Raising Venture Capital


From early beginnings in the aftermath of World War II, the venture capital industry has evolved from an ad hoc collection of pioneering investors into a sophisticated, fast paced and highly specialised industry. During this period, venture capitalists have provided the fuel for entrepreneurs to create companies that have changed the face of the planet. The question of how the venture capital industry works, however, remains a mystery for many novice entrepreneurs, and the dynamics of venture capital deals are challenging for those without first-hand experience. This book examines the fundamentals that drive the VC industry, explains how these fundamentals translate into investments, and culminates in a blow-by-blow account of how venture capital deals are negotiated and structured by examining a real venture capital ‘term sheet’ in detail.
  • Raising Venture Capital provides practical insights into positioning a business to raise venture capital finance, and how to navigate the investment process, based on a mix of real life deal experience and sound academic theory and research.
  • The book reveals how the delicate relationship between entrepreneurs and venture capitalists is managed before, during and after the deal, creating the ideal platform on which to build a successful business.
  • By understanding the principles that drive venture capital deals this book explains how entrepreneurs and venture capitalists can structure a win-win deal creating value for both.
  • A detailed, clause-by-clause examination of a venture capital term sheet provides practical solutions to the typical ‘sticking points’ in a venture capital deal, provides insight into what can and cannot be negotiated, and minimises the risk of potentially successful deals being derailed.
  • The book is intended for entrepreneurs and venture capitalists actively engaged in doing deals, investment bankers, lawyers and consultants who work with high growth venture-backed businesses and MBA students and policy makers alike who wish to understand how the venture capital business operates.

RUPERT PEARCE joined Inmarsat in 2005 as Group General Counsel. Inmarsat is the world’s leading mobile satellite communications provider and recently underwent a $1,500 million leveraged buy-out by Apax and Permira and subsequent $3,000 million IPO on the London Stock Exchange. Inmarsat is now well-established in the FTSE 250. Prior to joining Inmarsat, Rupert was a General Partner at Atlas Venture, the leading transatlantic venture firm, responsible for corporate finance, mergers & acquisitions and special situations. He also served as Atlas Venture’s European COO. Prior to Atlas Venture, Rupert was a partner at the international law firm Linklaters, specializing in corporate finance, mergers & acquisitions, technology and private equity. Rupert has therefore experienced private equity and venture capital transactions from the perspectives of investor, adviser and member of management. As a founder of Out-Take Limited, an on-line publisher, he has also dabbled in entrepreneurship.
Rupert holds a First Class MA in Modern History from Oxford University and won the 1995 Fullbright Fellowship in US Securities Laws, studying at Georgetown Law Centre, Washington DC.

SIMON BARNES is Director of the Entrepreneurship Centre, and Deputy Director of the Full Time MBA programme at the Tanaka Business School, Imperial College London. He teaches electives in new venture creation and venture capital finance on the MBA, MSc Finance and MSc Health Management as well as courses for the faculty of Imperial College’s science and technology departments. His research at Imperial focuses on technology entrepreneurship and venture capital, with an emphasis on the development of university spin outs and technology ventures. Simon has six years of hands on experience in the venture capital industry, first with the transatlantic firm Atlas Venture and most recently with GIMV Venture Capital where he invested in early stage biotechnology companies. He has been a board director of several VC backed ventures, and lived through two M&A transactions at board level.
Simon received a first class honours degree and a PhD from The University of Cambridge. He holds an MBA with Distinction from the Tanaka Business School, Imperial College London, and was the winner of the European MBA Business Plan of the Year Competition in 1998.



1. Entrepreneurs and Venture Capitalists.

2. Other People’s Money.

3. The Limited Partnership.

4. The Competitive Environment.

5. The VC’s Investment Model.


6. Introduction to Part II.

7. Is Venture Capital the Right Option?.

8. Choosing a VC Firm.

9. The Entry Point.

10. The Investment Process.

11. Preparing for the Investment Process.


12 Introduction to Term Sheets.

13. Business Valuation.

14. Investment Structure.

 15. Syndication.

16 Investment Milestones.

17 Corporate Governance.

18. The Equity Participation.

19 Share Incentives.

20. Share Vesting.

21. Pre-emption Rights on Securities Issues.

22. Anti-dilution Rights.

23. Provisions Relating to Share Transfers.

24. Deal Management Terms.