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How early is early?The early stage investment philosophy of Butterfly Ventures
Juho Risku• Involved with the web mid ‐90’s, since then at the very front of networked technology and business innovation•...
INTRODUCTIONWho we are, and what we do
Board of DirectorsJukka MäkinenChairman of the BoardJari PasanenMember of the BoardThe TeamPartnersMatti Kanninenmanaging ...
Northern Startup Fund• Located in Oulu, Finland• Investors– 5M from City of Oulu, First closing done– 5M from private inve...
Idea15‐90 k€ 200‐400 k€ 1‐2 M€ xx M€Unqualified Qualified pre‐seed/seed Qualified expansionAcceleratingStartUpFinancingFin...
THE RIGHT KIND OF STARTUPWhat we’re looking for and why
Trajectory of business01020304050600 6 12 18 24 30 36 42 48Positive black swanScope of realistic trajectoryMarket potentia...
image by freeimageslive.co.uk ‐ Halloween
Fragile, robust and antifragile01020304050600 6 12 18 24 30 36 42 48Pivot forced by marketFragile trajectoryAntifragile tr...
Maximizing the exposure to positive black swans and avoiding fragility
Startups where in addition to money we can add value.
THE INVESTMENT PROCESSWhen to start and how it happens
Decission makingProcess• Quick look– ~25% into prospect = examined in more detail• Case selection– Heuristic analysis and ...
Dealflow in numbers>200Seriously considered25%Prospect Invested1.4%+1kk +3kk<1kk
Stages ‐ dealflow vs. investmentsPre‐seed; 28%Seed; 56%Growth; 17%DealflowPre‐seed; 33%Seed; 67%Investments
We like to get involved early on, preferably well before you need the money.
Valuation and time050010001500200025003000350040004500‐12 ‐6 0 6 12 18 24Pre‐seedSeedCrash point
EXAMPLESA few cases of ours
NWG Tools (pre‐seed)• Value proposition: 200% profit increase for tiling contractors ‐ verified by proto• Invested because...
MyPose (seed)• Value proposition: Significant revenue stream for clothing retailers and cost effective social media market...
FilmMe (seed)• Value proposition: Easy and cost effective filming of your self in action without having someone else opera...
Here’s the front line, lets rock!
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Butterfly ventures early stage investment philosophy - 18.6.2013

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Butterfly Ventures early stage investment philosophy slide deck. The deck explains what kind of startups we're looking for and why.

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Butterfly ventures early stage investment philosophy - 18.6.2013

  1. 1. How early is early?The early stage investment philosophy of Butterfly Ventures
  2. 2. Juho Risku• Involved with the web mid ‐90’s, since then at the very front of networked technology and business innovation• Serial entrepreneur, founder in four companies, involved in hundreds of projects, gathered millions of venture financing and helped numerous startup entrepreneurs• Outside of work: Big mountain freeriding, ice climbing and mountaineering , friend of good literature food and wineEmail: juho@butterfly.vcLinkedIn: http://fi.likedin.com/in/jrisku About.me: http://about.me/juho.riskuJuho Risku• Involved with the web mid ‐90’s, since then at the very front of networked technology and business innovation• Serial entrepreneur, founder in four companies, involved in hundreds of projects, gathered millions of venture financing and helped numerous startup entrepreneurs• Outside of work: Big mountain freeriding, ice climbing and mountaineering , friend of good literature food and wineEmail: juho@butterfly.vcLinkedIn: http://fi.likedin.com/in/jrisku About.me: http://about.me/juho.risku
  3. 3. INTRODUCTIONWho we are, and what we do
  4. 4. Board of DirectorsJukka MäkinenChairman of the BoardJari PasanenMember of the BoardThe TeamPartnersMatti Kanninenmanaging partnerJuho Riskupartner, co-founderAntti Kosunenpartner, co-founder,and Board member
  5. 5. Northern Startup Fund• Located in Oulu, Finland• Investors– 5M from City of Oulu, First closing done– 5M from private investors• Asymmetric, private investors have the preference– Will get their invested capital back first– Will get their share of the returns first
  6. 6. Idea15‐90 k€ 200‐400 k€ 1‐2 M€ xx M€Unqualified Qualified pre‐seed/seed Qualified expansionAcceleratingStartUpFinancingFinanced – ExitGo fast forward or fail fastScoutingScoutingBasics PreparationProof of conceptScope of main interestOperationalizationOperationalizationScale‐upΣ < 500 k€ Σ < 2.5 M€Fast forward, fail fastFirst time InvestmentFollow up InvestmentFollow up InvestmentFollowExit
  7. 7. THE RIGHT KIND OF STARTUPWhat we’re looking for and why
  8. 8. Trajectory of business01020304050600 6 12 18 24 30 36 42 48Positive black swanScope of realistic trajectoryMarket potential& scalability
  9. 9. image by freeimageslive.co.uk ‐ Halloween
  10. 10. Fragile, robust and antifragile01020304050600 6 12 18 24 30 36 42 48Pivot forced by marketFragile trajectoryAntifragile trajectoryRobust trajectory
  11. 11. Maximizing the exposure to positive black swans and avoiding fragility
  12. 12. Startups where in addition to money we can add value.
  13. 13. THE INVESTMENT PROCESSWhen to start and how it happens
  14. 14. Decission makingProcess• Quick look– ~25% into prospect = examined in more detail• Case selection– Heuristic analysis and scoring– Priorization: Each week, focus on top 3• Deal scoping– Business model and cash flow analysis– Deal proposal• Agreement and approvalScoring criteria• Market / market potential• Founder team• Product and business model• Long term competitive advantage / protection fo market position• Current situation• Exit potential• Financing requirements now and in future
  15. 15. Dealflow in numbers>200Seriously considered25%Prospect Invested1.4%+1kk +3kk<1kk
  16. 16. Stages ‐ dealflow vs. investmentsPre‐seed; 28%Seed; 56%Growth; 17%DealflowPre‐seed; 33%Seed; 67%Investments
  17. 17. We like to get involved early on, preferably well before you need the money.
  18. 18. Valuation and time050010001500200025003000350040004500‐12 ‐6 0 6 12 18 24Pre‐seedSeedCrash point
  19. 19. EXAMPLESA few cases of ours
  20. 20. NWG Tools (pre‐seed)• Value proposition: 200% profit increase for tiling contractors ‐ verified by proto• Invested because– Clear and simple value proposition– Great neatly protectable and enforceable IPR– Team with strong industry experience  + commitment– Lean operation mode• Invested for– First commercial product version– Customer value proposition validation– Reference customer acquisition
  21. 21. MyPose (seed)• Value proposition: Significant revenue stream for clothing retailers and cost effective social media marketing –investment paid back in 3‐10 months• Invested because– Industry dynamics changing value proposition– Clever business model with billion dollar market opportunity and naturally viral product– Capable committed team– First product version tested by several customers (Marimekko, Calvin Klein, One Piece)• Invested for– Business model finalization and value proposition validation– Acquisition of reference customers
  22. 22. FilmMe (seed)• Value proposition: Easy and cost effective filming of your self in action without having someone else operating the camera• Invested because– Clear value proposition for different actors– Attractive business model with billion dollar market opportunity and naturally viral product– Demonstrated market traction with 180k€ worth of pre‐agreements– Committed balanced team with marketing and technological skill• Invested for– Business model validation– Establishing the required metrics for follow on round
  23. 23. Here’s the front line, lets rock!

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