Last week I was a bit concerned of the professionalism of some VCs regarding disclosure. This week I attended a VC conference with some 230 attendants from top notch private equity firms and growth phase entrepreneurs who usually had already one or two rounds of financing under their belt. My concern might have been a bit overrated compared to the disclosure found from the seminar material. How comfortable would you be to disclosure this information in public?
- Current shareholder structure (name & amout of shares)
- previous rounds of financing (round date, stage, company valuation, total amount)
- Key figures for 2002-2006 (turnover, EVIT, equity, employment)
The sad part is that many of the companies gave almost all the info. I would not like to be the poor VC who did the previous round and sat in the room surrounded by collegues figuring out your deal details. Open door policy is OK to a point but this much information does not help to get the next round of financing. While making your initial sales pitch no one is interested of the financial details and shareholder structure per se. They come later if the overall value proposition is in place. If nothing else this information is very valuable to a company's competitors and clients.
One should also be consistent with the sales pitch. It is not convincing to tell first your profit margin and explain to a question about how to keep the high rate in the future by answering that we do not reveal our margin to our clients. But you just did it, in public. A real case is not missed by revealing too much info early in the financing process but way too much in a wrong place can be a serious deal breaker.
Posted at September 29, 2004 05:54 PM | TrackBack