1. Changes in the Venture Industry: An Ex- CEO’s View of the New Venture World Jonathan Baer Threshold Ventures tventures@compuserve.com

2. The more things change the more… Welcome back to the 1990’s The old things matter-team, syndicate, business model, customers, target market, timing Hard to fund new markets-easier to fund technology improvement to existing VC’s are risk adverse-will invest when company does not need money-C rounds are cheaper than A

3. More things change… Founders are once again expendable-along with their equity T’s and C’s matter a lot more than valuation The largest risk today is financial

4. A biased view of the VC environment Finding right vc remains big hurdle –Pattern Recognition –Brain vs. Gut Inexperienced vc’s will disappear Fear versus greed remains –Revenue growth versus profitability Angels returning, but following, not leading

5. VC’s remain caught between… High ROI needed, but no public market Need to put money out in big chunks, with a syndicate that carriers company to cfbe LP’s are running scared No theme investing

6. Advice Build product, team and install base before going to venture capital firms Raise more money than need-and before you need it Founders need to protect themselves

7. Designer Venture World class team Technology mature, product built, roadmap well defined No market education required Immediate, measurable ROI Short sell cycle No IT involvement No BPR Natural acquisition for major player, but also IPO candidate