Your SlideShare is downloading. ×
Yoav Leitersdof: Early Stage Venture Investments
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Introducing the official SlideShare app

Stunning, full-screen experience for iPhone and Android

Text the download link to your phone

Standard text messaging rates apply

Yoav Leitersdof: Early Stage Venture Investments

1,562
views

Published on

Published in: Business

0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
1,562
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
40
Comments
0
Likes
2
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Web.Start Zagreb May 2008
  • 2. BIO SNAPSHOT – YOAV ANDREW LEITERSDORF
    • Managing partner of YL Ventures
      • European & Israeli early stage tech VC w/Silicon Valley presence
      • Unique medium-size exit strategy to known acquirers
    • Founded, grew and successfully sold 3 tech businesses
      • Movota (London) – Cofounder, MD & CEO (exit Bertelsmann ‘05)
      • ExchangePath (New York) – Cofounder & CTO (exit CMGI ‘99)
      • PcEntertainer Magazine (Tel Aviv) – Founder & CEO (exit ‘93)
    • VC Associate at Draper Fisher Jurvetson
    • 15 yrs coding, engineering & telecom experience
    • MBA ( Columbia University ); studied at IMD , Switzerland
  • 3. MOVOTA LTD. – 18 MONTHS FROM INVESTMENT TO EXIT
    • Company founded : London, March 2004
    • Capital : $1MM from founders and several investors
    • Business : Mobile software for TV broadcasters & producers
    • Product : Mobile games synchronized with TV game shows
    • Customers : BBC, RTL, SBS, Endemol, FremantleMedia…
    • Months 1-6 : invention, product development, prototyping
    • Months 7-12 : proof of concept deployments with the BBC
    • Months 13-18 : minor revenues, expansion, exit negotiations
    • Acquired : Bertelsmann AG, September 2005
  • 4. MOVOTA LTD. – PRODUCTS AND CUSTOMERS
  • 5. EXCHANGEPATH LTD. – 2.8 YEARS FROM INVESTMENT TO EXIT
    • Company founded : New York, January 1997
    • Capital : $3MM from angel investors
    • Business : Person-to-person & micro online payment system
    • Product : Online payments for data & auction items
    • Customers : MasterCard International, Hoovers, 20 others
    • Consumers : 25,000 accounts
    • Revenues : Minor, product in Beta (pre-breakeven)
    • Acquired : CMGI, September 1999, $25MM
  • 6. PROBLEMS WITH TODAY’S EARLY-STAGE VENTURE CAPITAL
    • Funds are too large ; entrepreneurs are too frugal!
    • VCs look for billion-Euro exits ; founders want to make 1 st million
    • Average time-to-exit: 5.8 years ; investors in VC get impatient
    • Multiple rounds of VC investment; founders get diluted to <5%
    • 1-2 portfolio companies win; another 8-9 completely lose
    • Funds launched in 1999 & 2000 have negative returns
    • At 2008, the IPO window is still closed to all but a few
    Is early stage venture capital in trouble? Is there another way?
  • 7. EARLY EXITS APPEALING TO FOUNDERS – LESS CAPITAL AND DILUTION REQUIRED Microsoft , Google , Yahoo! & AOL acquired 57 companies Q1 ’07 to Q1 ‘08 (inc.), vast majority of which are valued at under $100MM or “value undisclosed” Motivation for the founders? Lower probability of $200MM exit owning 5%-10% of the company in 5-7 yrs Higher probability of $50MM exit owning 40%-60% of the company in 2-3 yrs OPTION A OPTION B * Note YL Ventures typically invests 1 year after the start Founders’ Share = $15MM Founders’ Share = $25MM Date Company Acquirer Price Funding Comments 17 Apr ‘08 Sphere AOL Undisc $4MM 3 years* start to exit 28 Feb ‘08 Yadata (Israel) Microsoft $25MM $2.5MM 1.5 years* start to exit 5 Feb ‘08 Foxytunes (Israel) Yahoo! $40MM <$1MM 3 years* start to exit 4 Feb ‘08 Goowy AOL Undisc <$1MM 4 years* start to exit 12 Dec '07 Multimap (UK) Microsoft $50MM $6MM $25MM went to founder 9 Dec ‘05 Del.icio.us Yahoo! $30MM Undisc 2 years* start to exit 20 Mar ‘05 Flickr Yahoo! $40MM <$1MM 3 years* start to exit
  • 8. INTRODUCING: THE YL VENTURES ( “Y LV ” ) WAY
    • Seek good valuation opportunities that YLV can improve quickly, with low burn, to maximise near-term exit value
      • Back start-ups suited as corporate divisions rather than standalones
      • Stage-invest to fund 24 months of burn-rate through to acquisition
      • Guide company strategy and provide access to customers & partners
    • In parallel, introduce qualified, pre-identified acquirers for speedy, successful (IRR/x) sale
    Time (and capital) Enterprise Value 5+ Years ~24 Months Hyper Growth Venture Chasm Home Run 1-2 per Portfolio Most YLV deals exit here Some YLV exits YLV investment
  • 9. YLV EXIT STRATEGY Start Early Exit Aptly
    • Manage companies towards accelerated exits
      • Identify potential acquirers prior to investing using strategic fit
      • Iteratively fine-tune company strategy to acquirer tastes
      • Recruiting customers/partners that can later be acquirers
    • Exit ‘sweet spot’ is $20MM-$80MM, with potential for more
      • Acquirer motivation: technology, products & management
      • Valuation basis: revenue potential, not revenue history
      • 1-2 portfolio companies will take longer and exit at over $200MM
    Earn Out Period Sourcing & Negotiations Q-1 t 0 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q-2 Risk Control Stage Expansion Stage – deployments, US presence, more features Management Earn Out – acquirer synergies, revenue growth Bridge Funding Stage $ Invested: $500K-$1MM $500K- $1M $500K $ Exit: $20MM-$80MM
  • 10. YLV SOURCING STRATEGY
    • Internet, telecom (mobile) & digital media software
    • Europe & Israel (70% cheaper than Silicon Valley)
    • Deep tech intellectual property
    • Technological expertise & unquestionable ethics
    • R&D is complete and product ready for deployment
    • Bootstrapped operations / low burn rate
    • The fund can establish a clear M&A exit route
    Sectors Geography Technology Management R&D Finances Exit Blog scanning : primary deal sourcing strategy (monthly funnel routine) The firm’s researchers scan blogs and databases Associate and analyst filter 100’s of opportunities Managing Partner authorizes sending ‘ radar emails’ out to several companies Interested companies submit documentation Best prospects invited to a meeting Best of the best start due diligence
  • 11. SUMMARY
    • Early stage venture capital is going through a shakeup
    • Venture capitalists are rethinking their exit strategies
    • Not all start-ups are destined to be the next Google
    • Corporations are hungry for external talent & innovation
    • Accelerated medium-sized strategic exits might just work!
    More at www.YLVentures.com Refer start-ups to [email_address] Yoav Andrew Leitersdorf Managing Partner