The Little Book of Venture Capital Investing Empowering Economic Growth and Investment Portfolios Little Books. Big Profits Series, Vol. 57

After having been thrown for a loop by the bursting of the tech bubble more than a decade ago, the venture capital industry suddenly has come roaring back to life over the past two years. In 2011 alone, more than $7.5 billion in venture capital was invested—representing more than a 19% increase over the previous year—in more than 966 companies. A majority of these companies reside in the life sciences, Internet, and alternative energy sectors.

In today's weak job market, VC is more important than ever, since financing new tech, alternative energy, media, and other small to mid-sized companies is vital to creating new jobs. Written by Lou Gerken, a noted international authority on venture capital and alternative investments, this book tells you everything you need to know about the venture capital industry's important role in enhancing economic growth and employment. It is also the perfect go to primer on making venture capital investments to enhance portfolio returns.

• Highly accessible explanations of the ins and outs of venture capital for would-be investors and experienced VCs
• Highlights the historical VC track record, and offers expert advice and guidance on venture capital exposure, investment options, sourcing opportunities and due diligence
• Provides proven strategies for successful investment selection, timing, monitoring, and exiting for optimum returns
• Features endorsements from luminaries of the VC world, including Kleiner Perkins Caufield & Byers co-founder Frank Caulfield, and Dr. Art Laffer, among others

Acknowledgments ix

An Introduction to Venture Capital Investing xi

Chapter One An Historic Overview of Venture Capitalism 1

Chapter Two The VC Industry Today 23

Chapter Three The Value Proposition 45

Chapter Four Prevailing Investment Climate 71

Chapter Five Field Guide for VC Investing Options—Nonlisted 105

Chapter Six Investment Options—Listed 145

Chapter Seven Investment Process—Sourcing and Screening 165

Chapter Eight Investment Process—Due Diligence and Selection 179

Chapter Nine Investment Process—Portfolio Construction, Monitoring, and Monetizing 209

Appendix: Resources 237

Notes 252

About the Authors 261

LOUIS C. GERKEN founded alternative asset fund manager Gerken Capital Associates (GCA) in 1989. Prior to forming GCA, Mr. Gerken was a Managing Director and Group Head of Prudential Securities' Technology Investment Banking Division, which served as an advisor to international M&A and corporate finance mandates.

Earlier, Mr. Gerken was a General Partner to Prudential Securities' four venture capital funds, known collectively as Prutech, one of the largest U.S. venture capital funds at the time. Prutech completed over fifty IT and bio-tech sector early- and expansion-stage investments, and was one of the first VC funds to pioneer corporate partnering as a co-investment strategy. Prior to this, Mr. Gerken was responsible for overseeing Wells Fargo's venture capital activities where he structured one the industry's first fund of funds.

He was a founder/CEO of TCG, a telecom consulting engineering firm and started his career with emerging markets fund management pioneer, GT Capital.