Cashing in - how to make money investing in startups

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Join Zack Miller, Head of the Investor Community at OurCrowd, and David Stark, Investment Associate at OurCrowd, as they discuss the investment strategies necessary to build and maintain a successful startup portfolio. By nature, startup investments are a high risk/high reward asset class. Knowledge, therefore, is key in maximizing your profit potential when investing in startups.

Join us to learn:
The startup math that investors use to get rich
Understand how companies' valuations change over time and what that means for your investments</li>
Learn how OurCrowd and other startup investors see an eventual return on their investment and how those returns are calculated

This webinar is appropriate for both investors and entrepreneurs alike.

Published in: Business, Economy & Finance
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Cashing in - how to make money investing in startups

  1. 1. Cashing In How to make money investing in startups
  2. 2. Your hosts David Stark, Investment Associate Zack Miller, Investor Community
  3. 3. OurCrowd a better way to invest in Israeli startups
  4. 4. Startup Lifecycle
  5. 5. Startup success is predicated on being able to continuously market to more mature customers
  6. 6. Investors participate at different stages (“rounds”) along the way
  7. 7. Seed Round A Round B Round Later Rounds
  8. 8. The Startup Math
  9. 9. Early Stage Valuation Model: #1
  10. 10. Early Stage Valuation Model: #2
  11. 11. Early Stage Valuation Model: #3
  12. 12. Mid Stage Valuation Model • Marketplaces: 1x gross transactions and 20x EBITDA • SaaS: 4x this year’s revenue and 3x next year’s revenue • Revenue multiples by sector
  13. 13. Late Stage Valuation Model
  14. 14. Buy low sell high ?
  15. 15. At each funding round, investors run the risk of getting diluted vs
  16. 16. More math: Effect of dilution
  17. 17. –Paul Graham “If a company does really well, you eventually will get diluted, because the valuations will get so high it’s not worth it for you.”
  18. 18. The importance of reserving capital 1. Some deals are pay to play 2. Doubling-down on your winners Dave McClure’s Moneyball for Startups: Invest BEFORE product/market fit, double-down after
  19. 19. Exit, turn right for profits
  20. 20. The importance of portfolios the right way to hedge investor risk
  21. 21. Prof Robert Wiltbank’s Angel Investing Study • Diversified angel investors averaged 2.5X ROI • BUT, 90% of returns to investors came from only 10% of exits
  22. 22. How to identify a $billion unicorn
  23. 23. –Paul Graham “The 2 most important things to understand about startup investing, as a business, are (1) that effectively all the returns are concentrated in a few big winners, and (2) that the best ideas look initially like bad ideas.” Seemingly bad ideas Good ideas Huge winners Peter Thiel Model
  24. 24. Different types of exits • Mergers and Acquisitions • Going public (IPO, Reverse Merger) • Acquihires • Soft Landings !
  25. 25. • Cash acquisition • Merger • IPO • Dividends Taxes, Fees, Liquidity and Net Returns
  26. 26. Exit scenario Investment case Build a great business and the exit will sort itself out
  27. 27. Seed round Idea phase Series C-D rounds POC, revenues Series A-B rounds R&D, early sales Diversification across early-stage phases
  28. 28. OurCrowd a better way to invest in Israeli startups
  29. 29. Funding the next generation of successful startups Since February 2013, invested in 36 startups ! OurCrowd and our community of investors have invested over $43 million in these firms
  30. 30. Any questions? For feedback or more information: ! zack@ourcrowd.com http://www.ourcrowd.com

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