1. Evaluation Criteria
.including the strong management team, the uniqueness of the opportunity, expected good returns, upwards of 60 percent ROI for early stage,
2. Evaluation Process
.initial presentation, usually preceded by screening to establish a “fit” with the philosophy and style of the investor
.understanding as to the nature of the offer, ownership, etc.
.due diligence-often paid for by the new venture or entrepreneur
.decision and “deal”
.legal closing (see Telaport)
3. Factors in Decision about, tranches
.input of cash, amount, tranches
.ROI
.Quality of the deal
.quality of the team
.future growth
.downside risk
.exit strategy
4. Typical Odds
.4 out of 10 fail
.3 walking wounded (near dead)
.2 okay operations
.1 success
5. Guiding Precepts
.Murphy ‘ s law
.Parkinson’ s law and more
.It costs more than you think
Phase Iv-Going Public- the First Time
Most venture capitalists look to the day when their investment terms around and they can divest some or all of their shares in the enterprise. Or the entrepreneur, having financed the enterprise, is now persuaded to establish a value for the venture by taking it public.
The concept is simple, sell some portion of the company, through an equity offering, to the public. In Ontario the process can cost in the $300000-500000 range and, depending on the requirements of the Ontario Securities Commission (OSC), can take up to a year or more for the first underwriting. A Junior Capital Pool Offering (JCP) through the AIberta Stock Exchange (ASE) is less expensive but requires adherence to a fairly common procedure.
Initial Public Offering (IPO) There are five stages to an IPO. The first entails filing and clearing a prospectus through an authorizing securities commission. Completion of this task permits the entrepreneur to offer some portion (usually 25 percent or more) of the issued capital of the venture in a public offering. When this is successfully completed the company’ s shares listed on the Exchange.
Step1. The company files an application for listing along with a preliminary prospectus with the commission