风险投资与公共政策chapter2

Identity of the LPs
• 5. Fund-of-Fund
– Fund-of-fund investors collect capital from investors to invest it in several venture capital funds. – They represent a second intermediary between the capital provider and the growth company. – They are subject to their own market pressures and performance benchmarks – These “upstream” factors have become extremely important for the VC community, particularly in recent years. – the LP community has generally become more riskaverse (owing to the market correction in 2000)
• A special group of private investors are business angels who invest directly in growth companies
– They sometimes combine financial goals with personal ones
Funding raising cycle
• For an established VC firm, the process will typically start with an approach to the existing investors in the firm’s most recent fund, to seek their commitment to re-invest. • Once the relationship is built around one or two successful fundraisings, then LPs tend to invest again and again in the same VCs. • LPs use not only objective measures of a VC firm’s track record (such as the internal rate of return on previous funds) but also subjective views of the VC firm’s reputation and track record.
Identity of the LPs
• 2.Public authorities
– Public authorities invest in venture capital because of the importance of growth companies for economic development. – Apart from public subsidy programs, several governmental institutions supply funds for investment in growth companies
• VCs are professional fund managers who screen, evaluate, invest in and monitor entrepreneurial new ventures on behalf of those who invest in the VC fБайду номын сангаасnd. • Like many other businesses, VCs are acting on behalf of their shareholders (referred to in this case as limited partners (“LPs”)
Identity of the LPs
• 3. Companies
– Established companies supply capital generally for investments in growth companies of related industries to pursue strategic goals rather than financial goals. – These goals include the revitalization of the company’s culture, access to new technologies and in some cases even ensuring the livelihood of the company. – This special type of venture capital is called corporate venture capital.
• The LPs exert a strong influence on the VC firm.
– This influence is apparent in the structure of the investment deals that VCs strike when they back entrepreneurs. – The investment terms that VCs insist on are usually driven by the deal they have signed with the LPs
Introduction
• The fact that a VC firm is not playing with its own money is both a blessing and a curse for entrepreneurs.
– blessing ☺~ VC will be much more likely to take investment risks with someone else’s money – Curse ~ because the nature of risk that a VC firm will take with its investment funds is, in reality, tightly defined by the circumstances in which those funds are made available to the VC firm and by the very fact that those funds are not its own.
– The completion of the fund raising process does not result in all the funds flowing into the VC’s bank account. – The LPs sign up to a commitment to make funds available when requested at regular intervals by the VC.
Chapter 2
Venture Capital Fundraising
Introduction
• VCs do not sit at the beginning of the capital supply chain.
– They are not playing with their own money, but in fact with someone else’s.
Funding raising cycle
• Typically, this process can take between six months and a year from initiation of the fundraising to the ink drying on the investors’ checks. • Note:
Identity of the LPs
• 4. Private individuals • There are only few private investors in venture capital.
– Reasons: the high investment; lack of a transparent market for venture capital investments. – Normally they pursue only financial goals.
Relationship with LPs
• VCs will
– meet investors informally on a regular basis, – report to all LPs formally via written quarterly reports – conduct at least one formal meeting with all LPs every year (often in a suitably impressive location).
Identity of the LPs
• 1. Institutions
– Institutional investors, such as pension funds, insurance companies and banks, supply the greatest part of the funds. – They use venture capital investments as a supplement to their portfolios. – Apart from the effects of diversification, the high rate of return of venture capital increases the average return of their portfolios. – They pursue only financial goals