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BLACKSTONE ENTREPRENEURS NETWORK

BLACKSTONE ENTREPRENEURS NETWORK. Carolina Innovation Seminar - UNC October 4, 2012.

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BLACKSTONE ENTREPRENEURS NETWORK

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  1. BLACKSTONE ENTREPRENEURS NETWORK Carolina Innovation Seminar - UNC October 4, 2012

  2. A joint program of Duke University, North Carolina Central University, North Carolina State University, the University of North Carolina at Chapel Hill, and CED-Council for Entrepreneurial Development, funded by the Blackstone Charitable Foundation. • Harness the collective wisdom of area Serial Entrepreneurs • Scour the region – on and off campuses • Select high potential ideas in the Triangle • Guide them to next inflection point using EIR’s knowledge, contacts and resources Objective – Support Innovation/Entrepreneurship resulting in more companies and economic impact for Triangle

  3. Unique Model • “Portfolio” approach to building successful companies • Each client has a lead entrepreneur in residence (EIR) • EIRs meet regularly as a group to review and discuss strategies/tactics for each client: • Experience of group/team – value in collaboration • Connections/Networks of EIRs • Coaching Support Funds • Deal Team from Blackstone Group assigned to Network • Collaboration and resources of Network Partners

  4. Current Portfolio

  5. Client Snapshot Tethis & Joosy Cloud Tethis – Water desalination for fracking industry. Joosy – Management of content for CDMs. Chris Evans, Lead EIR MintMarket Online marketplace for local food allowing chefs in the Triangle to discover, purchase, and schedule delivery of food directly from area farms. Frank Plastina, Lead EIR KeonaHealth Tech software company developing solutions for providing better access to quality of care at a lower cost. Kay Wagoner, Lead EIR SLEDVision Software solution for State, Local and Education organizations to manage and negotiate their enterprise software contracts. (Vendor Management System) Lee Buck, Lead EIR

  6. Blackstone EIRs • Frank Plastina • Lee Buck • Kip Frey • Igor Jablokov • Alston Gardner • Chris Evans • Kay Wagoner • Peyton Anderson • Kevin Bowles

  7. Venture Capital Market

  8. VC Market – Interesting Contrast • New Venture Funds started in Q2 2012 at lowest number (10) since Q1 2009 • Down from 12 in Q1 2012 and 14 in Q4 2011 • Returns to Funds gradually improving Q1 to Q4 • 1 year – 12.8% vs 13.2% • 3 year – 12.6% vs 10.0% • 5 year – 5.9% vs 5.3% • 10 year – 4.4% vs 3.3% • Source - NVCA

  9. Latest Numbers- Fundraising • Venture Investments: Q2 2012 vs Q1 2012

  10. VC Survey Q2 2012 • High Confidence: • Cloud computing, software, healthcare IT, new media/social networking • Low confidence: • Semiconductors, telecom, clean tech, biotechnology PWC Money Tree

  11. VC Terms Series A – Q2 2012 • Median Pre- Money: • $11 million in Q2 - $9 million in Q1 • Liquidation Preference: • 91.7 % at less than 1 vs Q1 at 97% • 8.3% at 1x -2x vs 0% in Q1 • Participating Preferred: • 32% in Q2 vs 51% in Q1 overall • 25% in Series A vs 37% in Q1 • 21% were full participation and 4% were 3x cap Cooley LLP

  12. VC Terms Series A – Q2 2012 • Anti-dilution: • 90% broad based weighted average • No real change • Pay to play: • 4% in Q2 vs 6% in Q1 • Drag along provision: • 71% in Q2 vs 65% in Q1 and 59% in Q4 2011 • Series A – 54.2% Cooley LLP

  13. Academic Funding Models • Development/Grant awards: • NCSU, Harvard, Utah, UNH, U. Mass • Industry/Academic Institution: • Johnson & Johnson – Mass General Hospital • Merck – Flagship Ventures • Incubators with Venture Groups • Academic Institution – State – Private Donors • Portland State University – tax credit for donors • Funds: • Partners Innovation Fund, Mayo, Kaiser, Ascension

  14. Thoughts on Fundraising IT IS A CAMPAIGN – IT IS ONGOING AND IT TAKES A LONG TIME

  15. A Summary of Capital Sources .

  16. Stage Crystallize Idea &Demo-stration Funding Gap between $500,000 and $3,000,000, EarlyScalingGrowth Repeatable Growth Equity Capital: High Growth Companies (by stage) Demo-strationStage Founders, Friends and Family  Accelerators Individual Angels and Angel Groups Source Most Venture Funds $5,000,000 and up (initial capital may be smaller, but exit targets higher) $25,000 to $100,000 $100,000 to $500,000 Investment Market Entry & Early Growth  Angel Groups and Angel Group Syndication Micro-cap Funds • Estimate exit potential based on multiples of revenue levels achieved • Use projected 4-5 year revenues to estimate exit potential • Companies with low profits and/or revenues < $2M: arms length equity capital not interested • Angels look for $7-10M revenue targets with room for growth • VCs (most) need to see north of $30-40M revenue with great potential • No “exact” rules but stage of VC fund and total capital in use will point toward exit expectations 16

  17. Checking out ANY Investor NETWORKING • Get an introduction as high up the food chain as possible • Personal network or entrepreneurial organizations • DO YOUR DILIGENCE • Industry focus – have they done deals in the industry • Size – average funding provided – initial, follow-on, age of fund • Stage of development – concept, revenue, team • Referral path/reputation – introductions to others • Experience, track record • Style & interaction with management – find the best fit partner • Call the CEOs of the portfolio and find out how the investor behaves • GET THE RIGHT INVESTOR FOR YOUR STAGE

  18. A VC’s Playbook • PLAN/PRESENTATION MUST BE FOCUSED • CLEARLY-DEFINED USER BENEFIT – ROI • NUMBERS MUST BE SUPPORTED

  19. A VC’s Playbook • THOROUGH REVIEW OF COMPETITION • SOLID DESCRIPTION OF MANAGEMENT • DEMONSTRATE CUSTOMER/MARKET KNOWLEDGE – TALK TO THEM BUT DON’T TELL ME IF YOU DID NOT ACTUALLY TALK

  20. A VC’s Playbook • DO NOT OUTLINE THE RISKS INVOLVED • DO NOT INCLUDE VALUATION • TRY TO AVOID “CONSERVATIVE” OR UNUSUAL FINANCIALS

  21. A VC’s Playbook • PRE-MONEY – DOES IT INCLUDE OPTION POOL OR NOT • CONVERTIBLE NOTES – BE CAREFUL • GOAL OF THIS MEETING: • – GET TO THE NEXT MEETING

  22. CONTACT • Bob Creeden • Executive Director • Blackstone Entrepreneurs Network • bob.creeden@blackstoneen.org • 508.361.1914 • blackstoneentreprenuersnetwork.org

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