Notes by Carla R. Portocarrero on Bill McAleer, Voyager Capital

Date: Friday, May 19, 2000 4:28 PM


Voyager Capital investments - web-enabled software, infra-structure, e-commerce


Redemption - when investors want money quickly in debt-like situations



Valuation considerations - difficult to value e-companies

            qualitative and quantitative factors (in order of importance)

                        1. size of market (larger the better)

                        2. sustainable advantage - patents demonstrate propriety, sometimes the VCs partner with entrepreneurs to get patents

                        3. management team


            capital structure

                        1. common shares

                        2. options for employees

                        (at start CEO 5-7%, VPs 2-3%)


            ownership target

                        VC wants 15-20%


            exit options and horizon

                        VC wants to leave in 2,3,5 yrs



valuation approaches

            comparables - can't compare public and private

            similar deals - VCs have databases to explore



difference in regions (not a slide)

            Silicon Valley - stronger marketing teams (have already gone through process 2-4 times), more base technology/research, infrastructure, more money flow

            Seattle - more software


investment targets

            Seattle numbers in slide, more in CA

            seed - no customer, no code

            early - some customers, prototype/code

            mid - more customers, concept is more proven


return multiple - doubles in Internet

investment time - now 1.5 years, before 5 yrs



what deals are now getting done that economy is worse than 2 months ago?

            public - all IPOs are pulled, mostly telecom, some Internet infrastructure

            private - VCs those in arbitrage game are finding it more difficult, they want to get in right before the IPO rather than work with company from beginning           


syndication - less firms investing together, 1 takes lead w/ term sheet, angels good for 1st round


phases of an acquisition - deal is easy, people part much harder

            initiation - many different reasons

            negotiation and diligence - use stock or cash to acquire

            definitive agreements - people issues, many provisions

            board approval - do road show, need majority approval, 70% of board is institutional so don't need to talk to many different groups

            SEC - public

            HSR - private


acquisition considerations

            role of investment bankers and VCs - puts bad guy in middle of negotiations rather than you negotiating against future boss, also more experience and connections

            fiduciary responsibility-fairness opinion - investment banker charge fee



IPO criteria - shake-out of public companies coming soon


steps to going public

            preparing the pitch - needs to be solid for investment bankers

            banker bake off - hone in on lead banker

            s-1 registration statement - attorneys work furiously fast

            filing and SEC review - 30-60 days, may need revisions

            road show - marketing, "build a book"

            pricing - committee reviews recommendation of pricing

            effective - start atrading, green shoe


IPO considerations

            investor mix - retailer stays in stock, institutional investor may hold on to it for as little as a minute

            lockup - can't trade stock for 6 months