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How to sell equity to VC's?

There is a course at MIT called Entrepreneurial Sales and a lecture on complex sales, specifically about selling a stake in your company to VC's.

What additional information is important to keep in mind to have the greatest chance of success selling equity in your company?

5 Replies

Irwin Stein
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Irwin Stein Advisor
Very experienced (40 years) corporate,securities and real estate attorney.
VCs want to make money. The best way to look at it is that investors buy earnings. How many dollars will you earn with each dollar invested? A lot of people will give you all kinds of esoteric answers but I always tell people to stay with the numbers. If $1 million will help you to put 50,000 units out the door and earn $25 per unit, net, that is what I would tell them. If you can't turn a good profit, quickly and consistently, VC money will be hard to get.
Roger Rappoport
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Roger Rappoport Advisor
Partner, Procopio
Hi Irwin. If you'd like to get t straight from the preverbial "horses mouth," take a look at the fireside I did last night with Scott Kupor, VC, managing partner and COO of Andreessen Horowitz, probably the most sought after VC (on the West coast, at least). I think you will get some good perspective.http://livestream.com/pemo/scottkupor

Also take a look at my fireside a couple of months ago with Ann Miura-Ko, cofounder and VC of Floodgate ventures, a very highly sought after early stage VC.http://accesssiliconvalley.net/fireside-chat-unleashed-with-an-investing-ninja-assasin-ann-miura-ko-vc-floodgate-ventures/

And lastly, I havent posted it on Access Silicon Valley, but the fireside I did last month with Steve Goldberg, of Ventock. Lots of good takeaways, particularly where Steve talks about looking for startups whose customers are "bleeding from the neck!!"https://www.youtube.com/watch?v=jYj1znSHZeg

Hope you get some good info that helps answer your question.
Irwin Stein
1
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Irwin Stein Advisor
Very experienced (40 years) corporate,securities and real estate attorney.
Roger: I am not looking for VC money. I have represented VC funds and investment banks in the US, Europe and Asia for the better part of 40 years. I worked on my first IPO in Silicon Valley in around 1976. That said, even an old dog like me can always learn a few new tricks. I'll check out your "chats" but I doubt that most VC's would deviate from the advice that I gave. Too much of the "new think" focuses on things other than the bottom line. I hear a lot of people say "be disruptive" or "solve a problem." All the VC's I represented always said "make money". I know its old school but I believe that it is still the best advice. The best VCs were always ready to step in and protect their investment. They were prepared to bring in new management or more money if there was a problem. It was venture capital but they did not want to lose. If the VC fund has that attitude, it should not be difficult to explain why your company should get funded.
Roger Rappoport
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Roger Rappoport Advisor
Partner, Procopio
Apologies Irwin. The post was intended for Eugene. I.dont know what you know, but all I can tell you is that funding dynamics have changed significantly, on so many levels over the past few years, primarily as a result of the huge reduction in infrastructure costs. What used to require a Series A, can probably be accomplished with a friend's and family round.

Enjoy the fireside discussions. I think you may find them interesting!
.
Martin Omansky
0
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Martin Omansky Entrepreneur
Independent Venture Capital & Private Equity Professional
Complex subject. Many different priorities. Research indicates the following major categories in rank order of importance: size of market, comparative advantage, intellectual property protection, management credibility, business model, cultural similarities, Sent from my iPhone
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