Venture Capital Investing: The Complete Handbook for Investing in Private Businesses for Outstanding Profits
Format: PDF / Kindle (mobi) / ePub
In his classic bestseller Venture Capital Handbook, leading venture capitalist David Gladstone showed thousands of companies how to get funding and work with early stage investors. Now, in his revision of the classic, Venture Capital Investing, he looks at venture capital through the eyes of the investor. Gladstone shows all of you VC investors and angels exactly how to weed through scores of business proposals and find the gem that will deliver outstanding returns, especially in these soft economic times. You will learn what to look for in a business proposition; how to assess entrepreneurs and their management teams; how to evaluate financial statements, market niches, competitive environments, and product innovations; how to investigate a business that's already operating; and how to build effective partnerships with existing portfolio companies.
The company has currently outstripped its line of working capital at the bank, and its low equity base prevents the bank from increasing the line of credit beyond the current status. Initially, the company will use the $15 million to pay down the bank loan and negotiate a larger line of credit ($50 million) with the bank so that more working capital will be available to the company. 20 Ve n t u r e C a p i ta l I n v e s t i n g Financial History. Item Actual 2 Years Ago ($) Actual 1 Year
of Resourcefulness 33 Sense of Urgency 34 Knowing What Is Real 34 High Level of Energy 35 Mental Stamina 36 Strong Communications Skills 36 High Degree of Integrity 37 Seeking Partnership Status 39 Seeking Fair Play 39 How We See Entrepreneurs 40 How We Make Judgments 41 Analytical Approach to Evaluations 42 Interviewing Entrepreneurs 43 Be Prepared 44 Clear Mind 44 Conducive Environment 44 Be an Effective Listener 45 Keep on Your Toes During the Interview 45 Types of Interviews 46 Document
Interviewing is tough work. It can be a tremendously complex event marked by both strain and exhilaration as you push forward, looking for information. Types of Interviews There are two types of interviews. The first type is a panel or group interview. For example, a group of VCs may interview one entrepreneur or two or three of the top management. In the latter situation, the entrepreneur is facing several interviewers at once and may be more formal and less open. On the other hand, when a
and see whether management is making a conscientious effort to spur the employees on through regular evaluations. In addition, ask for the amount of turnover in the production process every year and the average number of years that a full-time employee works in production. The number of years people work in a plant is very telling. Some production plants hire temporary labor, due to seasonality. You may want to find out how many workers are hired and Chapter 5 • Investigating Production 125
discounts. Analysis of the Balance Sheet Cash flow analysis naturally leads you to the balance sheet. One source of cash is accounts receivable. You need to understand how receivables are recognized and how frequently receivables are not paid. That is, the company may have a receivable booked and income recognized, but the buyer of the product owing the money may not have recognized it as a payable and may not believe it owes anything to the company at all. Looking behind accounts payable is a