2. Current Co-Building Realities
1. Lots of money looking for quality opportunities
2. Top-tier generally large in VC World
3. More time & capital used than ever before
4. Angel capital has become very sizeable
5. Building many types of cos. requires less capital than
ever (open source, cloud services, ..)
VC Activity being re-structured in in US, still under
VC Activity being re-structured US, still under
consolidation in in Europe.. possible mis-match?
consolidation Europe.. possible mis-match?
Angels well positioned toto add valuehave become
Angels well positioned add value / / have
a key part ofkey part of the co-bldg eco-system
become a the co-bldg eco-system
3. Realities: More Capital
4. Realities: VCs larger
5. Realities: Time to Build
6. Realities: Time to Build (2)
7. Realities: a Mismatch?
"I personally believe and I think the evidence proves that the
venture industry has gotten too big, the funds have gotten too
big.. In order to invest their enormous amounts of capital,
venture capitalists end up choosing companies that are not
sufficiently disciplined or capital-efficient. Because firms have
invested so much money, they depend on taking their portfolio
companies public to get great enough returns, at a time when I.
P.O.s are few and far between."
- Alan Patricof (June '09)
8. Realities: Providers of Funds*
Invested amounts '04-07**
VCs: $24.4B.. 51K cos backed.. $7.5m ave
Angels: $24.3B.. 3K.. < $0.5m ave
Angels Today (2009)***
225K active, 10K "organized"
100 organizations in '99 --> 300 in '09
Angel Fund size (ave. no. members): 44
$280K per financing round
60% co-invested / were followed on by VCs
** Kaufmann Foundation
*** Angel Capital Association
9. Empirical Observations
Top Tier VC
Capital Required to prove up to €2m (approx) > €3m ++
Target Exit Valuation €20-50m > €50m ++
Exit time horizon 2-5 yrs 5 yrs+
Pre-existing relationships for a
Transition / collaboration Early-stage investors (many in
always an option Europe now later stage)
Remarks / Exceptions Individual-driven Chances of a complete failure
Lead investor critical (1/3) increase..
Potentially complex board
10. Angels & VCs: how similar?
Are they Different?
- VCs offer more capital
- Angels earlier stage; VCs seek more evolved, formed ventures
- VCs tend to less flexibility
Are they Similar?
- Individual involvement critical
- Non-monetary value: expertise, credibility, rolodexes, effective sounding board
- Money another key element (how much really needed?)
- HAVE TO COMPARE SPECIFIC OPTIONS
- For smaller amounts of capital (<€3m) Angels should definitely be considered..
- At earlier stages (developing frugality, focus, simplicity), Angels generally more
appropriate & interested
- If things turn capital intensive can always go VC route (plenty of capital)
- Intense collaboration between Angels and VCs in SV..
11. Background & Investment Approach
Direct Equity Experience
Adara founded in 2002, €55m fund operational since '05 / focus on Spain and Spain-
related IT ventures / pioneer in Spain
RSM making direct equity investments since 1992 / 23 investments managed
Mostly early-stage / multiple write-offs / many mistakes
Sample VC investments: eDreams (Spain), Eyesquad (Israel), Cambridge
Broadband (UK), OfficeNet (Brasil)
Ideas always good - PEOPLE & MARKETS critical
Do a lot with a little / true POC before u scale
Look for exit windows all the time, best way to get big (3 key windows)
-> Try to make things go well quickly
Simplicity & good execution are key..
Smaller exits can be fine (and available).. particularly with a smaller vehicle
In financial backing, individuals are critical (> firms)
Remember that Investors should only go "so far"
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