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Bootstrapping vs Fundraising 
Bonus: a comprehensive guide to understand Venture Capital
Nos partenaires sur le financement & l’accompagnement
Are you sure you need investors?
Are you sure investors need you?
France Digitale is 
the alliance of the best entrepreneurs & investors 
to create more 
world-class digital champions in France. 
! 
We lobby to make a startup-friendlier environment and 
make awesome events 
! 
Interested in being part of this amazing community? Drop 
us an email: willy@francedigitale.org 
More info: www.francedigitale.org
Part 1. How does fundraising work? 
“For [VC-Backed] startups, 
escape velocity has to do 
with becoming the dominant 
vendor and growing indefinitely.” 
— David Cummings
Who will fund you? 
Startups don’t get money from bankers (lending), only from shareholders (equity) 
Banks won’t lend money to finance projects with no 
short term revenue generation 
So let’s focus on shareholders 
(Equity = long-term financing needs in uncertain corporate investment) 
that’s you 
PS: there are lots of subsidies in France, from 50K to 500K. Go and look for it (warning: it’s very time consuming)
Pre-seed 
Savings 
Love Money (F&F) 
Grants 
Seed 
Venture Capitalists 
Love Money (F&F) 
Business Angels 
Angel Funds 
Wealth managers 
Series A & B 
Venture Capitalists 
Angel Funds 
Wealth managers 
Corporate funds 
Serie C+ 
<100K 100K-1.5M 500K-5M 
Venture Capitalists 
Growth funds 
M&A 
IPO 
Who are the shareholders for each step? 
Shareholders 
Rule of thumb: each round you give around 20-30% of your remaining capital, except in pre-seed when you give around 5-10%
Pre-seed 
Savings 
Love Money (F&F) 
Grants 
Seed 
Venture Capitalists 
Love Money (F&F) 
Business Angels 
Angel Funds 
Wealth managers 
Series A & B 
Venture Capitalists 
Angel Funds 
Wealth managers 
Corporate funds 
Serie C+ 
<100K 100K-1.5M 500K-5M 
Venture Capitalists 
Growth funds 
M&A 
IPO 
Who are the shareholders for each step? 
Shareholders 
If you raise funds in tech, it will most likely be sooner or later 
with venture capitalists
You’ll certainly work with VCs. 
Do you really know them?
Behind each VC there is at least one LP* 
VCs also raise funds and need to be profitable 
& when VCs fund your startup, they also risk their own money (between 1% and 3% of the total fund) 
Business governance 
LPs Venture Capital Startups 
Acquirer** 
when you raise, you add two constraints: 
sell your company within 5-8 yrs (1) at a bigger price than your last valuation (2) 
financial flow *Limited Partners 
**M&A/IPO
When do VCs earn money? 
The objective of a startup is to grow the business and its value 
as fast as possible to realize the greatest ROI possible on exit 
So all the profits get reinvested rather than paying dividend 
Shareholders get paid ONLY when they sell the company
QUICK TEST 
2 questions about venture capital
1 What should be the minimum return per startup? 
eg: if you say x1.5 it means that you have to earn 
€3M if you have invested €2M
1 What should be the minimum return per startup? 
Answer: x2.25 
Do you wanna know why? 
Please refer to Annex at the end of the presentation, it’s a bit technical
2 What are the key factors for an exit? 
eg: the startup was a member of France Digitale
2 What are the key factors for an exit? 
Answers 
Growth 
it’s the only real focus of an entrepreneur 
Visibility 
from the mass market and from the key players 
Barrier to entry 
IP, distribution, partnership, technology... 
Profitability 
especially if you look for a financial exit (LBO/MBO/IPO), 
People -> Process 
the right organization to keep scaling the business
3 What are the differences between FCPI & FCPR?
Category 
! 
Funded by 
! 
Investment period 
! 
Investment criteria 
! 
Maturity 
! 
Size 
! 
Management Fees 
! 
Raising period 
! 
FCPI FCPR 
Retail investment fund 
! 
Tax-incentivized individual investors* 
! 
30 months 
! 
Innovative* companies in Europe 
! 
5 to 7 years 
! 
Between 10M€ to 30M€ 
around 3,5% / year 
! 
Every year (following the fiscal calendar) 
Institutional investment fund 
! 
Limited Partners (institutional) 
! 
36 to 48 months 
! 
Defined by the GP 
! 
7 to 10 years 
! 
Between 30M€ to 200M€ 
! 
2% /year 
! 
No rule (usually when the investment 
period of the previous fund is finished) 
*Individual 
investors 
benifi2ng 
from 
a 
tax 
incen2ve 
: 
immediate 
18% 
IR 
tax 
credit 
/ 
immediate 
50% 
ISF 
tax 
credit
What does a VC expect from a startup? 
“The best shot is a very large market with 
big companies where nothing disruptive 
happened for 5+ years“ 
— Stéphanie Deslestre, Qapa
Venture capitalists look at the same things* 
* but they don’t see things the same way
The criteria of investment for VCs: 
team + opportunity + business model
Team = risk of execution 
the most important criteria by far 
Best format: 
2-3 founders 
with complementary skills, 
experience in the field, 
good learning pace, 
connexions within the industry, 
(or a community already built). 
1 
Super bonus: recommendation from a VC/BA or entrepreneur 
Mega bonus: you already sold one company before 
Ultra Bonus: you already sold one company before with a multiple of x2.25+
2 Opportunity = vision+promise 
make them want to know more. work on your brand. 
Problem/solution 
(problem/solution -> be very specific & convincing about the problem) 
Timing 
(the later you enter a market the less risky but also the more expensive - don’t be too early though) 
Market size 
(you have to be ambitious & disrupt a huge market) 
Competitors 
(you are not the best, you do things differently and that’s a better way to do it and you execute it well. Focus on your 
competitive advantages.) 
Joker: exit easy to spot (big players + recent M&As) 
(or IPO if you want to rock the world)
3 Business Model = smart & wise 
show them you know your job & you’re creative 
Value proposition 
(not the technology but the product/service for the client) 
Clients 
(you’d better really know them) 
Competitive Advantage 
(distribution, technology, partnership...) 
Distribution 
(growth hacking plan) 
Joker: you’ve got wonderful traction 
(if it seems very risky you’d better have some good figures)
Valuation 101
Valuation: the basics 
Pre-money 
value of the company + goodwill 
funding 
Post-money 
stock options 
Post-money fully diluted 
+ 
+
Valuation: illustration 
Pre-money 
Post-money 
Post-money fully diluted* 
10M€ 
15M€ 
16.67M€* 
Capitalisation 
10% stock option 
Pre Post Post FD 
Historic shareholders 
New shareholders 
Stock options 
100% 66% 
33% 
valorisation = 10M€ 
fundraise = 5M€ 
60% 
30% 
10% 
* it’s like you have only (1-% stock options) of the company, since the stock options will dilute the overall shares 
Valorisation Post FD = post-money/(1-% stock option)
Looking for advanced lessons about valuation? 
Check Khan Academy
All stocks are not made equal
Preferred stocks & main associated rights 
1. Rights of capital protection 
1.1. Right of pre-emption 
Right to acquire stocks that are sold before it can be offered to any other person or entity. 
Also called "first option to buy". 
1.2. Right of anti-dilution 
In common and preferred stock, the right of a shareholder to maintain the same percentage of ownership in a company, 
should the company issue more stock. The anti-dilution clause can also indicates the right of a shareholder to purchase 
more shares in a new round of financing at the offering price up to his/her previous percentage of ownership. 
* if an investor have 20% of the company for 700K€ in seed, and anticipates a future need of financing of 10M€, he 
will allocates 2M€ (or more) to maintain 20% of the company.
Preferred stocks & main associated rights 
2. Political Rights 
2.1. Right to board representation 
2.2. Vote of strategic decisions 
Acquisition, budget, dividends.. can be vetoed
Preferred stocks & main associated rights 
3. Financial Rights 
3.1. Liquidation preference 
Specify which investors get paid first and how much they get paid in the event of a liquidation event such as the sale of the 
company. Liquidation preference helps protect venture capitalists from losing money by making sure they get their initial 
investments back before other parties. eg: the first 5% pro rata for all shareholders, then to financial shareholders till the level of 
their investment, then the rest pro rata for all shareholders 
3.2. Ratchet 
Correction of the pricing for the next round if the shares are at lower price. Two possibilites: full ratchet = the initial shares 
are priced at the level of ones from the new round ; weighted average ratchet = initial shares are priced at the level of the 
weighted average price paid during the different rounds 
More about preferred stocks & main associated rights (french)
The 2Ps: prediction-process
Investing in VC is not really an exact science* 
A glance at the anti-portfolio of Bessemer Venture Partner
Prediction: chances to fundraise with a VC 
in France are pretty low 
[0,4-1]% 
chances 
with a specific VC fund 
5% chances 
with any VC fund 
* dealflow of around 1000-1500 startups/year for a reputed VC fund (between 500 & 2000 depending of the scope & the attractiveness of the fund). 5-10 deals closed/year 
** around 4000 startups/year seeking fund. Around 200 fundraise in the whole ecosystem.
The Process 
Executive 
Summary 
Dealflow 
instruction 
analyst 
Weekly 
investment 
committee 
full team 
90% OUT 
Business Plan 
First meeting 
analyst + partner 
Slideshow 
85% OUT 
Instruction 
2 partners/1 partner-1 analyst 
focus on specific points, “friendly“ due diligence 
40% OUT 
40% OUT 
try to avoid this step by meeting them 
before you need funds (chances almost x2) 
>10% OUT 
Negotiation 
at least one partner 
Everything you got 
Party 
everyone cool 
Champaign 
/! due diligence 
chance of raising: 100*(1-40%)*(1-90%)*(1-85%)*(1-40%)*(1-10%)=0,48%
The relationship AFTER the raise 
What they will ask you: 
- reporting (revenue each month or quarter) 
- an action plan 
- validate the P&L and the main decisions 
! 
What you should ask them: 
read this wonderful article
Want to be part of the amazing 
community of France Digitale ? 
Click here* 
* or send us an email: willy@francedigitale.org
Part 2. Should you raise funds? 
yes, this is just an option
What do they have in common?
They bootstrapped.
You can make an incredible startup 
without raising funds.
No money = great constraint to look for efficiency 
Money is a painkiller.
Founded in 2008 - 3 cofounders. 
1 kept working full time during the early days, 
the 2 other made freelancing on the side. 
* Github
Founded in 2010 - 3 cofounders. 
Build the MVP with $60 (open source + outsourcer) 
First test on Reddit : 200 deals of pro accounts at imgur.com 50% discount 
Then rebuilt the site & sold 500 productivity bundles on Lifehackers. POC + cashflows. 
* AppSumo
Yes, this is possible*. 
So when should you raise fund? 
* also in France, look at MyLittleParis, HumanCoders, Adopteunmec, Wisembly, Capital Koala, Appgratis (at least for a long time), etc.
The next slide could hurt 
your aesthetic sensibility.
Do you want to grow very fast 
to disrupt a market? 
YES 
Do you have significant upfront 
investment to test your 
market? 
Can you grow your business as 
you wish with your revenue 
stream before burning all your 
cash? 
NO 
Do you charge man days to 
your clients? 
YES 
Is your market small? 
DON’T RAISE! 
DON’T RAISE! 
C’mon, 
close more deals. 
(you don’t sale 
enough to raise) 
NO 
Do you want to keep the 
control of your business 
Either you can find a way to 
generate enough revenue or 
your dead 
NO 
NO 
YES 
YES 
YES 
RAISE! You’re in trouble 
NO YES 
RAISE! 
NO 
you are here
What should you remember?
What should you remember? 
Not raising is not failing. 
Raising is not succeeding.
By the way... 
Github raised funds eventually. 
So did 99designs 
! 
raising funds is not a one time decision
What does bootstrapping mean? 
in practice
Bootstrapping = lower velocity 
Escape velocity, in physics, is basically the speed needed to break free from gravity. 
For a bootstrapper it might only be the freedom to pay the bills.
Your growth can be linear. 
If you have 10 new clients every month and if your retention is great. 
that makes 120 clients per year. That can be more than sufficient
Distribution can be smaller 
If you need a few thousand customers and not millions, 
you can use any channel that is ROI positive. Even if it doesn’t scale.
Acquisition & retention can be manual 
You can email yourself your power customers and get to know (or at least talk 
to) most of your clients, sooner or later.
Conclusion for PG 
“Avoid investors till you decide to raise money, and then when you do, talk 
to them all in parallel, prioritized by expected value, and accept offers 
greedily. That's fundraising in one sentence. Don't introduce complicated 
optimizations, and don't let investors introduce complications either. 
! 
Fundraising is not what will make you successful. It's just a means to an 
end. Your primary goal should be to get it over with and get back to what 
will make you successful—making things and talking to users—and the 
path I've described will for most startups be the surest way to that 
destination. 
! 
Be good, take care of yourselves, and don't leave the path.“ 
- Paul Graham
Credit 
Infos of bootstrapped companies in Quora 
Discussion with lots of investors, especially Marie Ekeland, Xavier Lazarus, Samantha 
Jerusalmy & Sebastien Derhy (Elaia Partners), Emanuele Levi (360 Capital Partner), 
Nicolas Celier (Alven Capital), Jean-David Chamboredon (ISAI) & Vladimir Bolze (Fa 
Diese), Jérôme Masurel (50 Partners) 
Discussion with Frederic Mazzella (BlaBlaCar) 
Discussion with Oussama Ammar (The Family) and his wonderful workshops (in french: 
fundraising & valorisation) 
Workshop France Digitale + Girls in Tech about “Financing Seed“ 
Presentation (in french) from Christophe Raynaud (ISAI) 
Article of Paul Graham 
Special thanks to Mathieu Daix, Taro Ugen & Emmanuelle Coulon, my dear colleagues 
that helped me to improve this presentation 
Slides 27-28, 31-32 were made by Marie Ekeland (Elaia Partners) 
Slides 63-65 were made by Emanuele Levi (360° Capital Partner) 
Slide 19 were made by Barbara Belvisi (PiedElephant)
Willy Braun 
GM France Digitale. 
willy@francedigitale.org 
www.francedigitale.org 
Want to be part of the 
amazing community 
of France Digitale ? 
click here* 
* or send me an email 
Mathieu Daix 
CMO France Digitale. 
mathieu@francedigitale.org 
www.francedigitale.org
Annex 
THE DARK SIDE OF THE PRESENTATION
Corporate finance 101: hurdle rate & IRR 
you can skip this slide, only for math lovers 
€100M with a hurdle rate: 7%* (6 year average holding 
period positive return) -> €150M minimum 
! 
Target IRR of fund investors (the LP) 10-15%*net of 
carried interest -> around €225M to stay in business 
* average in the venture capital market
20 startups in the portfolio 
€4M of funding per startup 
valuation x2 
Below 2x they actually “lose money“ (20x4x2=160 < 225) 
3x is a positive contributor to fund objectif (20x4x3= 240 > 225) 
5x & 10x are needed to compensate bad investments 
target size for 
the fund 
Let’s explain why you need a x2.25 
on average without math (1/2)
Let’s explain why you need a x2.25 
on average without math (2/2) 
1 blockbuster: 20x = 80m 
! 
1 Star: 10x = 40m 
! 
2 Successes: 5x = 2x20m = 40m 
! 
4 Average: 2-3x = 4x10m = 40m 
! 
6 Bad investments: 0,5x-2x = 20m 
! 
6 Write-offs 
! 
€220M, net IRR to investors 12%* 
On any given investment, x10 must be possible. 
*including 20-25m of carried interests (for 12 years of work)

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Startup funding : bootstrapping vs fundraising

  • 1. Bootstrapping vs Fundraising Bonus: a comprehensive guide to understand Venture Capital
  • 2. Nos partenaires sur le financement & l’accompagnement
  • 3. Are you sure you need investors?
  • 4. Are you sure investors need you?
  • 5. France Digitale is the alliance of the best entrepreneurs & investors to create more world-class digital champions in France. ! We lobby to make a startup-friendlier environment and make awesome events ! Interested in being part of this amazing community? Drop us an email: willy@francedigitale.org More info: www.francedigitale.org
  • 6. Part 1. How does fundraising work? “For [VC-Backed] startups, escape velocity has to do with becoming the dominant vendor and growing indefinitely.” — David Cummings
  • 7. Who will fund you? Startups don’t get money from bankers (lending), only from shareholders (equity) Banks won’t lend money to finance projects with no short term revenue generation So let’s focus on shareholders (Equity = long-term financing needs in uncertain corporate investment) that’s you PS: there are lots of subsidies in France, from 50K to 500K. Go and look for it (warning: it’s very time consuming)
  • 8. Pre-seed Savings Love Money (F&F) Grants Seed Venture Capitalists Love Money (F&F) Business Angels Angel Funds Wealth managers Series A & B Venture Capitalists Angel Funds Wealth managers Corporate funds Serie C+ <100K 100K-1.5M 500K-5M Venture Capitalists Growth funds M&A IPO Who are the shareholders for each step? Shareholders Rule of thumb: each round you give around 20-30% of your remaining capital, except in pre-seed when you give around 5-10%
  • 9. Pre-seed Savings Love Money (F&F) Grants Seed Venture Capitalists Love Money (F&F) Business Angels Angel Funds Wealth managers Series A & B Venture Capitalists Angel Funds Wealth managers Corporate funds Serie C+ <100K 100K-1.5M 500K-5M Venture Capitalists Growth funds M&A IPO Who are the shareholders for each step? Shareholders If you raise funds in tech, it will most likely be sooner or later with venture capitalists
  • 10. You’ll certainly work with VCs. Do you really know them?
  • 11. Behind each VC there is at least one LP* VCs also raise funds and need to be profitable & when VCs fund your startup, they also risk their own money (between 1% and 3% of the total fund) Business governance LPs Venture Capital Startups Acquirer** when you raise, you add two constraints: sell your company within 5-8 yrs (1) at a bigger price than your last valuation (2) financial flow *Limited Partners **M&A/IPO
  • 12. When do VCs earn money? The objective of a startup is to grow the business and its value as fast as possible to realize the greatest ROI possible on exit So all the profits get reinvested rather than paying dividend Shareholders get paid ONLY when they sell the company
  • 13. QUICK TEST 2 questions about venture capital
  • 14. 1 What should be the minimum return per startup? eg: if you say x1.5 it means that you have to earn €3M if you have invested €2M
  • 15. 1 What should be the minimum return per startup? Answer: x2.25 Do you wanna know why? Please refer to Annex at the end of the presentation, it’s a bit technical
  • 16. 2 What are the key factors for an exit? eg: the startup was a member of France Digitale
  • 17. 2 What are the key factors for an exit? Answers Growth it’s the only real focus of an entrepreneur Visibility from the mass market and from the key players Barrier to entry IP, distribution, partnership, technology... Profitability especially if you look for a financial exit (LBO/MBO/IPO), People -> Process the right organization to keep scaling the business
  • 18. 3 What are the differences between FCPI & FCPR?
  • 19. Category ! Funded by ! Investment period ! Investment criteria ! Maturity ! Size ! Management Fees ! Raising period ! FCPI FCPR Retail investment fund ! Tax-incentivized individual investors* ! 30 months ! Innovative* companies in Europe ! 5 to 7 years ! Between 10M€ to 30M€ around 3,5% / year ! Every year (following the fiscal calendar) Institutional investment fund ! Limited Partners (institutional) ! 36 to 48 months ! Defined by the GP ! 7 to 10 years ! Between 30M€ to 200M€ ! 2% /year ! No rule (usually when the investment period of the previous fund is finished) *Individual investors benifi2ng from a tax incen2ve : immediate 18% IR tax credit / immediate 50% ISF tax credit
  • 20. What does a VC expect from a startup? “The best shot is a very large market with big companies where nothing disruptive happened for 5+ years“ — Stéphanie Deslestre, Qapa
  • 21. Venture capitalists look at the same things* * but they don’t see things the same way
  • 22. The criteria of investment for VCs: team + opportunity + business model
  • 23. Team = risk of execution the most important criteria by far Best format: 2-3 founders with complementary skills, experience in the field, good learning pace, connexions within the industry, (or a community already built). 1 Super bonus: recommendation from a VC/BA or entrepreneur Mega bonus: you already sold one company before Ultra Bonus: you already sold one company before with a multiple of x2.25+
  • 24. 2 Opportunity = vision+promise make them want to know more. work on your brand. Problem/solution (problem/solution -> be very specific & convincing about the problem) Timing (the later you enter a market the less risky but also the more expensive - don’t be too early though) Market size (you have to be ambitious & disrupt a huge market) Competitors (you are not the best, you do things differently and that’s a better way to do it and you execute it well. Focus on your competitive advantages.) Joker: exit easy to spot (big players + recent M&As) (or IPO if you want to rock the world)
  • 25. 3 Business Model = smart & wise show them you know your job & you’re creative Value proposition (not the technology but the product/service for the client) Clients (you’d better really know them) Competitive Advantage (distribution, technology, partnership...) Distribution (growth hacking plan) Joker: you’ve got wonderful traction (if it seems very risky you’d better have some good figures)
  • 27. Valuation: the basics Pre-money value of the company + goodwill funding Post-money stock options Post-money fully diluted + +
  • 28. Valuation: illustration Pre-money Post-money Post-money fully diluted* 10M€ 15M€ 16.67M€* Capitalisation 10% stock option Pre Post Post FD Historic shareholders New shareholders Stock options 100% 66% 33% valorisation = 10M€ fundraise = 5M€ 60% 30% 10% * it’s like you have only (1-% stock options) of the company, since the stock options will dilute the overall shares Valorisation Post FD = post-money/(1-% stock option)
  • 29. Looking for advanced lessons about valuation? Check Khan Academy
  • 30. All stocks are not made equal
  • 31. Preferred stocks & main associated rights 1. Rights of capital protection 1.1. Right of pre-emption Right to acquire stocks that are sold before it can be offered to any other person or entity. Also called "first option to buy". 1.2. Right of anti-dilution In common and preferred stock, the right of a shareholder to maintain the same percentage of ownership in a company, should the company issue more stock. The anti-dilution clause can also indicates the right of a shareholder to purchase more shares in a new round of financing at the offering price up to his/her previous percentage of ownership. * if an investor have 20% of the company for 700K€ in seed, and anticipates a future need of financing of 10M€, he will allocates 2M€ (or more) to maintain 20% of the company.
  • 32. Preferred stocks & main associated rights 2. Political Rights 2.1. Right to board representation 2.2. Vote of strategic decisions Acquisition, budget, dividends.. can be vetoed
  • 33. Preferred stocks & main associated rights 3. Financial Rights 3.1. Liquidation preference Specify which investors get paid first and how much they get paid in the event of a liquidation event such as the sale of the company. Liquidation preference helps protect venture capitalists from losing money by making sure they get their initial investments back before other parties. eg: the first 5% pro rata for all shareholders, then to financial shareholders till the level of their investment, then the rest pro rata for all shareholders 3.2. Ratchet Correction of the pricing for the next round if the shares are at lower price. Two possibilites: full ratchet = the initial shares are priced at the level of ones from the new round ; weighted average ratchet = initial shares are priced at the level of the weighted average price paid during the different rounds More about preferred stocks & main associated rights (french)
  • 35. Investing in VC is not really an exact science* A glance at the anti-portfolio of Bessemer Venture Partner
  • 36. Prediction: chances to fundraise with a VC in France are pretty low [0,4-1]% chances with a specific VC fund 5% chances with any VC fund * dealflow of around 1000-1500 startups/year for a reputed VC fund (between 500 & 2000 depending of the scope & the attractiveness of the fund). 5-10 deals closed/year ** around 4000 startups/year seeking fund. Around 200 fundraise in the whole ecosystem.
  • 37. The Process Executive Summary Dealflow instruction analyst Weekly investment committee full team 90% OUT Business Plan First meeting analyst + partner Slideshow 85% OUT Instruction 2 partners/1 partner-1 analyst focus on specific points, “friendly“ due diligence 40% OUT 40% OUT try to avoid this step by meeting them before you need funds (chances almost x2) >10% OUT Negotiation at least one partner Everything you got Party everyone cool Champaign /! due diligence chance of raising: 100*(1-40%)*(1-90%)*(1-85%)*(1-40%)*(1-10%)=0,48%
  • 38. The relationship AFTER the raise What they will ask you: - reporting (revenue each month or quarter) - an action plan - validate the P&L and the main decisions ! What you should ask them: read this wonderful article
  • 39. Want to be part of the amazing community of France Digitale ? Click here* * or send us an email: willy@francedigitale.org
  • 40. Part 2. Should you raise funds? yes, this is just an option
  • 41. What do they have in common?
  • 43. You can make an incredible startup without raising funds.
  • 44. No money = great constraint to look for efficiency Money is a painkiller.
  • 45. Founded in 2008 - 3 cofounders. 1 kept working full time during the early days, the 2 other made freelancing on the side. * Github
  • 46. Founded in 2010 - 3 cofounders. Build the MVP with $60 (open source + outsourcer) First test on Reddit : 200 deals of pro accounts at imgur.com 50% discount Then rebuilt the site & sold 500 productivity bundles on Lifehackers. POC + cashflows. * AppSumo
  • 47. Yes, this is possible*. So when should you raise fund? * also in France, look at MyLittleParis, HumanCoders, Adopteunmec, Wisembly, Capital Koala, Appgratis (at least for a long time), etc.
  • 48. The next slide could hurt your aesthetic sensibility.
  • 49. Do you want to grow very fast to disrupt a market? YES Do you have significant upfront investment to test your market? Can you grow your business as you wish with your revenue stream before burning all your cash? NO Do you charge man days to your clients? YES Is your market small? DON’T RAISE! DON’T RAISE! C’mon, close more deals. (you don’t sale enough to raise) NO Do you want to keep the control of your business Either you can find a way to generate enough revenue or your dead NO NO YES YES YES RAISE! You’re in trouble NO YES RAISE! NO you are here
  • 50. What should you remember?
  • 51. What should you remember? Not raising is not failing. Raising is not succeeding.
  • 52. By the way... Github raised funds eventually. So did 99designs ! raising funds is not a one time decision
  • 53. What does bootstrapping mean? in practice
  • 54. Bootstrapping = lower velocity Escape velocity, in physics, is basically the speed needed to break free from gravity. For a bootstrapper it might only be the freedom to pay the bills.
  • 55. Your growth can be linear. If you have 10 new clients every month and if your retention is great. that makes 120 clients per year. That can be more than sufficient
  • 56. Distribution can be smaller If you need a few thousand customers and not millions, you can use any channel that is ROI positive. Even if it doesn’t scale.
  • 57. Acquisition & retention can be manual You can email yourself your power customers and get to know (or at least talk to) most of your clients, sooner or later.
  • 58. Conclusion for PG “Avoid investors till you decide to raise money, and then when you do, talk to them all in parallel, prioritized by expected value, and accept offers greedily. That's fundraising in one sentence. Don't introduce complicated optimizations, and don't let investors introduce complications either. ! Fundraising is not what will make you successful. It's just a means to an end. Your primary goal should be to get it over with and get back to what will make you successful—making things and talking to users—and the path I've described will for most startups be the surest way to that destination. ! Be good, take care of yourselves, and don't leave the path.“ - Paul Graham
  • 59. Credit Infos of bootstrapped companies in Quora Discussion with lots of investors, especially Marie Ekeland, Xavier Lazarus, Samantha Jerusalmy & Sebastien Derhy (Elaia Partners), Emanuele Levi (360 Capital Partner), Nicolas Celier (Alven Capital), Jean-David Chamboredon (ISAI) & Vladimir Bolze (Fa Diese), Jérôme Masurel (50 Partners) Discussion with Frederic Mazzella (BlaBlaCar) Discussion with Oussama Ammar (The Family) and his wonderful workshops (in french: fundraising & valorisation) Workshop France Digitale + Girls in Tech about “Financing Seed“ Presentation (in french) from Christophe Raynaud (ISAI) Article of Paul Graham Special thanks to Mathieu Daix, Taro Ugen & Emmanuelle Coulon, my dear colleagues that helped me to improve this presentation Slides 27-28, 31-32 were made by Marie Ekeland (Elaia Partners) Slides 63-65 were made by Emanuele Levi (360° Capital Partner) Slide 19 were made by Barbara Belvisi (PiedElephant)
  • 60. Willy Braun GM France Digitale. willy@francedigitale.org www.francedigitale.org Want to be part of the amazing community of France Digitale ? click here* * or send me an email Mathieu Daix CMO France Digitale. mathieu@francedigitale.org www.francedigitale.org
  • 61. Annex THE DARK SIDE OF THE PRESENTATION
  • 62. Corporate finance 101: hurdle rate & IRR you can skip this slide, only for math lovers €100M with a hurdle rate: 7%* (6 year average holding period positive return) -> €150M minimum ! Target IRR of fund investors (the LP) 10-15%*net of carried interest -> around €225M to stay in business * average in the venture capital market
  • 63. 20 startups in the portfolio €4M of funding per startup valuation x2 Below 2x they actually “lose money“ (20x4x2=160 < 225) 3x is a positive contributor to fund objectif (20x4x3= 240 > 225) 5x & 10x are needed to compensate bad investments target size for the fund Let’s explain why you need a x2.25 on average without math (1/2)
  • 64. Let’s explain why you need a x2.25 on average without math (2/2) 1 blockbuster: 20x = 80m ! 1 Star: 10x = 40m ! 2 Successes: 5x = 2x20m = 40m ! 4 Average: 2-3x = 4x10m = 40m ! 6 Bad investments: 0,5x-2x = 20m ! 6 Write-offs ! €220M, net IRR to investors 12%* On any given investment, x10 must be possible. *including 20-25m of carried interests (for 12 years of work)