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Venture Deals


Synopsis


Brad Feld, Jason Mendelson

Summary

Chapter 1: The Basics of Venture Capital

* Explains the fundamental principles of venture capital, including its role in financing early-stage companies.
* Real example: Sequoia Capital, a renowned venture capital firm, invested $110 million in Airbnb in 2010, which has since become a multi-billion dollar business.

Chapter 2: The Venture Capital Term Sheet

* Provides an in-depth overview of the key terms and conditions found in a venture capital term sheet.
* Real example: Stripe's 2010 Series A term sheet outlined a $2 million investment, a $20 million valuation, and a 10% equity stake for the investors.

Chapter 3: Negotiating the Term Sheet

* Offers practical guidance on how to negotiate various aspects of the term sheet, such as valuation, equity split, and board representation.
* Real example: LinkedIn's 2005 Series B negotiation resulted in a $100 million investment at a $270 million valuation, granting investors a 15.5% equity stake.

Chapter 4: The Due Diligence Process

* Explains the importance of due diligence in venture capital transactions and provides a step-by-step guide to conducting thorough research.
* Real example: Google's 2004 acquisition of YouTube involved extensive due diligence, including financial, legal, and technology reviews.

Chapter 5: Closing the Deal

* Covers the final steps in closing a venture capital deal, including documentation, legal paperwork, and the transfer of funds.
* Real example: Tesla's 2010 Series A round closed with a $40 million investment led by Elon Musk, the company's CEO.

Chapter 6: Managing the Investment

* Discusses the ongoing responsibilities of investors and entrepreneurs after the closing of the deal, such as governance, financial reporting, and exit planning.
* Real example: Google Ventures partnered with Slack in 2013 and provided mentorship, access to resources, and strategic advice.

Chapter 7: The Venture Capital Industry

* Provides an overview of the venture capital industry, including its structure, funding sources, and investment trends.
* Real example: The National Venture Capital Association (NVCA) represents the venture capital industry in the United States and advocates for policies that support innovation and job creation.

Chapter 8: Exit Strategies

* Explores various exit strategies for venture-backed companies, such as IPOs, acquisitions, and liquidations.
* Real example: Facebook's 2012 IPO raised $16 billion and made early investors significant returns.

Chapter 9: Venture Capital in Different Countries

* Compares the venture capital markets in different countries, highlighting the unique challenges and opportunities in each region.
* Real example: China's venture capital market has grown rapidly in recent years, with investments in technology, e-commerce, and fintech companies.

Chapter 10: Trends in Venture Capital

* Discusses current trends in the venture capital industry, such as the rise of seed funding, the emergence of specialized funds, and the increasing importance of data-driven investing.
* Real example: Seedcamp, a European-based seed fund, has invested in over 300 startups since its inception in 2007.