MFIN2210 Chapter Notes - Chapter 1: Digital Equipment Corporation, Spreadsheet
11 Jun 2018
School
Department
Course
Professor
Entrepreneurial Finance
Venture Deals Book Notes:
Chapter 1:
First Famous VC Deal: Digital Equipment Corporation (DEC) 1957
· AR&D invested 70,000, turned into $355 Million
1957 = Venture Capital is created
Term Sheet- Letter expressing interest in investing, along with the proposed terms
· Today, term sheet is 8 pages long
· Protective Provisions
· Vesting arrangements
· Drag-Along rights
· Registration rights
Two major parts of the term sheet: Economics and Control
Chapter 1: The Players
Entrepreneur, Venture Capitalist, Angel Investors, Lawyers, Mentors
Entrepreneur- Center of the entrepreneurial universe
Often, one or more founders will leave the business, sometimes on good or bad terms
Venture Capitalist- The next character in line
· Come in all shapes and sizes
· Most senior person is called the Managing Director, or General Partner
o They have the final say
· Principals and Directors are next in line
o Have deal responsibility and power, but not the final say
· Associates comes next
o They work for the deal partners
o Write up internal memos
§ Work closely with the CAPITALIZATION TABLE
§ Spreadsheet that determines the economics of the deal
· Analysts- Bottom of the ladder, very junior people, crunch numbers
Venture Partners or Operating Partners- experienced entrepreneurs who have a part-time
relationship with the VC firms
Entrepreneurs in residence (EIRs)- Part time member
· Experienced Entrepreneurs who park themselves at a VC firm while they are working to
figure out their next company
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
First famous vc deal: digital equipment corporation (dec) 1957. Ar&d invested 70,000, turned into million. Term sheet- letter expressing interest in investing, along with the proposed terms. Today, term sheet is 8 pages long. Two major parts of the term sheet: economics and control. Often, one or more founders will leave the business, sometimes on good or bad terms. Most senior person is called the managing director, or general partner: they have the final say. Principals and directors are next in line: have deal responsibility and power, but not the final say. Associates comes next: they work for the deal partners, write up internal memos. Spreadsheet that determines the economics of the deal. Analysts- bottom of the ladder, very junior people, crunch numbers. Venture partners or operating partners- experienced entrepreneurs who have a part-time relationship with the vc firms. Experienced entrepreneurs who park themselves at a vc firm while they are working to figure out their next company.
