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Develop an understanding of the fundamental principles that drive Venture Capital fund investing and get insights into ways to bridge the incentives gap between entrepreneurs and institutional investors.
Innovation is powered by funding yet the relationship between startup founders and investors is often marked by misaligned incentives and conflicting interests. Receiving funding from reputable Venture Capital (VC) firms is a strong positive signal of success for any entrepreneur, yet many founders could benefit from gaining a deeper understanding of what institutional VC investors look for when identifying their next big investment opportunity.
In this Build Project, you will put yourself in the position of a private institutional investor and analyze the performance factors of a successful venture portfolio, practice negotiating a term sheet, and develop an investment memo pitching a compelling startup investment opportunity to an Investment Committee. With the guidance of a professional with private institutional investing experience, you will calculate a venture portfolio’s performance metrics and practice identifying and pitching startup investments. You will master the fundamentals of key startup valuation metrics and portfolio management basics such as calculating pre-/post-money valuations, portfolio performance metrics, and others. This project will stimulate the operations of a venture capital firm and provide holistic insights into the skills both venture investors and founders need for success in the competitive venture ecosystem.
Develop an understanding of common venture capital firm structures. Master the fundamentals of private fund investing and the related technical terminology.
Learn what the key drivers or performance are for venture portfolios. Identify a target rate of return for your portfolio and develop an investment thesis.
Identify and analyze key private fund performance indicators such as an internal rate of return or a multiple on invested capital. Compute these metrics for a paper venture portfolio gaining practical insights into portfolio management and performance evaluation.
Build an understanding of two of the most common venture investment instruments – priced equity and convertible notes such as simple agreements for future equity. Analyze their tradeoffs, relative value, and fit within a private portfolio.
Learn to analyze venture capital term sheets by understanding key terms and the differing incentives of founders and investors. Engage in a discussion to classify terms as either investor-friendly or founder-friendly, deepening your understanding of the strategic considerations in venture financing.
Engage in a hands-on negotiation exercise, taking on the roles of founders and investors to negotiate key terms from a term sheet. Reflect on the negotiation process and explore strategies for achieving mutually-beneficial outcomes in founder-investor relationships.
Develop an investment memorandum for a real-world startup, synthesizing your research into a concise 1-2-page document. Focus on crafting a clear and compelling argument tailored to an institutional investment committee.
Refine verbal presentation skills through a live pitch of a chosen investment, emphasizing how it fits within a broader portfolio strategy. You will receive feedback to improve your ability to present and defend your investment choices effectively.
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Nadia is a NYC-based Finance Fellow at Open Avenues leading projects in the area of Venture Capital Investing.
Nadia has 2 years of investing experience in finance (Endowments & Foundations) and currently works in fintech on AngelList's GP Relations team, working with private fund investors in the Venture Capital space.
Fun fact: Nadia was in a mineral water commercial when she was 8, which was the peak of her career as a creative.