Day 4 Reading 7Signal’s Deck & TrackAbout’s Note

Today is my fourth day at CoreNetwork Fund, also the first working Friday here (though I haven’t felt the excitement for the weekend yet, maybe because I have enjoyed learning about VC and haven’t got tired of it yet)! I arrived earlier than 9 in the morning today so I went to a closeby coffee shop and sat down to read the deck (a company’s presentation) Erik sent me yesterday. After a cup of Japanese green tea, I had glanced through the 67-page report on 7Signal, a company that enhances Wi-Fi performance.

After checking in with Erik in the office, I got my two tasks today: write an executive summary for 7Signal’s presentation and read TrackAbout’s Note. In the morning, I mainly worked on reading through the report and taking notes of what I think were important. It was helpful to see a presentation a company prepared for VC firms, as I saw how it was structured and what important content was included. Since the document is confidential, I won’t go into details about the company. I can talk about the structure of the presentation, as it will be helpful for entrepreneurs to include several key factors when making a presentation for VC firms. The following sections were included in the presentation: 1) Organization Chart & CEO summary 2) Sales Analysis 3) Finance Update 4) Product Development 5) Marketing 6) Strategic Discussion 7) Account Update 8) Board Executive Session. I read all sections and to report back to Erik and prepare for our discussion, I drafted an executive summary. Unexpectedly, Erik came around lunch time and collected it to make a copy (would have wrote more in detail and nicely if I knew it would have been collected). But as per usual, Erik said “Excellent”.

In the afternoon, I started working on the second office task of today: read though TrackAbout’s Note and take notes on “Superior Indebtedness” and “Security Provision”. Since Erik told me it was a note, I thought it would be short. However, it was a “Note” (with a capitalized “N”), an 11 pages document written in a confusing language. I read it from front to back and back to front, after a while, I have finally started to absorb the info. This so-called note is basically a term & agreement type of document. While reading, Erik wanted me to focus on “security provision” (what happens if companies went bankrupt) and “superior indebtedness” (the perks of being seniority investors). In sum, 1) the Note protects lenders’ rights to get paid from the company without delay after it declared bankruptcy (one of the means is sacrificing other property to pay back the investor); 2) the Note guarantees the seniority investor (the more you invest, the more superior) to get paid in full in cash before other lenders (one of the means is give other lenders additional securities while paying senior indebtedness first).

Before leaving the office, I talked to Erik about what can my final project be, and he said he and Bob will talk and get back to me on Monday. After I get home, I finished reading chapters 4-5 in Venture Deals, which talked about the Term Sheet (with two parts: Economic and Control). The term sheet is basically the document that outlines the terms by which an investor (angel or venture capital investor) will make a financial investment in your company. Term sheets tend to consist of three sections: funding, corporate governance and liquidation. These two chapters were a bit of confusing, so I marked some questions and I will ask them on Monday.

Today I have reached my overall goal of learning How Venture Capital Works through reading the two professional documents. I touched on my first goal of learning about how to determine whether an investment is good or not through looking at how company present itself. I didn’t get much experience on my second goal of knowing the process of a VC deal, as my tasks today were not in this focus. But I think all I have been leaning throughout the internship eventually contribute a small part of the second goal. As for third goal, by reading chapters 4-5 Venture Deals, I understand the paperwork perspective of VC from entrepreneurs’ perspective.