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Entrepreneurship & Venture Capital (VC) Investment

Entrepreneurship & Venture Capital (VC) Investment. A Risky Business?. Experience – Before MBA (03-04). 13 years in mobile telecoms & IT Co-founder / CEO of CopperEye High performance indexing for databases Raised c. £6M institutional funding Catalyst: MIT’s Entrepreneurship competition

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Entrepreneurship & Venture Capital (VC) Investment

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  1. Entrepreneurship & Venture Capital (VC) Investment A Risky Business? Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  2. Experience – Before MBA (03-04) • 13 years in mobile telecoms & IT • Co-founder / CEO of CopperEye • High performance indexing for databases • Raised c. £6M institutional funding • Catalyst: MIT’s Entrepreneurship competition • Prior to CopperEye: • I was a “corporate career person” • Stagnating in operational senior management • Overworked, under-challenged, under-rewarded Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  3. Experience – Post MBA • Co-founder / MD of Hampton Consulting • Advice to start-up technology companies • Consultancy to mobile telecoms companies • Co-founder / Non-exec director of Aquantra • Specialist Bath-based technology recruitment company • Self-funded (a little!) plus organic growth • Co-founder / CEO of Zenulta • Providing enterprise event correlation solutions • Delivered 2 rounds of funding • Co-founder / CEO of iRooms • Providing enhanced utilisation of space • Self-funded by founders – relationship with electronics manufacturer Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  4. Entrepreneurial Motivation • Reduced bureaucracy • Ability to take decisions • Speed to market • Share in the fruits of your labour • Unlimited upside potential. Downside potential? • Faster career progression • Less rigid role definitions Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  5. Recipe for Success? • Experienced team • Diverse skill sets • “Stand on the shoulders of giants” (I. Newton) • Find a unique angle on a business problem • Network like crazy • http://www.linkedin.com • Build strong reference customers Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  6. Funding a Business • Bank loans • Secured loan • Often matched by personal investment • High personal risk • Venture Capital (& angel) investment • Can provide “value added” operational skills • Low personal risk Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  7. Why is Venture Capital the Lower Risk Route? • No personal financial risk • Just warranties & disclosures • Job security in large companies? Yeah right!! • Funding gives run of at least 1 year • Follow on funding • Longer notice periods (6 months) • Saleable commercial experience Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  8. How do you get VC Funding? (1) • Find a good idea – a solution to a problem • Network with individuals in different vertical markets • “Know your onions” • Exit value £60M -> £300M • Do market research • Know your competitors • Build a business plan Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  9. How do you get VC Funding? (2) • Draw up a shortlist of VCs who invest in your marketplace • http://www.bvca.co.uk • “Value added” investment, or “dumb money”? • Try to get personal introductions / referrals • Choose your professional advisors carefully Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  10. MBA Summer Project • “Leveraging the VC Relationship – The Entrepreneurs’ Perspective” • Interviewed 6 entrepreneurs in areas of: • Relationship with VCs • Legal & commercial terms used in investment agreements • Board balance & composition • Control within the relationship Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  11. Earlier Research • Relationship between entrepreneur & VC • MUST be balanced & cooperative for a company to be successful • If an entrepreneur loses influence due to poor performance or greedy investors, the company will fail Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  12. Project Findings (1) • Entrepreneurs have most influence at first funding round • Negotiate then “play the long game” • Board structure has no effect on entrepreneur’s influence within relationship • Founder mentoring is a good idea Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  13. Project Findings (2) • Choose a VC with entrepreneurial experience if this is your first company • Fairer terms • Fairer terms promote trust and cooperative behaviour • Greater chance of success Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  14. Project Findings (3) • Entrepreneurs should raise more capital than they think they need • Maintain influence by recognising “domain expertise” Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  15. What’s next for me? • Developing my current businesses • Helping others grow theirs • Advisor capacity on strategy & investment • Conducting venture capital “due diligence” Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

  16. QUESTIONS Hampton Consulting Ltd. jtucker@hamptonconsulting.co.uk

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