University Start-up  / Story & lessons Neil Costigan May 2011
Why listen to me ? <ul><li>CTO BehavioSec, Lulea, Sweden. </li></ul><ul><li>PhD. Applied Cryptography. DCU. 2010. </li></u...
Idea to VC A journey
‘ Pattern’ <ul><li>Commercialisation at a university </li></ul><ul><ul><li>Often a ‘must do’ for funding </li></ul></ul><u...
Process to get funded <ul><li>Idea / prototype </li></ul><ul><li>Patent  ? </li></ul><ul><li>Team  (full engineering&sales...
Painful truths <ul><li>Friends fall out. Plans change. </li></ul><ul><li>Not everyone contributes equally. </li></ul><ul><...
The chasm : a cliché but true !
So you want to take VC ? A dance with the devil ?
Process… <ul><li>Pitch </li></ul><ul><li>Round table discussion </li></ul><ul><li>Term Sheet </li></ul><ul><li>Due diligen...
Pitch / Get to next step <ul><li>Practice practice practice </li></ul><ul><ul><li>Watch for key questions and what gets a ...
Term Sheet <ul><li>2 to 3 pages outlining plan </li></ul><ul><li>Very important BUT NOT BINDING </li></ul><ul><li>Sets up ...
Due Diligence <ul><li>You will pay!  (>30K Euros) </li></ul><ul><ul><li>Technical </li></ul></ul><ul><ul><li>Financial </l...
Realities <ul><li>Never goes fast.  12 weeks+ </li></ul><ul><li>Participating preferred stock </li></ul><ul><ul><li>Zone o...
Shareholders Agreement <ul><li>Legal representation of term sheet </li></ul><ul><li>Very legal </li></ul><ul><li>Very long...
Remember <ul><li>Don’t take your own team for granted. </li></ul><ul><ul><li>Communicate </li></ul></ul><ul><li>Be ready f...
Lots and lots of luck. You make your own luck. <ul><li>It is tough. Very few short cuts. </li></ul><ul><li>You will not ch...
Why would you bother ? <ul><li>Amazing journey. It is winning the cup. </li></ul><ul><li>David vs. Goliath </li></ul><ul><...
Upcoming SlideShare
Loading in …5
×

Neil Costigan / University Startup Lessons & VC deal structure

584 views

Published on

talk about lessons learned with university startup including some on VC deal

Published in: Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
584
On SlideShare
0
From Embeds
0
Number of Embeds
8
Actions
Shares
0
Downloads
7
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide
  • 1992 2005 DCU basement
  • Neil Costigan / University Startup Lessons & VC deal structure

    1. 1. University Start-up / Story & lessons Neil Costigan May 2011
    2. 2. Why listen to me ? <ul><li>CTO BehavioSec, Lulea, Sweden. </li></ul><ul><li>PhD. Applied Cryptography. DCU. 2010. </li></ul><ul><li>VP R&D, Gemplus, France. </li></ul><ul><li>Founder/CTO Celo, Sweden & US. </li></ul><ul><li>Software developer MedCom, Sweden </li></ul><ul><li>Software developer Telecom Ireland Software </li></ul><ul><li>5th StartUp ! </li></ul>
    3. 3. Idea to VC A journey
    4. 4. ‘ Pattern’ <ul><li>Commercialisation at a university </li></ul><ul><ul><li>Often a ‘must do’ for funding </li></ul></ul><ul><ul><li>Patent ? (worthless a high % of time) </li></ul></ul><ul><ul><li>University / Local / National Bus plan competitions </li></ul></ul><ul><ul><li>Start-up competitions / Networking </li></ul></ul><ul><ul><ul><li>Stay focused </li></ul></ul></ul><ul><ul><li>Advisors (hit & miss). Beware of the MBA project. </li></ul></ul><ul><li>In parallel … Sell !!! </li></ul><ul><ul><li>PoCs / pilots </li></ul></ul><ul><ul><li>Find the market fit </li></ul></ul>
    5. 5. Process to get funded <ul><li>Idea / prototype </li></ul><ul><li>Patent ? </li></ul><ul><li>Team (full engineering&sales&marketing&executation) </li></ul><ul><ul><li>You wear many hats. </li></ul></ul><ul><li>Angels </li></ul><ul><li>‘ Version 1’ Extremely important to stay focused </li></ul><ul><li>Pilot (and paid pilots are much more important) </li></ul><ul><li>FCS (first customer shipment) Focused </li></ul><ul><li>Polish and fix key product features Focused </li></ul><ul><li>Repeat business </li></ul><ul><ul><li>Not a service </li></ul></ul><ul><ul><li>Next customers buying same thing </li></ul></ul><ul><li>It was much easier before </li></ul>
    6. 6. Painful truths <ul><li>Friends fall out. Plans change. </li></ul><ul><li>Not everyone contributes equally. </li></ul><ul><ul><li>Sort this out early. </li></ul></ul><ul><li>Technology becomes less important </li></ul><ul><ul><li>Idea is just 5% </li></ul></ul><ul><ul><li>Patent, in software business, is a checkbox </li></ul></ul><ul><li>‘ Crossing the chasm’ </li></ul><ul><ul><li>Two chasms ? </li></ul></ul><ul><li>VCs invest in teams. Fundable teams are balanced. ‘Made guys’. </li></ul><ul><li>Need credible market verification </li></ul><ul><li>Only you can sell it at early stage </li></ul><ul><ul><li>‘ Partners’ & resellers worthless in the beginning </li></ul></ul>
    7. 7. The chasm : a cliché but true !
    8. 8. So you want to take VC ? A dance with the devil ?
    9. 9. Process… <ul><li>Pitch </li></ul><ul><li>Round table discussion </li></ul><ul><li>Term Sheet </li></ul><ul><li>Due diligence </li></ul><ul><li>Shareholders Agreement </li></ul><ul><li>€€€€ ! </li></ul>
    10. 10. Pitch / Get to next step <ul><li>Practice practice practice </li></ul><ul><ul><li>Watch for key questions and what gets a hook. </li></ul></ul><ul><li>Show that you have verified your technology is what *industry* wants and you have packaged it that way. </li></ul><ul><li>Confident thought out answers. Can’t be shy. </li></ul><ul><ul><li>Know the pricing models, the sales process and who will buy. </li></ul></ul><ul><ul><li>Know how much money you want and what you will do with it. </li></ul></ul><ul><ul><li>Know these off by heart !!! </li></ul></ul><ul><li>One shot. </li></ul><ul><li>All about showing them they are not taking a risk </li></ul>
    11. 11. Term Sheet <ul><li>2 to 3 pages outlining plan </li></ul><ul><li>Very important BUT NOT BINDING </li></ul><ul><li>Sets up broad parameters </li></ul><ul><ul><li>Valuation / cap table </li></ul></ul><ul><ul><li>Investment amount </li></ul></ul><ul><ul><li>Board set up </li></ul></ul><ul><ul><li>Timing for investment tranches </li></ul></ul><ul><li>Exclusivity </li></ul><ul><li>No lawyers (yet) </li></ul><ul><li>Takes 2 or 3 weeks discussion max </li></ul><ul><li>Lots of these do not result in investment </li></ul>
    12. 12. Due Diligence <ul><li>You will pay! (>30K Euros) </li></ul><ul><ul><li>Technical </li></ul></ul><ul><ul><li>Financial </li></ul></ul><ul><ul><li>Legal </li></ul></ul><ul><ul><li>Marketing </li></ul></ul><ul><li>4 to 6 weeks for uncomplicated early stage </li></ul><ul><ul><li>Worth having good books and business practice </li></ul></ul>
    13. 13. Realities <ul><li>Never goes fast. 12 weeks+ </li></ul><ul><li>Participating preferred stock </li></ul><ul><ul><li>Zone of indifference </li></ul></ul><ul><li>Lock-up and Vesting </li></ul><ul><li>Option programs for new hires </li></ul><ul><li>Warranties (and liability for) </li></ul><ul><li>Board control </li></ul><ul><li>Expenses </li></ul><ul><li>Qualified decisions </li></ul><ul><li>Employment agreements (salaries etc.) </li></ul><ul><li>Clichés </li></ul>
    14. 14. Shareholders Agreement <ul><li>Legal representation of term sheet </li></ul><ul><li>Very legal </li></ul><ul><li>Very long </li></ul><ul><li>Very boring </li></ul><ul><li>Very expensive </li></ul><ul><li>Get help </li></ul><ul><li>Traps </li></ul><ul><ul><li>Legal Templates </li></ul></ul><ul><ul><li>Drag along etc. </li></ul></ul>
    15. 15. Remember <ul><li>Don’t take your own team for granted. </li></ul><ul><ul><li>Communicate </li></ul></ul><ul><li>Be ready for bureaucracy by the government side. </li></ul><ul><li>It will take forever and a day. </li></ul><ul><ul><li>Urgent for you. Not for others. </li></ul></ul><ul><ul><li>Need to keep a watch on your business too. </li></ul></ul><ul><li>You should never see any of these documents again* </li></ul>*ever!
    16. 16. Lots and lots of luck. You make your own luck. <ul><li>It is tough. Very few short cuts. </li></ul><ul><li>You will not change the way things are done </li></ul><ul><li>Nothing counts more than real business </li></ul><ul><li>Uni-projects are treated with suspicion </li></ul><ul><li>Do not keep working the business plan over and over. </li></ul><ul><ul><li>It is a check box </li></ul></ul><ul><ul><li>But know how you will monetise the idea </li></ul></ul><ul><li>Understand the typical deal …. ask peers. (Incubators are great) </li></ul><ul><li>No one else will sell a PoC or beta or even 1.0. You have to sell it yourself. </li></ul><ul><li>Opensource & freeware has a place but be careful promoting it. </li></ul><ul><li>Keep burn low </li></ul><ul><li>Advertising as a business model is no business model </li></ul>
    17. 17. Why would you bother ? <ul><li>Amazing journey. It is winning the cup. </li></ul><ul><li>David vs. Goliath </li></ul><ul><li>Inventing cutting edge technology is rare </li></ul><ul><li>Huge learning opportunity </li></ul><ul><li>Be your own boss </li></ul><ul><li>Potential for huge financial reward </li></ul>

    ×