The Business of Venture Capital Insights from Leading Practitioners on the Art of Raising a Fund, Deal Structuring, Value Creation, and Exit Strategies

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  • Format: Hardcover
  • Copyright: 2011-10-25
  • Publisher: Wiley
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The newly updated fast-reference problem solver The Complete CPA Desk Reference-the convenient, comprehensive reference professionals have relied on for over fifteen years-is now updated in a new Fifth Edition to give today's busy executives and accountants the helpful information they need in a quick-reference format. Whether in public practice or private industry, professionals will always have this reliable reference tool at their fingertips because it easily goes anywhere-to a client's office, on a business trip, or to an important lunch meeting. Written in an easy question-and-answer format, this is the perfect up-to-date reference for today's accountants. Discusses the latest on FASB Accounting Standards Codification (ASC) and Accounting Standards Update (ASU) Includes a new section to cover International Financial Reporting Standards (IFRS) Covers web-based budgeting, cloud computing, and environmental costing Written by the bestselling authors of The Vest Pocket CPA, Fourth Edition Question-and-answer format covers an abundance of topics, including financial measures, ratios, and procedures Packed with practical techniques and rules of thumb for analyzing, evaluating, and solving day-to-day accounting issues, The Complete CPA Desk Reference, Fifth Edition helps you quickly pinpoint what to look for, what to watch out for, what to do, and how to do it. It is a powerful companion for the complex, ever-changing world of accounting.

Author Biography

MAHENDRA RAMSINGHANI manages Invest Detroit's First Step Fund, a seed and early stage fund with investments in over twenty-five start-ups. He led the development and launch of legislation for two fund-of-fund programs for the state of Michigan. The author has over fifteen years of experience with development of early stage companies and venture investments in the United States, Singapore, and India.

Table of Contents

Forewordp. xiii
Prefacep. xvii
Acknowledgmentsp. xxix
Raising the Venture Fundp. 1
The Universe of Limited Partnersp. 5
An Overview of Alternative Assetsp. 6
Sources of Capitalp. 10
Comparison of Limited Partnershipsp. 29
Summaryp. 29
Fund Due Diligencep. 38
Sourcing and First Screensp. 34
Fund Due Diligence: How LPs Evaluate Venture Firmsp. 36
Evaluating the Fund Managersp. 39
Emerging Managers: A Promise of the Futurep. 53
The Quest for the Elusive Top Quartile Managersp. 61
Fund Investment Strategyp. 67
Market Timingp. 77
Fund Size and Portfolio Construction vis--vis Fund Strategyp. 80
Fit within the LP's Current Portfoliop. 85
Why LPs Terminate Existing Relationshipsp. 87
Summaryp. 87
Terms of Investment: The Limited Partnership Agreementp. 89
Sample Terms in a Fund's PPMp. 90
Other LP-GP Termsp. 105
What Matters Mostp. 110
Summaryp. 110
Fund Structure, Governance, and Operationsp. 113
Key Constituents of the GP Teamp. 114
Finding Suitable Partnersp. 125
Fund Governance and Economicsp. 126
Governance of Management Services GP LLCp. 127
Summaryp. 134
Getting to the First Closep. 135
Build Your Target List of Investorsp. 137
Fund Marketing Materialsp. 141
Presentation Slidesp. 142
Making the Presentation Pitch: Drink Your Own Kool-Aidp. 144
Attracting the Lead Investor: Your "Nut"p. 144
Communicate, Create, and Maintain Momentump. 146
Offering Sweeteners to Attract LPs: A Double-Edged Swordp. 147
The Role of Placement Agents in Fund-Raisingp. 147
Caveat Emptorp. 151
Summaryp. 152
The Investment Processp. 153
The Art of Sourcing Investment Opportunitiesp. 155
The Best Source: The Networkp. 157
The Fountainheads of Academia and Researchp. 160
Corporate Researchp. 161
Venture Events and Trade Conferencesp. 163
Venture Farmingp. 165
Angels and Pledge Fundsp. 167
Business Plan Competitionsp. 171
Cold Callingp. 172
You Win Some, You Miss Somep. 172
Summaryp. 174
The Art of Conducting Due Diligencep. 177
What Is Important: Jockey, Horse, or Markets?p. 178
Attributes of the Jockeyp. 179
Serial Entrepreneurs versus First-Time Entrepreneursp. 183
What about Charisma?p. 184
Management Team Due Diligence: How to Assess the Jockeyp. 185
The Importance of Conducting Background Investigationsp. 192
Assessing the Marketp. 194
Evaluating the Idea or Productp. 199
Reviewing the Business Modelp. 201
Considering the Financial Projectionsp. 202
Weighing the Importance of Business Plansp. 203
The Due Diligence Checklistp. 203
Summaryp. 206
The Basics of Corporations, Ownership, and Controlp. 209
Authorized Shares and Issued Sharesp. 211
Shareholder Rightsp. 217
Role of the Boardp. 217
Summaryp. 218
Valuation Methods and Other Voodoo Artsp. 219
The Drivers of Valuationp. 220
The Simplified Form of the VC Method of Valuationp. 221
Comparable Valuations of Similar Investments (Comps)p. 224
Discounted Cash Flow Methodp. 226
Summaryp. 228
Structuring Investment Transactionsp. 229
The Spirit of the Term Sheetp. 229
Negotiation Stress Pointsp. 230
Milestone-Based Financing: Risk Mitigation or Distractionp. 238
Structuring Terms to Generate Target Returnsp. 239
Governance and Control: Protecting Your Securitiesp. 246
Exit-Related Provisionsp. 247
Other Termsp. 248
Toward a Simpler Term Sheet for Smaller Investmentsp. 250
Syndicating Investmentsp. 251
The Closing Process: After the Term Sheetp. 252
Summaryp. 253
Behind Every Successful CEO Stand a Few Good Board VCsp. 255
The Need for Director Educationp. 256
Roles and Responsibilities of a Board Memberp. 257
Board Composition and Orientationp. 261
Board Practicesp. 263
Get That Gavel: Overview of Robert's Rules of Orderp. 265
Value Creation: How to Support Your Portfolio Company's CEOp. 268
The CEO's Perspective on Venture Capitalist Value Addp. 269
Setting the Tone through Board Culturep. 275
Improving the Board Gamep. 284
Summaryp. 289
Exit Strategiesp. 291
Preconditions for an Exitp. 292
Acquisitions: The Primary Path to an Exitp. 297
The Sell Processp. 302
When an Acquirer Comes Knockingp. 307
The Buy-Side Acquisition Processp. 307
Deal Killersp. 310
Acquisition Case Study: Mint.com Generates 5x Cash-on-Cash Return in Two Yearsp. 310
Initial Public Offeringp. 313
Private Exchanges: Necessity Drives Liquidity Solutionsp. 324
Summaryp. 327
Summing Upp. 329
Aptitudes and Attitudes of Successful Practitionersp. 330
Drawbacksp. 338
What about Luck?p. 339
Key Takeaways for Practitionersp. 340
As You Go Forwardp. 344
About the Companion Web Sitep. 345
Notesp. 347
Suggested Readingp. 375
About the Authorp. 379
Indexp. 381
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