Investmentoptionsfor
Startupsin2013
Startup Day Cologne
Thomas Grota – Investment Director T-Venture
June 29, 2013
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
InvestmentProcessinaNutshell:MindtheTimeframe!
1st M...
InvestmentClimeis
changingsinceQ4/2012….
Investors & Founders
are on the same boat!
…butthistimeitisdifferent.
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
Investorsgotburned…
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
Winteriscoming…
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
UnsuccessfulExitsdon’thelptoattractnewcapital.
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
StartupLifecyclefromafundingstrategyperspective
pre-...
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
ValuationsadaptedintheUSbutstabilizedsincethen.
Sour...
Whatdoesfuturelooklike?
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
Incubatorsmustavoidthe“SeedGap”in2013
Sourcing/Due D...
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
“TheSeedGap”:1000+USStartupsWillbeOrphaned
“… The pr...
Whoarethepossible
InvestorsformyCompany?
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
ThenewfundingpyramidforStartupstoreceivecapital
Mids...
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
GlobalFunds/PEwith>$2bnunderManagement
 Traction in...
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
VCfirms<2ynewfundingwith<$150m
 Traction <10m users...
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
Governmentalvehicleswithregionalfocus
 Private VCs/...
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
CorporationsinvestfromBalanceSheetorCVCs
 Needs str...
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
BAs,Crowdfunding,Incubators<$100kperdeal
 Low valua...
Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
ChallengestoreceivenewFundingin2013
 Why should the...
Goodluckforreaching
aFollowOninvestment….
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Investment options for startups in 2013 and how to address investors

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Financing clime in 2013 from a VC perspective in Europe. Startups in 2013 seek investment opportunities in Europe will face challenges. What options are available and what needs to be addressed in selecting investors.

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Investment options for startups in 2013 and how to address investors

  1. 1. Investmentoptionsfor Startupsin2013 Startup Day Cologne Thomas Grota – Investment Director T-Venture June 29, 2013
  2. 2. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr InvestmentProcessinaNutshell:MindtheTimeframe! 1st Meeting get-to-know each other understand: - team - business model - technology - market Preparation Term sheet Evaluate: - Market - Customers - Legals - Financials Discuss Funding Strategy and Future Preparation Contracts Due Diligence: - Management - Technology - Legals - Financials Discuss Terms & Deal Structure MS MS Investment Management Development: - Management - Technology - Portfolio - Markets Prepare exit through outstanding performance 3 - 5 months depending on Due Diligence and contract negotiations 4 - 6 weeks depending on business idea and strategic fit 3 - 5 years depending on Exit Scenario Term Sheet Contract
  3. 3. InvestmentClimeis changingsinceQ4/2012…. Investors & Founders are on the same boat!
  4. 4. …butthistimeitisdifferent.
  5. 5. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr Investorsgotburned…
  6. 6. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr Winteriscoming…
  7. 7. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr UnsuccessfulExitsdon’thelptoattractnewcapital.
  8. 8. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr StartupLifecyclefromafundingstrategyperspective pre-seed seed a-round b-round c-round late stage/IPO Time F.F.F. Biz Angels/Crowdf. Seed VCs Large VCs Growth finance partners, Buyout, IPO banks € 0,3m - € 1m € 0,5m - € 3m € 2m - € 10m € 5m - € 30/80m € 20m - € 100m € 40m - € 250m Value Blue = importance of management, Red = maturity of product Orange = market footprint of company, Circle = valuation range of company
  9. 9. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr ValuationsadaptedintheUSbutstabilizedsincethen. Source: http://www.cooley.com/files/92123_VF2012Q3.pdf
  10. 10. Whatdoesfuturelooklike?
  11. 11. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr Incubatorsmustavoidthe“SeedGap”in2013 Sourcing/Due Diligence Dealflow/ PrepareFunding Fundingby 3 months €300k Runway for Startup 6 to 9 months ScenarioB) Term sheet from another Incubator and/or Business Angels. ScenarioC) No Follow On Investment made: “Put Startup in Survival mode” FundingbynewInvestors ScenarioA) Term sheet from VC firm and/or Corporation (optional support by governmental vehicle). NextSteps: Preparation for new VC/BA approach or Evaluate Exit options. Runway till next round < 18 months NextSteps: Preparations for Series A/B funding. “SeedGap”
  12. 12. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr “TheSeedGap”:1000+USStartupsWillbeOrphaned “… The process of natural selection that will happen with seed companies (and which we’d argue should happen) will result in over 1000 recently funded seed companies being orphaned, i.e. unable to raise follow-on financing. The eventual death of many of these companies may also help the tight labor market for other startups who are looking for capable and driven talent. …” Source: http://www.cbinsights.com/blog/trends/seed-investing-report 2283 Seeded Companies Q3 2011 – Q4 2012 Companies receiving Follow On Funding 102 5% Companies Acquired 212 10% 788 Projected to receive Follow On funding. 35% 1181 Projected for No Follow On funding (Average 39%) 50%
  13. 13. Whoarethepossible InvestorsformyCompany?
  14. 14. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr ThenewfundingpyramidforStartupstoreceivecapital Midsized VC firms US II EU Corporate Investors Governmental Investors Global VC firms / Private Equity firms Fund >$2b Fund <$150m Business Angels, Incubators, Accelerators, Crowdfunding <$500k -- - - - The Seed Gap - - - ---
  15. 15. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr GlobalFunds/PEwith>$2bnunderManagement  Traction in Seed Stage >10m user  Profitable in Seed Stage / strong growth  After Early Stage revenue > $5-10m  Sales activity in US / US customers Pre-requisites for engagement  ‘Killer Team’ with a ‘Killer Product’  Personal network to leaders (P. Thiel) What investors or incubators can do  Sequoia  Accel Partners  A16z (Andreessen Horrowitz)  Stripes  KPCB  Index Sample Firms or Corporations  Ruckus (2006), Innovid (2012)  Flaregames (2012)  Cyphercloud, Aliphe, LookOut (2012)  Netbicuits (2012)  Cooliris (2008), Pinger (2011)  Cyphercloud, LookOut (2012), Number4 Sample T-Venture Portfolio Deals
  16. 16. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr VCfirms<2ynewfundingwith<$150m  Traction <10m users in B2C  1-2 signed B2B customers  Tech focused / trend area of VC firm  Part of consortium with biz dev potential Pre-requisites for engagement  Generate traction on B2C product  Support PR work through contacts  Identify VC partner for this segment  Align possible consortium of investors What investors or incubators can do  Atomico  Earlybird  Xange  Creathor  Capnamic  Shortcut Ventures Sample Firms or Corporations  6Wunderkinder (2011)  6Wunderkinder (2012)  -  Netbiscuits (2011), Zimory (2010)  -  - Sample T-Venture Portfolio Deals
  17. 17. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr Governmentalvehicleswithregionalfocus  Private VCs/CVCs act as lead investor  Prepare for very formal processes  Decisions not based on VC terms +/- Pre-requisites for engagement  Embrace role as lead investor  Evaluate as partner for mirroring invest  Evaluate business risks caused by rules What investors or incubators can do  IBB Bank  NRW Bank  Bayern Capital  L Bank  KFW  HTGF Sample Firms or Corporations  Clipkit (2012), Moviepilot (2010)  -  -  -  myTaxi (2011), apprupt (2010)  Zimory (2010), 6Wunderkinder (2011) Sample T-Venture Portfolio Deals
  18. 18. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr CorporationsinvestfromBalanceSheetorCVCs  Needs strong strategic impact for invest  May demand certain terms from VCs  Excludes potential competitors Pre-requisites for engagement  Investigate potential corporations  Check with other investments before  Evaluate Exit potential of corporation What investors or incubators can do  Holtzbrinck Ventures (€145m)  BDMI / Bertelsmann  eVenture / Otto  Intel Capital / Intel  Tengelmann Ventures / Tengelmann  Daimler Mobiliity Services / Daimler Sample Firms or Corporations  Dropgifts (2012), Mindmatics (2008)  Contentfleet (2011)  KaufDA (2009)  C&B (2008), DeliveryAgent (2012)  -  myTaxi (2012) Sample T-Venture Portfolio Deals
  19. 19. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr BAs,Crowdfunding,Incubators<$100kperdeal  Low valuation to be attractive  Less funding needed in the future to avoid dilution of angels  Strategic fit with portfolio interest  Optional ESOP for mentors/BAs Pre-requisites for engagement  Network with BAs on events / meet ups  Engage with their portfolio companies  Get dealflow from BAs to invest What investors or incubators can do  Lars Hinrichs / hackfwd  Founders of Idealo  Founders of Check24  Founders of adcloud  Companisto Sample Firms or Corporations  myTaxi (2012)  Tripodo (2012)  Gini (2012)  -  - Sample T-Venture Portfolio Deals
  20. 20. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr ChallengestoreceivenewFundingin2013  Why should they invest?  Why does Hubraum need another co- investor of this size?  What is the potential for their return? BAs / other Incubator  Does the company/ product has traction?  Can company attract international funds?  What is the long term investment strategy? Series A from VC  Where is a strategic fit?  What are the deal terms and conditions?  How is Telekom’s view on company / product? Corporation Deal  Who will take the lead role for this investments? Mirror Investments with governmental vehicles Option A Option A & B Option BOption C
  21. 21. Goodluckforreaching aFollowOninvestment….

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