Bitspiration 2014


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Presentation given during Bitspiration conference in Cracow.
It is about early stage VC fund strategy Black Swan vs low risk and its implications.

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Published in: Business, Economy & Finance

Bitspiration 2014

  1. 1. Venture Capital Funnel in CEE.
  2. 2. It was 9th of April 2012 when we all were stunned BTW “Stunned” is the code word for jealous…
  3. 3. Nice, isn’t it?
  4. 4. Why big checks are important?
  5. 5. Because the returns onVenture Capital Funds comes from big checks only This is purely American experience, but the valid one.
  6. 6. Without returns for Investors, there would be no tech startup funding. Money follows the returns.
  7. 7. A little bit of math behindVC firm • 50% of the investments are dead • 10% is responsible for the most of the returns (1 out of 10) • It is best description of “power law distribution”
  8. 8. So SiliconValley model is about searching for “Black Swans”.
  9. 9. What the Black Swan company is? • It is the company which exited returns total capitalization of the given fund. • Let’s assume that you have a 50 milion PLN fund. • Your average share in portfolio company is 20% • Conclusion is simple: you have to exit at total valuation (100% shares) of 250 million PLN.
  10. 10. How many public listed companies (on GPW) have valuation bigger than 250 m.? 164
  11. 11. How many of them come from tech industry… 10 
  12. 12. Maybe our approach should be different? There are logical alternatives.
  13. 13. Either we lower risk acceptance with a strategic approach of lowering the “loss ratio” (remember 50%!!!) Which is makingVC a kind of early stage PE company.
  14. 14. That means reasonable returns but in a longer perspective No innovation.
  15. 15. “One of the most important thing to understand about startup investing is that the best ideas look initially like a bad ideas”
  16. 16. Or...
  17. 17. Scaling tech companies in this part of the World is crucial for future of the whole tech scene. Once again: returns attracts money,
  18. 18. How to… 1. Black Swans are rarely local since the idea of the world wide web isn’t. 2. IMO we have to focus on niche business (mostly B2B) trying to win them at least regionally. 3. Engaging global partners (funds, angels, advisors).
  19. 19. Going global is no longer is something “nice2have”. It’s crucial if want to survive. Copycat times are over. If you are one of Samwer brothers skip this slide…
  20. 20. SpeedUp Venture Group Bartłomiej Gola @golabartek