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The Case for Seeding Europe - Keynote #FundraiseIT 2014 #Belgrade @ceedvc
 

The Case for Seeding Europe - Keynote #FundraiseIT 2014 #Belgrade @ceedvc

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    The Case for Seeding Europe - Keynote #FundraiseIT 2014 #Belgrade @ceedvc The Case for Seeding Europe - Keynote #FundraiseIT 2014 #Belgrade @ceedvc Presentation Transcript

    • VITALYM.GOLOMB|GENERALPARTNER @VITALYG THECASEFORSEEDINGEUROPE BELGRADE | MAY 16TH, 2014
    • K E E N P R I N T. C O M +Investor C E E D . V C
    • EUROPEANECOSYSTEMDRIVER&BRIDGETOSILICONVALLEY “BLACKJACK”SEEDFUNDLAUNCHINGIN2014
    • INVESTINTHESEEDROUNDSOFTOPEUROPEAN STARTUPSWITHSPECIALEMPHASISONTHE HIGH-POTENTIALCEEMARKET MISSION
    • THESILICONVALLEYFUNDINGSTACK BOOTSTRAP/FriendsFamily&Fools ACCELERATORS ANGELS/SEEDVCs $100M+VCFUNDS GROWTHEQUITY circa 2014 M&A/IPO
    • BOOTSTRAP ACCELERATORS ANGELS/SEEDVCs $100M+VCFUNDS GROWTHEQUITY EUROPEANFUNDINGSTACKcirca 2014 /FFF M&A/IPO
    • 2001 DOT COM CRASHUS VC FUNDS RAN AWAY FROM EUROPE few, STRONG EUROPEAN VC FUNDS SURVIVED
    • …andpre-date LARGEFUNDTHESISAREBASED ON$5M+FIRSTROUND
    • LIMITEDBIGDEALS + LIMITEDEXITS = MOSTREGIONAL FUNDSTOOBIG TOPROVIDEGOOD RETURNS
    • YESTERDAY’SSEEDISTODAY’SSERIESA/B
    • YESTERDAY’SIPOsARETODAY’SACQUIHIRES
    • SOURCE: STEVE BLANK
    • SOURCE: SEED DB MEDIANEXIT=$20M
    • $300MFUND=$1.8B MINIMUMACCEPTABLEVCRETURN 20%IRROR6XONCASH
    • MODELBROKENEVENINSILICONVALLEY TOPQUARTILE=2.1X
    • SOURCE: STEVE BLANK
    • DOYOUFEEL LUCKY?
    • WELLDO YOU,PUNK?
    • EUROPEPRODUCESHIGHER MULTIPLESTHANU.S.
    • EXITARE25%SMALLER,BUT… ENTRYVALUATIONSARE3-4XLOWER
    • EUROPEPRODUCES 1/2ASMANYEXITSASU.S. AND1/3OF$100M+EXITS WITHONLY20%OFU.S.VC
    • MEDIANCASH-ON-CASH $100M+EXITMULTIPLE 4.5X US 7.2X EUROPE 2005-2011 SOURCE: EARLYBIRD, DOW JONES VENTURE SOURCE
    • REPEATENTREPRENEURS INVCFUNDEDCOMPANIES SOURCE: EARLYBIRD GLOBAL ENTREPRENEURSHIP REPORT 1 9 9 8 2 0 0 7 93%NEW 7%REPEAT 50%NEW 50%REPEAT
    • 4.5% 5.2% 7.4% 8.5% 9.0% NUMBEROFLATENTEUROPEAN ENTREPRENEURSGROWING 2 0 0 0 2 0 1 2 2 0 0 6 SOURCE: EARLYBIRD GLOBAL ENTREPRENEURSHIP REPORT
    • DEALFLOWGROWING 12%CAGR
    • BLACKJACK
    • SPLIT MULTIPLE INVESTMENTS INTHESAME THEME DOUBLEDOWN INCREASE OWNERSHIP% ASRISKIS REMOVED
    • $500K@$8MVAL = 14%OWNERSHIP (POSTDILUTION) $200K@$4MVAL = 12.5%OWNERSHIP (POSTDILUTION)$100K@$1MVAL = 10%OWNERSHIP ✓ $100K -INITIALTRACTION,CEEDFIRSTINSTITUTIONALINVESTOR
 (100-130INITIALINVESTMENTS) ! ✓ $200K -CONTINUEDGROWTH,CO-INVESTWITHLARGERVC
 (20-30SECONDCHECKS) ! ✓ $500K+-ABOUTTOBREAKOUT,CONTINUECO-INVESTING
 (~10THIRDCHECKS) “BLACKJACK”3STAGEINVESTMENTPATH(INEUROPE)
    • CASH-ON-CASHEXITMATH $30M 5.25X $50M 8.75X $100M 17.5X
    • TYPICALFUNDNEEDSATLEASTTWO 30XEXITSOUTOF10-20INVESTMENTS “BLACKJACK”FUNDHAS10XMORECHANCES
    • OLDMODEL OUTDATED traditional$250M+fundmodelisbasedona$5M+firstround investmentandpredatesdistributionplatforms&techthat makestoday’searlystagestartups10Xmorecapitalefficient siliconvalleyisbroken- topquartilefundsstartat 2.1Xreturn7.7%IRRvs20-40%promised <$250Mfundsproduce muchbetterresults 10Xhigherchanceof5X+returns earlystagefundsoutperform otherfundtypes(1981-2010) 70%OFTHETIME SOURCES: ! 2013 NATIONAL VENTURE CAPITAL ASSOCIATION ANNUAL YEARBOOK! SILICON VALLEY BANK. “DIALING DOWN: VENTURE CAPITAL RETURNS TO SMALLER SIZE FUNDS”, MAY 2010! CAMBRIDGE ASSOCIATES LLC, “US VENTURE CAPITAL INDEX AND SELECTED BENCHMARK STATISTICS”, SEPT 2012 todaymajorityofVC-backedexitsare$10M-$80Macquisitions $300M+exitsneededtomakelargefundsworkareexceptionallyrare VENTURECAPITALISTRANSFORMING
    • DOW JONES VENTURE SOURCE EUROPEISANUNDERSERVEDOPPORTUNITY EUROPEANEXITSARE25%SMALLER BUTENTRYVALUATIONSATEALYSTAGE ARE3-4XCHEAPER TODAYEUROPEPRODUCES 1/2ASMANYEXITSASU.S. AND1/3OF$100M+EXITS WITHONLY20%OFU.S.VC onlyafewstrongeuropeanVCssurvivedthe2001DOTCOMCRASH U.S.VCsretractedfromEuropeandhavebeenslowtoreturn MEDIANCASH-ON-CASH $100M+EXITMULTIPLE 4.5X U.S. 7.2X EUROPE DEALFLOWISGROWING 12%CAGR
    • A STARTUP IS... an experiment in search of a business model- steve blank
    • SCALABLE
 STARTUP transition company business model found product/market fit repeatable sales model managers hired break-even profitable rapid scale new senior management ~150 people “a startup is not a smaller version of a large company”- steve blank
    • A STARTUP IS A COMPANY THAT IS CONFUSED ABOUT: ! 1. WHAT ITS PRODUCT IS, ! 2. WHO ITS CUSTOMERS ARE, ! 3. HOW TO MAKE MONEY - DAVE MCCLURE
    • “A STARTUP’s default state is #failure. as a founder, you have to work to unfail it.”- VITALY M. GOLOMB
    • so what’s a goodstartup?
    • solves a painful problem for a specific customer
    • measure everything
    • internet-driven customer acquisition
    • nothinG matters more than traction
    • main ingredient: team
    • BUSINESS DESIGN ENGINEERING balanced startup team
    • FUND+ECOSYSTEMDRIVER INVESTMENTSCONFERENCES & EVENTS EDUCATIONAL PROGRAMS LEADINGSTARTUP GATHERINGINCEE BRIDGE TO SILICON VALLEY REAL VALUE ADD physicalpresence,establishednetwork and partnershipswithtopinvestors, platforms,andmajorenterprises hands-onmarketingandgrowth consultingforportfoliocompanies connectiontoaworldofmentors
    • DESIGN BUILD FUND
    • “ISKATETOWHERETHE PUCKISGOINGTOBE, NOTWHEREITHAS BEEN.” ! WAYNEGRETZKY
    • want the slides? follow @vitalyg