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VC Do's and Don'ts - Jurgen Ingels

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    • 1. Financing& Reporting Case Study: C2P - NGDATA Jürgen Ingels Founder & CFO Oct. 2012
    • 2. Jürgen Ingels - Background General: o 16 March 1971 o Married & 2 kids Education: o Master in Political and Social Sciences o MBA at the University of Antwerp o Bachelor Industrial Engineer (KIHO) Career: o Founder, Managing Director & CFO of Clear2Pay o Founder NG Data o Board chairman of CityMesh o Board member of different companies: Projective, Enqio, Itineris, Rightbrain o Member of investment committee of Vinnof (PMV) & Sniper investment o Co - President Tech Tour – French Benelux 2012
    • 3. 1. Corporate Introduction Clear2Pay
    • 4. Company History PAYMENTS VALUE CONTINUED CHAIN EXTENDED GROWTH CONTINUED EXPANSION 2003 2006 2009OPERATIONAL START INTERNATIONAL CAPITAL GLOBAL 2001 OPF LAUNCHED EXPANSION INVESTOR ROLL-OUT 2004 2007 2010 2002 2005 2008 2011 FIRST COMMERCIAL OPF CONFIRMED RAPID CUSTOMER KICK-OFF UNIFIED PAYMENTS SUCCESS ADOPTION OPEN TEST PLATFORM DEVELOPMENT
    • 5. Clear2Pay - Open Payment FrameworkEXTERNALINTERNAL
    • 6. Unified Payments for a Diversified World Unified Product and Service Offering across the payments spectrumConsulting Open Test Platform Open Open Card Payment System Framework
    • 7. Global Company with Local Expertise World-Class Operation Across more than 100 countries Strategising Globally Over 700 customers The world’s local payment vendor Developing Regionally +1,300 staff worldwide Operating 22 offices in 13 countries
    • 8. Clear2pay Key clientsSingapore
    • 9. Strong Growth - Strong Shareholders
    • 10. 2. Corporate Introduction NGDATA
    • 11. A Next Generation Customer Intelligence Company  Founded in 2009  Experienced Management team: Expertise in Data Management & Apache Hadoop Big Data ecosystem  Funded ING, VCs and Angels  HQ in Belgium, offices in San Fran & NYC  Delivered Lily 1.3: 8 releases and counting  Marquee customers in Banking, Retail & News/Media
    • 12. Driving Customer Loyalty … Customer intelligence at technology companies Decisions (= Analysis, Insights, Learn, Acti on) within less than 0.1 second 360 streams Social Total Data: a combination of internal and external data – aggregated in one platform Operations context Enterprise
    • 13. The Enterprise Reality Today: Not capitalizing on massive customer data … Limited Customer Intelligence leads to moderate results Fragmented Data: single (or limited) source data - various silos of data – limited customer overview… 60 streams Social Operations context Enterprise
    • 14. With Lily: 360 Degree Customer IntelligenceMakes Big Data actionable to drive outcomes … Maximized Customer Intelligence leads to results and performance Sales Intelligence 360 streams Social Operations context Enterprise
    • 15. Summary of Key Differentiators Consumer database: 360 Unique Continuous machine learning degree consumer view indexing, search, retrieval Consumer apps such as Schema flexibility & data SDK for building custom apps recommendations & reverse Enterprise friendly platform variation segmentation
    • 16. Reference users Thousands of downloads per month
    • 17. NGDATA In Action: Mobile Wallet for BanksPersonalized offers via deep consumer intelligence Personalized Offers 360 Consumer Data in-store purchase: 298$ 4/2/12 web visit: sweaters 5/7/11 points withdrawal: 250$ 6/9/12 CC used: 125$ @ location Liked “Basket” group visit Merchant Offers Store purchase Context Clickstreams Social Enterprise Operations Operations Bank Merchant Consumer Location Merchant Profiles (loyalty cards)
    • 18. 3. Fundraising Understandingthe do’s and dont’s
    • 19. The Top 10 lies told by Entrepreneurs Our projections are conservative (A well know and reputable market research firm) says our market will be $50 billion in 2015 (A fortune Top 50 company name) is going to sign our purchase order next week Key employees have committed to join us as soon as we get funded No one is doing what we are doing No one can do what we are doing Hurry because several other VC’s are interested (A fortune Top 50 company name) is too bil/dumb/slow to be a threat for us We have a proven management team All we have to do is get 1% of the market
    • 20. The Top 10 lies told by VC’s I liked you company but my partners didn’t If you get a lead investor, we will follow We are all in the same boat (but we sit priveliged in the lifeboat) Show us some traction and we will invest We love to co-invest with other venture capitalists We are investing in your team I have lots of bandwidth to dedicate to your company This is a vanilla term sheet We can open doors for you at our client companies We like early-stage investing
    • 21. Each others perceptionVC’s think entrepreneurs Entrepreneurs think VC’s Are arrogant, young and egocentric  Are arrogant, inexperienced & egocentric Are stubborn and don’t listen  Are a necessary evil Forget that they would not be where  Are heavily overpaid and somehow believe they are without the money of the VC themselves that the earn this. Are obsessed with valuation and  Are Risk-adverse and play with other people’s dilution money Are overly optimistic  Think they can make a difference Are not good at giving appreciation  Lack operational experience If the company is a success, it is an accomplishment of themselves and  Are never there but always feel the need to they had to give up way to much for meddle their stock If the company is a failure, the VC is to  Are not capable of contributing added value blame because he does not understand the business  Are eager for power without taking any responsibility
    • 22. General preparation Study and compare other business models used in your sector (Gross margins, R&D, G&A, S&M, contribution) Prepare a slide deck of 15 pages – never show a whole business plan on slide Make sure you can realize a growing bruto margin. If you can’t, don’t look for VC’s Vc’s spend more time on analyzing numbers then reading your business plan. So provide detailled and correct numbers ! Present ambitious numbers but be able to defend them Don’t make a financial plan for more then 3 years “What you see is what you get” – Avoid window dressing & R&D activation Prepare as of day 1 a detailled dataroom with all official documents (legal, financial, operational) given a possible due diligence Hire top management to assist negociations
    • 23. Choice of VC Select a VC and don’t be selected. Select one with a broad network Send a teaser of max 3 slides and keep some points open. This will make them curious and will make them contact you Organise a follow up via mail and contact them on different moments Realise that Belgian VC’s are relatively young and unexperienced. So don’t hesitate to go abroad; go to US / UK and take the initative to contact them. Don’t be modest Study the companies a potential investing VC has invested in. You can also contact them and ask for their relation with a particular VC Choose a VC who can realize added value for your company. Make sure they can bring business on board Ask for one investment manager of the VC company to be the contact person during the whole process. Make sure you have directors who have experinece with this investing process Create “buzz” and sell your company – VC’s know each other and talk about opportunities.
    • 24. Legal structure Chose a laywer with experience in VC contracts. Avoid others. Combine a capital raise with free investor warrants. VC’s don’t like loosing money Avoid complex legal structures who will be discussion points in case of a merger / acquisition, Align the interests of the VC and your own company / founders. Avoid different types of shares (blocking majorities) Try to get different VC’s on your board so they can entertain each other Negociate an option with a yearly and fix return on a certain number of shares of the VC Don’t accept any anti-dillition protection. You will neigther get a present of the VC During negocations, include 10% as SOP and make sure the number holds Avoid partial payment of shares or funding in different steps. These will only delay the business plan and will allow the VC to take a “second look”
    • 25. The process Take control over the whole process Never present alone. Go with a team and let eveybody speak (no ego’s) Never give any kind of exclusivity. Negociate with 2 VC’s untill the end and make them compete Tell the truth and be honest to VC’s Know that company valuations aren’t an exact science Make sure the VC doesn’t sqeeze you when the company is short in cash Publish press articles during the fundraising process “if it is on the news, it must be good” Make sure you have enough people available to prepare and participate in the discussions
    • 26. Post fund raising Don’t burn your cash faster then initally calculated. If you are short, the VC wil present the bill Set up direct communication lines with the VC and bring bad news immediately Make the VC work. You can expect certain tasks to be executed (studies, market research, analysis of competitors, ...). Use the network of the VC Make one reporting tool for all VC’s and avoid send different information to each Send your cash position on a regular basis VC’s like monthly weighted and unweighted sales pipeline Never forget that VC’s are not joining for charity
    • 27. 4. Reporting financialsfor non- financial peers
    • 28. Build up contribution analysis model Achievo Analytical Time accounting registration Man Day Analytic Reporting Reporting (Achievo) CONTRIBUTION ANALYSIS Analysis Contribution Budget Simulation evolution Tool Management Tool
    • 29. Contribution Analysis28.455 MD 28.808 MD 49.923 MD 52.844 MD 64.616 MD Price increases MD increase Efficiency Growth + Acquisitions increases + ILF increase
    • 30. 2009-2010 # of services services rev. Serv + maint 3rd Party + total revenue total revenue Total costFY 2010 maintenance cos days revenue per cos day per cos day Rebilled per entity per cos day of salesC2P BE 29.435 14.611.287 496 2.067.122 567 45.000 16.723.409 568 12.177.176C2P Ned 8.119 5.679.576 700 537.664 766 126.000 6.343.240 781 3.503.028C2P US 5.363 3.600.000 671 726.249 807 - 4.326.249 807 2.834.887C2P AU 6.731 2.992.805 445 1.637.800 688 - 4.630.605 688 2.963.467Integri 6.711 3.230.044 481 1.228.948 664 24.000 4.482.992 668 2.919.975Diagram 8.258 1.853.448 224 2.100.668 479 108.340 4.062.456 492 2.959.868C2P Group 64.616 31.967.160 495 8.298.451 623 303.340 40.568.951 628 27.358.401C2P Poland - - - 423.922 423.922 11.204Total 31.967.160 8.298.451 727.262 40.992.873 27.369.605 total cost total Net Total Net RLF Total total gross FY 2010 % ILF per manday contribution contrib/Mand Volume Revenue contribution C2P BE 414 4.546.233 34% 154 4.302.525 302.038 21.327.972 9.150.796 C2P Ned 431 2.840.212 21% 350 2.658.484 - 9.001.724 5.498.696 C2P US 529 1.491.362 11% 278 1.946.428 - 6.272.677 3.437.790 C2P AU 440 1.667.138 13% 248 1.218.750 - 5.849.355 2.885.888 Integri 435 1.563.017 12% 233 1.350.000 - 5.832.992 2.913.017 Diagram 358 1.102.588 8% 134 1.294.020 853.892 6.210.368 3.250.500 C2P Group 423 13.210.550 100% 204,45 12.770.207 1.155.930 54.495.088 27.136.687 C2P Poland 412.718 - - 423.922 412.718 Total 13.623.268 12.770.207 1.155.930 54.919.010 27.549.405 197,63 17,89
    • 31. 2009-2010 Net revenue per COS day (excl. RLFv and ILF) H1 2009 H2 2009 FY 2009 H1 2010 H2 2010 FY 2010 Var H1 Var H2 Var FY C2P BE 546 536 541 562 574 568 16 38 27 C2P NL 1024 889 946 672 886 781 -352 -3 -165 C2P US 503 494 499 635 916 807 132 422 308 C2P AUS 590 672 635 713 656 688 123 -17 53 Integri 552 512 531 680 658 668 128 146 137 Diagram 655 772 714 503 481 492 -152 -291 -222 Group 596 600 598 603 652 628 7 52 30 Cost of Sales per COS day H1 2009 H2 2009 FY 2009 H1 2010 H2 2010 FY 2010 Var H1 Var H2 Var FY C2P BE 398 405 401 409 419 414 10 14 12 C2P NL 368 421 399 428 435 431 60 13 33 C2P US 430 390 411 547 517 529 117 127 117 C2P AUS 241 445 352 451 426 440 211 -19 88 Integri 419 325 370 439 432 435 20 107 65 Diagram 421 513 468 358 358 358 -62 -155 -109 Group 383 405 395 422 425 423 38 20 29 Net contribution per COS day H1 2009 H2 2009 FY 2009 H1 2010 H2 2010 FY 2010 Var H1 Var H2 Var FY C2P BE 148 132 140 153 156 154 6 24 15 C2P NL 656 468 547 244 451 350 -412 -17 -197 C2P US 73 104 88 88 399 278 15 295 191 C2P AUS 349 227 283 261 230 248 -88 3 -35 Integri 133 186 161 242 225 233 109 39 72 Diagram 234 259 246 144 123 134 -89 -136 -113 Group 212 196 204 181 227 204 -31 31 1
    • 32. Analysis Contribution EvolutionGross Margin 2009 20.099.466Gross Margin 2010 27.136.687Difference 7.037.221Impact ILF 4.295.795 ILF 2009 8.474.412 ILF 2010 12.770.207 4.295.795Impact RLF 284.747 RLFv 2009 871.183 RLFv 2010 1.155.930 284.747Impact Maintenance 233.728 RLFm 2009 8.064.723 RLFm 2010 8.298.451 233.728Impact Services revenue 8.916.357 Net Contribution 2.456.679 Services 2009 23.050.803 Net 2009 10.753.871 Services 2010 31.967.160 Net 2010 13.210.550 8.916.357 2.456.679 Impact mandays 2.406.714 (* keep contribution fixed) Mandays 2009 52.844Impact Cost of Sales -6.509.408 * + see next slide Mandays 2010 64.616 COS 2009 -20.848.993 11.772 COS 2010 -27.358.401 * contribution 204 -6.509.408 2.406.714Impact 3rd party -183.997 3rd/rebilled 2009 487.337 Impact higher margin 5.817 3rd/rebilled 2010 303.340 (*keep number of days fixed) Contribution 2009 204 -183.997 Contribution 2010 204 0 * mandays 52.844 5.817 Net margin variation 2.412.530
    • 33. Budget Simulatie Toolprice increase 0,00% price increase 10,00% price increase 0,00% In 2008, thecontribution 13.623.268 contribution 17.722.555 contribution 13.623.268 targetted turnoverextra people - extra people - extra people 15 was missed by onlyextra contribution - extra contribution - extra contribution 690.010 1.4% (39.4 mio EURILF increase 0% ILF increase 0% ILF increase 0% versus 38.8 mioILF 12.770.207 ILF 12.770.207 ILF 12.770.207 EUR) and EBITDARLF increase 0% RLF increase 0% RLF increase 0% was reached with aRLF increase 1.155.930 RLF increase 1.155.930 RLF increase 1.155.930 difference of 3%G&A decrease 0% G&A decrease 0% G&A decrease 0% (-5.6 mio EURG&A 7.670.488 G&A 7.670.488 G&A 7.670.488 versus -5.5 mio EUR).R&D decrease 0% R&D decrease 0% R&D decrease 0%R&D 10.234.475 R&D 10.234.475 R&D 10.234.475 In 2009, theS&M Decrease 0% S&M Decrease 0% S&M Decrease 0% targetted turnoverS&M 6.518.970 S&M 6.518.970 S&M 6.518.970 was overachieved by only 0.5% (43.45EBITDA 3.125.472 EBITDA 7.224.759 EBITDA 3.815.482 mio EUR versus 43.26) mio EUR)price increase 0,00% price increase 0,00% price increase 0,00% and EBITDA wascontribution 13.623.268 contribution 13.623.268 contribution 13.623.268 missed with onlyextra people - extra people - extra people - 45k (-238 kEUR vrsextra contribution - extra contribution - extra contribution - – 195 kEUR)ILF increase 10% ILF increase 0% ILF increase 0%ILF 14.047.228 ILF 12.770.207 ILF 12.770.207RLF increase 0% RLF increase 15% RLF increase 0%RLF increase 1.155.930 RLF increase 1.329.320 RLF increase 1.155.930G&A decrease 0% G&A decrease 0% G&A decrease 5%G&A 7.670.488 G&A 7.670.488 G&A 7.286.964R&D decrease 0% R&D decrease 0% R&D decrease 5%R&D 10.234.475 R&D 10.234.475 R&D 9.722.751S&M Decrease 0% S&M Decrease 0% S&M Decrease 5%S&M 6.518.970 S&M 6.518.970 S&M 6.193.022EBITDA 4.402.493 EBITDA 3.298.862 EBITDA 4.346.669

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