This chapter discuss the history & current status of venture investing in the , explain the professional venture investing cycle and its relevance to entrepreneurs seeking professional venture capital, describe the venture capital screening process & list characteristics central to determining a venture capitalist’s willingness to invest,. | Chapter 11 Professional Venture Capital 1 © 2012 South-Western Cengage Learning ENTREPRENEURIAL FINANCE Leach & Melicher 1 Chapter 11: Learning Objectives Discuss the history & current status of venture investing in the . Explain the professional venture investing cycle and its relevance to entrepreneurs seeking professional venture capital List major elements in the design & structure of a venture capital fund Describe the venture capital screening process & list characteristics central to determining a venture capitalist’s willingness to invest Discuss the various roles a venture capitalist can take in providing financing and services to an emerging venture Enumerate several terms or conditions to be negotiated when structuring venture capital financing 2 Historical Development of Professional Venture Capital Venture Capitalists (VCs): individuals who join in formal, organized firms to raise and distribute venture capital to new and fast-growing ventures Pre-World War II Era: . | Chapter 11 Professional Venture Capital 1 © 2012 South-Western Cengage Learning ENTREPRENEURIAL FINANCE Leach & Melicher 1 Chapter 11: Learning Objectives Discuss the history & current status of venture investing in the . Explain the professional venture investing cycle and its relevance to entrepreneurs seeking professional venture capital List major elements in the design & structure of a venture capital fund Describe the venture capital screening process & list characteristics central to determining a venture capitalist’s willingness to invest Discuss the various roles a venture capitalist can take in providing financing and services to an emerging venture Enumerate several terms or conditions to be negotiated when structuring venture capital financing 2 Historical Development of Professional Venture Capital Venture Capitalists (VCs): individuals who join in formal, organized firms to raise and distribute venture capital to new and fast-growing ventures Pre-World War II Era: Most venture investing came from wealthy individuals and families 1946: Beginning of Professional VCs Formation of American Research & Development (ARD) 3 Historical Development of Professional Venture Capital (cont’d) ARD’s Early Performance $ million was raised ($2 million from institutional investors) By end of 1947, ARD had invested in eight ventures, six of which were startups By 1951 the performance was still lack-luster (stock price was at $19 down from the initial offering price of $25 in 1946) 4 Historical Development of Professional Venture Capital (cont’d) 1953: Small Business Administration (SBA) was formed Legislation permitted the federal government to actively engage in fostering new business formation 1958: SBA Created Small Business Investment Companies (SBICs) Due to tax and leverage advantages, the SBIC became the primary vehicle for professionally managed venture capital 5 Historical Development of Professional Venture Capital (cont’d) ARD’s Later Performance: In .
