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Hispanic Venture Capital Fund

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					Venture Capital Funding


      January 28th, 2005

       Steve Montoya
          Azul Venture Partners
       Vice-President, Hispanic-Net
                          Outline

         Funding
         Equity Financing
         Venture Capital
         VC Statistics
         Advice

Jan 28th, 2005        Azul Venture Partners   2
                 Financing Alternatives

       Bootstrap
       Debt
       Customers/Partnerships
       Equity


Jan 28th, 2005         Azul Venture Partners   3
                 Equity Sources
       Personal
       Angel Investors
       Partnerships/Corporations
       Government
       Private Capital Firms
       Venture Capital Firms
Jan 28th, 2005      Azul Venture Partners   4
                 Equity Investment Model
       Purchase % of Ownership
       Risk Capital
       High Growth Businesses
       Strong Management
       Realize a Large ROI
       7 to 10x Within 5 Years
Jan 28th, 2005          Azul Venture Partners   5
                 Stages of Equity Financing
      Seed                   Seed


      Start-up/First                Angel                      Early Stage




      Second/Third                              Series A

      Expansion                                         Series B, C, …
      Mezzanine                                               Mezzanine
      Buyout                               Hot Tip;
                                                                         Late Stage

                                            Customer Commit



Jan 28th, 2005           Azul Venture Partners                                    6
                       Venture Capital
 Definition

                 An investment in a start-up business
                 that is perceived to have excellent
                 growth prospects but does not have
                 access to capital markets. Type of
                 financing sought by early-stage
                 companies seeking to grow rapidly.


Jan 28th, 2005                 Azul Venture Partners    7
                  Venture Capital
 Why Use Venture Capital?
         Require substantial capital to develop the
          product or service.
         Must expand quickly to hit the market window.
         Need the contacts to grow the business




Jan 28th, 2005            Azul Venture Partners       8
                  Venture Capital
 What do Venture Capitalist Have?
         Industry Expertise
         Industry Contacts
         Vast Experience in Starting, Growing, Selling
          Companies
         Enjoy Working With Young Companies
         They Want to Make Money !!!


Jan 28th, 2005            Azul Venture Partners           9
                 VC Investment Preference
       Stage of Financing
       Amount of Capital
       Geographic
       Industry Specialization
       Management Team
       Strong Referrals
Jan 28th, 2005          Azul Venture Partners   10
                 Venture Capitalists Look At
       Vision
       Leadership
       Experienced Team
       Target Market Potential
       Business Model
       Revenues, Revenues, Revenues

Jan 28th, 2005           Azul Venture Partners   11
                    How to Approach VCs?

                  Option 1 - Referral
                  Option 2 - Referral
                  Option 3 - Referral


Jan 28th, 2005              Azul Venture Partners   12
                        Venture Capital
 Your Must Have’s
                  Clear Differentiation
                  High Barriers to Entry
                  Market Expertise
                  Business Model
                  Financials
                  Strong Management Team




Jan 28th, 2005                  Azul Venture Partners   13
                     Investments—VC Industry
         120

         100

           80

           60
                                                             Total $ (Bil)
           40

           20

                 0
                     1997    1999   2001              2003

 Source: Moneytree Survey (PWC)
Jan 28th, 2005                      Azul Venture Partners                14
                  Qtr 2004 – National
                       3rd

           Top 6 Investments by Industry
          Software                                                    22%
          Biomedical, Health                                          19%
          Telecomm., Networking                                       17%
          Medical Devices & Equipment                                 11%
          Semiconductors                                              8%
          Media, Entertainment                                        3%

         Source: Venture Economics (www.ventureeconomics.com)
Jan 28th, 2005                                 Azul Venture Partners         15
                    3rd Qtr 2004 – National
                 Top 6 Investments by Region
                Silicon Valley                                         33%
                New York                                               11%
                New England                                            10%
                Southeast                                              6%
                Northwest                                              5%
                Texas                                                  4%
          Source: Venture Economics (www.ventureeconomics.com)



Jan 28th, 2005                                  Azul Venture Partners         16
                          3 Qtr 2004 – National
                           rd

                         Investments by Rounds
                               Seed                                       0.4%
                               Early Stage                                21%
                               Expansion                                  49%
                               Later Stage                                30%


                 Source: Venture Economics (www.ventureeconomics.com)



Jan 28th, 2005                                     Azul Venture Partners          17
                                 Overview 2004

          Investments have stopped declining
                  2003 Investments – $18.8B
                  2004 Investments – $20.8B
          1900 Companies funded – remains flat
          $8.5M Average investment – remains flat
          Most $ still going into existing portfolios

             Source: Pricewaterhouse Coopers (www.pwcmoneytree.com)

Jan 28th, 2005                                  Azul Venture Partners   18
                                 Advice
 Venture Capital
                  It’s a Marriage, Not a Date
                  One Opportunity for a First Impression
                  Seek Value-Added Partner
                  Ask Questions
 Funding
                  Understand Your Options
                  Best Time to Raise $$$ is When You Don’t Need It
                  Control Your Expenses, Understand Financials
Jan 28th, 2005                     Azul Venture Partners          19
                 Thank You




Jan 28th, 2005     Azul Venture Partners   20

				
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