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10 lessons learnt from
investing in Startups
Start 2013
Money deployed:
Euro 5M
15 investments
Seed + early stage
Marketplace & Saas
+ others
Start 2013
Money deployed:
Euro 4M
12 investments
Mainly seed
Marketplace & Saas
+ others
Business Angels
Start 2011
Money deployed:

Euro 1M
12 investments
Seed
Marketplace & Saas
• 4000 projects reviewed
• 35 investments (incl. 4 co-investments)
• 20% write-offs
• 10% money-back
• 8 companies with 5x+ growth
• 2 companies exceeding Euro 100 M valuations
Business Angels
Current, total valuation of companies in Protos, HH and our BAs
portfolio exceeds Euro 400 M
- People are by far the most important factor. People
constitutes 80% chances for a success or a failure, both for a
Startup and aVC.
'You are the average of the five people, you mostly spend time with'
Lesson for a Founder:
- Chose your partners very wisely.
- Friends and Family is usualy an average choice.
-Your Investors will be your Partners. Spend time on getting
know your potential Investor.
Rule #1. - People
Rule #2. - Specialization / Focus
- VC as well as a Startup should have a common focus (an
area of interest).
- Funds offering REAL smart money usually present strong
specialization.
Lesson for a Founder:
- If you would like a real support from your Investor -
chose aVC with a specialization matching your business.
- CheckVC's current and past portfolio.
- Not everyVC is good for you.
Rule #3. - Values / DNA
- VC usually has its own 'backbone', its 'code of conduct',
unbreakable values and rules - its 'DNA'.
- These values are presented i.e. in their investment
agreements, specific clauses, and the way they treat
Founders.
- DNA of aVC influences its perception at the market.
Lesson for a Founder:
- Find out what values and investment standards presents a
VC.
- The best source of information are other founders from this
VC's portfolio.
- GoodVC (seed / early stage) present adequate relation of number
of Startups in portfolio to internal resources:
- approx. 5-6 Startups per 1 Partner
- portfolio of 25-50 Startups
- > 25 Startups - decreased probability for 'Dragon' or 'Unicorn'
- < 50 Startups - possible defocus ('Spray and Pray' strategy)
Lesson for a Founder:
- Check if aVC would be able to help you, or you 'will be lost' in its
portfolio.
- CheckVC's Partners and Inv. Managers prior experiences and track
record.
- Find out with whom will you be able to work.
- The way your fund will help you depends largely on you. 

Fight for their time!
Rule #4. - Portfolio / Resources
Rule #5. - Follow-on Policy
- Follow-on policy is a crucialVC success factor
- 50/50 - optimal ratio
- A goodVC should have a clear 'stage' and follow-on
investment policy.
Lesson for a Founder:
- Be sure if aVC you are dealing with will support you in later
rounds and on what conditions.
- A lack of follow-on of your fund in later rounds can be really
problematic.
- One of the key elements ofVC is it's network: BAs, other
VCs, entrepreneurs, specialists, they work and co-invest
with.
- Network is the most important dealflow channel.
Lesson for a Founder:
- Check out the network of aVC you are dealing with and
get to know how you can benefit from it.
- Ask who are LPs and what are the examples of their help.
- Find out if other Startups from aVC's portfolio benefited
from such co-operation.
Rule #6. - Network, network, network
- Startup's lifetime is on average longer nowadays as it was
few years ago due to the international expansion.
- The longerVC's lifetime the longer fund can stay with a
startup and generate better returns.
-VCs stay with a startup on average 5,5 years.
Lesson for a Founder:
- Check out what's theVC's lifetime you are dealing with.
- Be sure how long aVC can stay with you and what are their
goals when it comes to returns.
-You don't want yourVC to try to sell their shares in your
startup after 2 years becuase they are motivated by internal
regulations.
Rule #7. -VC's Lifetime / Investment Period
-VC should support its Startups in all possible, business
aspects incl.: recruitment, accounting, legal, PR, software-
house, e-marketing etc.
-VC should be 'a Hub' offering complex services easing the
successful start of the business.
Lesson for a Fouder:
- It is better to chose a Fund being a Hub of all services you
need.Ask theVC what do they have?
- GoodVCs often have own Platform where Founders and all
members of their network exchange information and help
each other.
Rule #8. - The Hub / The Platform
Rule #9. - Dealflow
network invitation active hunt organic
no of projects 460 32 12 940
no of deals 9 2 2 2
conversion 2% 6,4% 17% 0,2%
Lesson for a Founder:
- Sending your deck to kontakt@vc.com rarely brings positive result. 

VCs receive plenty of projects from organic and they call it 'the noise'.
- Do not write directly to investors at FB Messenger nor LinkedIn.
- It is much better to reach-ourVC through an intro / refferal from
somebody from their network
- VC scan different market opportunities and often they actively look
for projects in specific areas or sectors.You could askVC for an
inspiration.
Rule #10. - Track Record / Fitness Trail
- A good Team would be successful with a difficult business and 'adjust' it
to the market. A weak Team could not be successful even with a
business easy to expand.
- VC are eager to invest in 'serial entrepreneurs' or people with
executional experiences and proven track record (both of successes and
failures)
- AmongVCs there is limited trust for Founders without track record and
you have to build one.
Lesson for a Founder:
- If you do not have a track record, take care about your referrals.
- Be prepared for a 'Fitness Trail' (a few months) when you co-operate
with aVC (before an investment) proving your execution.

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10 lessons learnt from investing in Startups

  • 1. 10 lessons learnt from investing in Startups
  • 2. Start 2013 Money deployed: Euro 5M 15 investments Seed + early stage Marketplace & Saas + others Start 2013 Money deployed: Euro 4M 12 investments Mainly seed Marketplace & Saas + others Business Angels Start 2011 Money deployed:
 Euro 1M 12 investments Seed Marketplace & Saas
  • 3. • 4000 projects reviewed • 35 investments (incl. 4 co-investments) • 20% write-offs • 10% money-back • 8 companies with 5x+ growth • 2 companies exceeding Euro 100 M valuations Business Angels
  • 4. Current, total valuation of companies in Protos, HH and our BAs portfolio exceeds Euro 400 M
  • 5. - People are by far the most important factor. People constitutes 80% chances for a success or a failure, both for a Startup and aVC. 'You are the average of the five people, you mostly spend time with' Lesson for a Founder: - Chose your partners very wisely. - Friends and Family is usualy an average choice. -Your Investors will be your Partners. Spend time on getting know your potential Investor. Rule #1. - People
  • 6. Rule #2. - Specialization / Focus - VC as well as a Startup should have a common focus (an area of interest). - Funds offering REAL smart money usually present strong specialization. Lesson for a Founder: - If you would like a real support from your Investor - chose aVC with a specialization matching your business. - CheckVC's current and past portfolio. - Not everyVC is good for you.
  • 7. Rule #3. - Values / DNA - VC usually has its own 'backbone', its 'code of conduct', unbreakable values and rules - its 'DNA'. - These values are presented i.e. in their investment agreements, specific clauses, and the way they treat Founders. - DNA of aVC influences its perception at the market. Lesson for a Founder: - Find out what values and investment standards presents a VC. - The best source of information are other founders from this VC's portfolio.
  • 8. - GoodVC (seed / early stage) present adequate relation of number of Startups in portfolio to internal resources: - approx. 5-6 Startups per 1 Partner - portfolio of 25-50 Startups - > 25 Startups - decreased probability for 'Dragon' or 'Unicorn' - < 50 Startups - possible defocus ('Spray and Pray' strategy) Lesson for a Founder: - Check if aVC would be able to help you, or you 'will be lost' in its portfolio. - CheckVC's Partners and Inv. Managers prior experiences and track record. - Find out with whom will you be able to work. - The way your fund will help you depends largely on you. 
 Fight for their time! Rule #4. - Portfolio / Resources
  • 9. Rule #5. - Follow-on Policy - Follow-on policy is a crucialVC success factor - 50/50 - optimal ratio - A goodVC should have a clear 'stage' and follow-on investment policy. Lesson for a Founder: - Be sure if aVC you are dealing with will support you in later rounds and on what conditions. - A lack of follow-on of your fund in later rounds can be really problematic.
  • 10. - One of the key elements ofVC is it's network: BAs, other VCs, entrepreneurs, specialists, they work and co-invest with. - Network is the most important dealflow channel. Lesson for a Founder: - Check out the network of aVC you are dealing with and get to know how you can benefit from it. - Ask who are LPs and what are the examples of their help. - Find out if other Startups from aVC's portfolio benefited from such co-operation. Rule #6. - Network, network, network
  • 11. - Startup's lifetime is on average longer nowadays as it was few years ago due to the international expansion. - The longerVC's lifetime the longer fund can stay with a startup and generate better returns. -VCs stay with a startup on average 5,5 years. Lesson for a Founder: - Check out what's theVC's lifetime you are dealing with. - Be sure how long aVC can stay with you and what are their goals when it comes to returns. -You don't want yourVC to try to sell their shares in your startup after 2 years becuase they are motivated by internal regulations. Rule #7. -VC's Lifetime / Investment Period
  • 12. -VC should support its Startups in all possible, business aspects incl.: recruitment, accounting, legal, PR, software- house, e-marketing etc. -VC should be 'a Hub' offering complex services easing the successful start of the business. Lesson for a Fouder: - It is better to chose a Fund being a Hub of all services you need.Ask theVC what do they have? - GoodVCs often have own Platform where Founders and all members of their network exchange information and help each other. Rule #8. - The Hub / The Platform
  • 13. Rule #9. - Dealflow network invitation active hunt organic no of projects 460 32 12 940 no of deals 9 2 2 2 conversion 2% 6,4% 17% 0,2% Lesson for a Founder: - Sending your deck to kontakt@vc.com rarely brings positive result. 
 VCs receive plenty of projects from organic and they call it 'the noise'. - Do not write directly to investors at FB Messenger nor LinkedIn. - It is much better to reach-ourVC through an intro / refferal from somebody from their network - VC scan different market opportunities and often they actively look for projects in specific areas or sectors.You could askVC for an inspiration.
  • 14. Rule #10. - Track Record / Fitness Trail - A good Team would be successful with a difficult business and 'adjust' it to the market. A weak Team could not be successful even with a business easy to expand. - VC are eager to invest in 'serial entrepreneurs' or people with executional experiences and proven track record (both of successes and failures) - AmongVCs there is limited trust for Founders without track record and you have to build one. Lesson for a Founder: - If you do not have a track record, take care about your referrals. - Be prepared for a 'Fitness Trail' (a few months) when you co-operate with aVC (before an investment) proving your execution.