The message of the following exercise has to do with innovation for entrepreneurs, but in an unconventional arena. We all are aware of how the IT revolution has enhanced the efficiency and cut the costs of business firms in this country and around the world … managing the supply chain, relating to customers, enhancing internal communications. The list goes on and on.
The same can be true, although often is not, when entrepreneurs and their advisers intelligently attack the frictional costs of raising capital. The possibilities, relatively speaking, are enormous but, unhappily, not as widely adopted as should be the case. Since the entrepreneur, the founder of Newco, is the real party in interest, the text is aimed at energizing him or her to require the necessary improvements fro all involved.
This text focuses specifically on the quantitative analysis, versus gut feel, as venture transactions in this country are negotiated, wordsmithed and closed. I contend that the abundance of data in today's environment makes it critically important that venture capitalists, entrepreneurs and their advisers "get it right" when, for example, the Series A round is negotiated. To illustrate what I have in mind, allow me to use, as I often do, exposition in a Q&A format.
Article (DOC)