多,不必什么都有答案。你的项目也是。

你再聪明也不可能回答得了所有的问题。尤其是你还在做一件未来某个时间才能成功的项目。所以不必为不能回答某些问题而感到羞涩。也不要为自己根本不知道答案的问题编造答案,或者仅仅嘴里嘟囔着一些自己也不理解的话语。

勇敢的说我不知道,这完全是一种得体的应答,并无损于自身。

总体上讲,在演示项目时要注意应答的多样性。建议如下:
•有些问题是有答案的,如果知道就简短有力的回答。
•有些问题根本就没有答案。那么直接说你不知道。
•有些问题的确很难,你也不可能瞬间给提问者制造一个答案出来,直接说你要再想想。
•有些问题被提出来,提问者自己也不认为会有好答案,他只是问问而已。那你就向他请教,问问他是怎么想的。
•有问必答一定是失败的。听众会感觉场上来了一个万事通,对万事皆有答案。结果导致陈述中本来有说服力的那部分,也因为这种的态度给损掉,甚至连场面也输掉。

值得注意的是,有时投资人故意语意尖锐严厉,你也不要乱了阵脚,不要以为人家故意来折磨你。其实,他们很可能是在试探创业年轻人的“抗压能力”。也许他有点把这个测试提前了一些,但这恰恰说明了他可能“喜欢”上了你。

英雄也要问出处

我常常问那些准备去提案、投标、做项目陈述的人:“我们把所有资料寄送给客户就行了,为什么客户一定要见见我们?” 这是个好问题,因为你只有理解了客户要见你的原因,你才知道如何去做有针对性的准备。

如果创业团队把完整的项目资料送给投资方,资料袋里包含了一切,甚至也把难懂的软件操作录成视频刻成光盘一同送过来。那么,是不是就不用亲自来演示自己的项目了?

所有人都知道这不可以。为什么?

有人说看资料很累,还可能会看不懂,有问题又没人即时解答,等等。但是这些都不是最重要的原因。最重要的是:人家要看看你是什么样的人!

有人说,人(团队)的相关情况是项目的重要部分。我说不对。人的因素不是项目资料的一部分,它是所有部分的根。

就像Gerald M. Weinberg说的那样:

无论问题最初看起来怎样,它始终是人的问题。

所以创业者少不了要对自己和团队的背景加以介绍,即使你的专业、履历和背景与这个项目无太大关联,你的思想、个性、价值观等等也会从过去经历中体现出来。

介绍自己是一项既简单又困难的事情。听众对你的印象,一半来自你自我介绍的信息,另一半来自你自我介绍的态度。陈述者也不用费心去拿捏姿态,不用去想是保持高傲一些好,还是谦卑一些更有利,真实最为好。这不涉及攀比资历,有光鲜资历有更好,没有也无妨。

“自我介绍”环节是值得去精心准备的。选择一个好的角度,完全可以把平凡的人生经历说得有趣而吸引人。还可以把自己的思考和体验融入进去,提升沟通的质量。

The ABCs of Starting an Investor Pitch Meeting – Always Be Credible July 14, 2011

Posted by Ian Cheng in Funding.
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Jeff Bussgang

Malcolm Gladwell made famous the natural human reaction of judging other people in the first few minutes of an encounter with his book, Blink. Like many other business people, VCs and angel investors (“investors” going forward) blink and judge entrepreneurs very quickly in the first few minutes of an interaction. That’s why the way an entrepreneur starts an investor pitch meeting is a key determinant of their success in that meeting. Those first 10-15 minutes, where the entrepreneur presents themselves before they even present the idea, are very critical in establishing credibility and the right to continue to pitch to an engaged audience.

Yet, it is amazing to me how few entrepreneurs start investor meetings crisply and confidently. The formula for the start of the meeting is almost always the same – you are trying to answer the simple question on the mind of the investors: who are you and why are you here? But when asked to review their backgrounds, entrepreneurs often fumble through incoherently, or ramble on tangents that aren’t relevant to the situation.

So, how should you start an investor meeting? It’s as simple as ABC: Always Be Credible. Investors are looking for credibility – can we trust that you have a uniquely good idea or insight, are you capable of executing on it, and are you the real deal or full of bluster and BS?

When you talk to investors and ask about this opening gambit from entrepreneurs, you hear a consistent pattern about why they like a certain entrepreneur they’ve invested in. When you distill the inputs into a coherent pattern, here are the top three things you typically hear entrepreneurs should do:

•Be genuine and personable – Let your personality show, professionally of course. At some point in the introduction, say something that makes you smile, which will make those around you smile. If you don’t engage your audience, they’ll jump to their Blackberries. For example, ZestCash CEO/co-founder Douglas Merrill is a charming character and, even putting aside the shoulder-length hair and tattoos, you can’t help smile when he introduces his background (raised dyslexic in Arkansas, followed an unlikely path of earning a Princeton PhD, leading Google engineering and IPO in his role as CIO for 5 years, and now has developed a vision to transform short-term consumer credit by blending online data with traditional underwriting techniques).

•Be crisp and on point – The most compelling background speeches are crisp, straightforward and very demonstrate relevant links to the opportunity at hand. For example, SaveWave CEO/co-founder Dave Rochon gave the following brief narrative when pitching investors: “I worked at Catalina Marketing for 10 years in sales and launched their Internet couponing business, then joined Upromise the year it was founded and built the grocery business for 10 years, serving for three years as president after the acquisition by Sallie Mae. I now want to transform the online and mobile grocery coupon business.” Dave’s Series A round was way over-subscribed by folks like First Round, Ron Conway, Roger Ehrenberg, Founder Collective and I think it’s in no small part because his background and delivery were so crisp and relevant.

•Keep it short. I find that the more impressive the entrepreneur, the shorter the introduction. The worst situation – 20 minutes into the presentation, the entrepreneur is still bragging about some random product they launched in a completely irrelevant industry sector. The VCs are already hitting their Blackberries and wondering how they can end the meeting gracefully. And you run out of time to actually pitch the big idea. Meandering introductions are the death of a pitch.

And here are the top three things to avoid:

•Do not exaggerate. Assume that everything you say will be thoroughly checked out in due diligence. If you claim credit for a company where you played a small role, it is bad form. I recently called the CEO of a company that an entrepreneur bragged they had led during the pitch. When the CEO told me they were a minor player and left after a brief two years, I stopped spending any more time evaluating the opportunity. Remember, investors are professional BS detectors. Err on the side of underselling your background because the BS alarm bells may ring in the first few minutes of introduction and spoil the rest of the presentation.

•There’s no “I” in team. When entrepreneurs talk about themselves in grandiose terms in their introductions, it’s usually a sign of egotism. When entrepreneurs talk about the teams they built and the smart people that somehow they were able to convince to join them in their cause, it’s a sign of great leadership. Guess which of these two profiles investors are more attracted to?

•Don’t name drop. Some investors are notorious name droppers, so this is a bit of the pot calling the kettle black, but investors get very turned off when the entrepreneurs name drop in their introductions. We don’t need to hear every famous person you’ve met or pitched or worked with. Establishing a few common points of contact is a good thing. Acting like you are best friends with folks who wouldn’t recognize you if you bumped into them in the grocery store on a Sunday afternoon is not recommended.

Remember, be credible, humble and specific and you’ll do fine. Take the 5-10 minutes time to establish that initial credibility, and then move on. Investors like to back great people, so spend as much time thinking about how to present yourself in a compelling fashion as you would your idea.

创业企业应寻找能提供附加值的风投 July 11, 2011

Posted by Ian Cheng in Funding.
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  天使投资常见的融资工具有多种,如果他把钱借给你也是有问题的,投资人是很纠结的,他既想投资很安全,又要最大限度的去避免风险,可转换优先股就出现了,尽管证券法里面没有优秀股,但是很多的投资条款里都出现了类似于优先股的条款。优先股是股份,但是有很多优越的条件,比如他在分红方面有很多苛刻的要求,说你这个企业投进去挣钱了,大家想想是创业者最想把钱拿回去还是投资人最想把钱拿回去?是创业者,因为投资人看不上这点利息。他就设立了一个门槛,如果要分红,我投资人必须先分一部分的红,然后我们再按比例分红,如果有了优先股这样一个金融工具,就设计了一个门槛,使得他的分红权高于其他所有人,包括创始人。可转换优先股是指一旦这个企业成功,这个优先股可以转成和你具有一样权利的普通股,你上市了,我也跟你一样能够上市、能够卖一个好价钱。所以优先股是目前很多投资机构,特别是境外投资机构开始采取的一个普遍使用的方法。所以当大家今后跟投资人沟通的时候,他说我看重你的企业了,在签订正式的合同之前,我先给你一个投资条款书,这里面有类似于优先股的形式。条款书里面有很多重要的条款,为什么要对创业者说这些条款呢?是因为让创业者了解到这些条款,就使得我们能够把屁股坐在投资人的位置上来看创业者。如果投资人把钱投给你,我有哪方面的考虑,我怎样规避风险,我对你的团队有什么样的要求,我怎么样能够最大限度的保护我的利益,所以你了解了投资人的想法,你就能更好的和投资人沟通,同时按照投资人要求的模式去成长和发展,所以你了解这些投资条款很重要。

  第一、清算优先权条款。我们这里有很多的创业者,训练营要求创业者在报名的时候必须有营业执照,你光有创业计划书是不可以的,我们想把这个机会让给已经下海的创业者,但是这并不等于那些有了一个伟大的思想和非常好想法的创业者不可以融到资。原来假定这个思想由于国家的特殊政策和其他的原因这家企业经营不下去了,大家就得分家,这个企业里有100万和一个好的思想,这个时候各占50%,有伟大思想的人分走了50万现金。这个企业发生了任何的清算,我必须拿回我投资的1—2倍甚至5—6倍的回报,剩下的再按照比例进行清算。也就是说我不管你出现什么情况,我也不知道会出现什么情况,但是一旦出现清算的情况,我投了一百万,我就要先拿回两百万,剩下的再按照50%来分。

  第二、反稀释条款。私募股权基金市场很大,每年几百亿的资金投到成千上万的企业里,没有一个显性的法规去约束双方,全是靠条款约束,所以是这些核心的条款来掌控和主导着这么大一个非上市公司资金市场的运行,所以契约很厉害,当这个条款设计得比较完善,双方又很遵守这个契约时,这个力量是很大的。比如我们中间有一个创业者需要投资,一个投资者愿意给他钱,两块钱一股,我自己的公司有一百万股,我再引进一百万股,这就引进了两百万,这个时候公司有两百万股,只不过是你注册的时候是以一块钱注册的,由于经营了一段时间可以两块钱再引进一百万股,这个时候世道就发生了变化,遇到了金融危机,这个企业开始走下坡路,但是这个情况还没有那么糟,金融危机的时候缺多少钱都没有人给,这个时候你又遇到了其他一个投资人,你遇到了愿意救你的投资人,这个投资人说我愿意给你钱,但是两块钱一股我不能给,一块钱一股我再给你一百万股,第一轮投资是两块钱一股,原来的预期是十块钱,等上市的时候变成50块钱,现在你遇到了一个极端的情况,你再融资可以,这个投资人说我只愿意按一块钱一股。所以你就变成了一个倒挂的现象,第一轮融资两块钱一股进来了,第二轮融资本来应该卖四块钱一股,结果这个人说一块钱一股,这个时候第一轮投资人肯定是很难受的,说我在你最弱小的时候我把钱给你了。现在你这个企业变大了,肯定能活下去,只不过是由于金融危机、由于世道不好你需要钱,结果你卖了更便宜,所以他很难受。第一轮投资人制定了反稀释条款,如果你后续融资的价格卖得更便宜,必须把我投的钱变成同样低的价格。大家将来要融资,这是一定会碰到的条款,因为这些都是天使投资、风险投资已经规范的最核心的条款。

  第三、董事会条款。投资人给你钱到一定规模时他都会变成一个董事,这个董事参与公司的决策。在国内我们的企业在接受外来投资时,对于董事的态度经过了一个转变,一开始大家都怀着一个敌对的态度,说你投那么点钱你还派一个人来看着我,我还要有一些信息向你披露。但是经过一段时间的发展,大家觉得这个董事虽然说是来看着你的,但是由于这个董事具有非常丰富的行业经验,他能给你提出很多有建设性的意见,特别是非常专业的意见,这个时候你觉得这个董事非常好。这个条款本身没有什么,但是我要说,大家在吸引资金的时候,一定要找那些跟你的专业、跟你所从事的行业比较接近的那些创投机构。比如说他原来投过类似的企业,他再投你他就知道你的上下游企业,知道你的竞争对手,知道你类似企业的弱点,相当于你不花钱聘了一个咨询公司。虽然在开始我强调了目前资金比较紧张,但是在发改委备案的创投机构已经超过的500家,我认为相当一部分都是不具有专业经验的,他们只有钱。你说只有钱好啊,给了钱就管不了我们了,但是我建议你应该找那些给能提供投资以后在战略发展、财务控制、公司治理、团队建设这方面给你提供大量帮助的投资机构。所以你与投资人沟通时一定要问他投了什么企业,你投了以后对我们企业的发展有哪方面的贡献。一个好的投资机构对于企业的帮助有多么的重要。

创投机构里有一类创投是大企业内部的创投,英特尔有一个创投机构叫英特尔资本,这个创投机构非常的成功,他的成功机率超过了很多独立的创投机构,现在退出的成功比率超过了40%,创业者在日常经营活动中最难的就是产品的销售,特别是一些高技术企业,你想把你的产品销售到全世界各地多难,因为你没有钱去做广告。但是英特尔如果投了你,他在全球一百多个国家有分支机构,他在全球40多个国家有他所投资的企业,这些企业都有可能是你潜在的客户。他们的研发能力非常强,能够对他所投资的高技术企业进行强大的技术后盾和技术支持,所以他投的企业成功率特别高。我是巴塞罗那全球创业大赛中国提名的委员,我们每年都推荐训练营的企业去巴塞罗那参加全球创业大赛,前年我们推荐了一个企业,他说特别想让英特尔投我,如果他投了我,我就能够把我的产品卖给他很多的企业,而且他投资的很多企业和我的企业都是关联的。现在有钱的创投机构很多,当这些投资人找到你的时候,说明你的企业还有价值,这个时候你要挑一个真正对自己有帮助的创投机构。

  第四、保护性条款。保护性条款大家在接受投资的时候一定要小心,这些表现形式是一票否决,小股东也有一票否决权,所以你带接受投资的时候,你要看有一票否决权。

  第五、股份兑现条款。如果现在所有的创业者转向变成投资人,我们都去投一个企业,这个企业肯定没有问题,我们也都愿意把钱给他,给了以后这个企业慢慢的还不错,这个时候你最担心的是什么?如果我们关注媒体能看出一个关于创业板集中的报道,高管辞职,让你们这些创业者将来上市以后很无奈,你本来还想指望他多干几年,可是这帮年轻人轻轻松松就上亿的身价了。辞职了没有办法,但是股份在他手里,他想什么时候卖什么时候卖,所以这里头有一个股份兑现的条款,说的是我给你投资了,我占20%,这80%你是要分期分批兑现的。这里头给我们带来的另外一个反思就是我们和创业合伙人的关系问题,包括和你一起创业的那些高管的激励问题。我们有一个EMBA同学,创业板第一家上市公司,他们的高管就处理得非常好,他们的高管所有的股份都装在一个公司里,通过这个公司持有上市公司股份,锁定期18年。这家公司减持一点,我们按照高管的比例分,这些高管一辈子都绑在一起了,也能过上体面的生活,也能享受对于成就的追求。股份兑现的条款从投资者的角度理解的是我怕你跑,股份给你你跑了怎么办,反正这个企业已经上市了,或者是马上要上市,所以就有股份兑现的安排。这个安排给我们带来的启发和反思是我们在创业的时候怎么样和我们一起创业的人,和我们的高管一起把这个股份安排好。谁先谁后我们做一个长远的安排,这样防止对企业由于关键的员工和高管的辞职所给企业带来的损害。这样的股份兑现的条款安排不仅仅对于上市公司是有启发性的,对于创业也是有很大的启发性。

  第六、股份回购。这是一个中国特色的条款,你们在接受投资的时候很多情况下都能遇到,因为国内很多投资机构投你的时候都是以上市作为条件的,如果你无法上市,我投的钱你得退回来。如果我无法上市肯定是出问题了,钱还能退回吗,但是一般投资机构都会做这样的要求,万一你无法上市我们好和好散,当然有没有这样回购成功的呢?的确有。由于种种原因,这个且上市短期内没有希望,所以深创投就及时的把投资拿回来了,企业用自己的钱回购回来了。

  第七、对赌条款。要求企业的高管在预定的时间内达到预定的业绩,如果无法达到要求你赔我股份,最多的时候创始人一点都没了。这里面源于估值的安排,上市里很多用的是市盈率,就是这家企业值多少钱,你的净利润乘以倍数。在座的任何一家企业经营得还不错,年净利润一百万(税后),给你十倍的估值就是你这个企业值一千万,如果创投机构给你一千万,他占50%。你说我净利润一百万我亏了,我明年净利润就五百万了,我要按照明年的净利润进行估值,如果按照明年的估值,这个人出了一千万才占了1/5。创投机构说我认你五百万的净利润,他当然是希望你达到五百万的净利润,虽然他占的比例小了,但是蛋糕大了,他赚得更多了。但是你如果虚报军情,我就得罚你。对赌条款实际上是希望你经营得好,但是希望你提供一个相对准确的预期,不希望你忽悠。一般来说投资机构都比较友好,差得不多就算了,但是要差几倍就不行。

  如果大家将来不希望引入投资,这些都没有用,如果希望引入投资,这些东西都是你要遇到的。有一点需要强调的,所有的这些条款都必须在中国的证券法和公司法、其他法律管辖的范围之内。所以这些条款会针对中国的法律做相应的变化和调整,但是核心的意思是存在的。

VC/PE追捧清洁技术 中国市场备受关注 July 1, 2011

Posted by Ian Cheng in Funding.
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  在清洁技术领域,新能源开发最先受到VC/PE的关注,2009年以后VC/PE开始关注能源高效利用。下一个阶段,VC/PE的投资不仅集中于新能源开发和能源高效利用,而且将发展到末端处理所涉及的清洁技术领域,即全面清洁化改造阶段。

  “下一个阶段,风险投资/私募股权投资(VC/PE)对于清洁技术领域的投资,不仅集中于开发新能源和提高能源效率方面,而且将从能源的产生、利用扩展到废弃处理等细分领域。”在清科创业投资俱乐部近日举办的清洁技术产业专场上,清科研究中心高级分析师肖珺表示,未来清洁技术各细分领域之间将协同发展,进入全方位清洁化改造阶段,并成为VC/PE关注的重要领域之一。

  清科研究中心相关统计显示,今年4月的并购案例中,清洁技术涉及金额最高,为20.63亿美元,占4月份并购交易金的37.9%。整个清洁技术领域受到了VC/PE的追捧。

  中国市场受青睐

  清洁技术涵盖范围较广,涉及众多细分领域,其中主要包括三方面:一是清洁能源资源,如生物质能、太阳能、风能;二是节能与能效,如节能照明、智能电网、电动车、节能服务;三是减排环保,如固体废弃物处理、大气保护、水处理等领域,

  自2008年以来,VC/PE投资清洁技术的案例一直呈快速增长趋势。中国在2009年首次超过美国,排名全球清洁技术领域投资第一位。

  “中国已经成为清洁技术领域增长最快的市场之一。”普华永道会计师事务所清洁技术行业主管合伙人崔志义表示。

  近年来,VC/PE对中国清洁技术领域的投资热度有增无减。清科研究中心统计数据显示,2009年至2010年上半年,中国清洁技术领域共披露24起并购案例,其中21起披露了金额,共涉及45.46亿美元。

  罗兰·贝格国际管理咨询公司的报告显示,清洁技术发展程度最高的国家是丹麦,中国排在第二位;同时中国环保产业的增长速度最快,平均每年增长77%。

  肖珺表示,清洁技术的内涵不是一成不变的,其内涵一直不断扩充。在利用资源的过程中,通过高效利用能源出现新的技术,比如节能照明、电动车、智能电网都是利用资源过程中产生的清洁技术。此外还有一些旁系,比如可持续农业、新材料都是清洁技术的细分领域。

  近年来创投业普遍看好清洁技术,认为清洁技术将获得巨大发展空间,其主要推动力来自两方面:一是我国培育和发展战略性新兴产业,清洁技术成为重要领域。在七大战略性新兴产业中,与清洁技术相关的产业包括新能源、新能源汽车、节能环保、新材料,其中节能环保被列为七大战略性新兴产业;二是哥本哈根世界气候大会之前,中国政府承诺,到2020年单位国内生产总值二氧化碳排放比2005年下降40%-45%。基于上述二氧化碳减排目标,无论是节能还是减排都将获得很大的发展空间。

  肖珺表示,由于清洁技术发展受政策影响比较明显,因此这些积极政策将成为清洁技术发展的重要推动力。

  能源存储成投资热点

  我国清洁技术的发展得益于VC/PE的投资,近年来国内成立不少专注于清洁技术领域的基金。2010年以来,能源存储已经成为清洁技术领域新一轮的投资热点。

  所谓能源存储是指将电能通过一定的技术转化为化学能、势能、动能、电磁能等形态,使转化后的能量具有空间上可转移或时间上可转移或质量可控制的特点,可以在适当的时间、地点以适合用电需求的方式释放,为电力系统、用电设施及设备长期或临时供电,如电池储能、飞轮储能、抽水蓄能、压缩空气储能等。

  清科研究中心的数据显示,2010年上半年,我国能源存储行业共披露10起VC/PE投资案例,其中7笔披露了投资金额,共涉及金额4301万美元,能源存储投资案例数量在整体清洁能源中占比达28.6%。投资大多分布在电池行业,也有部分超级电容器投资案例。电池行业中以锂电池投资最为集中,传统铅酸电池也吸引了一些投资,其他先进电池技术领域的投资还包括液流电池等。

  对于能源存储投资升温,肖王君认为有三方面原因促成投资升温的事实。一是清洁技术发展阶段特点使然。从清洁技术本质的节能减排诉求来看,各清洁技术细分领域主要可以分为开源型(新能源的开发)、节流型(能源的优化利用)、末端处理(废水、废气、固废的处理和循环利用等),这几种类型的细分领域将依次成为阶段发展的重点。开源型细分行业如光伏产业是上一阶段的投资热点,但由于成本较高,且可再生能源发电上网不易,目前还很难有效开发。正是由于开源型细分行业的这一瓶颈,节流型业务在清洁技术中异军突起,成为现阶段的发展重点。

  二是新能源汽车的补贴政策是直接推手。2009年1月财政部、科技部共同发出《关于开展节能与新能源汽车示范推广试点工作的通知》,2010年国家发改委牵头制定的《节能与新能源汽车发展规划(草案)》中提出,未来10年中央财政将投入上千亿元支持节能与新能源汽车核心技术的研发和推广。政策一直是清洁技术投资的航标灯,能源存储作为新能源汽车的重要技术基础,自然成为投资追捧的对象。

  三是锂电行业集体上市的示范效应不容忽视。2009年下半年以来,从碳酸铁锂原料到正负极、电解液等多家涉及锂离子电池生产制造的企业相继上市,无疑对整个行业的投资产生了积极的影响。

  全面投资机会将展现

  2009年之前,清洁技术领域的专项基金数量不是很多,比较典型的是专注于清洁技术领域的青云创投,另外还有中国环境基金、义云清洁技术基金、高创特新能源基金等。

  到2010年以后,各种清洁技术专项基金如雨后春笋般诞生,出现了建银城投环保基金、世铭国际低碳环保生活基金、金茂环保基金、湖北新能源创投、湖南新能源产业创投基金等,还有一些地方成立了环保、新能源的相应基金等专注于清洁技术领域的创投基金。今年以来,圆基新能源创投、河南新能源产业基金也相继成立。

  青云创投对于清洁技术领域投资机会非常看好,青云创投合伙人李立伟表示,国家“十二五”规划纲要中提出着力培育和发展战略性新兴产业,节能环保作为战略性新兴产业之首将给予重点支持,并且七大战略性新兴产业几乎都与清洁技术有关,其中有4个产业与清洁技术直接相关。过去10年清洁技术的发展速度很快,其中一些清洁技术在未来若干年可以成为主流技术,同时新技术不断涌现,相信清洁技术将在未来几年之内实现跨越式发展。未来一段时间,青云创投比较看好废弃物气化、垃圾处理、地热等清洁技术细分领域的投资机会。

  光控新能源创业投资公司合伙人阮航表示:“对于清洁技术的投资,在过去的十几年里面一直持续不断,投资热点也在不断变化。实际上清洁技术细分领域里面还有很多投资机会,在主流技术商业运用明确的情况下,通过细分领域寻找合适的投资目标,这就是我们的策略。”

  肖珺表示,在清洁技术领域,新能源开发最先受到VC/PE的关注,到2009年以后VC/PE开始关注能源高效利用,最为典型就是LED照明产业、节能服务等细分领域。下一个阶段,VC/PE不仅集中于新能源开发和能源高效利用,而且将发展到末端处理所涉及的清洁技术领域,即全面清洁化改造阶段。

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