Jens Düing presentation at Luther start-up Conference Berlin, 28-Jan-16

1. Property of Frog Capital
Not to be distributed without agreement
January 28th, 2016
Berlin’s Growing Significance in the
European Context – and its Challenges

2. Who is Frog Capital?
• Pan-European growth capital investor
• Typically invest €3-10m in funding rounds of up to €20m
• Tech driven disruptors with some market traction and fast growth (>40%)

3. Berlin has come a long way
Source: CapitalIQ, fundraisings between €1m and €20m
0
20
40
60
80
100
120
140
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Number of fundraisings
Berlin London Paris

4. Berlin ecosystem has professionalised – example: proliferation of incubators
4Source: BerlinVC

5. Berlin’s growing importance increasingly recognised
5
Source: Compass group 2016
Note: Growth index calculated as
● Annual growth in the number of start-ups (33%) estimated based on CrunchBase data;
● 2013-2014 growth in VC investments (33%);
● Two-year moving average growth of the annual sum of exit valuations (33%), i.e. (2014 +
2013 exit values) / (2013 + 2012 exit values)
• Strongest trajectory among leading
ecosystems
• Recent exits part of the natural
evolution
• Distinctive strengths
0
1
2
3
4
5
6
7
8
9
10
Berlin London Paris
Growth index

6. Carried by distinctive strengths…
6
Source: Compass Group 2016
0%
5%
10%
15%
20%
25%
Berlin London Paris
Founders w/high growth start-up
experienece
0%
10%
20%
30%
40%
50%
60%
Berlin London Paris
Foreign employees

7. … attracting significant founding resource…
7
Source: Compass, 2016
0
1
2
3
4
5
6
7
8
Berlin London Paris
Average Series A raise (€m)
• Sufficient size to reach next phase of
growth
• Top companies have choice of
renowned investors

8. … accompanied by predictable challenges
8
Source: Compass, 2016
30
35
40
45
50
55
60
Berlin London Paris
Days to hire software engineer
• Comparatively long hiring times
• Salaries rising, now in line with EU
averages at c$60k
• Bigger funding rounds and small
employee option pools lead to mobile
workforce and higher salaries

9. Avg. Series valuation highest in Europe
9
Source: Compass, 2016
0
10
20
30
40
50
60
Berlin London Paris
Average Series A pre-money val.
(€m)
• Smaller dilution
• Recognises high potential
• But: Appears high vs London; sets high
bar for further funding rounds and exit

10. How aggressive later stage valuations can hurt founders
10
Suppose a 1x participating Series C
• €180m pre-money valuation
Exit
• €150m sale
• Participating preference paid back first
39
60
78
120
33
20
0 50 100 150 200
Exit
Post Series C
Founders Early funders Series C
Suppose a 1x non-participating Series C
• €100m pre-money valuation
42
33
83
67
25
20
0 50 100 150 200
Exit
Post Series C
Founders Early funders Series C
• You hold 33.3% of the equity before a €20m Series C

11. Jens Düing
jens.dueing@frogcapital.com
11