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.