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Managing Venture Capital Relationships

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Money2020 Europe, presented by Desiree Cachette
The Dos and Don’ts of Fundraising, Tips for Meetings, Capital Preparations, Picking the Best LPs.

A Fund of Funds perspective on managing venture capital relationships, investment strategies and understanding various LP types.

Published in: Business
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Managing Venture Capital Relationships

  1. 1. MANAGING VENTURE CAPITAL RELATIONSHIPS 6 JUNE 2018 // 09:50-10:10 1 DESIREE CACHETTE, MANAGING DIRECTOR
  2. 2. MANAGING VENTURE CAPITAL @ECACHETTE WWW.CACHETTECAPITAL.COM RELATIONSHIPS Desiree Cachette Managing Director
  3. 3. 3 The Dos and Don’ts of Fundraising Tips for Meetings Capital Preparations Picking the Best LPs MANAGING VENTURE CAPITAL RELATIONSHIPS
  4. 4. 4 ARE THERE MORE VENTURE CAPITAL FUNDS THAN EVER BEFORE? YES.
  5. 5. 5 More liquidity for funds under $150MM Growth of European venture capital Growth of corporate venture capital Tech IPOs creating individual liquidations Exited startup founders becoming managers MARKET CONDITIONS FOR VC FUNDS MONEY2020: MANAGING VENTURE RELATIONSHIPS
  6. 6. THERE ARE OVER 490 VENTURE CAPITAL FUNDS UNDER $200MM IN SIZE THAT HAVE RAISED SINCE 2011 https://bit.ly/1GvikTq 6
  7. 7. EVERONE AND THEIR MOTHER HAS A FUND. 7 Everyone and their mother has a fund.
  8. 8. 8 OF FUNDS RAISED IN EUROPE IN 2017 WERE FIRST TIME FUNDS. FRANCE CLOSED MORE DEALS IN 2017 THAN THE UK... FOR THE FIRST TIME EVER. MORE THAN 200 US INVESTMENT FUNDS PARTICIPATED IN FUNDING IN EUROPE UP FROM 103 UNIQUE INV. FUNDS IN 2013 THE RISE OF EUROPEAN VENTURE MONEY2020: MANAGING VENTURE RELATIONSHIPS 25% #HUSTLE $4M MEDIAN SERIES A IN EUROPE $5.5M 20172016
  9. 9. 9 Pitchbook and Atomico 2017 EUROPEAN STARTUP DEALS MONEY2020: MANAGING VENTURE RELATIONSHIPS
  10. 10. 10 EUROPEAN ON THE RISE MONEY2020: MANAGING VENTURE RELATIONSHIPS
  11. 11. BUT WHAT DO I KNOW? 11 EVERYTHING.
  12. 12. 12 OUR FUND (A “FUND OF FUNDS”) MONEY2020: MANAGING VENTURE RELATIONSHIPS
  13. 13. 13 REGION VC FUNDSIZE OUR COMMIT % OF THEIR FUND % OF OUR FUND US- New York 30MM 10MM 33% Less than <1.0% US- New York 100MM 10MM 10% Less than <1.0% UK 60MM 7.5MM 12.5% Less than <1.0% EU- France 60MM 7MM 12% Less than <1.0% US- New York 30MM 5MM 16% Less than <1.0% UK 60MM 10MM 16% Less than <1.0% US- California 30MM 5MM 16% Less than <1.0% Switzerland 150MM 15MM 10% Less than <2.0% EU-Netherlands 150MM 10MM 6.6% Less than <1.0% EU-Romania 100MM 10MM 10% Less than <1.0% Switzerland 100MM 10MM 10% Less than <1.0% FOF FUND PLACEMENT SNAPSHOT MONEY2020: MANAGING VENTURE RELATIONSHIPS
  14. 14. VC FUND MANAGER DO’S 14 Have a specialized strategy or focus Explain how your VC fits a “MMF” Market-Market Fit vs. “PMF” Product-Market Fit Show Your Ability to Pick Winners Defend Your Equity Positions MONEY2020: MANAGING VENTURE RELATIONSHIPS
  15. 15. 15 Do your emails read like a fund manager or a college english essay on imperialism? Proprietary Dealflow? GTFO. Academic Partnerships = Not Leverage Get into the weeds of one product or company MONEY2020: MANAGING VENTURE RELATIONSHIPS VC FUND MANAGER DON’TS !
  16. 16. 16 Be organized Ask for check-ins - don’t assign them Obsess over fund quality (money out) Set clear milestones Remember, fundraising is a sport … and this probably isn’t your last fund. GENERAL OBSERVATIONS MONEY2020: MANAGING VENTURE RELATIONSHIPS
  17. 17. 17
  18. 18. 18 CAPITAL MEETING OR MEETING PREP MONEY2020: MANAGING VENTURE RELATIONSHIPS Understand your firms margins and costs (fees) Know your “ticket” or investment sizes by heart Treat future LPs as colleagues (if you like them) Don’t fake urgency Be genuine. Most FOFs have seen every trick in the book.
  19. 19. 19 Getting a second meeting is more important than a flawless first meeting
  20. 20. SUMMARY OF TIPS 20 Be honest and genuine about your mission and why Be organized! Run fundraising like a process Treat your fundraising like a routine and think long term Focus on how your fund can outperform others (advantage) MONEY2020: MANAGING VENTURE RELATIONSHIPS
  21. 21. 21 Do you understand your fund LPs? Maybe.
  22. 22. 22 PENSION FUNDS FAMILY OFFICES INSTITUTIONS CORPORATIONS WEALTH INDIVIDUALS LP Capital Sources If you understand your LP, you will better know how to manage their expectations and their shareholders WHERE DOES VENTURE COME FROM? MONEY2020: MANAGING VENTURE RELATIONSHIPS
  23. 23. 23MONEY2020: MANAGING VENTURE RELATIONSHIPS FUND OF FUNDS FLOW
  24. 24. 24 NORTH AMERICAN PENSION FUNDS ACCOUNT FOR HIGHEST GROWTH IN 2011-2016 OF 6.7% THE WORLDS LARGEST PENSIONS ACCOUNT FOR $15.7 TRILLION ASSETS UNDER MANAGEMENT PENSIONS IN EUROPE & ASIA INVEST LESS IN VENTURE AND SHOWED LOWER RETURNS OF 2.8%-3.1% $15,700,000,000,000 Assets managed in pensions Countries which invest into venture capital are producing better returns than those investing more into Bonds THE RISE OF PENSION IN CAPITAL
  25. 25. 25 COUNTRY 2007 2017 CHANGE Netherlands 126% 194% +68% UK 88% 121% 33% US 106% 131% 25% Canada 83% 108% 25% Finland 71% 22% 22% Switzerland 112% 133% 21% Hong Kong 35% 49% 14% Willis Towers Watson, 2018; * in local currency PENSION ASSETS vs. GDP CHANGE* MONEY2020: MANAGING VENTURE RELATIONSHIPS
  26. 26. 26 MARKET TOTAL ASSETS (2017) USD BILLION ASSETS/ GDP RATIO % United States 25, 411 131.2% U.K 3,111 121.3% Japan 3,054 62.5% Australia 1,924 138.4% Canada 1,769 107.8% Netherlands 1,598 193.8% Switzerland 906 133.1% Willis Towers Watson, 2018 COUNTRY % of COUNTRY GDP Netherlands 193.8% Australia 138.4% Switzerland 133.1% United States 131.2% U.K 121.3% Canada 107.8% Japan 62.5% Ranked by % of Assets v. % of Country GDP Ranked by $ of Assets in USD Most Money in Pensions: United States Most GDP as Pension Assets: Netherlands MONEY2020: MANAGING VENTURE RELATIONSHIPS PENSION ASSET SIZE BY COUNTRY
  27. 27. 27 MOST % GDP IN PENSIONS: NETHERLANDS MOST $ (CAPITAL) IN PENSIONS: U.S LEAST CAPITAL USED OF GDP: JAPAN Japan and Netherlands typically invest 15% more into bonds than equities, compared to other countries. They produce returns 1/2 of countries which invested more.
  28. 28. 28 Smaller positions in startups, earlier stage Liquidity events and likeliness of follow-on Specialized approach to selection Overall portfolio position (i.e shutdowns or coverage) Manager preparedness for market shifts OTHER TRENDS LPS LOOK FOR MONEY2020: MANAGING VENTURE RELATIONSHIPS
  29. 29. 29 Sharing news and information Extends invites or introductions Gives clear feedback even if opinion is different Offer other team members as resources GOOD SIGNS OF LPs MONEY2020: MANAGING VENTURE RELATIONSHIPS
  30. 30. MONEY2020: MANAGING VENTURE RELATIONSHIPS DESIREE CACHETTE CACHETTE CAPITAL MANAGEMENT Prinses margrietplantsoen 33, 3e, 2595AM Den Haag Nederlands +31 615 411 453 70 Washington Street, Suite 303 Oakland, CA 94607 United States +1 510 513 6833 30 FOR MORE INFORMATION SEE: WWW.CACHETTECAPITAL.COM

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