This document discusses venture capital as an alternative financing source for early stage companies. It provides an overview of the venture capital investment process, including typical investment criteria such as a company's growth potential and exit strategy. It also outlines how venture capital funds work to enhance company value between investment and exit. Finally, it provides tips for pitching an investment opportunity to venture capital investors, focusing on key elements like the founding team, company overview, solution, and financial projections.

1. Venture capital funds as an alternative financing source for early stage companies

4. Company financing sources

6. Equity vs Debt financing Bank loan Equity Risk sharing no yes Founder’s “sacrifice” cash flow ownership Ownership unchanged VC fund co-owner Investor protection standard no / deal structure Value added no yes

7. Target industries of regional funds IT / SW development Telecommunications Internet / e-commerce Biotech Alternative energy Services Media VC funds’ investments

8. From presentation to investment VC funds invest in ~2% screened companies Investment 100 50 Short review Financial analysis Business model Letter of intent Consultants Tech due diligence Investment memo Investment committee Management team First meeting Investment process usually lasts from 4 to 9 months

11. Exit strategies Stock market listing Common strategy in CEE, in most cases the most profitable one Not very common, few SME platforms available The least favorable option for a VC fund Trade sale MBO or secondary