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Basic's, DO's and DON'Ts from the perspective of an early stage VC.

Basic's, DO's and DON'Ts from the perspective of an early stage VC.

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  • 1. ApproachingVCs: Basics, DO’s and DON’Ts Berlin, 23.7.2013
  • 2. Early-stageVenture Capital firm based in Berlin investing internationally (focus Europe) SaaS Network effects Commerce Current key investment themes and examples:
  • 3. Currently Point Nine Capital Fund II (40m Euro) • PNC I - 6m Euro (launched 2009/10) • PNC II - 40m Euro (launched 2012) • Investment size: 100k - 1m Euro + follow-on • Stage: seed / series-A
  • 4. Early stage investment landscape (largely simplified) Angels / Accellerators / Incubators VCs
  • 5. VC investment landscape looking from Berlin (super simplified, based on perception and not exhaustive :-) Stage Investment size Seed Series A Series B €100k Business Angels €500k €1-5M €5M+ F&F Accel- erators Grants
  • 6. Other investor types / financing sources: •BANKS (need collateral / cash flow / history) •CORPORATES (can make sense, support, but issues with exit) •STATE SUPPORT (varies over time / by region)
  • 7. Good reasons to raiseVC money
  • 8. Do you really need VC? VC ≠ Sales Dilution is your enemy! Investors = bosses? ? Lifestyle business Forced to grow
  • 9. When not to raiseVC money
  • 10. What a goodVC can give you
  • 11. VCs tend to specialise, but in general they look for: •Amazing teams • Great products • Huge / fast growing / not very competitive market opportunities • Great unit economics •Traction • Exit
  • 12. VCs look at a lot of companies Point Nine Capital in 2012: - 2500 business plans - 10 investments => we invested in 0.4% of business we have seen in 2012. other investors will have a similar rate
  • 13. TheVC process Startup First Screening Intro Outgoing Due Diligence Deal Memo Term Sheet Legal DD Deal Support Exit Pass Negotiation
  • 14. How do you get on the radar screen? ... and network...
  • 15. Approach - have a Deck! +/- 10 slides - be visual + numbers english only no paper no 50 page business plan no NDAs => the initial info needs to grab attention and explain basics, not everything!
  • 16. NDAs are bad for you 1000s of projects / year => admin Many similar projects, we do compare “backend of the idea” is the value + execution Too lazy to copy your idea anyway Slow down No feedback Layman
  • 17. „We invest into lines, not dots“Mark Suster Stay in touch & be persistant
  • 18. The termsheet • Price - X% shares forY$ • Liquidation Preference (who gets the money when) • Anti-Dilution • Controlling rights • Future rounds (pro-rata, right of first refusal) • Drag Along • Vesting (when founders can lose some of their shares) • Board • Information rights (what to tell your investor) • Costs • Exclusivity • Binding (Legal)
  • 19. Negotiations Competitive pressure + high quality (traction, product, team) win
  • 20. Contract (lawyers make money) Can be smooth Can be long Not done until done
  • 21. Quick case study 1 • Berlin based • One founder - coded - simple, but first users • Co-founder in the pipeline •Approached referring to SaaS • Spent quite some time educating us on the space • Ended up investing with a London based fund
  • 22. Quick case study 1I • New Zealand based •We approached proactively, while reviewing the global POS space • Best product, some traction • Small company - 5 guys, tens of paying users •We invested in NZ without having been to NZ
  • 23. Get prepared! Read (blogs > books):
  • 24. Good luck! @pawell www.pawel.ch pawel@pointninecap.com