An introduction to the basics of Early-Stage-VC

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An introduction to the Basics of Early-Stage-Venture Capital
The economics of an early-stage VC-Fund
PointNineCap @ Pirates on Shore Poznan June 11th, 2014

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An introduction to the basics of Early-Stage-VC

  1. 1. The Basics of VC The economics of an early-stage VC-fund PointNineCap @ Pirates on Shore Poznan - June 2014 early stageAn intro to
  2. 2. Agenda cześć About Us Intro to Venture Capital
  3. 3. About us @PointNineCap ● Berlin-based, 2011 ● 45mEur, 2 funds ● Seed & Series A (500k-1m €) ● Europe & North America @Mathias ● Made @ Wuppertal (DE) ● Business/Finance Studies @ ESB (DE) & Neoma (FR) ● Ecommerce @ OTTO (DE) ● Consulting @ Deloitte (SA) ● VC @ Mountain Partners (CH) ● M&A @ Naspers (CH/CEE) ● VC @ PointNineCap ● Mentor/Supporter @ Seedcamp, LauncHub and Kisura
  4. 4. Sources of Startup financing Intro to the basics of early stage VC Idea Startup Early Maturity Growth Equity Clients Crowdfunding F&F Accelerators Angels VC Private equity IPO Debt External ✓ Validate opportunity✓ Sustainable✓ “Easy” ✓ Feedback x Requires productx Risk of fundedcompetitors
  5. 5. Clients: 4 Business Models Supply Demand % Software Users $ Product Customers $$ SaaS Marketplace eCommerce Intro to the basics of early stage VC
  6. 6. Venture Capital: Stages Pros: ✓Less maturity ✓Quick growth ✓Knowledge Cons: x Distraction, Effort, slow and hard x Less control x Addictive Intro to the basics of early stage VC
  7. 7. How does it work 1Closed fund (+) 40mEur 0Institutional investors Pension funds 2Focus Stage, Geography, Segment etc. Seed, West, Internet 3 Investments (ie. seed, 500k for 15%) 4Support growth Strategy, hiring, etc. 5Exits 100mEur 6Allocation 40mEur + 80% 85mEur -> founders 15mEur -> fund First 40mEur to investors. Next: 20% to fund (carry), 80% a investors Intro to the basics of early stage VC
  8. 8. How does it work (ii) Maths Fund size 40mEur Goal x3 cash-on-cash Exits proceeds 120mEur Avg Ownership 15% Exits req. 800mEur ● Investments 40 ● Hit rate 33% hits Requirements ● Big market = international! ● Great team and ambition= full- time & main occupation! ● Fast growth = scalable! ● Sustainable position = Sustainable comp advantage! Exit requirement (rule of thumb): x5 fund size Intro to the basics of early stage VC
  9. 9. Fund Duration time to build & sell a company: roughly 7 years → average fund duration 7-10 years How does it work (iii) 3y 5y 7y 10y Investment Period Divestment Period Extension Extension Intro to the basics of early stage VC
  10. 10. How does it work (iv) Intro to the basics of early stage VC → Every investment needs to have “fund-maker” potential Out of a hypothetical portfolio that consists of 10 companies...
  11. 11. Intro to the basics of early stage VC
  12. 12. Relevant players (incomplete excerpt) Intro to the basics of early stage VC
  13. 13. Questions? Feedback?
  14. 14. If you want to stay in touch www.pointninecap.com + Some say we have a pretty cool newsletter! ;) Follow us on Twitter and facebook @PointNineCap | /PointNineCap mathias@pointninecap.com LinkedIn | XING | facebook | Angel.co Thanks!
  15. 15. Further Reading ● www.pointninecap.com ● Christoph’s Blog - The Angel VC (Partner at .9$) ● Pawel’s Blog (Partner at .9$) ● CB Insights on Berlin’s Startup Ecosystem ● European Tech Exits ● VentureLoop-Jobs @ Point Nine Family & Berlin Startup Jobs ● The Economist about Tech Startups (in Europe) ● The Economist - Comeback Capital: Venture Investing in Europe ● VentureBeat about Point Nine Capital ● WSJ about Michael Wolfe & Point Nine ● TechCrunch - Vend raises from Peter Thiel ● WSJ - Clio raises from Bessemer Ventures ● TechCrunch - Zendesk’s stellar IPO Intro to the basics of early stage VC

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