ELEC5701 Venture Financing. sdfl. David Rowe Investment Manager Uniseed Management Pty Ltd firstname.lastname@example.org. Uniseed – Funding Early Stage R&D. Established 2000, a $61m ‘open ended’ fund Focus on commercialisation of University R&D Operate with financial and commercial discipline
The bottom line: raising equity finance provides the working capital to enable a
company to sustain a higher burn-rate than if utilising organic/internal resources…
Webvan an online "credit and delivery" grocery business that went bankrupt in 2001
Successful founders… e.g. Louis Borders
Hot investors… e.g. Benchmark, Sequoia
Danny Rimer (now Index Ventures i.e. Skype): “Webvan was my billion dollar bonfire…”
CNET hailed Webvan as one of the greatest dotcom disasters in history [Jun’08]
The Investor will invest up to a total of AU$750,000 in exchange for Series A Preference Shares at a pre-money valuation of $550,000.
Share price to equal Pre-money Valuation / # Shares on issue, following the extinguishing of any outstanding Equity Liabilities.
Preference rights include 1x Liquidation Preference, Conversion Ratioof 3:1, Anti-Dilute with Full Ratchet and Drag Along of minority shareholders.
Investor to have first right of refusal on future Equity raisings.
Company must consent to Critical Business Matters being subject to Special Majority Approval including the Investor Director.
The Company shall reserve an employee share option plan (ESOP) of up to 10% of the fully-diluted capital, allocated subject to SMA.
Investment subject to full due diligence and all conditions precedent being met.
SpinoutA ‘Real Life’ Example
Total Funds Raised: $10.3m Equity + $4.8m Grants
Valuation $600k $5m $9m$13m
1) Seed Round $1m
2) Series A-1 $3m
3) Convertible Note $1.8m
4) Series A-2 $4m
Industry Institute Grant $2.1m
5) Strategic Investor $500k
PLUS Working Capital (EFIC) $500k