My Library and Courses
Last Update: Monday October 23, 2017

Key Idea: Find Venture Capital

Vince Occhipinti explains how his firm makes investment decisions.   More...

Key Question:

A: 
Use your own money, the money you could borrow from friends and family, an angel investor, a bank loan, cash flow from an existing business, suppliers, or, you could go after venture capital.
Q:  What is venture capital and how does an entrepreneur attract it?
A: Venture capital is money invested in a new idea by a group of professional investors who are probably handling other people's money and not their own. So, a venture capitalist is much like a stock broker who is looking for the right investment for his customers.
Vince Occhipinti is a general partner of the Woodside Fund. A venture capitalist looks for companies in large demand-driven markets that have a talented management team, a differentiating technology that is truly special, and willingness to work as a partnership.
No one wants to be a passive investor. The entrepreneur has to be willing to take suggestions and be a team player. Also, there must be an exit strategy. 
Vince pointed out that they will invest in less than 1% of the deals they see.
Q:  Why is your exit strategy important to the venture capitalist?
A:  It is the way the entrepreneur repays the venture capitalist. If venture capitalists invests $1 million dollars in a company, they want to know when they can get their investment back plus return on investment (ROI) . In fact, often venture capitalists will seek as much as 49% ownership of the company in the first round of funding; often a small block of investors can force the entrepreneur to sell or they can buy him/her out when they are ready to move on to another project.
You can be sure that if a venture capitalist is willing to risk loosing their money, they would only be happy if they are able to make more money than the stock market.
To keep the venture capital community happy, the entrepreneur must be meeting and surpassing all their projections for development, deployment, sales and growth. If an investor wants to get out early, their ROI will be lower. Entrepreneurs have been known to sell more equity through a second round of funding to get these types of investors out, sometimes even at even a loss to the investor!
Some founders will go through three rounds of funding before explosive sales, an IPO, or an acquisition provides enough capital to give their initial investors the kind of return they desire.
Use the words, exit strategies, to search the Internet to learn more.

Think about it

Do you have an idea that would fascinate a venture capitalist?

Clip from: The Enterprise Network

Santa Clara and San Jose, California: Silicon Valley is famous for technology startups and its goal is to never lose the distinction of being "the place" for innovation. The Enterprise Network (TEN) houses over a dozen start-ups working to bring new technologies to the marketplace. At TEN they find low-cost office space and mentors who guide them. You will meet the men who run the incubator and a number of the entrepreneurs who depend upon the leadership and camaraderie offered here.

According to the National Business Incubation Association, there are about 5,000 incubators worldwide with about 1,100 in the US. 

We chose this incubator because it became famous during the dot-com boom and it is situated  close to Stanford University. 

Stanford was early to the idea of technology licensing.  Technology licensing has assisted faculty and students in the process of launching companies which in turn have created thousands of jobs and brought millions of dollars into Stanford University.  Stanford enjoys the "success breeds success" principal so things are popping there.   In this program we go to the campus to see how one PhD student is working to commercialize his discoveries.

Go to all the key ideas and video of this episode...
Go to the homepage of this episode...

Woodside Fund

Vincent M. Occhipinti , Founder, Managing Director

350 Marine Parkway, Suite 300
Redwood Shores, CA 94065
650-610-8050

Visit our web site: http://www.woodsidefund.com/

Office: 650-610-8050

Business Classification:
Financial Services

Year Founded: 1983

Find Venture Capital

HATTIE: All right. Now how does one get your attention?

(Voiceover) Vince Occhipinti is a general partner with Woodside Fund. A venture capital firm specializing in start-up and early-stage companies.

Computer Voice: Good idea.

VINCE OCCHIPINTI (Woodside Fund): Normally, you have a business plan, and that business plan gets the attention of the venture capitalist with an appropriate introduction. And then you get--and your goal is to simply get a meeting. That's the primary purpose of sending them the information. You have to understand that a venture capitalist will see, for example, our firm, 600 to 1000 business plans a year.

HATTIE: Wow.

VINCE: We will invest in less than 1 percent of the deals we see. So there is a huge filter from all of the deals you see, to those areas that can justify combination of all of our investment criteria, which justifies a meeting, and then, ultimately, those companies that gain financing.

HATTIE: We meet a lot of people with a lot of wonderful ideas. But that doesn't mean anybody wants to buy that.

VINCE: That's perfect. Let me tell you what our investment criteria are. The most important thing is just what you've said, is market. We like companies that address large, demand-driven markets. And there is a difference between actual need and perceived need. The second thing is management, and there has to be a willingness to either have a premanagement team or the willingness to build it. The third item is barrier to entry. Do you have a technology or something that is unique that differentiates you, because you're going to have to compete with large corporations. So you've got to have something special. And that's why venture capitalists, particularly here in Silicon Valley, gravitate toward high technology; something that's unique, something that's interesting, something that is mostly patentable or some other advantage.

So that's what we call barrier to entry. The fourth element is whether they want to work as a partnership. And venture capitalists that want to give money and want to help are not going to be interested in being just a passive investor. The next item is what we call exit. And exit is how you get liquidity.

HATTIE: Right.

VINCE: And there are two vehicles for that. One is an IPO, and the second could be a merger and acquisition.

Not a member yet? Learn!  Be empowered! Join us!