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Fail Conference      Ghent, November 6th 2012Failure is not about falling down, failure is about staying down             ...
Introduction• Newion Investments Management has 3 Funds under Management:  • Newion Investments I: Early stage IT software...
Team   4
Under Management               5
Personal obeservations• These are personal observations• In hindsight everything is easy• No one can predict the future   ...
Failures that hurt most• Company A (RIP 2002)   • Buy and Build strategy in Supply chain software          • Focused on ex...
Failures that hurt most• Company B (RIP 2010)   • Expansion Software for Defense industry (intelligence departments)      ...
Almost a failure• Company C (Successful exit in 2006)    • Investment in September „01.    • Goal: Buy and Build since the...
Almost a failure• Lessons   • Timing is everything   • Never give up in fighting for the company   • In a re-organization ...
My personal cliché takeaways• Understand your business through and through   • Measure everything.       • Find a balance ...
My personal cliché takeaways• “Failure is not about falling down, failure is about staying down”    • Why have you ever st...
Do you have any questions ?                              13
Thank you for your attention.                                14
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Fail Conference 2012: Patrick polak
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Fail Conference 2012: Patrick polak

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Transcript of "Fail Conference 2012: Patrick polak"

  1. 1. Fail Conference Ghent, November 6th 2012Failure is not about falling down, failure is about staying down 2
  2. 2. Introduction• Newion Investments Management has 3 Funds under Management: • Newion Investments I: Early stage IT software fund ( € 28 mln, 2000, closed) • Private Plus Fund: generic fund (€ 20 mln, 2005, closed) • Newion Investments II: Early –Later stage IT software fund (€ 50 mln, 2011, open) • B2B, Enterprise Software • Benelux • Stages: • Early: Market validation by minimal 5 pilots/customers • Later: Expansion stage has just started • Investment rounds: min € 500.000 up to € 2.000.000 • Total max € 4.000.000 per company • Controlled growth philosophy: fully funded rounds 3
  3. 3. Team 4
  4. 4. Under Management 5
  5. 5. Personal obeservations• These are personal observations• In hindsight everything is easy• No one can predict the future 6
  6. 6. Failures that hurt most• Company A (RIP 2002) • Buy and Build strategy in Supply chain software • Focused on exit rather on building a company • IPO forecasted in 2001-2002 • Large syndicate of large VC‟s/PE involved, plus Angels • Too many people involved….. • Successful but dominant CEO • Many acquisitions (paid in shares and cash) • Too fast • No Integration of product and organization and region • Too much money involved: “almost too big to fail” • If one PE would say no to next funding round: full dilution… so domino effect• Lessons • Ambition is great, but you have to build a company rather than go for the exit. • Doing an acquisition requires strategy, careful planning, investigations and integration. • It is high risk! • Do not acquire the next company until the previous company is successfully integrated • Make sure all your shareholders are aligned, and keep them aligned. • A small team is way better and efficient. • Listen to your gut feel!!! If it doesn‟t feel right, it is wrong 7
  7. 7. Failures that hurt most• Company B (RIP 2010) • Expansion Software for Defense industry (intelligence departments) • World class technology • Track record and references • Unbelievable committed and dedicated (complete!) team • Unpredictable market • One year good revenues, the next none. • Fully driven by budgets and politics• Lessons • No matter how good and committed the CEO and team is, it is not always a guarantee for success • I did not have experience in this typical market • In defense industry you need to be very well funded to survive the long dry desserts. It‟s different compared to other software markets • Shareholders to “bridge from gap to gap” is not the right way: after a while everybody is tired • Understand the situation and try to move away from a market while you still can 8
  8. 8. Almost a failure• Company C (Successful exit in 2006) • Investment in September „01. • Goal: Buy and Build since they had 1 huge dominant customer • Autonomous growth was not high enough compared to the growth of this dominant customer: buy and integrate other companies to become less depended on this customer • Good technology, good management, excellent market • Long term contracts • 1 week after investment, large customer in financial difficulties: ending relationship with all their suppliers • Instead of investment for growth, re-organize • Laying off over 50% of all staff in two rounds (early 2002 and early 2003) • Lost many key people in second round • After re-focus: acquisition/merger with competitor • Rebuilding again in 2004-2006 • Successful exit in 2006 9
  9. 9. Almost a failure• Lessons • Timing is everything • Never give up in fighting for the company • In a re-organization always cut deeper than you expect • Minimum of 20% more • Staff is intelligent: they understand and acknowledge the first reorganization. But at a second (or third) they do not support the management and talent looks elsewhere. • Keep your eyes open for survival and maybe that is by doing something hat hurts your ego: talk to a competitor • VC‟s have to stay close to the management of the startup • Many times young entrepreneurs • VC should have hands on experience • VC‟s must look for a solution for all stakeholders • Including founders, other shareholders, staff etc.. 10
  10. 10. My personal cliché takeaways• Understand your business through and through • Measure everything. • Find a balance between “if you think you are in control, you are not going fast enough” and “to finish first you first have to finish”. • Analyze everything and “sample size n=1 is no proof”! Don‟t fool yourself • Be in daily contact with your customers: they tell their needs and wishes. And they are the believers in your startup. Use that. • It is the CEO‟s job to test new offerings to existing customers, not a sales guy‟s • Look for proof. Real proof…. Don‟t fool yourself • “sample size n=1”is no proof! • Build a Minimal Viable Product! And test it with your customers. Do not build the “Full-Spec-Product-Suite-From-The Attic”: you will be too late.• There is no such thing as 1+1=3 • There is no magic, it is dedication, hard work and smart thinking. 11
  11. 11. My personal cliché takeaways• “Failure is not about falling down, failure is about staying down” • Why have you ever started to become an entrepreneur? • Focus on the positive things, not on the negative. • And if things go wrong, explain and be professional: you‟ll have a second chance later• It is not the exit, it is building a company • Take the best people in your team. Never compromise on this • Shareholders can ruin your company if they are not aligned, not share the same knowledge, philosophy, experience, etc. • Do not expand too soon or too fast • Scale only if you can prove that your business model is predictable!!• Always listen to your gut feeling. • Use your brain, listen to your heart • Do not be impressed by the seniors and specialists • If it doesn‟t feel right, it is wrong.• Buy: Steve Blank’s “The startup owners manual”• Prepare, Stay focused, Have Fun! 12
  12. 12. Do you have any questions ? 13
  13. 13. Thank you for your attention. 14
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