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Approaching VC's
 

Approaching VC's

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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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    Approaching VC's Approaching VC's Presentation Transcript

    • ApproachingVCs: Basics, DO’s and DON’Ts Berlin, 23.7.2013
    • Early-stageVenture Capital firm based in Berlin investing internationally (focus Europe) SaaS Network effects Commerce Current key investment themes and examples:
    • 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
    • Early stage investment landscape (largely simplified) Angels / Accellerators / Incubators VCs
    • 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
    • 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)
    • Good reasons to raiseVC money
    • Do you really need VC? VC ≠ Sales Dilution is your enemy! Investors = bosses? ? Lifestyle business Forced to grow
    • When not to raiseVC money
    • What a goodVC can give you
    • 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
    • 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
    • TheVC process Startup First Screening Intro Outgoing Due Diligence Deal Memo Term Sheet Legal DD Deal Support Exit Pass Negotiation
    • How do you get on the radar screen? ... and network...
    • 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!
    • 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
    • „We invest into lines, not dots“Mark Suster Stay in touch & be persistant
    • 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)
    • Negotiations Competitive pressure + high quality (traction, product, team) win
    • Contract (lawyers make money) Can be smooth Can be long Not done until done
    • 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
    • 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
    • Get prepared! Read (blogs > books):
    • Good luck! @pawell www.pawel.ch pawel@pointninecap.com