How to Accelerate Your Sales to Private Equity, Venture Capital, and Hedge Funds

© Teten Advisors, LLC 2008. All Rights Reserved - Privileged and Confidential

The Virtual Handshake:How to Accelerate Your Sales to Private Equity, Venture Capital, and Hedge Funds

http://www.flickr.com/photos/roblee/133498854/

David TetenTeten Advisors, LLC

Teten.cominfo @ teten.com

New York, NY

Intro Social Media Tells Network Next StepsNetwork Next Steps

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Tradition

• Introduction

• Traditional Methods of Selling

• Social Media

• Tells of People and Funds You Want to Know

• Client Network

• Next Steps


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Tradition

• Currently: independent investment banker (Teten.com),specializing in advising private equity and venture capital funds on: accelerating deal flow,portfolio company executive optimization, corporate training, and due diligence

• Managing Director, Evalueserve, through September 2008. 2,500-person research firm.

• Founder and CEO, Circle of Experts (investment research firm), sold to Evalueserve

• Founder and CEO, Teten Executive Recruiting, sold to Accolo, #42 on 2007 Inc. 500

• Founder and CEO, GoldNames, domain name investment bank, based in Israel

• Technology M&A, Bear Stearns. Largest group by revenues.

• Lead author, The Virtual Handshake: Opening Doors and Closing Deals Online (TheVirtualHandshake.com)

• Harvard MBA, Yale BA, both with honors

• Contact: info @ teten.com

David Teten Biography


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Tradition

Why should I care about social media?

•Because 3 out of 4 Americans use social technology. (Forrester, The Growth Of Social Technology Adoption, 2008)

•2/3 of global internet population visit social networks (Nielsen, Global Faces & Networked Places, 2009)

•Visiting social sites is now the 4th most popular online activity—ahead of personal email.

(Nielsen, Global Faces & Networked Places, 2009)

•Visitors spend 5 million minutes per day on Facebook.(Facebook)

http://www.slideshare.net/mzkagan/what-is-social-media-2005829 . http://www.flickr.com/photos/sreejithk2000/2385193167/sizes/l/

Tells Network Next StepsNext Steps

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Intro Social MediaTradition

• Introduction


• Social Media


• Client Network

• Next Steps


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From Warm Relationships to Ice-Cold

http://flickr.com/photos/jwthompson2/88090871/

Tells Network Next Steps

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Warm – Lukewarm – Ice


Personal Relationships

http://blog.socaltech.com/2008/06/

Red = tech companies

Green = VC firms

Blue = service providers (lawyers, PR firms, real estate agents, focused on tech).


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Intermediaries

• Lawyers

• Private Bankers

• Accountants

• Recruiters

• Insurance brokers

1999 IPO Deals from IPOData.com, cited in “Social Networks in Silicon Valley”, Castilla, Hwang, Granovetter, and Granovetter, http://web.mit.edu/ecastill/www/publications/CastillaExtract.pdf

IPO Deals in California Information Retrieval Services IndustryEach tie=firms worked together on at least one IPO

Length of tie line inversely proportional to # IPOs worked on


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Speaking at Conferences

http://www.flickr.com/photos/programmerman/2315566040/sizes/l/


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Personal Life


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Marketing Collateral

Westshore Capital Partners; Weinbach Group

•PR

•Newsletters

•White papers


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Cold Calling

http://www.flickr.com/photos/23439761@N03/3258313816/sizes/l/


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• Introduction


• Social Media


• Client Network

• Next Steps


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Firms Fail to Capitalize on Their Internal and External Networks

Forrester Research/David Teten and Scott Allen, The Virtual Handshake: Opening Doors and Closing Deals Online. http://www.flickr.com/photos/pagedooley/2494191157/sizes/l/

• Knowledge is not readily searchable

• Knowledge is not retained when employees leave

• Relationships are not visible• Relationships are primarily tied to

colocated people• Millennials expect and embrace

social technologies


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“Web 2.0 is the business revolution …caused by the move to the Internet as platform,

and an attempt to understand the rules for success on that new platform. ”

- Tim O’Reilly

http://en.wikipedia.org/wiki/Web_2.0, http://flickr.com/photos/oliversteiner/326174717/sizes/o/


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http://www.flickr.com/photos/briansolis/2735401175/sizes/l/

Social Media


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• Searchable

• Crosses boundaries of time and space

• Passive presence

• Ease of forming groups

• Reduced time and expense

• Greater visibility

Benefits of Online Networks

http://www.flickr.com/photos/uaeincredible/3333223048/sizes/o/


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• Corporate• Personal• Your digital trail

The Virtual You


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The Future of Online Networks

• Online business relationships mainstream• Technology available now• Early adopters reap

maximum benefits• Technology required to

overcome some barriers, but education is solution

• Systems that address privacy and time concerns will be leaders

http://www.flickr.com/photos/extraketchup/748452643/sizes/o/


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Transition: Web 1.0 Web 2.0

Parameters Web 1.0 (Read) Web 2.0 (Read-Write)Governance Top-down Bottom-up

Communication Channels People to Machine Machine to Machine and People to People

Information Discovery Search and Browse Publish and Subscribe Information Retrieval Transactional Relationships

Information Aggregation Portal, Commercial Aggregators Micro-Aggregation

Marketing, Selling Push, Contextual Conversational, Personal Content Control Publishers, Aggregators Content Authors Content Structure Documents, Pages Tagged Objects Applications Closed, Proprietary Open, Standard-based

Technology HTML, Solaris, Oracle XML, AJAX, RSS, PHP, MySQL, XQuery

Partially sourced from: “Web 2.0 the Living Web and Putting “We” in the Web”, Bebo White, University of San Francisco (http://www.rthk.org.hk/mediadigest/20060915_76_121128.html)


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Powerful Emails

• Direct E-mail• E-mail

Signature

http://www.flickr.com/photos/misbehave/2352753067/sizes/l/


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Toolkit

• Email groups file • Profiles file • Standard emails

http://flickr.com/photos/neilt/2517652/sizes/o/


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• Introduction


• Social Media


• Client Network

• Next Steps


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Tells of Potential Clients

• Investors with particular industry interests (industry or geography)

• Investors where relevant contact person has recently changed


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Fund Performance: Rapid growth

http://flickr.com/photos/laserstars/908946494/sizes/o/


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Fund Performance: Underperforming

http://flickr.com/photos/carve/2856365431/sizes/l/


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Selected Databases

http://www.dnb.com/

http://www.bvdep.com/

http://www.10kwizard.com/main.php?g=

http://www.docuticker.com/

https://www.themarkets.com/

http://www.reuters.com/

http://www.zoominfo.com/Search/

http://www.factiva.com/index.asp

http://www.thedeal.com/

http://lbo.djnewsletters.com/default.asp

http://www.buyoutsnews.com/AdClick.asp?ad=Y12948-17328625&pp=Y12948-173282F1&url=http%3A%2F%2Fwww%2Ebuyoutsnews%2Ecom%2FsubscribeMenu%2Easp%3FprodTypeCode%3D2

http://www.privateequityanalyst.com/

http://www.specialissues.com/

http://www.fitchratings.com/corporate/index.cfm

http://www.highbeam.com/index.asp?homepage=y&ctrlInfo=Round23%3AProd%3AHP%3AHdr%2EHome

http://www.pewnews.com/index.asp

http://www.researchandmarkets.com/index.asp

Tells Network Next StepsCharacter – Competence – Relevance – Strength – Information – Number – Diversity

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• Introduction


• Social Media


• Client Network

• Next Steps


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= D * ∑ (Chn*Con *Rn* Sn*In)

Ch = CharacterCo = Your Firm’s Competence R = Relevance of the contactS = Strength of your relationshipI = InformationN = Number of peopleD = Diversity

Network Valuation Formula

N

n=1David Teten and Scott Allen, The Virtual Handshake: Opening Doors and Closing Deals Online (www.TheVirtualHandshake.com)


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Average Strength = Minutes Available / PersonNumber = # People

therefore…

Balance of Strength and Numbers

Average Strength * Number = Total Minutes Available

vs.


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Biography Analysis Software


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David Teten and Scott Allen, The Virtual Handshake: Opening Doors and Closing Deals Online (www.TheVirtualHandshake.com)

Case study: Daniel Zumino

•Prominent French angel investor•November 1999: Sent mail to Stanford GSB alumni list seeking capital for startup•March 2000: Raised $8m through referral from alum


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Website


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Relationship Capital Management Software

Relationships ranked by Strength

See which colleagues have best

relationships to target

Privacy Access Layer configured for firm’s culture

Email traffic patterns, address books, billing systems, employment

history, etc.

Contact Network Corporation (ThomsonReuters)

Leverage Software, Contact Network Corp., others….


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Find the Funds

• Private Equity• Pitchbook• Eurekahedge

• Venture Capital• CrunchBase• PWC MoneyTree• TheFunded• VentureDeal

• All investors• Galante’s• Grey House• VentureXpert


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Multiple Media

http://flickr.com/photos/re-ality/41676755/sizes/o/

• Phone

• Email

• Instant messaging

• Internet telephony (Skype)

• Web conferencing

• SMS

• Twitter


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Data from Business Cards


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Data from Email and Files


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Source of Lead Result Success Rate

business directories,company listings,company websites

Ice Cold Call Low response rate

All of the methods above, plus virtual

communities, blogs, job networks, email

lists, biography analysis, etc.

Warm Cold Call

Higher response rate

From Cold Calling to Warm Cold Calling


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Socialtext

Socialtext Wiki Case Study: Dresdner Kleinwort Investment Banking

problem • Heavy dependence on email communication & meetings for decision-making

solution • 5,000 wiki usersbenefits • Reduced meeting times by 50%

• Reduced email traffic by up to 75%• Adoption outpaced corporate intranet usage

within six months• Wiki today: 6,000 pages & 100,000 hits per

month


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Private Equity Focus

• ACG.org

• Angelsoft.net

• Finemrespice.com/subrosa

• Village.Albourne.com

Gated Communities for Investors

Public Markets Focus

• FTAlphaville.FT.com/longroom

• SumZero.com

• ValueInvestorsClub.com

• Village.Albourne.com


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Mailing Lists and Discussion Forums

• Customize standard intro• Lurk before you leap• Dive in, but

don’t splash

http://flickr.com/photos/kaibara/1231278142/sizes/o/


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• Groups.Yahoo.com

• Groups.Google.com

• Grouply

• LinkedIn

• Xing

Virtual Community Platforms / Social Network Sites


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Take One Step

• By industry • By geography • By personal

characteristics

http://flickr.com/photos/extranoise/169187125/sizes/l/


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Major Expert Networks

• Generalists• Gerson Lehrman Group• Coleman Research Group• DeMatteo Monness LLC• Guidepoint Global (Vista)

• Specialty/Other Players• Evalueserve Circle of

Experts • Intota• Kingfish Group• Primary Global Research• Primary Insight• Round Table Group

• Medical• MEDACorp (Leerink Swaan)• Sermo


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Social Media is a better platform

Parameters Face-to-Face Social MediaCharacter Judge by a handshake SEC filingsCompetence Personal resources Enterprise resourcesRelevance Semi-random Focused, searchableStrength Limited channels Multi-media

Information Poor visibility Detailed, current data

Number Small Large

Diversity Restricted by time, space

Crosses time & space


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Maximize Value of Company Contact Database

• Goal: Increase benefit Company receives from its global contact database, and identify new investment opportunities in doing so.

• Process:– Gather data from individual executives’ contact databases (e.g., Blackberry, Microsoft Outlook)

into Company central contact database. • Request from members of Company’s outside advisor network information about their high-

value contacts, e.g., CEOs of companies with over $200m in revenue.– Run contact database against multiple Internet database providers (e.g., InfoUSA, Jigsaw, Spoke,

etc.), in order to update and verify accuracy.– Call individuals on an as-needed basis to verify database accuracy.– Produce “Change Reports” indicating which contacts have changed jobs, since their change in

status may correlate with a new investment opportunity. E.g., an investment banker at Bear Stearns may have moved to Citadel. The past Controller of a client company may now be CFO of another media company, which could become a client.

• Deliverable: Accurate database of past and current relationships. Company team can reach out again to touch base with old clients/colleagues.

• Estimated # person-minutes per updated contact: 20-40 minutes


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Conference Attendance Optimization

• Goal: Maximize ROI on conference attendance.• Process:

– Company team member identifies conference which he/she plans to attend.– Team member obtains list of attendees that meet given criteria, e.g., CEOs of companies

with over $200m in revenues. – Cold caller solicits all attendees’ secretaries, and asks, “Do you have 15 minutes to meet

with ----- from Company, who will be attending the ----- conference with you?”• Deliverable: Company investing team member has packed schedule of meetings.• Estimated # person-minutes per conference attendee: 30


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Any questions?

Slides available at www.Teten.com

Free copy of book available atTheVirtualHandshake.com

http://www.teten.com/

How to Accelerate Your Sales to Private Equity, Venture Capital, and Hedge Funds

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