1. THE START FUND A Seed/Startup Venture Fund working with, supporting and compensating Incubators, Universities and Economic Development Agencies Elliott Dahan Q3, 2009 [email_address] http://www.thegrowthgroup.com Office 650 903 9990
3. Venture Risk Investing - One Size Does Not Fit All Paul Gompers and Josh Lerner attempted to quantify the venture capital effect. They found that 90% of start-ups that were unable to attract venture capital within the first three years failed, while the failure rate dropped to 33% for those that did attract venture capital. The (Not So) Puzzling Behavior of Angel Investors Darian M. Ibrahim University of Arizona Rogers College of Law February 2008 Little risk – IPOs are pre-sold or called off 1/3 losers; 1/3 breakeven & 1/3 average 5X return – Pretty much Blind Faith RISK LEVEL OF INVESTMENT The World Markets for IPO Geographic hubs – Silicon Valley, NY, LA, Seattle, London, Tel Aviv Same Day turnaround – investors/company can meet face-to-face and be home in 1 day GEOGRAPHIC REACH Operating groups within a corporation for M&A, Public markets for IPO VC funds for follow on rounds, corporations for M&A, investment bankers for IPOs VC Firm, Corporate partners, customers for company’s products CUSTOMER Can it be sold on the public market for IPO & does it meet corporate goals for M&A “ Traction” – validation by usage/acceptance of the target market (consumers, B2B) #1 – belief in the guys standing in front of you – can they really do what they say FUNDING CRITERIA EXIT STAGE (M&A or IPO) VC FUND STAGE SEED STAGE RISK STAGE / VARIABLE
7. TECH SCOUTS/INTRODUCTIONS TheFunded.com Discussion Posted by Anonymous June 17, 2009 “ . . . . . . .After lots of research, we decided not to go the VC route. The size of the required investments coupled with the technical resources we would need convinced us that we should try and partner with a major existing player. One very large US corporation is already evaluating our proposal, but we would like to talk to more. We are having major problems finding a route into companies like GOOG, AMZN, YHOO etc. Cold emails aren't working. So here is the question: are there any companies out there that can make these introductions for us? I wasn't really thinking about M&A focused businesses, rather the equivalent of some sort of tech scouts – who can review our technology and then introduce us to the big boys. Thanks in advance for any ideas.” NOTE: the two elements every startup needs are: money and VALIDATION – COMMUNITY AND COLLABORATION ON A BOTTOMUP GLOBAL BASIS
17. In what geographic region does your group invest?: Within two-hours drive of the center of the group’s metropolitan area 28.4% Within four-hours drive of the center of the group’s metropolitan area 18.5% Only within our state or province 16.0% Within a region (i.e. Midwest or Southeast) 19.8% No geographical restrictions 17.3% NOTE – This geographic limitation greatly restricts the size of the seed pool thereby making seed investment more of an “avocation” than a “vocation” The START Fund, working with and compensating incubators, universities and economic development organizations for both pre-investment sourcing and post-investment oversight, will not be limited by geography – both within the United States and Internationally. 2008 Angel Group Confidence Survey Results Angel Capital Assoc. Feb., 2008
33. Florida, the Next Hotbed of Venture Capital? Claire Cain Miller, NY Times, December 29, 2008 The state of Florida wants to tap into the billions of venture capital dollars invested in young companies each year. It is seeking venture capital funds in which to invest money from the $29.5 million Florida Opportunity Fund , established by the state to funnel more venture capital to Florida start-ups. The fund will look for regional and national venture capital funds that have done business in Florida and plan to invest in young Florida companies, particularly those developed at Florida universities and research institutions . Then, the fund will invest portions of its $29.5 million in those funds, with the goal of creating and growing Florida businesses. The fund is managed by Florida First Partners, which is a joint venture between Milcom Venture Partners, a Florida venture capital fund manager, and a Credit Suisse investment group that runs similar funds in Ohio, Michigan, Indiana, New York and Oregon . Venture capital is spreading outside its historic hotbeds in Silicon Valley and New England, but so far, Florida has not been getting a significant chunk of the money. The fastest-growing regions for venture capital investment over the last decade are New Mexico, Pittsburgh, Seattle, Los Angeles and the District of Columbia, according to the National Venture Capital Association.
37. Michigan incubator partners with venture capitalist OU INC , Oakland University’s business incubator in Rochester, Mich., is partnering with venture capitalist Ian Bund to invest in growing Michigan companies -- including incubator graduates. Bund will base his new $30 million fund at the incubator, which will provide staffing and back-office support. Bund’s company, Plymouth Management, will provide funding for at least one full-time staff person to run an office at OU INC. Bund founded Plymouth Management in 2003 and has since helped take 34 companies public. Bund also is co-founder of Innovation Capital Ltd., which brings Australian technology to the U.S. The agreement between Bund and the university calls for the fund to invest between $500,000 and $2 million in either debt or equity in growth companies, defined as having revenue and approaching the point where they are cash-flow positive. David Spencer, executive director of OU Inc., projects that the fund will begin accepting applications and inquiries by this fall. Founded in 2001, OU INC has nine resident clients and five affiliate clients. It is one of 12 SmartZones, technology clusters recognized by the Michigan Economic Development Corporation for their ability to incubate and accelerate emerging companies. Together, SmartZone businesses have created 8,300 new jobs and attracted more than $1 billion in public and private investment. NBIA Review June, 2008