VC's history and mechanism, valuation, term sheet, contract,
From IPOs and M&A to startup HR, equity distribution, IR, and financial statements.
A Guide for Entrepreneurs, Aspiring Entrepreneurs, Startup Professionals, and Investment Reviewers

“If a startup doesn’t know VCs, it’s only seeing half of the ecosystem.
“If VCs don’t understand the struggles of startups, they’re only seeing half the ecosystem.”

This book is a must-read for startup founders, aspiring startup founders, VC (venture capital) investment reviewers, and college students and job seekers interested in VCs and startups. It begins with a VC's role and work process, and then provides essential information on startup valuation and exit methodologies, as well as IPOs and M&As, in an easily understandable manner.
The author, who has experience with both VCs and startups, shares his knowledge and insights gained in the field, covering everything from co-founder equity allocation to the appropriate timing and amount of investment, to HR and financial statements for startups, to ensure successful startup establishment.
Section-by-section tips add depth to the content through real-world examples and provide key practical tips.


And as institutional investors betting on the market, VCs question the trends of the times that could change the world, and to work with startups seeking answers to those questions, they discuss key market trends such as artificial intelligence, blockchain, education, K-bio, K-healthcare, and the environment.
The author argues that venture capital and startups are a single, organic entity. This book, filled with insights only an author with experience in both VC and startups could have, is essential for both VCs and startups. I highly recommend it to all startup professionals as a first step toward understanding VC.

The domestic VC market experienced a downturn due to the dot-com bubble, but is now entering growth mode again thanks to the influx of government funds, such as the Mother Fund.
In line with this trend, second-generation VCs such as Stonebridge, Company K, and DSC Investment emerged, achieving remarkable returns in a short period of time and establishing themselves as absolute powerhouses in the market.
The mobile boom that began in the late 2000s, coupled with active government support, presented a significant opportunity for second-generation VCs.
National services such as 'Kakao', 'Baedal Minjok', 'Coupang', and 'Toss' were created, and mobile games recorded enormous sales both domestically and internationally.
Second-generation VCs who invested in startups that operated these services were able to generate astronomical profits.

--- p.38

VC's influence in the Korean economy remains strong.
As of 2022, approximately 60% of newly listed companies on KOSDAQ had received VC investment.
The scale of investment is also clearly on a dramatic upward trend compared to the early days.
The world is changing rapidly, and technological advancements are accelerating the pace of change. Yet, despite this, VCs have always been at the center of new changes.
The past 40 years have been like that, and the next 40 years won't be much different.

--- p.40

In addition to LPs with strong financial objectives, such as pension funds, and LPs with strong policy objectives, such as mother funds, there are also institutions that invest in GPs for "business purposes." Large corporations and mid-sized companies participating as LPs fall into this category.
Large and medium-sized companies have many concerns about new businesses.
Because we know that if we fail to respond appropriately to market changes, we can quickly be eliminated.
They usually have solid cash cows and good cash flow.
Since we have a lot of cash on hand, we invest a certain amount of it in VC funds to check the flow of venture companies.
If there is a startup with clear business synergy in the fund's portfolio, it is considered for M&A.
Of course, we are not ignoring financial value as well.
If you meet a capable operator and achieve a large-scale recovery, you can also achieve significant financial gains.

--- p.92

So, how can we determine the benchmarks we can use to evaluate Startup B? The answer is simple.
It's 50 billion won.
In fact, when we were talking to Startup B, we started negotiations with a target of 50 billion won.
However, the final corporate value was measured at 60 billion won on a post-money basis, because Startup B's development team was judged to be superior to Startup A's.
The most common method is to find startups with similar external indicators and use their officially recorded corporate values ​​to conduct valuations.
However, in this case, we consider the intangible competitiveness of Startup B's development team and give it a plus or minus.

--- p.98

The 'fair value' of a startup is always a subject of controversy.
Unlike listed markets, where information is public and trading is free, unlisted markets involve a small number of participants who determine prices and trade company stocks.
Looking at domestic VCs, it is estimated that there are approximately 1,000 evaluators, of which approximately 20% are senior-level personnel with decision-making authority over corporate value selection. Therefore, it is no exaggeration to say that the value of startups is effectively determined by around 200 venture capitalists.

--- p.107

Because startups are unlisted companies, the criteria for measuring corporate value are somewhat vague.
So, the point that usually serves as a benchmark is the valuation that has been most recently recognized by institutions such as VCs.
For example, if a company successfully attracted investment at a corporate value of 100 billion won before M&A review, there are many cases where the value is plus or minus based on 100 billion won.
There were many cases where the management premium was recognized within the range of 20-30% to calculate the equity value.

--- p.144

Liquidation priority is a clause that startups want to avoid if possible.
Unlike the example mentioned above, if the founder has debts that need to be repaid, the bank account balance may actually go into the red after liquidation.
However, from the VC's perspective, there may be some aspects that feel a bit unfair.
If the founder sells the company for a low price, the investment institution will suffer a huge loss.
Liquidation preferences can be a poison pill for founders, but for VCs, they can be a useful tool to protect against downside.

--- p.176