Mid term report title venture capital

2, Background Venture capital is a form of private equity financing provided by venture capital firms or individual investors to startups and small businesses considered to have long-ter

THAI NGUYEN UNIVERSITY INTERNATIONAL SCHOOL

MID-TERM REPORT

Title: Venture Capital

This submitted to Lecturer: Dinh Phuong Anh Course: Financial Markets and Institution

By

Nguyen Thi Quynh Trang - DTQ2153401200058 Nguyen Thị Ha - DTQ2153401200041 Nguyen Y Nhi - DTQ2153401200053

Ha Minh Phuong- DTQ2253401200003 Ngo Thi Huyen - DTQ2153401200045 Trinh Thi Thanh Huyen - DTQ2153401200046

May, 2024

Assign work

Ngo Thi Huyen | 1 Present

2 Content of part 2 Operation of accel

Nguyen Thị

Quynh Trang | ! Contents of part 5 The future of Accel

Nguyen Y Nhi | 1 Present

2 Content of part 3 Investment criteria and due dilligence

Trinh Thi Thanh | 1 Content of part I Introduction

institution Accel

Neuyen Thi Ha | 1 Recap of venture capital's role in funding innovation and

growth, and Conclusion

Ha Minh 1 Present Phuong 2 Content of part 4 Portfolio Management and Value

Addition

I INTRODUCTION

1 Purpose of the report

The purpose of this report is to provide a comprehensive overview of the venture capital industry, its current trends, challenges and opportunities It aims to provide

ways to secure venture capital as well as the benefits and limitations of venture capital,

better understand the venture capital market and identify potential investment opportunities and how to operate them Venture capital operates as an important source of funding for startups and high-growth companies, driving innovation and

economic development This report will be useful to entrepreneurs seeking funding,

Investors considering venture capital investments, and policymakers interested In supporting the startup ecosystem

Presents a comprehensive assessment of venture capital organizations across many industries in the market, identifying evaluation criteria and processes of venture capital

to the global economy To draw conclusions and general models of the highlights of

venture capital organizations Evaluate whether venture capital is suitable for the current market and needs Consider how lessons learned from successful and disruptive venture investments across multiple industries can impact businesses

2, Background

Venture capital is a form of private equity financing provided by venture capital firms

or individual investors to startups and small businesses considered to have long-term

growth potential term

The main characteristic of venture capital is Investing in startups and early stage companies These companies often have high growth potential but also contain significant risks Instead of lending at a fixed interest rate, venture capitalists often buy

a company's stock, become shareholders, and expect the stock value to increase as the company grows Venture capitalists then often seek to exit capital after a certain period

of time, either through selling their shares when the company IPOs (initial public offering) or reselling them to investors public company another company

Venture capital (VC) plays an important role in promoting development and Innovation in the economy such as encouraging innovation and creativity, providing financial support to businesses, promoting economic growth, etc

Venture capital provides essential capital to startups and new technology businesses, helping them develop groundbreaking products and services that otherwise might never become a reality These investment companies often invest heavily in research and development (R&D) to develop breakthrough technologies, products and services

Additionally, venture capital helps reduce the financial burden, allowing founders to

focus on testing and product development without the immediate pressure of profits In addition to providing capital, venture capitalists also use their network of relationships and experience to help startups reach customers, business partners and build effective marketing strategies This not only promotes the growth of startups but also shapes new industries, creates new trends and opens up new markets

Venture capital not only supports startups but also creates a strong spillover impact on

the entire economy By driving innovation, creating jobs, improving productivity and

growing markets, VCs play an important role in driving economic growth and

improving living standards for communities

Many large and successful companies such as Google, Facebook and Uber received support from venture capitalists in their early stages These companies have not only become tech giants but also have a major impact on the global economy

Venture capital is increasingly asserting its importance in many fields, not only

providing financial support but also promoting a strong and creative business

ecosystem, creating conditions for the economy to develop sustainably and sustainably

prosperous

Il CONTENT

1 Overview of venture capital financial institution Accel

1.1 History of Accel formation

Accel, formerly known as Accel Partners, is an American venture capital firm Accel works with startups in seed, early-stage and growth-stage investments The firm has offices in Palo Alto, California and San Francisco, California, with additional

operating funds in London, India and China (through a partnership with International

Data Group)

Accel was founded in 1983 by Arthur Patterson and Jim Swartz, two experienced venture capitalists with a vision of creating a company that supported early-stage

technology companies Their combined expertise and networks within the industry

provided a strong foundation for the new venture

Since 2000 until now, Accel has continuously expanded and diversified its investment

activities From partnering with KKR to establish Accel-KKR, expanding investment

in Europe, establishing growth funds, to raising large funds in 2016 and 2019, Accel

has affirmed its position as one of the world's leading venture capital firms

Joint Venture with KKR and Establishment of Accel-KKR

In 2000, Accel entered into a joint venture with Kohlberg Kravis Roberts to form Accel-KKR, a technology-focused private equity investment firm Accel-K KR focuses

on controlling investments in middle-market companies, expanding Accel's investment

capabilities in the technology sector

In 2001, Accel opened an office in London and established a separate fund to invest in European technology companies This fund focuses on Series A and Series B Investments Some prominent investments in Europe include Avito, BlaBlaCar,

Deliveroo, HopIn, Spotify, Supercell and UiPath

In addition to continuing to invest in early-stage startups, in December 2008, Accel

announced a $480 million growth fund The fund focuses on growth equity

opportunities in sectors such as information technology, Internet, digital media, mobile, networking, software and services

In March 2016, Accel raised $2 billion, including $500 million in early-stage venture

capital and $1.5 billion in growth investments In April 2016, Accel continued to mobilize a separate fund worth 500 million USD to invest in Europe and Israel In

November 2016, Accel's India arm closed its fifth fund with $450 million, two years

after closing its fourth fund with $325 million

In May 2019, Accel closed a $575 million fund, aimed at Series A funding for startups

in Europe and Israel This round 1s the largest in the region, bringing the total amount

of funds under management by Accel to $3 billion

1.2, Accel's vision and mission

Vision

From its inception, Accel's vision was to be a force driving innovation and growth in

the technology sector The company aims to support groundbreaking ideas that have the potential to change industries and improve the lives of people around the world Accel wants to be a trusted partner to talented founders, helping them turn innovative ideas into reality and build companies with lasting impact

Mission

Accel's mission is to identify and invest tn innovative technology startups with high growth potential Accel's founders, Arthur Patterson and Jim Swartz, established this mission with the goal of providing not only financial capital but also comprehensive support to entrepreneurs

Accel is committed to providing the necessary investment capital for startups so they

can develop products, expand markets and build teams Additionally, Accel provides startups with strategic guidance from experienced industry experts This includes

shaping business strategy, product development plans, and go-to-market strategies

In addition to capital and strategy, Accel also supports startups in terms of operations

This includes helping recruit top talent, establish efficient operating processes, and scale operations sustainably Accel uses its extensive network to connect startups with

partners, potential customers, and other investors This helps startups access important collaboration and development opportunities

Patterson and Swartz understand that building a successful company is a long-term

process that requires commitment and patience Therefore, Accel focuses on building long-term relationships with founders and accompanying them through many stages of the company's development Accel doesn't just seek short-term profits but sets goals Accel's vision and mission at its founding are the foundation for the company's success and reputation today By focusing on comprehensive support for technology startups, Accel has helped many companies overcome early challenges and achieve great success globally

1.3 Accel's investment strategy

Accel focuses on investing in early-stage startups, typically in Series A and Series B funding rounds Accel's goal is to support entrepreneurs from the first steps of their journey startup, when the company is still in the stage of product development and market identification

Accel looks for companies with groundbreaking ideas and founding teams with strong execution capabilities Then help startups develop and perfect their product or service ready for market launch

In addition to early-stage investments, Accel also focuses on growth investments, targeting companies that have proven business models and are at the scale-up stage

Providing capital for companies to expand their scale of operations, expand their

markets and grow their revenue Helps companies optimize operations, manage finances, and build infrastructure to support sustainable growth

Accel also focuses on investing in mnovative technology companies in many different fields including Information Technology and Software (Enterprise Software), Internet and Digital Media (Consumer Internet), Mobile (Mobile) ), Finance Technology (Fintech)

Accel always aims to build long-term relationships with the companies in which it

invests The company does not just seek short-term profits but aims to create sustainable and long-term value for the companies in its portfolio

Accel's investment strategy is built on a foundation of comprehensive support and long-term orientation From investing in early-stage startups to supporting companies

as they grow and scale, Accel has established its position as a trusted and influential partner in the venture capital field

1.4, Ecosystem of venture capital fund Accel

The Accel venture capital fund ecosystem is a complex and closely linked network of startups, investors, advisors, partner companies, and many other components Comprehensive support from Accel, from providing capital to strategic guidance and development support, has helped many startups thrive and achieve great success in the global market This ecosystem not only creates value for startups but also contributes

to the development of the technology industry 1n general

Startups are at the heart of the Accel ecosystem These are the businesses that Accel Invests in, providing capital and support to help them grow and succeed These

companies are often prominent names in fields such as information technology,

internet, fintech, healthcare, and many other technology fields Examples include Facebook, Dropbox, Spotify, Slack, Deliveroo, BlaBlaCar, UiPath

Investors are people or organizations that provide capital to Accel so the company can Invest in startups These can be pension funds, financial institutions, high net worth individual investors and other institutional investors

Accel has a vast network of experts and advisors in many different fields They provide strategic advice and technical expertise to startups in Accel's portfolio The role of consultants is to provide strategic guidance, support product development, and advise during the scaling process

Corporate Partners and Large Enterprises These companies can be customers, strategic partners, or even potential acquirers for the startups in which Accel invests Global Offices Accel has offices in many major technology hubs globally, helping to expand its reach and access to international investment opportunities

Locations in Silicon Valley (USA), London (UK), Bangalore (India)

Entrepreneur and Founder Community Accel builds and maintains a strong

community of founders and entrepreneurs This community creates a network of

mutual support, sharing experiences and knowledge, facilitating collaboration and

learning

2 Operation of accel

2.1 How Accel's fund work

Accel Fund is a US-based venture capital organization that specializes in investing in

growing technology businesses The way an Accel fund might work :

Fundraising: Accel raises funds by attracting capital from investors, typically pension funds, financial institutions, and well-resourced individual investors

Project search and evaluation: Accel conducts research and evaluates potential businesses for investment This can include tracking new technology trends, evaluating

startups, and seeking out potential investment opportunities

Investment: After identifying potential businesses, Accel invests capital in these companies through different investment rounds, from the first round to the following Investment rounds

Business support: Accel not only provides investment capital but also provides strategic support and consulting to the businesses it invests in, helping them grow and succeed in a competitive market

Management and divestment: Accel continues to monitor and support the businesses

in which it invests, as well as implement divestment strategies through equity sales or

mergers and consolidations

Generate profits: Accel's ultimate goal is to generate profits for investors by investing 1n businesses with potential and success in the market

2.2, Accel's investment stages

Seed Stage

This stage takes place at the earliest point of a business, often when it is still just an idea or an unfinished product

Investment rounds at this stage are called "rounds of seed funding” or "seed rounds"

Investment money 1s often used for product development, market research and

team building

Series A

This stage occurs when the business has a basic product or service and has

attracted interest from investors

Series A investment rounds are typically larger in scale than Seed Rounds and are used for product expansion, market development, and sales growth Series B and C

B and Series C investment rounds take place when a business has a stable customer base and revenue, and 1s looking for capital to expand its business operations

Investment funds from these rounds are often used to expand production scale, expand geographic operations, and develop products and services

Growth Stage

This stage occurs when the business has achieved significant growth and revenue and needs capital to expand its scale of operations

Investment money at this stage 1s often used to expand geographical operations,

develop new distribution channels, and penetrate new markets

2.3 Success stories of Accel

Corporate venture capital (CVC) has emerged as a powerful mechanism to spur

innovation and reshape industries This is two stories of the success stories that shows

the profound impact of strategic investment and cooperation :

Google Ventures and Nest Labs - Elevating the smart home: One of CVC's most notable success stories 1s the partnership between Google Ventures (GV) and Nest

Labs GV's investment in Nest Labs has accelerated the development of smart home

automation technologies, including smart thermostats, smoke detectors and security cameras This partnership bore fruit when Google acquired Nest Labs for $3.2 billion,

revolutionizing the smart home concept and strengthening Google's position in the

Internet of Things (oT) market

Instagram: This online mobile photo and video sharing website was developed in San

Francisco by Kevin Systrom and Mike Krieger In less than a year and three, it has attracted more than 100 million users and quickly attracted the attention of many

venture consultants Instagram has raised $7 million in Series A funding from various

advisors, including Benchmark Capital, Jack Dorsey, Capital Fund and Adam

D'Angelo, which puts the company at a valuation of $25 million In the next round of

funding, they raised $500 million from venture advisors, increasing the company's value to about $25 million Social media giant Facebook eventually acquired this

company for a symbolic $1 billion

3 Investment criteria and due dilligence

3.1 Investment Criteria

Investment criteria play an important role and are the deciding factor in the success of

Investments in venture funds These criteria help investors identify the best investment opportunities and avoid unnecessary risks It can be seen that investment criteria are an essential tool to help venture funds evaluate, select and manage investments

effectively, optimize profits and minimize risks

The five basic criteria that must be met when investing in venture capital funds are market attractiveness, product differentiation, managerial capabilities, resistance to environmental threats and cash-out method

« Market attractiveness ( size of market, market need, market growth potential, and access to market)

and patentability of product)

« Managerial capabilities (management skills, marketing skills, financial skills,

and references of entrepreneur)

« Resistance to environmental threats (protection from competitive entry, protection from obsolescence, protection against downside risk, and resistance

to economic cycles)

« Cash-out method (realize profits, risk management, create liquidity, optimize returns, attract new capital )

3.2 Due Diligence

Due diligence has a significant impact on investment success, especially when

determining valuation It helps investors confirm whether a proposed valuation is

feasible based on the company's financial health, market potential and competitive positioning Additionally, investors can negotiate terms if necessary

Due diligence is a critical step in venture capital All aspects of a startup are scrutinized, such as finances, market potential, management, intellectual property and competition

This helps investors make informed decisions and reduce risk Additionally, it can

benefit startups by providing feedback, refining strategies, and increasing transparency and trust between investors and founders

Venture capital 1s changing rapidly, and due diligence 1s critical to investing wisely

As new technologies, industries and business models emerge, thorough due diligence

is critical It helps cope with the complexity of the entrepreneurial ecosystem,

increases the likelihood of entrepreneurial success and drives innovation

4 Portfolio Management and Value Addition

Portfolio management is a fundamental capability used to plan, align, and optimize Innovation investments It serves as the primary link between innovation strategy and product development execution, allowing leaders to fund the night mix of projects across all growth horizons As companies improve their portfolio management practices, they progress from static, manually driven approaches to dynamic decision- making using up-to-date data they can trust

Accel is a venture capital firm that concentrates on the following technology sectors:

« Consumer

¢ Infrastructure

« Media

« Mobile

« SaaS (Software as a service)

« Security

« E-commerce

4.1 Monitoring

The investment committee, which includes experienced partners and industry experts,

reviews the results and makes the final investment decision This step ensures that only

the most promising opportunities are funded Accel Capital closely monitors the progress of its portfolio companies and provides strategic advice and operational support Futhermore, they regularly analyze financial performance, market trends and competitive dynamics to ensure optimal portfolio management

4.2 Value creation