Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Hec inside venture capital part 2 & 3

719 views

Published on

HEC lecture about Venture Capital (introduction) topics : investment thesis, how do VC source and select deals.

Published in: Technology
  • Be the first to comment

Hec inside venture capital part 2 & 3

  1. 1. INSIDE VENTURE CAPITAL February 2016 Christophe Raynaud – Managing Partner & Cofounder
  2. 2. WHO AM I TO SPEAK ?  HEC graduate (last millenium)  Entrepreneur… - Chateauonline - Netboussole - Samaris  …Turned VC (dark side of the force) - Saeed Amidi (Amidzad partner / plug&play tech center) - Paris Business Angels - ISAI CONTACT : r a y n a u d @ i s a i . Fr / @chraynaud
  3. 3. WHAT WILL I BE TALKING ABOUT ?  What is Venture Capital History ?  What is an investment thesis ? What’s ISAI’s ?  How do VC/ISAI source/screen opportunities ?  What makes a great founder ?
  4. 4. WARNING  NO BULLSHIT RULE  NOT THE TRUTH, JUST MY OWN EXPERIENCE
  5. 5. INVESTMENT THESIS
  6. 6. PEOPLE vs IDEA INVESTMENT CHOICE  ARTHUR ROCK « WHAT I AM INTERESTED IN IS INVESTING IN PEOPLE » > BET ON THE JOCKEY NOT THE HORSE EUGENE KLEINER « MAKE SURE THE DOG EATS THE DOG FOOD » « IN A HIGH WIND, EVEN TURKEYS CAN FLY » > BET ON HUGE MARKET AND PROVEN TRACTION T E A M M A R K E T
  7. 7. DEAL FLOW vs THESIS DRIVEN  DEAL FLOW CENTRIC INVESTMENT (PASSIVE) - PAST BUYER’S MARKET - 1980’s : 183 VC @ $42m - THIN & SHALLOW  THESIS DRIVEN INVESTING (ACTIVE) - TODAY SELLER’S MARKET - 2000’s : 3300 VC @ $280m - WIDE & DEEP
  8. 8. DEMAND / SUPPLY INVERSION
  9. 9. WHAT’S AN INVESTMENT THESIS (example 1) SOFT TECH VC - 3 ASSES RULES
  10. 10. WHAT’S AN INVESTMENT THESIS (example 2)  USV @AVC - Thesis in one Tweet
  11. 11. WHAT’S THE MANDATE LPs GAVE GPs?  WHAT IS YOUR STRATEGY TO PROVIDE RETURNS TO LPs - SECTOR - STAGE - GEOGRAPHY - PORTFOLIO SIZE / DEAL SIZE - NUMBER OF DEALS / PARTNERS - VALUE ADDED / BOARD SEATS - FAILURE RATE / MULTIPLE TARGETED - WHY IS THIS COMPELLING ? WHAT SECRET INGREDIENT ? (Cycles ? Differientiators ?)
  12. 12. WHAT VCs DO TO SPOT A DEAL ? > RISK / REWARD ANALYSIS
  13. 13. BUSINESS PLAN TOPIC COVERAGE 1/3 1. The Business: - Company’s business - Strategy - Mission statement 2. The Market: - Historic and projected sizes in dollars - Market trends 3. Product Offering: - Product description - Development schedule and launch date(s) - Product differentiation
  14. 14. 4. Distribution: - Key customers - Customer acquisition strategy - Sales channels /Partnerships 5. Competition: - Key competitors - Competitive advantages - Barrier to entry 6. Management Team: - Roles and responsibilities - Background of team members - Board composition BUSINESS PLAN TOPIC COVERAGE 2/3
  15. 15. 7. Financials: - Revenue model, margin analysis - Historic and forecasted P&L (first two years by quarters) - Projected cash flow (first two years by quarters) - Current balance sheet - Projected head count by functional area (G&A, sales, marketing, product development) - Capitalization schedule 8. The Deal: - Amount to be raised - Anticipated valuation - Use of proceeds - Options plan BUSINESS PLAN TOPIC COVERAGE 3/3
  16. 16. WHAT ELSE THAN BP DO VCs LOOK AT ?  INVESTMENT STRATEGY COMPATIBILITY - AMOUNT / STAGE / GEOGRAPHY / SECTOR  PORTFOLIO COMPATIBILITY  QUALITY OF THE SOURCE  SHOPPED DEAL / AUCTION  CO-INVESTORS (FIT/QUALITY)  QUALITY OF LEGAL COUNSEL / INVESTMENT READINESS  PERSONAL FIT
  17. 17. ISAI BUSINESS CASE
  18. 18. ISAI [isaj] n.f. (jap. name: different, remarkable) Acronym : Internet Savvy Active Investors VISION: RECYCLE $/EXP. OF SUCCESSFUL FOUNDERS FOUNDERS WHO HAVE MADE IT HELP OTHER FOUNDERS TO MAKE IT
  19. 19. WHO ARE WE ?  AN ENTREPRENEURS’ FUND - 130 ENTREPRENEURS - €150M UNDER MANAGEMENT  INTERNET SECTOR SPECIALIZED (MARKETPLACES/SAAS/MOBILE/ADTECH)  EARLY STAGE FOCUSED (SEED/POST SEED/SERIES A)  FRANCE BASED (OR ABROAD WITH FRENCH ANGLE) > BORN 6 YEARS AGO
  20. 20. WHO ARE WE ?  OUR TEAM  OUR COFOUNDERS  OUR PORTFOLIO
  21. 21. OUR ENTREPRENEURS’ FUND MODEL  OUR LPs ENTREPRENEURS HELP US SOURCE DEALS - GLOBALLY - HIDDEN MARKET  OUR LPs ENTREPRENEURS HELP US SCREEN DEALS  OUR LPs ENTREPRENEURS ADD VALUE TO BOARD MEETINGS
  22. 22. MISSION: HELP OTHERS SUCCEED
  23. 23. WHAT’S OUR (INITIAL) INVESTMENT THESIS ?  TARGET USUAL SUSPECTS TEAM/PRODUCT/MARKET/COMPETITIVE ADV.  SELECT THOSE WITH ISAI CRITERIA - CAPITAL EFFICIENCY - PROVEN TRACTION - PROGRESSIVE AMBITION - VALUATION < 3/5M - ETC… > BUILD A WHITE PONEY IN 3/5 YEARS EXIT > 15/30M€
  24. 24. WHERE’S THE TRICK IN OUR THESIS ?  WE OPERATE ‘AVENUE DE LA GRANDE ARMEE’  …NOT ON ‘SAND HILL ROAD’ - IPO (FR) = DEAD END - SMALL M&A MARKET - EXITS > $80M ARE VERY RARE  WHITE PONEY CAN TURN INTO : - CENTAURS (> $100m) - UNICORNS (> $1Bn) > FROM 2X (LOW FAILURE RATE) UP TO 4X (1/3 WINNERS)
  25. 25. ISAI’S « MAGNIFICENT SEVEN » 1. Oustanding TEAM 2. Proven Traction / Velocity 3. Low Capital Intensity 4. Defensible Position 5. Progressive Ambition 6. Fair Valuation 7. Value Added Board Position(s)
  26. 26. SOURCING & SCREENING
  27. 27. TRADITIONAL DEAL FLOW SOURCING  INBOUND - BRAND / BLOG POST / PRESS / SOCIAL PRESENCE / WHITE PAPER  INCUBATORS
  28. 28. TRADITIONAL DEAL FLOW SOURCING  INBOUND - BRAND / BLOG POST / PRESS / SOCIAL PRESENCE / WHITE PAPER  INCUBATORS  ACCELERATORS
  29. 29. TRADITIONAL DEAL FLOW SOURCING  INBOUND - BRAND / BLOG POST / PRESS / SOCIAL PRESENCE / WHITE PAPER  INCUBATORS  ACCELERATORS  BOUTIQUES
  30. 30. TRADITIONAL DEAL FLOW SOURCING  INBOUND - BRAND / BLOG POST / PRESS / SOCIAL PRESENCE / WHITE PAPER  INCUBATORS  ACCELERATORS  BOUTIQUES  STARTUPS STUDIO
  31. 31. TRADITIONAL DEAL FLOW SOURCING  INBOUND - BRAND / BLOG POST / PRESS / SOCIAL PRESENCE / WHITE PAPER  INCUBATORS  ACCELERATORS  BOUTIQUES  STARTUPS STUDIO ANGEL GROUPS / SEED FUND  LPs + ECOSYSTEM REFERALS OTHER PRO-ACTIVE RESEARCH - SPECIALIZED MEDIA / COMPETITIVE ANALYSIS / TECH EVENTS / STARTUP JURY
  32. 32. ISAI DEAL FLOW / CONVERSION FUNNEL
  33. 33. ISAI DEAL FLOW EVOLUTION 643 1105 1377 1529 1507 1505
  34. 34. ISAI DEAL FLOW COVERAGE ISAI look at 4/5 opportunitiesISAI look at 2/3 opportunities 89 rounds « Seed Stage » 145 rounds « Post Seed » & « Series A »
  35. 35. ISAI DEAL FLOW SOURCING Deal flow Step 0 Deal flow Step 3 BEST DEAL FLOW COMES FROM OUR 130 ENTREPRENEURS LPs NETWORK
  36. 36. Download slides on twitter/chraynaud

×