As part of our services to member companies we coordinate Lunch & Learns on various topics and recently we’ve been doing a 3 part series on term sheets and valuations. Check out the speakers we had on the Term Sheets and Valuations Session #1 post.
The second session was held on October 5 and the third was on October 26 which we will be posting about soon. The second in the series on term sheets and valuations builds on the terms and term sheets discussed in the first session. This session consisted of a panel of investors who discussed their perspectives on the investment and valuation process for companies seeking funding.
A Few Takeaways:
Some key mistakes entrepreneurs make when approaching VCs and discussing term sheets include:
- focusing too much on valuation and not on the term sheet as a whole package
- not doing enough due diligence on the VC
- not taking time to really understand the option pool
- not articulating well how they are going tom ake the team rich
- sending a n unsolicited, self prepared term sheet to the VC
- having unique and complicated debt structures that ’scare’ away some VC’s
- having employment agreements with certain employees that make investing by a VC difficult
Some terms that are important to understand:
- liquidation preferences
- anti-dilution clauses
- ratchets
- option pool
Speakers:
Charley Dean is a Principal with Silverton Partners, an early stage-venture capital firm based in Austin, Texas. Prior to joining Silverton, Charley worked with Thomas Weisel Venture Partners in Menlo Park. He has also worked in the investment banking group at Thomas Weisel Partners and with Cargill in their distressed commercial loan fund. He received both his BS and MBA from Stanford University.
Blair Garrou has significant experience in operating, investing and advisory roles with start-up companies, with a particular focus on enterprise and consumer software. Prior to co-founding DFJ Mercury, Blair was the CEO of Intermat, Inc., a leader in product information management software, where he led the sale of the company to IHS, Inc. (NYSE: IHS). Prior to Intermat, Blair was a Principal of Genesis Park LP, a Houston-based private equity firm, where he focused on the firm’s venture investments, including Intermat, FuelQuest (acq. by Saracen Energy), and SAT Corporation (FTSE: ISYS.L). Prior to Genesis Park, Blair helped launch and was the Director of Operations for the Houston Technology Center, the largest technology incubator in the state of Texas, and led the formation of the Houston Angel Network, one of the largest and most active angel investment organizations in the US. Previously, Blair was an investment banker with BMO Nesbitt Burns, and an auditor with Deloitte & Touche. Blair is a licensed CPA in the state of Texas. He received a B.S. in Management with special attainments in Commerce from the Williams School at Washington & Lee University.
Doug Mangum is a managing director in Silicon Valley Bank’s Central Division. He is responsible for business development and growth in the division through his work with high-growth technology and life science companies and private equity firms. In his tenure at Silicon Valley Bank, Mangum has specialized in unique financing solutions for high-growth technology companies, focusing on software, semiconductor design and web 2.0 enterprise companies. He has served as an integral business partner to over 150 technology and life science companies in Austin, Dallas and Houston helping develop debt infrastructure plans to help companies grow and succeed.
Christopher Shonk – Chris started his first business at fourteen and has been financially self-sufficient from that day on. Beyond that he has actively sought out opportunities to improve the environment of those around him. Chris served in the US Special Forces to provide money for college and attain leadership and strategic execution skills from the world’s most elite operators. Chris won the highly prestigious Special Warfare Soldier of the Year award while on active duty. He specialized in unconventional warfare, medical and communication training. He worked as an analyst at Merrill Lynch before attending the nation’s most competitive MBA, Austin’s own Acton MBA in Entrepreneurship. Upon graduation Chris cofounded Austin’s first local investment bank, Virtus Financial Group, and managed the firm’s private equity fund. Chris sold his interests in 2006 and focused on personal investments. Chris is committed to excellence and the betterment of local businesses, he is an active angel investor and brings experience, counsel and capital to many companies looking to grow. Known as a numbers based operator Chris is a sought after director and adviser, he is a director at Display Points Holdings and Minggl and the Central Texas Angel Network. Chris currently owns and operates several Massage Envy clinics in Austin, Texas and a chain of pawn shops in Arizona. He helps provide local jobs for over 250 people in Austin. Chris has been interviewed by such major publications as Business Week, Inc. Magazine, Entrepreneur Magazine, and Forbes. He was the first alumni to start an endowment for the Acton MBA to afford other deserving entrepreneurs to follow in his footsteps.
Sponsored By:
Andrews Kurth is a leading law firm for entrepreneurs, public and private emerging grown companies, and venture capital and private equity firms. Our firm’s Technology & Emerging Growth practice comprises a dedicated team of attorneys in technology centers around the United States providing focused representation to public and private emerging growth companies and entrepreneurs as well as the venture capital and private equity firms that finance them. We take pride in having a practical, business-life approach to advising our clients, and we share their entrepreneurial spirit and drive. Our driven client service teams combine relevant experience with an understanding of a client’s business and markets to provide efficient, cost-effective legal services and creative solutions with an outstanding degree of responsiveness. We thrive in the fast-paced entrepreneurial world by combining flexibility and speed with the experience that comes from taking billions of dollars in new ventures from inception to IPO and beyond.
Tags: andrews kurth, ATI lunch and learn, blair garrou, charley dean, chris shonk, dfj mercury, doug mangum, silicon valley bank, silverton partners
