March 13, 2013

Cover Story

CEO of the Year

Effective leaders often credit their team members for successes and achiev...Read More

Featured Articles

It Isn't Easy Being Green

Founding Partners

Sections

Legal Briefs
Social Media and Investment Advisers

Money Talk
Drop in the Bucket

Economic Insight
From Vision to Action

Lessons Learned
The Right Move

TechKnowledge
Measuring Up

EntrepreneurEdge
Needle in a Haystack

Business Trends
Corner the Market

Living Well
Upper Crust

Players
Players

Profiles
Kirk Ririe

Profiles
Susan Yule

Around Utah
Around Utah

By the Books
"Never Eat Alone," by Keith Ferrazzi

Editor's Note
Are you a credible leader?

Reader's Choice
One for the Books

Focus
A Capital Idea

Industry Outlook
Travel & Tourism

Regional Report
Davis and Weber Counties

Article

A Capital Idea

What Entrepreneurs Need to Know About VC Investments

Gaylen Webb | Illustration by Mike Bohman

March 13, 2013

The term sheet will also dictate the percentage of ownership the VC firm, or firms, will take, “plus a whole bunch of legal stuff,” says Peterson.

Life Cycle

Entrepreneurs should understand that every VC firm invests with an exit in mind.

“Nobody gets a big payday unless the company is sold or goes public. That’s how venture firms return the money to their investors,” says Stone. “We’re not investing so you can have a lifestyle company and work four hours a day. It is completely the antitheses of that. We are investing so you will work your butt off and make us money and at the same time, you make money. It is capitalism at its best.”

Most venture funds have 10-year lifecycles. Hence, the VC firm won’t want to invest in your company for any longer than six to eight years, depending on where the venture fund is in its lifecycle. Some VC firms don’t want to invest for any longer than three to five years. However, early-stage VC firms like Epic typically model their investments for longer periods than later stage VC firms do.

The industry your company is in may determine the amount of return the VC firm expects to get by investing in you. For example, Stone says Epic Ventures models its investments as 10x, meaning if Epic puts $1 million in your hot technology company, the firm will expect to get $10 million out.

“Now whether that is a sale or an IPO, quite frankly, we don’t care, as long as it is 10 times,” he says.

Page 12
Utah Business Social
UB Events View All
CEO of the YearUtah Business Event
Mar 20, 2015
Utah Business Magazine and Presenting Sponsors - Holland & Hart and Newmark Grubb ACRES - are pro...
Job Summit 2015Utah Business Event
Apr 10, 2015
Position your company as a Premier Employer in today's competitive job market! Utah Business maga...
30 Women to WatchUtah Business Event
May 21, 2015
Utah Business magazine and Snell and Wilmer are proud to announce the 18th annual 30 Women To Wat...
Community Events View All
CEH - Certified Ethical Hacker
Mar 2, 2015
Learn to hack like a pro, while pleasing the boss! The ethical hacker is usually a trusted employ...
Advance Your HR Career by Building Credibility, Trust, and Professionalism
Mar 3, 2015
Even if you know your craft, do you know how to improve others’ perception of your ability and pr...

info@utahbusiness.com  |  90 South 400 West, Ste 650 Salt Lake City, Utah 84101   |  (801) 568-0114

Advertise with Utah Business

Submit an Event

* indicates required information
* Event Name:
Price (general):
Website (if applicable):
Coordinator's Name:
Coordinator's Email:
Coordinator's Phone:
Venue Name:
Venue Address:
Venue City:
Venue Zip:
Event Capacity:
Date(s):
to
* Event Description:
  Cancel