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Maria Dramalioti Taylor - 10 non-textbook lessons for entrepreneurs copy

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  2. 2. Fundraising in Europe: 10 non-textbook lessons for entrepreneurs Maria Dramalioti-Taylor x.Million Capital Ventures maria@x.xmillioncapital.eu www.dramalioti-taylor.org Mobile Monday, Athens 16.01.12
  3. 3. Agenda •  Venture/Angel Capital: –  How to decide if you need it –  How to navigate the VC scene •  Raising Capital in EU vs US: –  What is really going on? 3
  4. 4. x.Million: news kids on the block What? How much? When & where? MOB & WEB STARTUP & SEED EUROPE Seed Retai l €100k €250k € 500k Other €50k €1m How we work: -  Lean, K.I.S.S. -  Back exceptionally talented people -  Look beyond web 2.0 4
  5. 5. Portfolio highlights 2011 Pilot fund: €10M 2012 Fund I > €10M 5
  6. 6. Agenda •  Venture/Angel Capital: –  How to decide if you need it –  How to navigate the VC scene •  Raising Capital in EU vs US: –  What is really going on? 6
  7. 7. #1 – Sell shares only when you need speed ENTREPRENEUR HAS… …AND NEEDS… …money to move 1 *FASTER* than OWN Original THEREFORE FACES… capital allows idea …intensifying competition 2 …SO SELLS shares to Best-in-market to pay for.. founding team Hiring 3 Faster product development Large potential Infrastructure market Commercialisation Geographical expansion 7
  8. 8. THE STARTUP FUNDING SPECTRUM NET CASH POSITION + - Closed Public SCALE STAGE ALPHA BETA 1st Revenue 8
  9. 9. #2- Illuminating but not necessarily true (John Kay) NET CASH POSITION Grants Venture Capital Venture Capital Bootstrapping Angel Capital Series A Series B,C,D Family (€2m-€20m) (€5m-€20m) Venture Debt + - Closed Public SCALE STAGE ALPHA BETA 1st Revenue 9
  10. 10. DO IT LIKE A JACANA 10
  11. 11. #3 – Decode the Business Angels •  Angels invests own money Angels are •  Small amounts, early, at low valuation like women: –  €10k-€250k at temperamental valuation €0.5-€2m & (mostly) •  Exit: –  sell at €5-10m irreplaceable valuation & make 2-5x –  bring VCs, get diluted (may) make 10x •  FOCUS ON: getting capital back 11
  12. 12. #4 – Decode the Venture Capital business •  VCs raise a fund every 2-4 years VCs run a –  Invest other people’s business. money They make it •  Invest the funds over 5 years •  Exit (sell) via M&A or IPO sound like •  They take: –  2.5% pa management fee on Black Magic. funds managed –  Carry = 20% x [Total Return at IT IS NOT. Exit] – [Total Amount Invested] •  FOCUS ON: returning 3x-5x capital back to investors in 4Y-5Y 12
  13. 13. TEST: Can you see the (main) difference? Ca. 2,000 ANGEL UK Typical VC portfolio investments 10x 10x 10x 9% 10% 10% Loose 1x-5x Write your 1x-2x 1x-2x Loose downs 20% your shirt 35% shirt 30% 40% 56% 50% 3x-5x 3x-5x 30% 10% 13
  14. 14. TEST: Can you see the (main) difference? Ca. 2,000 ANGEL UK 1x-2x Typical VC portfolio investments 20% Angel George 10x 9% 1x-5x 3x-5x 30%  Write downs 10x 10% 1x-2x 35% 50% 30% 56% 3x-5x 10% Angel Dimitris Angel Maria Fund Investors share of profits 14
  15. 15. #5 – γνῶθι..τω επινδυτή Angels may not let you fail, VCs may give you a big success www. http://www.instigatorblog.com 15
  16. 16. #6 - Mind the AC/VC disconnect + - Closed Public SCALE STAGE ALPHA BETA 1st Revenue DISCONNECT ANGEL /VC ANGEL CAPITAL VC £500k £2m 16
  17. 17. NOTE: The blurring of AC/VC in the US www.dramalioti-taylor.org 17
  18. 18. #7 –A new taxonomy of investors Venture Accelerators Accelerator academy, Seedcamp, Astia, Ycombinator, 500hats, Springboard… Super Angels high batting avg. Angellab, Cherry Coutou, Husein Kanji Lean VCs treats every entrepreneur as an individual x.Million, pro-founders… 18
  19. 19. #8 - Connect the fundraising dots “what they offer” Fight the vs. information “what you need” asymmetry –  Initial capital per idea Sources –  Sector focus: do they www.thefunded.com understand it? –  Risk tolerance: can they www.fredestin.com deal with uncertainty? Angellist –  Compatibility: will their www.Ventureshacks.com pride suffer if you fail? –  Terms (& strings attached) 19
  20. 20. Agenda •  Venture/Angel Capital: –  How to decide if you need it –  How to navigate the VC scene •  Raising Capital in EU vs US: –  What is really going on? 20
  21. 21. #9 - Bust the US VC myth US VC is big Investment is at a high Investments per •  OVERALL VC INVESTMENTS capital in US is 5.8x –  $7.5 bn, 966 deals, 19% up –  on track to $26 bn & 6th higher than EU most active year •  INTERNET AT 10-YEAR HIGH US EU –  $2.3 bn (72% up from Q1) 275 deals (46% up from Q1) –  5/10 top deals in Internet 0.15% 5.8x 0.026% GDP GDP Data: US, Q2/11 21
  22. 22. #9 - Bust the US VC myth It is also …bubbly 22
  23. 23. #9 - Bust the US VC myth US VC … VCs invest more dollars than fundraising raising…level of lowest for 15 investment years unsustainable withoutexits and, subsequently, fundraising… NVCA, 2011 23 Data: Q2/2011, US
  24. 24. #9 - Bust the US VC myth IF VIX >30 THEN IPOs drop dramatically 24
  25. 25. #9 - Bust the US VC myth IF US VC Exits of the same order of magnitude need only ½ the VC capital in EU is big THEN EU = 1/2 x USA EU VC is effective 25
  26. 26. #9 - Bust the US VC myth US IT is big EU feeds it Global tech industry is EU companies bought by US dominated by US companies tech companies using offshore cash Source: Hussein Kanji,2011 26
  27. 27. #10 – Focus on the social graph 27
  28. 28. #10 – Focus on the social graph 28
  29. 29. #10 – Focus on the social graph 85% of worlds population covered by wireless signals vs 80% of world population connected to the electrical grid 29
  30. 30. 30
  31. 31. #10 – Learn to read the VC barometer stage-agnostic - likely bias due to large follow on rounds 33
  32. 32. Post-bubble EU VC industry: survival of the fittest 38
  33. 33. LESSON 9: Exploit geo-differences, create arbitrage 40
  34. 34. IRR % 2x 3x 4x 5x 6x 8x 10x 2Y 41 73 100 124 145 183 216 3Y 26 44 59 71 82 100 115 4Y 19 32 41 49 56 68 78 5Y 15 25 32 38 43 52 58 6Y 12 20 26 31 35 41 47 7Y 10 17 22 26 29 35 39 8Y 9 15 19 22 25 30 33 9Y 8 13 17 20 22 26 29 10Y 7 12 15 17 20 23 26 42
  35. 35. Time to Exit: Angels vs VCs http://www.techvibes.com/blog/what-happens-to-exits-when-vcs-invest 43
  36. 36. Milestones & Rounds http://vcperspectives.com/wordpress/page/3/ 44
  37. 37. ANGEL ACTIVITY: US vs.UK US angel activity EU angel activity 0.8x 0.3x
  38. 38. ANGEL ACTIVITY: US vs.UK US angel activity EU angel activity 2.5x 6x
  39. 39. HNWI Population by Country, 2010

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