Ready for VC? A short cheklist

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Galileo Venture Academy - 3/3/2010
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Ready for VC? A short cheklist

  1. 1. Ready for VC? A short check list.<br />Olivier Witmeur<br />1<br />
  2. 2. First seek to understand,then to beunderstood.<br />Stephen Covey, The SevenHabits of Highly Effective People, Habit 5<br />Galileo Venture Academy - Olivier Witmeur ©2010<br />2<br />
  3. 3. The name of the game<br />The VC business is to make money with equity position in non listed firms:<br />Invest and sell (exit)<br />Make 3 to 10 times the investment over 3-7 years<br />Growth potential and timing are mission critical.<br />Money is invested to support growth: R&D, S&M, internationalization…<br />VC help/support entrepreneurs to grow their business (partner)<br />Main VC criteria (beyond a strong BP):<br />Management team<br />Uniqueness<br />Growth potential<br />Exit<br />Galileo Venture Academy - Olivier Witmeur ©2010<br />3<br />
  4. 4. 1. Do yourHomework.<br />From BP To Pitch<br />Formal Aspects<br />Mantra<br />Pitch<br />Executive Summary<br />Investor Presentation<br />Key Success Factors<br />FinancialPlan<br />Production / SCM<br />Milestones / Stages<br />Sales & Marketing<br />R&D<br />Financings<br />Risk & sensibility Analysis<br />Organization<br />Team<br />IPPosition<br />Board<br />Partnerships<br />Business Model<br />Vision (Exit incl.)<br />MarketResearch<br />Environment Analysis<br />(Competition incl.)<br />Benchmarking<br />Networking<br />Proof ofConcept<br />4<br />Galileo Venture Academy - Olivier Witmeur ©2010<br />
  5. 5. 2. Understandthatitis a people business!<br />Experience<br />Competences<br />Passion<br />YOU<br />Commitment<br />Vision<br />Trustworthy<br />Adaptable<br />Open Mind<br />5<br />Galileo Venture Academy - Olivier Witmeur ©2010<br />
  6. 6. What makes you (truly) unique<br />Team, know-how…<br />Partnerships, exclusivity…<br />?<br />Business model<br />Technology, secrets, patents…<br />Brand, location…<br />First Mover Advantage<br />6<br />Galileo Venture Academy - Olivier Witmeur ©2010<br />
  7. 7. 4. Scalability, Growth, and Speed<br />Speed<br /><ul><li>Internal capabilitiesvs outsourcing
  8. 8. Directvs indirect sales
  9. 9. Sales process duration
  10. 10. Repeated business</li></ul>Growth<br /><ul><li>Focus on a niche
  11. 11. Market diversification (international)
  12. 12. Product diversification
  13. 13. Upstream & downstream integration</li></ul>Scalability<br /><ul><li>Production constraints
  14. 14. Sales & Marketing constraints
  15. 15. Investment required
  16. 16. Additional developments</li></ul>7<br />Galileo Venture Academy - Olivier Witmeur ©2010<br />
  17. 17. 5. The exit route<br />Main exit routes :<br />Trade sales<br />IPO<br />Buy-out<br />(Convertible Debts)<br />Multiple aspects to take into consideration when analyzing exit path and timing:<br />Management / Founders  Personal life impact!<br />Company  Development stage<br />Investor  Funding cycle<br />Market  Market conditions<br />8<br />Galileo Venture Academy - Olivier Witmeur ©2010<br />
  18. 18. 6. Focus on the deal (not on entry valuation)<br />Critical Negotiation Items<br /><ul><li>Governance
  19. 19. Use of funds
  20. 20. Key People
  21. 21. Milestones
  22. 22. Options
  23. 23. Exit organization</li></ul> Contingent valuation<br />9<br />Galileo Venture Academy - Olivier Witmeur ©2010<br />
  24. 24. About Valuation<br />VCs value the future performance, not the past.<br />V = F (future cash-flows, value @ exit, exit time, expected return)<br />Typical expected return:<br />Seed 60-100%<br />Start-up 50-60%<br />Early development 40-50%<br />Growth 30-40%<br />VC are not looking for majority position as such, especially during first rounds.<br />Current valuation are on the (very) low side …<br /> … but valuation correction mechanisms can be very important.<br />Galileo Venture Academy - Olivier Witmeur ©2010<br />10<br />
  25. 25. 7. Pitch (again and again)<br />Having a mantra helps<br />The problem or ‘the pain’ (must be obvious)<br />Your solution (is unique and ready)<br />Market size (is big)<br />(A little bit on) Competition<br />Business model (value creation is for sure)<br />Team (is great)<br />Achievements to date (are impressive)<br />Credentials<br />You need … € and a meeting!<br /><ul><li>Be:
  26. 26. Smiling (fun is OK!)
  27. 27. Humble but not modest
  28. 28. Passionate …
  29. 29. … but realistic
  30. 30. Avoid:
  31. 31. Too technical
  32. 32. Too much numbers
  33. 33. Too much names
  34. 34. Jargon (Argh!)
  35. 35. Prepare and rehearse</li></ul>I WANT IT NOW!<br />11<br />Galileo Venture Academy - Olivier Witmeur ©2010<br />
  36. 36. Where to go?<br />VCs organize multiple financial rounds:<br />Seed & Start-up stage: <500k€ with Business Angels and local investors<br />Early growth: 1M€-2M€ with national VC firms<br />Fast growth: >2M€ with international VC syndicate, often lead by A national VC<br />National VC association in most countries<br />BVA in Belgium: www.bva.be<br />AFIC in France : www.afic.asso.fr<br />BVK in Germany: www.bvkap.de<br />BVCA in UK: www.bvca.co.ok<br />…<br />EVCA atEuropeanLevel: www.evca.com<br />Galileo Venture Academy - Olivier Witmeur ©2010<br />12<br />
  37. 37. Final thought<br />You never get a second chanceto make a first impression.<br />Galileo Venture Academy - Olivier Witmeur ©2010<br />13<br />
  38. 38. Thankyou<br />CONTACT:<br /> Olivier Witmeur<br /> Solvay Brussels School Of Economics and Management<br /> Université libre de Bruxelles<br />owitmeur@ulb.ac.be<br />www.olivierwitmeur.net<br />14<br />Galileo Venture Academy - Olivier Witmeur ©2010<br />

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