Friday, 11 January 2013

How to Become a Venture Capitalist in Canada


It seems that a lot of people ask me how to become a venture capitalist.  Seeking that answer got me reflecting on my own path to this point in my career.
 
First, here are the straight goods:  it’s not easy to become a venture capitalist.  Some who have made it give a nod to being in the right place at the right time or just plain old luck.  But all entrepreneurs, all successful business people know that luck is a fine blend of preparation and opportunity.  There are people in every area of life who seem to attract luck and success, but a deeper examination usually turns up several key characteristics. 

One of these characteristics is good old fashioned hard work, over what is often a long period of time.  There’s no getting around having to work at something in order to gain acuity.


This funny poster hangs in the Mozilla headquarters.
Next, as Stephen Covey points out in his book The Speed of Trust, it’s critical to build trust among those in your field.  Business, especially investing, always has been and always will be a trust-based business.  When large sums of money are being transferred between bank accounts, the involved parties need to trust that everyone will do their part responsibly and with a high degree of integrity.  In venture capital, as in most things in life, you are your word.

Confidence is another characteristic of the venture capitalist mindset.  You will need confidence in yourself and your abilities as well as confidence in the deals and funds that you choose to engage in.  Confidence is born out of experience, education and mistakes: three things to embrace along your journey.  Painful as mistakes are, they will give you strength, resolve and a gentle grounding: in other words, confidence.

Finally, mind your p’s and q’s.  We live in a global village and word travels fast within it, no matter your sector or role.  So, when a frustrating situation arises, when a deal goes sideways or when an associate proves difficult to work with, you’ll need to quietly go into your office, shut the door, and hit your punching bag.  No nasty emails, blog posts or memos, and no snide comments to others: these will only come back to haunt you and tarnish your own reputation.

Finding opportunities that open the door into the world of venture capital is tough and usually beyond our control, but there are options available to those who want to find a way to wedge their foot into that door.

One of the better ways is to get hired onto a venture capital fund, and then work your way up through the ranks.  Are there a lot of such jobs?  No.  Is it a clear and easy path up the ladder?  No.

Ideally if you can land a job in the venture capital world as an associate or principal then you’re well on your way.  Again, time will be a factor, and you’ll need to work towards becoming part of the team who manages a new fund, since it’s unlikely that any other venture capitalists are going to step away from a fund that they’ve already invested time and sweat equity into.

Another option is to go the way of the angel investor, and then work to raise more money.  It’s best to tackle this task with the same mindset of a start-up entrepreneur.  That means that you’re wise to choose a sector or industry that you have experienced with.  It also means that you’re going to need money to invest.  I’d highly recommend that you have some experience in investing if this is the route you choose.  This is not the time or place to learn about investing, not the place to ask, “Hey, what is ‘due diligence’ and not the place to experience your first heart-breaking loss of capital investment.  But if, and it’s a big IF, this approach works, you will have proven yourself as a venture capitalist and be able to write your own ticket.

Of course, if you have a high-level position at a respected company, or were involved with the founding of a success story, then you might have some of the credibility that is needed.  Again, it will be a slow process, but one that leverages your network, skills and experience.  But it has to be real; diving into the murky waters of venture capitalism isn’t something you can fake.  We’re talking about transferring skills, successes and networks to work to your advantage.   Who you are and what you can do will always be the proof in the pudding.

Venture capital can be a lucrative, exciting career, but it’s not for the faint of heart, and is not a way to fast riches.  But if, after performing full due diligence on the career, you still feel called to dip your toes into its murky waters, then go boldly and hang on for the ride.

Tuesday, 20 November 2012

What About Venture Capital Funding? - By: Mark Valentine

Necessary start-up capital for new or early stage businesses often comes from venture capital firms.  Increasing lender restrictions and limitations in the past decade have left a lot of ‘small guys’ unable to access traditional funding; so the rise of the venture capital industry has grown substantially.  The beauty of these deals is two-fold:  The venture capitalists (also known as ‘VCs’) offer money that is unsecured by personal assets and that has potential for high returns in a relatively short span of years.  This spells out a win-win for both sides.

VCs usually want to be, and are, actively involved with the companies that they invest in.  It’s in both parties’ interests to help that company grow and mature so that it’s successful and profitable.  This VC involvement can take several different forms but is at the very least, a seat on the company’s board of directors. 

If you’ve ever wondered what the venture capital process looks like from the angle of a venture capitalist, then read on.

The types of businesses that typically approach a venture capitalist often fit into one or more of the scenarios below:
  • Companies who are unable or unwilling to access traditional funding (from banks, public markets, etc.)
  • Start-ups
  • Early stage companies
  • High growth technology
  • Ventures with high risk
The venture capital companies tend to typically be interested in:
  • Investing in equity capital instead of straight debt
  • Assuming higher risks in order to realize higher potential returns
  • Young, emerging or high-growth companies
  • Offering a longer window of time for repayment than a bank or traditional lender would
  • Active involvement in aiding the company’s growth

First thing that falls to any company that needs funding is to identify several VCs that they see as a good fit.  This means vetting venture capitalists and going out and meeting them.  Once you have a short-list of companies to approach, you’ll need to set up meetings with them.  Polish up that business plan and submit it for review:  this will be critical in determining whether your business fits the fund’s investment criteria.  Criteria are usually focused on:
  • Region or geographic area
  • A particular industry
  • A particular stage of business development

If you’ve managed to get this far: good for you.  It’s now time to leave things in the VC company’s hands and give them time to perform full due diligence.  This phase can be a nerve-wracking time for those seeking investment funds, but it’s a critical part of doing business.  The VC needs to vet the details on things such as your:
  • operating history
  • company performance
  • financial statements
  • the management team
  • market and industry
  • products and services
  • corporate governance documents

Sometimes, during this process, a list of terms and conditions are created which define how the deal would operate should it be made.

When this due diligence is completed, your company will get a red or green light from the vetting VC.  If it’s a green light, then the list of terms and conditions will be rolled out, refined and agreed upon.  An investment is made in exchange for either debt or equity in your company.  Whatever the deal is, it needs to be one that will offer the necessary money to the small business / start-up as well as minimizing potential risks for the venture capital fund.

Venture capital funds very often make cash investments in rounds; that is to say, they don’t give up the entire funding immediately, but do so in installments.  These cash infusions are based on milestones that have been agreed upon in the terms and conditions phase.  This is the way that venture capital plans are usually created and executed.

The timelines of funding vary, but any venture capitalist will have a good idea going into a deal what their exit strategy is to be.  An average exit timeline may be four to six years after the initial funding was given.  The lender’s goal is a superior return on investment (ROI) and this requires a solid end-point strategy. 

How the exit strategy is executed varies as well.  There may be an Initial Public Offering (IPO), there may be a merger or acquisition, etc.  The invested venture fund may very well help a company exit by using their network of connections.

Mark Valentine is a VC with Q Capital.

Sunday, 4 November 2012

Mark Valentine Biography

Mark Valentine is a venture investor who specializes in early stage ideas, so early, in fact, the ink may not even be dry on the proverbial cocktail napkin.Valentine started taking Bay Street by storm at the age of 22 when he signed on as an Investment Adviser at BMO Nesbitt Burns Inc.

It wasn’t long before he was known not only for his sharp mind, but for his equally sharp trading and sales skills.As far back as the early 1990s, Valentine saw what was coming down the economic pipeline and how it would affect the market and business world.  He had a clear vision of the ‘new economy’- one that included the trending of technology stocks and a host of new trading tactics.Experience made him savvy with emerging technology stocks.

Mark Valentine


His cutting-edge mindset challenged the ‘old guard’ of Bay Street.  Early jobs lent him experience in the power and mining sectors and began to galvanize him as a salesman.Mark gained renown as a shrewd stock picker, and for being ahead of the market curve.  He had a flair for knowing how to pick winners in the tech and internet sectors.  Valentine’s acumen and achievements brought success along with the internet boom.Mark has always been a student and devotee of the markets.

A calm, collected broker with a mind for precision and the ability to grasp complex ideas and their details, Valentine has always had what it takes to ride out the volatility of the markets.  And he’s proven that through the dizzying ups and downs of the NASDAQ.Now, at 42, Valentine is a veteran of Bay Street, the markets and life in venture capital.In 2002 he founded Q Capital Corp in Toronto, where he continues as their CEO today.  Q Corp specializes in software, most particularly in the monetizing of mobile solutions for carriers in the global village.

The company portfolio also includes e-commerce, the natural resource sector and media – both traditional print and online.Altruistic involvement has seen Valentine raising money for The Children’s Wish Foundation and Mount Sinai Hospital Foundation in Toronto.  His $1 million endowment funds created a permanent legacy to support the future of the world-famous Mt. Sinai Hospital with the Mark and Stephanie Valentine NICU Fund for Excellence.  He also created The VF Children’s Network Charity.His charitable contributions aren’t slowing down either; he plans to climb Mt. Kilimanjaro in order to help London’s Kabbalah Center reach their own heights.Valentine was educated at Lakefield College School in Ontario and Concordia University in Montreal.


Monday, 18 June 2012

I Found A Website called MarkValentine.org

I was browsing around researching the other Mark Valentines in the world and came across MarkValentine.org.  It says:
Altruistic involvement has seen Valentine raising money for The Children's Wish Foundation and Mount Sinai Hospital Foundation in Toronto.  His $1 million endowment funds created a permanent legacy to support the future of the world-famous Mt. Sinai Hospital with the Mark and Stephanie Valentine NICU Fund for Excellence.  He also created The VF Children's Network Charity.