Butterfly Ventures early stage investment philosophy slide deck. The deck explains what kind of startups we're looking for and why.

1. How early is early?
The early stage investment
philosophy of Butterfly Ventures

2. Juho Risku
• Involved with the web mid ‐90’s, since
then at the very front of networked
technology and business innovation
• Serial entrepreneur, founder in four
companies, involved in hundreds of
projects, gathered millions of venture
financing and helped numerous
startup entrepreneurs
• Outside of work: Big mountain
freeriding, ice climbing and
mountaineering , friend of good
literature food and wine
Email: juho@butterfly.vc
LinkedIn: http://fi.likedin.com/in/jrisku
About.me: http://about.me/juho.risku
Juho Risku
• Involved with the web mid ‐90’s, since
then at the very front of networked
technology and business innovation
• Serial entrepreneur, founder in four
companies, involved in hundreds of
projects, gathered millions of venture
financing and helped numerous
startup entrepreneurs
• Outside of work: Big mountain
freeriding, ice climbing and
mountaineering , friend of good
literature food and wine
Email: juho@butterfly.vc
LinkedIn: http://fi.likedin.com/in/jrisku
About.me: http://about.me/juho.risku

3. INTRODUCTION
Who we are, and what we do

4. Board of Directors
Jukka Mäkinen
Chairman of the Board
Jari Pasanen
Member of the Board
The Team
Partners
Matti Kanninen
managing partner
Juho Risku
partner, co-founder
Antti Kosunen
partner, co-founder,
and Board member

5. Northern Startup Fund
• Located in Oulu, Finland
• Investors
– 5M from City of Oulu, First closing done
– 5M from private investors
• Asymmetric, private investors have the
preference
– Will get their invested capital back first
– Will get their share of the returns first

6. Idea
15‐90 k€ 200‐400 k€ 1‐2 M€ xx M€
Unqualified Qualified pre‐seed/seed Qualified expansion
Accelerating
StartUp
Financing
Financed – Exit
Go fast forward
or fail fast
ScoutingScouting
Basics Preparation
Proof of
concept
Scope of main interest
OperationalizationOperationalization
Scale‐up
Σ < 500 k€ Σ < 2.5 M€
Fast forward, fail fast
First time
Investment
Follow up
Investment
Follow up
Investment
Follow
Exit

7. THE RIGHT KIND OF STARTUP
What we’re looking for and why

8. Trajectory of business
0
10
20
30
40
50
60
0 6 12 18 24 30 36 42 48
Positive black swan
Scope of realistic trajectory
Market potential
& scalability

9. image by freeimageslive.co.uk ‐ Halloween

10. Fragile, robust and antifragile
0
10
20
30
40
50
60
0 6 12 18 24 30 36 42 48
Pivot forced by market
Fragile trajectory
Antifragile trajectory
Robust trajectory

11. Maximizing the exposure to positive
black swans and avoiding fragility

12. Startups where in addition to money
we can add value.

13. THE INVESTMENT PROCESS
When to start and how it happens

14. Decission making
Process
• Quick look
– ~25% into prospect = examined
in more detail
• Case selection
– Heuristic analysis and scoring
– Priorization: Each week, focus
on top 3
• Deal scoping
– Business model and cash flow
analysis
– Deal proposal
• Agreement and approval
Scoring criteria
• Market / market potential
• Founder team
• Product and business model
• Long term competitive
advantage / protection fo
market position
• Current situation
• Exit potential
• Financing requirements now
and in future

15. Dealflow in numbers
>200
Seriously considered
25%
Prospect Invested
1.4%
+1kk +3kk<1kk

16. Stages ‐ dealflow vs. investments
Pre‐seed;
28%
Seed;
56%
Growth;
17%
Dealflow
Pre‐seed;
33%
Seed;
67%
Investments

17. We like to get involved early on,
preferably well before you need the
money.

18. Valuation and time
0
500
1000
1500
2000
2500
3000
3500
4000
4500
‐12 ‐6 0 6 12 18 24
Pre‐seed
Seed
Crash point

19. EXAMPLES
A few cases of ours

20. NWG Tools (pre‐seed)
• Value proposition: 200% profit increase for tiling
contractors ‐ verified by proto
• Invested because
– Clear and simple value proposition
– Great neatly protectable and enforceable IPR
– Team with strong industry experience + commitment
– Lean operation mode
• Invested for
– First commercial product version
– Customer value proposition validation
– Reference customer acquisition

21. MyPose (seed)
• Value proposition: Significant revenue stream for clothing
retailers and cost effective social media marketing –
investment paid back in 3‐10 months
• Invested because
– Industry dynamics changing value proposition
– Clever business model with billion dollar market opportunity
and naturally viral product
– Capable committed team
– First product version tested by several customers (Marimekko,
Calvin Klein, One Piece)
• Invested for
– Business model finalization and value proposition validation
– Acquisition of reference customers

22. FilmMe (seed)
• Value proposition: Easy and cost effective filming of your self in
action without having someone else operating the camera
• Invested because
– Clear value proposition for different actors
– Attractive business model with billion dollar market opportunity and
naturally viral product
– Demonstrated market traction with 180k€ worth of pre‐agreements
– Committed balanced team with marketing and technological skill
• Invested for
– Business model validation
– Establishing the required metrics for follow on round

23. Here’s the front line, lets rock!