Things startups need to know if they want to raise capital from Silicon Valley


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I used this deck in a keynote at the Kima Ventures portfolio day, in Paris (France) on Dec 9, 2013. Kima has a very large portfolio of investments, mostly located outside of the US. Founders often hope to raise capital in Silicon Valley over the course of their financing journey, and my goal was to draw their attention to the traps and pitfalls ahead of them.

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Things startups need to know if they want to raise capital from Silicon Valley

  1. What  you  need  to  know  if  you  want   to  raise  capital  from  Silicon  Valley   Jeff Clavier Founder & Managing Partner Kima Ventures Portfolio Day Dec 9, 2013 – Paris, France
  2. SoftTech  VC  in  a  Nutshell   §  Founded in 2004, SoftTech VC has backed 143 seed stage startups in consumer internet, devices and Saas §  Geographies: §  80% of the portfolio is in Silicon Valley, 10% is in New-York, the rest is in SoCal, Boulder and Toronto/Waterloo Jeff Clavier §  To date: §  30+ companies have generated $1.5B in total exit consideration §  70+ companies have raised $1.5B in follow-on financing §  Top quartile performer in all funds SoftTech is very much a startup – it just happens to operate in the VC market. It was bootstrapped for 3 years (Fund I) – and then scaled by raising $155M (Fund II, III, IV). And yes, it had zero chance of being a success. 12/14/13 2 Charles Hudson Stephanie Palmeri
  3. A  few  SoftTech  Exits   Dec 05 Acquired by Dec 09 Acquired by Feb 12 Acquired by 12/14/13 Aug 06 Acquired by May 10 Acquired by Jul12 Acquired by Dec 06 Aug 07 Acquired by Acquired by July 10 July 10 Acquired by Acquired by Jul 12 Aug 12 Acquired by Acquired by 3 Aug 07 Acquired by Dec 10 Acquired by Aug 12 Acquired by Dec 09 Acquired by Oct 11 Acquired by Apr 13 Acquired by
  4. If  you  remember  ONE  thing  from  this  talk   “The only real mistake is not trying, anything else is part of an entrepreneur’s journey” 12/14/13 4
  5. Here  Is  the  SV/NY  Funding  Ecosystem   Pre-Seed < $500K Seed $1.2 to $2.5M Series A $4M tp $10M Series B $6M to $15M Growth $20M+ 12/14/13 • Bootstrapping/Friends and family/Crowdfunding • Incubators and Accelerators (YC, Techstars, AngelPad, SeedCamp) • Syndicates of micro-VC firms, angels and (potentially) traditional VCs • AngelList and Crowdfunding services as alternative or “fill up” opportunity • One traditional VC, with micro VCs investing pro-rata and adding strategic angels • Family Offices, Strategics, Micro-VCs + Crowdfunding pools as alternative • Another traditional VC (or two), with insiders coming in for pro-rata • Same mix as Series A for alternatives • Mix of traditional/growth VCs, PE firms, hedge funds. In parallel, secondary transactions. • Alternative: direct co-investments from LPs, hedge/mutual funds, cash rich corporates 5
  6. Challenges  to  Raising  Capital  in  the  US   §  Visas for Founders and Executives §  Financeable Idea: Big, Bold, Global Vision §  Limited/Inexistent Network for employees and investors referral §  Team/Product Credibility vs. Traction 12/14/13 6
  7. Two  Practical  Ways  To  Get  To  The  Valley   As an Employee §  Get a large US co to sponsor your visa and move you §  Network your way into the local community of entrepreneurs and investors §  After 2 to 4 years, you’re local and you can figure out your way into a new visa, startup, funding, etc. §  Takes time, but works well if you are committed to the US 12/14/13 As an Entrepreneur §  Raise seed financing in France/Europe for a global product, validated locally §  Raise a Series A/B in Europe with a global footprint target §  Raise a Series B/C in the US to expand/grow §  If your startup has 2+ years, transfer visas (L) is a possibility 7
  8. What  Silicon  Valley  Investors  Consider   §  Market Opportunity §  Distribution §  Vision §  Marketing §  Team/Bench §  Monetization §  Traction §  Economics §  Competition 12/14/13 8
  9. What  Silicon  Valley  Investors  Consider   §  Market Opportunity §  Distribution §  Huge ($Bs) §  Most critical §  Vision §  Marketing §  Big, Ballsy, Impactful §  What’s unique about yours §  Team/Bench §  Monetization §  World class/Experienced §  What brings the dough when §  Traction §  Economics §  Proof that the shit works §  Do the CAC vs. LTV maths work §  Competition §  Know your ecosystem 12/14/13 9
  10. Big  No-­‐No’s   §  Expecting we’ll move you §  Expecting that it’s easy §  Most investors will want to see commitment to US §  Convincing US investors is unbelievably hard §  Research how it worked for SoundCloud, Klarna, Unity, Criteo, Songkick, Skype, Rovio, etc. §  Traction in France is enough to get US funding §  Need global ambition and European traction §  A detail: the Exit slide in the deck §  Assume every VC is a potential investor §  We’ll show you the exit… door §  Previous European deal is a strong indicator 12/14/13 10
  11. Finally  a  Few  Recommendations   §  You need to understand the “right” source and amount of funding for your startup §  Based on the vision and market opportunity §  Depending on your stage, and industry §  Crunchbase and AngelList are great sources of information re who funded what §  Remember: most professional investors will only consider opportunities coming through a referral §  Other successful European entrepreneurs are probably best §  Incubators offer a real opportunity to get early stage financing in the US 12/14/13 11
  12. Any  Questions?