Understanding Venture Capital – slides for my Cass Business School talk

Thanks everyone who chipped in with suggestions for the talk I’m giving to a CASS Business School MBA class in a couple of hours.  One of the reasons I write this blog is to help shed some light on the often murky world of venture capital and it has been helpful to hear which areas are the murkiest.

I’ve embedded the slides below and they will hopefully answer most of the questions raised, although as ever there will be more in the voice over than the Powerpoint.  There are a couple of points that bear repeating in the body text of this post, although they won’t be surprising to many of you:

  • Taking money from a VC usually locks a company into shooting for a big exit, and rules out the possibility of a lucrative low level exit or running a lifestyle business
  • Venture capital is rarely for starting companies, but rather for accelerating the success of those that have gotten off to a good start

Finally – Ben Holmes, if you are reading I have copied a couple of slides from your Glasshouse presentation.  Thanks and I hope you don’t mind!

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  • http://www.facebook.com/profile.php?id=606635703 facebook-606635703

    Great presentation Nick – always interesting to see how this works.
    What would be a nice addition would be to understand how you guys all keep track of companies you have seen and your thoughts – do you use internal software / basecamp – that kind of thing…

    Phil W

  • http://www.theequitykicker.com brisbourne

    Tks Phil – we currently use a bespoke Sharepoint system, but we will be upgrading soon. Maybe to a web based CRM system – someone was recommending Zoho.

  • http://www.theequitykicker.com brisbourne

    I haven't organised anything so I don’t think so. If there is a recording I will post it.

  • http://www.picturetheuk.com/ James Penman

    Hi Nic,
    V useful, well done. Out of interest, are you recording (audio or video)?

  • Dimitri Inglezos

    Great presentation Nic. Thanks for sharing it.

  • http://twitter.com/davidsmuts David Smuts

    Well done Nick, great overview.

    Interestingly, I think the 2-3-2-3 (home run to write off) is more like 1-3-3-3 now adays. The challenge for the VC industry of course is that there are fewer 10x multiple home-runs than in previous years. Somehow the industry is either going to have to shrink so there are more home-runs per VC fund (bringing it back up to 2-3-2-3) or find some other way of maximising returns (perhaps investing less capital in earlier stage companies-seed). On the 1-3-3-3 equation the maths don't stack up.

    How did the presentation go? Did you get a good reception?

  • http://twitter.com/davidsmuts David Smuts

    Well done Nick, great overview.

    Interestingly, I think the 2-3-2-3 (home run to write off) is more like 1-3-3-3 now adays. The challenge for the VC industry of course is that there are fewer 10x multiple home-runs than in previous years. Somehow the industry is either going to have to shrink so there are more home-runs per VC fund (bringing it back up to 2-3-2-3) or find some other way of maximising returns (perhaps investing less capital in earlier stage companies-seed). On the 1-3-3-3 equation the maths don't stack up.

    How did the presentation go? Did you get a good reception?

  • http://www.squidoo.com/quiz-capitals Capitals

    Great job!