Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
What I Learned Seed
Investing Over the
Last 10 Years
Jeff Clavier
Managing Partner, SoftTech VC
Pre-Money Conference - Jun...
How to Fund-Raise the Roof?
How To Raise Enough Capital To Avoid The
Series A Crunch
Pre-Money Conference - Jun '15
Brief bio
• Jeff Clavier (@jeff)
– French born
– C/C++ & Distributed
Computing Hacking
– CTO at Financial Services
startup...
How we built our footprint
SoftTech VC I
($1M, 24 deals)
Goal: Build initial deal
access and reputation
as a value-added
i...
$85M SoftTech VC IV Primer
• 45 seed deals over 3 years
• $500K to $1M+ per initial
investments
– $35M = 45 deals @ $750K
...
The 2014 Funding Ecosystem
Pre-Money Conference - Jun '15
Pre-Seed
< $500K
• Bootstrapping/Friends and family
• Pre-Seed F...
The 2015 Funding Ecosystem
Pre-Money Conference - Jun '15
Pre-Seed
< $500K
• Bootstrapping/Friends and family
• Pre-Seed F...
Zooming in on Seed Stage(s)
• Pre-Seed: the old “Friends & Family” round
– Team = founders, Stage = Concept, Runway = 12 m...
What’s Happening at Seed Stage?
• Startup costs have dropped 10X, but Operating Costs
have increased 2/3X (in Silicon Vall...
Our Advice to Seed Entrepreneurs
• Figure out burn required to achieve the typical
Series A hurdles in your sector
• Typic...
What That Means For Investors
Pre-Money Conference - Jun '15
What That Means For Investors (& LPs)
• Have a clear portfolio construction strategy:
– How many deals, of which size over...
How much ownership are you “worth”?
• The size of your fund and your portfolio construction
will dictate your ownership ne...
Beating the Series A/B Crunch
• Have a clear “Hot or Not” map for sectors you
invest in, and understand runway implication...
Statistics from the last 18 months
• Raised $550M in 35 follow-on rounds across
Fund II, III and IV
– Average Series A: $9...
Reserve Planning
• Why invest in follow-on rounds?
– Avoid costly dilution of a position at low valuation
– “Double down o...
Recycling does matter… a lot
• Say you have a $50M fund, and you need to deliver a 4X gross
return. About 25% will go to m...
Good luck, and thank you!
www.softtechvc.com
@softtechvc
Pre-Money Conference - Jun '15
Upcoming SlideShare
Loading in …5
×

[PreMoney SF 2015] SoftTech VC >> Jeff Clavier, "Fund-Raising The Roof: How To Raise Enough Capital To Avoid Getting Cru$$$hed By The New Series A"

8,611 views

Published on

Comments are closed

  • Girls for sex in your area are there: tinyurl.com/areahotsex
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Sex in your area is here: www.bit.ly/sexinarea
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Dating for everyone is here: www.bit.ly/2AJerkH
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Doctor's 2-Minute Ritual For Shocking Daily Belly Fat Loss! Watch This Video  https://tinyurl.com/bkfitness4u
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Reasons why you should know this homemade recipe to stop your hair loss ●●● https://tinyurl.com/y49r9d8j
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here

[PreMoney SF 2015] SoftTech VC >> Jeff Clavier, "Fund-Raising The Roof: How To Raise Enough Capital To Avoid Getting Cru$$$hed By The New Series A"

  1. What I Learned Seed Investing Over the Last 10 Years Jeff Clavier Managing Partner, SoftTech VC Pre-Money Conference - Jun '14
  2. How to Fund-Raise the Roof? How To Raise Enough Capital To Avoid The Series A Crunch Pre-Money Conference - Jun '15
  3. Brief bio • Jeff Clavier (@jeff) – French born – C/C++ & Distributed Computing Hacking – CTO at Financial Services startup in 1989 – Acquired by Reuters in 1993 – “Traditional” VC in the Valley since 2000 – Angel/Seed Investing since 2004 • SoftTech VC (@softtechvc) – 11 years old – 165 investments – 40+ exits – $2.5B in follow-ons Pre-Money Conference - Jun '15
  4. How we built our footprint SoftTech VC I ($1M, 24 deals) Goal: Build initial deal access and reputation as a value-added investor By: Hustling, Blogging, Networking, Investing personal capital SoftTech VC II ($15M, 65 deals) Goal: Establish “institutional” angel model By: Focusing on access as we defined investment strategy, syndicating, building brand and top dealflow SoftTech VC III ($55M, 55 deals) Goal: Execute on a refined, repeatable seed strategy By: Building ownership in a select group of companies, and expanding the footprint of the firm SoftTech VC IV ($85M, 45 deals) Goal: Iterate on Fund III’s model, expanding post-seed when appropriate (Seed Prime, Series A) By: Building and maintaining 7% to 10% ownership through initial rounds of financing Pre-Money Conference - Jun '15 2004 2007 2011 2014 “Super-Angel” “Super-Angel” Fund Micro-VC Funds
  5. $85M SoftTech VC IV Primer • 45 seed deals over 3 years • $500K to $1M+ per initial investments – $35M = 45 deals @ $750K – $50M for Series As/Bs – Heavy recycling (120%) • Geos: SF/SV, NY, SoCal, Can • Target ownership: 7 to 10% • Always syndicating with peer micro-VCs and angels • Sectors • New Areas: VR/AR, drones, AI/robots,… Pre-Money Conference - Jun '15 6/9/15 Proprietary & Confidential SoftTech VC IV: $85M DealsCommerce and Marketplaces Mobile Services & Applications Consumer Services & Devices “New” Areas Monetization Cloud Services & Applications 13 : Follow-on closed (0) $: Acquired/Acquirer (2)
  6. The 2014 Funding Ecosystem Pre-Money Conference - Jun '15 Pre-Seed < $500K • Bootstrapping/Friends and family • Pre-Seed Funds and pre-order/crowdfunded campaigns • Incubators and Accelerators (YC, Techstars, AngelPad, 500 Startups, SeedCamp) Seed $1.2 to $2.5M • Syndicates of micro-VC firms, angels and (potentially) traditional VCs • AngelList and Crowdfunding services as alternative or “fill up” opportunity Series A $5M tp $15M • One traditional VC, with micro VCs investing pro-rata and adding strategic angels • Family Offices, Strategics, Micro-VCs + Crowdfunding pools as alternative Series B $10M to $20M • Another traditional VC (or two), with insiders coming in for pro-rata • Same mix as Series A for alternatives Growth $20M to $100M+ • Mix of traditional/growth VCs, PE firms, hedge funds. In parallel, secondary transactions. • Alternative: direct co-investments from LPs, hedge/mutual funds, cash rich corporates
  7. The 2015 Funding Ecosystem Pre-Money Conference - Jun '15 Pre-Seed < $500K • Bootstrapping/Friends and family • Pre-Seed Funds and pre-order/crowdfunded campaigns • Incubators and Accelerators (YC, Techstars, AngelPad, 500 Startups, SeedCamp) Seed $1.5 to $3 M • Syndicates of micro-VC firms, angels and (potentially) traditional VCs • AngelList and Crowdfunding services as alternative or “fill up” opportunity Series A $5M tp $15M • One traditional VC, with micro VCs investing pro-rata and adding strategic angels • Family Offices, Strategics, Micro-VCs + Crowdfunding pools as alternative Series B $10M to $30M • Another traditional VC (or two), with insiders coming in for pro-rata • Same mix as Series A for alternatives Growth $20M to $100M+ • Mix of traditional/growth VCs, PE firms, hedge funds. In parallel, secondary transactions. • Alternative: direct co-investments from LPs, hedge/mutual funds, cash rich corporates • SPVs (Special Purpose Vehicles) coming in all over the place
  8. Zooming in on Seed Stage(s) • Pre-Seed: the old “Friends & Family” round – Team = founders, Stage = Concept, Runway = 12 months+ – Size = $500/750K, Investors = Angels, Pre-Seed Funds • Seed: the first Institutional Round – Team = founders + few engineers, Runway = 18/24 months – Stage = early data: usage, acquisition, (some) revenues – Size = $1.5/$3M, Investors = Syndicate of Seed VCs + others • Seed Prime/Extension: backup to a failed Series A – Stage = some data/validation, not enough to raise a Series A – Investors = Seed Prime Funds + insiders Pre-Money Conference - Jun '15
  9. What’s Happening at Seed Stage? • Startup costs have dropped 10X, but Operating Costs have increased 2/3X (in Silicon Valley) • Traction proof needed to raise Series A trending higher as # of candidates is increasing • 10X increase in capital available at Seed stage forced larger rounds to make room for investors • Branded firms, and some new ones, have ownership targets due to portfolio concentration and fund size • Way too much capital chasing seed deals = sellers market (good) but support is not uniformly good Pre-Money Conference - Jun '15
  10. Our Advice to Seed Entrepreneurs • Figure out burn required to achieve the typical Series A hurdles in your sector • Typical runway is 18 to 24 months • Research via your network and CrunchBase/AngelList which funds are potential leads • Build a strong round foundation with Seed funds as leads, based on value add and expertise – and complement with useful angels/other sources • Avoid “party rounds” at all cost – no one caresPre-Money Conference - Jun '15
  11. What That Means For Investors Pre-Money Conference - Jun '15
  12. What That Means For Investors (& LPs) • Have a clear portfolio construction strategy: – How many deals, of which size over which period? – Do you plan to follow on in Series A? Series B? • Only Major investors are typically given these rights • Have a clear appeal for entrepreneurs: – Experience, expertise, network, track record – Area(s) where you can add value • Will you lead/co-lead? Take a board seat? • Figure out how much ownership “you’re worth” Pre-Money Conference - Jun '15
  13. How much ownership are you “worth”? • The size of your fund and your portfolio construction will dictate your ownership needs – A $1B exit should return at least half of your fund • Capital being a commodity, round construction would ideally be built based on “value add” – Entrepreneurs will reference you, better have delivered on the goods with your existing portfolio • If you claim the lead position, and aren’t prepared or fit to take the board seat = BFP – Committing involvement, time, advice, additional capital, etc. Pre-Money Conference - Jun '15
  14. Beating the Series A/B Crunch • Have a clear “Hot or Not” map for sectors you invest in, and understand runway implications for the Not’s • Early on establish and validate hurdles to clear in order to get the next round • Pre-market early with the “most likely/best fit” group of investors • Understand that the Seed round unlocks the A, and the A unlocks the B Pre-Money Conference - Jun '15
  15. Statistics from the last 18 months • Raised $550M in 35 follow-on rounds across Fund II, III and IV – Average Series A: $9M – Average Series B: $19M • Fund IV closed 24 rounds for a total of $20M – Average $800K ($500K to $1.2M) – Average ownership: 7.5%. – 10 board seats Pre-Money Conference - Jun '15
  16. Reserve Planning • Why invest in follow-on rounds? – Avoid costly dilution of a position at low valuation – “Double down on winners” and increase dollars invested to maximize returns • Planning to follow-on in one round? Reserve 50%. Two? Reserve 75% - but take into account your expected loss rate – SoftTech’s model is 20% failure before A, 10% post A – Of Fund IV’s $85M, $50M and recycled capital will go to reserves Pre-Money Conference - Jun '15
  17. Recycling does matter… a lot • Say you have a $50M fund, and you need to deliver a 4X gross return. About 25% will go to management fees and costs. • To produce a $200M total return, you’d need a 5.5X performance if you don’t put “fees in the ground” – 200 / (50 * (1 – 25%)) = 5.5 • Recycling means that you don’t distribute all proceeds back to LPs – Standard 120% recycling clause means 50% of proceeds are re-invested • Cashflow/distribution optimization is tricky since early exits are impossible to plan for Pre-Money Conference - Jun '15
  18. Good luck, and thank you! www.softtechvc.com @softtechvc Pre-Money Conference - Jun '15

×