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FVAP has compiled this FAQ to
answer common questions about our acceleration operations. We appreciate feedback
from entrepreneurs on how we can improve this section.
What exactly is Acceleration?
Acceleration is a modified form of incubation which was specifically
designed for promising and growing companies that are too young to receive
conventional venture capital or institutional financing. During
Acceleration, FVAP provides the resources, contacts, relationships and
value-add that would usually be deployed during a standard venture
investment, often including an Executive in Residence (EIR). These resources
are geared to help make the company as "investable" as possible, as quickly
as possible (typically between 3 to 12 months).
Does FVAP make investments when it
accelerates my company?
Funk
Ventures formed FVAP for the specific purpose of assisting promising
companies that were too young to receive traditional venture capital so that
the company could be quickly "accelerated" to a stage where it is
investable.
Only our venture capital
unit,
Funk Ventures Capital Partners, makes direct investments. However, FVAP
often helps in filling small private placements to seed the portfolio
company with amounts ranging from $25,000 to $250,000, allowing the business
access to small amounts of capital in order to grow during the Acceleration
phase.
Why
doesn't FVAP sign Nondisclosure Agreements?
Acceleration is
similar in its nature to venture capital, and just like the majority of VC's, we do not and cannot sign NDA's because it would open us up to potential litigation and
would seriously limit the number and type of deals we may want to evaluate
for our portfolio. The following are links to articles that illustrate (in
serious and comical ways) why VC's do not sign NDA's:
http://news.com.com/
http://www.thevc.com/
http://www.billsnow.com/
What
is an Executive in Residence (EIR) and what is their involvement?
Our EIRs have been founders, C-level executives and owners
of successful companies. They know how to move a company from early stage to
successful exit via IPO, merger or acquisition because they’ve done it
several times before.
Our Acceleration clients have varied needs in
order to take their companies to the next level, including sales and marketing
expertise, long term planning, strategic consultation, and even an overhaul
of day-to-day operations. Our EIRs
are skilled in all areas of growing a successful business and will provide
you with the time, knowledge, relationships and leadership in order to
satisfy those needs. Depending on the assignment, an EIR may
take an active role in your daily operations or may serve from a Board or
advisory position.
What is the process after I submit my executive summary for review?
After we
receive your executive summary, an FVAP associate will review and evaluate
your opportunity for Acceleration. If we determine your opportunity is not a
good fit, we will inform you accordingly. If we determine that your
opportunity may be a good candidate for Acceleration, we will contact you to
request more information (often a full business plan, management resumes and
any other relevant information). If we are interested in learning more after
reviewing this information, we will setup a conference call or face-to-face
meeting to get to know you, your team and your opportunity in more detail.
What type of exit strategy is FVAP looking for?
FVAP
assists in building companies at a very early stage. Hence, it is virtually
impossible to have a preferred exit strategy at the time FVAP first gets
involved. However, we often liquidate our stake if our venture capital unit
ends up making a follow-on investment in the company, or through more
traditional means such as an initial public offering (IPO), merger,
acquisition or management buy-back.
Can I be accelerated if all
I have is an idea?
Yes.
While it is almost impossible to raise venture capital with just an idea
these days, Acceleration focuses on younger, less developed companies. Many
companies that come to FVAP for acceleration have just completed their
prototypes or product but are not yet generating any revenues, and most do
not have a complete management team.
How does FVAP get compensated for
accelerating my business?
It depends largely on a variety of
factors, including financial resources of the accelerated company, equity
structure, anticipated future financings and valuation. The typical
compensation package for FVAP is a cash/equity combination. Our acceleration
clients are charged a monthly retainer fee and, due to the high level of
risk that is inherent in an acceleration candidate, FVAP is provided with an
equity stake in the company. We understand that young and less developed
companies may be unable to satisfy the cash portion of our fee.
Therefore, FVAP offers
flexible terms so that an acceleration partnership creates a win-win
situation.
How
much equity do I have to give up to be accelerated?
The equity portion depends entirely on the valuation of the
company, the stage of the company, the future potential for growth and the
proposed exit strategy. Our best acceleration projects so far have been
those where the founders and management of the company maintained majority
ownership.
Does FVAP require a Board seat in
my company?
No.
However, it is often very beneficial to have board representation by a
reputable venture firm, especially for younger and less developed companies.
We may seek a Board seat if we feel that it is in the best interests of both
the company and FVAP. If FVAP infuses an EIR into your company, it is also
customary for the EIR to hold a board seat.
What is FVAP's management Involvement?
Our management involvement will be significant, however not
to the point where FVAP is running the operations. Business development,
financial planning and forecasting, management, board and advisory board
build out, strategic relationship development and assistance with small
private placements are some of the most common resources we provide our
accelerated portfolio companies.
You may submit your executive summary to
FVAP via this website, e-mail, hard copy or fax.
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