Designing business models     Investors perspective
Who we are, and what we doBUTTERFLY VENTURES
The TeamPartners                          Board of Directors           Matti Kanninen                    Jukka Mäkinen    ...
Investing from pre‐seed to follow‐upUnqualified               Qualified pre‐seed/seed        Qualified expansion      Fina...
What early stage investors look for       in a target company?
Positive black swans.
Scale of opportunity.
The business model is the key while          reaching there.
All the investors are not the same.
Two models for venture financingEXIT VS. CASH FLOW
Exit driven model                      Cash from stock sale                                                      Expectati...
Exit driven startup• Has a very large market potential   – Most of the potential not realized in a form of      positive c...
Cash flow driven model                     Product launch                               End of life                       ...
Cash flow driven product• Requires less capital over life cycle, can accept   more market behavior related risk• Has well ...
How to choose the right modelExit driven model                   Cash flow driven model• The grand vision is large        ...
Venture capital is expensive.
What we’re looking for from a business model perspectiveTHE RIGHT KIND OF STARTUP
Customer acquisition.
Customer retention.
Tool to design business modelsBUSINESS MODEL CANVAS
* Source: Business Models Generation ‐ http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf
Tribevine: The predictive Google analytics of real world products.
* Source: Business Models Inc. ‐ http://businessmodelsinc.wordpress.com/2009/08/11/sellaband‐business‐model‐visualized/
It’s a iterative process.
Design customer‐centric*  Organization‐centric                                                    Customer‐centric  1.    ...
Any questions?
ResourcesBooks                                                         Links•   Business Model Generation: A Handbook for ...
Takomo   business model design - 24.9.2012
Takomo   business model design - 24.9.2012
Takomo   business model design - 24.9.2012
Takomo   business model design - 24.9.2012
Takomo   business model design - 24.9.2012
Takomo   business model design - 24.9.2012
Takomo   business model design - 24.9.2012
Takomo   business model design - 24.9.2012
Takomo   business model design - 24.9.2012
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Takomo business model design - 24.9.2012

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Presentation I gave at Takomo 25.9.2012 about business model design from investors perspective. First a few slides about Butterfly Ventures, then couple that related to VCs business model to models they're expecting, then a few key points we look at and finally a case example of use of business model canvas and a few tips.

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Takomo business model design - 24.9.2012

  1. 1. Designing business models Investors perspective
  2. 2. Who we are, and what we doBUTTERFLY VENTURES
  3. 3. The TeamPartners Board of Directors Matti Kanninen Jukka Mäkinen managing partner Chairman of the Board Juho Risku partner, co-founder Jari Pasanen Member of the Board Antti Kosunen partner, co-founder, and Board member
  4. 4. Investing from pre‐seed to follow‐upUnqualified Qualified pre‐seed/seed Qualified expansion Financed – ExitAccelerating ”TechStars”  Scouting Go fast forward  Operationalization Follow or fail fast Scope of main interestStartUp Proof of  Idea Basics Preparation Scale‐up concept 15‐90 k€ 200‐400 k€ 1‐2 M€ xx M€Financing First time  Follow up  Investment Exit Investment Σ < 500 k€ Σ < 2.5 M€
  5. 5. What early stage investors look for  in a target company?
  6. 6. Positive black swans.
  7. 7. Scale of opportunity.
  8. 8. The business model is the key while  reaching there.
  9. 9. All the investors are not the same.
  10. 10. Two models for venture financingEXIT VS. CASH FLOW
  11. 11. Exit driven model Cash from stock sale Expectations Exit 10 * Valuation Investor • Money • ExpertiseInvestor • Money • Expertise Cash flow Company Valuation
  12. 12. Exit driven startup• Has a very large market potential – Most of the potential not realized in a form of  positive cash flow at the exit• Is easily scalable, usually globally – Smart customer acquisition logic built into  business model is a plus• Has strong IPRs or a business model that  accumulates value over time – Customer retention can be clearly articulated
  13. 13. Cash flow driven model Product launch End of life 1‐x% cash flow Company• IPRs (value) Product x • Money • Expertise Investor x% cash flow = 10 * money invested
  14. 14. Cash flow driven product• Requires less capital over life cycle, can accept  more market behavior related risk• Has well defined, easy to understand product and  clear simple business model• Has short time to market  – Straight forward development, no technology related  risk• Generates large positive cash flow fast – Has short sales cycle – Are usually consumer market products
  15. 15. How to choose the right modelExit driven model Cash flow driven model• The grand vision is large  • Company is based on idea  enough to fill the purpose  of multiple products of the company alone • IPRs are mostly creative • IPRs are patents or  content based and different  accumulated during longer  in each product period of use (information) • Founders like to keep the • Founders ready to sell the  options open for future company or IPO is a realistic  • Successful product can be  option used as a future reference
  16. 16. Venture capital is expensive.
  17. 17. What we’re looking for from a business model perspectiveTHE RIGHT KIND OF STARTUP
  18. 18. Customer acquisition.
  19. 19. Customer retention.
  20. 20. Tool to design business modelsBUSINESS MODEL CANVAS
  21. 21. * Source: Business Models Generation ‐ http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf
  22. 22. Tribevine: The predictive Google analytics of real world products.
  23. 23. * Source: Business Models Inc. ‐ http://businessmodelsinc.wordpress.com/2009/08/11/sellaband‐business‐model‐visualized/
  24. 24. It’s a iterative process.
  25. 25. Design customer‐centric* Organization‐centric Customer‐centric 1. What can we sell to customers? 1. What does our customer need  2. How can we reach customers  to get done and how can we  help? What are their aspirations  most efficiently? and how can we live up to  3. What relationships do we need  them? to establish with customers? 2. How do our customers prefer to  4. How can we make money from  be addressed, how do we fit into  our customers? their routines? 3. What relationship do our  customers expect us to establish  with them? 4. For what value are customers  truly willing to pay for?* Source: Alexander Osterwalder & Al. (2010). Business Model Generation
  26. 26. Any questions?
  27. 27. ResourcesBooks Links• Business Model Generation: A Handbook for Visionaries,  • Butterfly Ventures in the web:  http://butterfly.vc/,  Game Changers, and Challengers (ISBN: 978‐ http://www.facebook.com/ButterflyVentures,  0470876411) http://www.linkedin.com/company/butterfly‐ventures, • The Lean Startup: How Todays Entrepreneurs Use  https://twitter.com/Butterfly_VC Continuous Innovation to Create Radically Successful  • Tribevine: http://www.tribevine.com Businesses (ISBN: 978‐0307887894)’ • How to build a startup – free course by Steve Blank: • The Startup Owners Manual: The Step‐By‐Step Guide  http://www.udacity.com/overview/Course/ep245/Cours for Building a Great Company (ISBN: 978‐098499930) eRev/1• The Art of the Start: The Time‐Tested, Battle‐Hardened  • Business model generation – tools:  Guide for Anyone Starting Anything (ISBN: 978‐ http://www.businessmodelgeneration.com/ 1591840565)’ • Business model canvas poster: • Running Lean: Iterate from Plan A to a Plan That Works  http://www.businessmodelgeneration.com/downloads/ (ISBN: 978‐1449305178) business_model_canvas_poster.pdf • Showcase your startup, practical tips: https://angel.co/ • Staretup Compass, tool to analyze your starup KPIs:  https://www.startupcompass.co/

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