Blood, Sweat and Tears until Priceza Today
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I'm invited to be a Guest Speaker for Entrepreneurial Finance Course at Bangkok University School of Entrepreneurship and Management. The topic is about my entrepreneurial experience and fund raising story of Priceza.
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Blood, Sweat and Tears until Priceza Today
- 1. Blood, Sweat and Tears until Priceza Today! 1 November 2014 By Thanawat Malabuppha (Wai) CEO & Co-Founder of Priceza Entrepreneurial Finance Bangkok University, School of Entrepreneurship and Management
- 2. Brief intro about me Background in Computer Engineering & Marketing • Undergrad, Computer Engineering, Chulalongkorn University • Exchange Student at Stanford University • Grad, in Marketing from MIM Thammasat Business School
- 3. Brief intro about me Professional Background • Management Committee at Thai Ecommerce Association • Part of the working group for Digital Economy Project • CEO & Co-Founder of Priceza – Over 4 Million Active Visitors per month – CyberAgent Ventures invested in 2013
- 5. Aims to be NO.1 Price Comparison Shopping in SEA 4 M Visitors/month 700K Visitors/month
- 6. 15 Years of My Journey 2014: Entrepreneur CEO of Priceza BLOOD, SWEAT & TEARS 2000: Undergrad Student
- 7. YEAR 2000 - 2004 Learning What I Love
- 9. Year 2000 - 2004 • Follow Your Heart – Doing & Learning What You Love! – Passionate in everything to do with Computer • Studying in Computer Engineering, Chula • Exchange Student at Stanford University
- 10. YEAR 2005 - 2006 Starting up My 1st Venture
- 11. Year 2005 - 2006 • Initiated an idea about Price Comparison Website called Shopsanova.com • Business Model is not clear! • Focus only on product and it turned out like a shit!
- 12. YEAR 2007 - 2009 Pursuing Marketing Knowledge & Experience
- 14. Year 2007 - 2009 • 14 February 2007: Shopsanova Go Live • MIM Grad with NO.1 Top GPA 3.79 • Runner-up Award, New Venture Championship (NVC) in USA
- 15. YEAR 2009 Dream High. Fight Hard. Never Give up!
- 16. Year 2009 • Shutdown Shopsanova.com !!! • Plan to launch a new site called Priceza.com • Market Validation
- 17. Market Validation • Focus on the real pain (problem) that you are going to solve • Know the best way to solve that pain – Clever – Better – Lower Cost • Make sure that the market is valid and huge
- 18. “You don’t need to raise funding to be successful.”
- 19. Why finance matters • A start-up can’t survive without sufficient finance • There are various sources of finance available for new businesses
- 20. Sources of Financing • Internal Sources (Bootstrapping) – Founder finance (personal sources) – Retained profit – Friends & family • External Sources – Bank loan – Bank overdraft – Trade credit – Business angels – Venture capital
- 21. Key considerations for financing • How much finance is required? • When and how long the finance is needed for? (this links in with the cash flow forecasting) • What security (if any) has to be provided? • Whether the entrepreneur is prepared to give up some control (ownership) of the start-up in return of the investment?
- 22. Personal sources of finance (Bootstrapping) • Various types of personal financing of the entrepreneur – Cash and investments – Personal credit cards – Putting time into the business for free (or for future pay)
- 23. Why Bootstrapping is important • Cheap (e.g. compared to a bank loan) • Entrepreneur keeps control over the business • The more the founder puts in, the more others will invest – There are a few companies that bootstrapped for a while until taking external investment, like MailChimp, AirBnB and Priceza ;)
- 24. YEAR 2010 - 2012 Go Homerun or Go Back Home!!!
- 25. Year 2010 • Jan 2010: Priceza.com Go Live • Doing everything myself! • Sale is NO.1 Priority!
- 26. Year 2011 • Break-even • Got contact from XXXX and XXXXXX • We decided that external funding can be a driving force for Priceza.
- 27. Year 2012 • Got contact from XXXXX and several VCs – Singapore – South Africa – Japan – Thailand – Malaysia – Russia • Talk to a lot of VCs to compare their offerings • Got 1st Term Sheet – Oh Put Option!
- 28. YEAR 2013 Close Seeding Funding
- 29. Year 2013 • Sep 2013: Close deal with CAV – Our 2nd Term Sheet – Due Diligence – Deal Structure: • New Money vs. Buying Out • Pre-Money Post-Money
- 30. How Start-up Funding Work Reference from Funders and Founders By Anna Vital / May 9, 2013
- 31. How Start-up Funding Work • Every time you get funding, you give up a piece of your company. • The more funding you get, the more company you give up. • That ‘piece of company’ is ‘equity.’ • Everyone you give it to becomes a co-owner of your company.
- 32. Splitting the Pie • The basic idea behind equity is the splitting of a pie. • When you start something, your pie is really small. You have a 100% of a really small, bite-size pie. • When you take outside investment and your company grows, your pie becomes bigger. Your slice of the bigger pie will be bigger than your initial bite-size pie. – When Google went public, Larry and Sergey had about 15% of the pie, each. But that 15% was a small slice of a really big pie.
- 33. Idea stage
- 34. Co-Founder Stage
- 35. The Family and Friends Round 5% of Share for 15,000$
- 36. The Angel Round Valuation of the company = $1M Pre-Money Angel Investment = $200K Post-Money = $1M + $200K = $1.2M
- 37. Venture Capital Round Valuation of the company = $4M Pre- Money VC Investment = $2M Post-Money = $4M + $2M = $6M
- 38. IPO 100% of Nothing is a lot less than 17% of a BIG Company
- 39. YEAR 2014 Accelerating Growth
- 40. Year 2014 • Accelerating Growth • Expanding to 4 more countries
- 41. Our Growth in Shopper Visits (Traffic) Thailand Site Shopper Visits (Million Visits) 4 +122% 9 +50% 20 +33% 30 +50% 40 60 70 60 50 40 30 20 10 - +125% 2553 2554 2555 2556 2557 2558 2010 2011 2012 2013 2014 2015 (Est.)
- 45. THANK YOU http://waiwaiworld.com Email: thanawat@priceza.com
Editor's Notes
- Priceza is the leading Product Search Engine and Price Comparison Shopping Service targeting South-East Asia. We aims to be Kakaku for South-East Asia in six major countries. Now we are operating in Thailand and Indonesia serving over 4.8 Millions Visitors per month.
- Cost to start-up an Internet Business is very low Initiated an idea about Price Comparison Website called Shopsanova.com Business Model is not clear! Focus only on product and it turned out it’s a shit!
- Ref: http://www.slideshare.net/tutor2u/sources-of-finance-for-a-startup
- http://fundersandfounders.com/how-funding-works-splitting-equity/ http://www.paulgraham.com/startupfunding.html
- The moment you started working, you started creating value. That value will translate into equity later, but since you own 100% of it now, and you are the only person in your still unregistered company.
- As you start to transform your idea into a physical prototype you realize that it is taking you longer (it almost always does.) You know you could really use another person’s skills. So you look for a co-founder. You find someone who is both enthusiastic and smart. You work together for a couple of days on your idea, and you see that she is adding a lot of value. So you offer them to become a co-founder. But you can’t pay her any money (and if you could, she would become an employee, not a co-founder), so you offer equity in exchange for work (sweat equity.) A true partnership is based on respect. Respect is based on fairness. Anything less than fairness will fall apart eventually. And you want this thing to last. So you give your co-founder 50%.
- Soon you realize that the two of you have been eating Ramen noodles three times a day. You need funding. You would prefer to go straight to a VC, but so far you don’t think you have enough of a working product to show, so you start looking at other options. Even if your family and friends are not as rich as an investor, you can still accept their cash. That is what you decide to do, since your co-founder has a rich uncle. You give him 5% of the company in exchange for $15,000 cash. Now you can afford room and ramen for another 6 months while building your prototype. You issued some common stock, gave 5% to uncle and set aside 20% for your future employees – that is the ‘option pool.’ (You did this because 1. Future investors will want an option pool;, 2. That stock is safe from you and your co-founders doing anything with it.)
- Now let’s count what percentage of the company you will give to the angel. Not 20%. We have to add the ‘pre-money valuation’ (how much the company is worth before new money comes in) and the investment $1,000,000 + $200,000 = $1,200,000 post-money valuation (Think of it like this, first you take the money, then you give the shares. If you gave the shares before you added the angel’s investment, you would be dividing what was there before the angel joined. ) Now divide the investment by the post-money valuation $200,000/$1,200,000=1/6= 16.7% The angel gets 16.7% of the company, or 1/6.
- Finally, you have built your first version and you have traction with users. You approach VCs. How much can VCs give you? They invest north of $500,000. Let’s say the VC values what you have now at $4 million. Again, that is your pre-money valuation. He says he wants to invest $2 Million. The math is the same as in the angel round. The VC gets 33.3% of your company. Now it’s his company, too, though. Your first VC round is your series A. Now you can go on to have series B,C – at some point either of the three things will happen to you. Either you will run out of funding and no one will want to invest, so you die. Or, you get enough funding to build something a bigger company wants to buy, and they acquire you. Or, you do so well that, after many rounds of funding, you decide to go public.