This document discusses investment options for startups in 2013. It begins by outlining the investment process from initial meetings through due diligence and contracting. It then notes that the investment climate has changed since late 2012, with investors and founders facing more challenges. Several graphs show declines in valuations in the US market. The rest of the document focuses on potential sources of funding for startups, including large VC funds, smaller VC funds, governmental investors, corporations, business angels, incubators, and crowdfunding. It outlines the prerequisites and typical deals for each type of investor. It concludes by noting challenges startups may face in securing follow-on funding in 2013.

1. Investmentoptionsfor
Startupsin2013
Startup Day Cologne
Thomas Grota – Investment Director T-Venture
June 29, 2013

2. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
InvestmentProcessinaNutshell:MindtheTimeframe!
1st Meeting
get-to-know
each other
understand:
- team
- business model
- technology
- market
Preparation
Term sheet
Evaluate:
- Market
- Customers
- Legals
- Financials
Discuss Funding
Strategy and Future
Preparation
Contracts
Due Diligence:
- Management
- Technology
- Legals
- Financials
Discuss Terms &
Deal Structure
MS MS
Investment
Management
Development:
- Management
- Technology
- Portfolio
- Markets
Prepare exit
through outstanding
performance
3 - 5 months depending
on Due Diligence and
contract negotiations
4 - 6 weeks depending on
business idea and strategic fit
3 - 5 years depending
on Exit Scenario
Term
Sheet
Contract

3. InvestmentClimeis
changingsinceQ4/2012….
Investors & Founders
are on the same boat!

4. …butthistimeitisdifferent.

5. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
Investorsgotburned…

6. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
Winteriscoming…

7. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
UnsuccessfulExitsdon’thelptoattractnewcapital.

8. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
StartupLifecyclefromafundingstrategyperspective
pre-seed seed a-round b-round c-round late stage/IPO
Time
F.F.F.
Biz Angels/Crowdf.
Seed VCs
Large VCs
Growth finance partners, Buyout, IPO banks
€ 0,3m -
€ 1m
€ 0,5m -
€ 3m
€ 2m -
€ 10m
€ 5m -
€ 30/80m
€ 20m -
€ 100m
€ 40m -
€ 250m
Value
Blue = importance of management, Red = maturity of product
Orange = market footprint of company, Circle = valuation range of company

9. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
ValuationsadaptedintheUSbutstabilizedsincethen.
Source: http://www.cooley.com/files/92123_VF2012Q3.pdf

10. Whatdoesfuturelooklike?

11. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
Incubatorsmustavoidthe“SeedGap”in2013
Sourcing/Due Diligence
Dealflow/
PrepareFunding
Fundingby
3 months
€300k Runway for Startup
6 to 9 months
ScenarioB)
Term sheet from another
Incubator and/or
Business Angels.
ScenarioC)
No Follow On Investment made:
“Put Startup in Survival mode”
FundingbynewInvestors
ScenarioA)
Term sheet from VC firm and/or
Corporation (optional support
by governmental vehicle).
NextSteps:
Preparation for new
VC/BA approach or
Evaluate Exit options.
Runway till next round
< 18 months
NextSteps:
Preparations for
Series A/B funding.
“SeedGap”

12. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
“TheSeedGap”:1000+USStartupsWillbeOrphaned
“… The process of natural selection that will happen with seed companies (and which we’d argue should
happen) will result in over 1000 recently funded seed companies being orphaned, i.e. unable to raise
follow-on financing. The eventual death of many of these companies may also help the tight labor market
for other startups who are looking for capable and driven talent. …”
Source: http://www.cbinsights.com/blog/trends/seed-investing-report
2283
Seeded Companies
Q3 2011 – Q4 2012
Companies
receiving
Follow On
Funding
102
5%
Companies
Acquired
212
10%
788
Projected to
receive Follow
On funding.
35% 1181
Projected for
No Follow On
funding
(Average 39%)
50%

13. Whoarethepossible
InvestorsformyCompany?

14. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
ThenewfundingpyramidforStartupstoreceivecapital
Midsized
VC firms
US II EU
Corporate
Investors
Governmental
Investors
Global VC firms /
Private Equity firms
Fund >$2b
Fund <$150m
Business Angels, Incubators, Accelerators, Crowdfunding
<$500k
-- - - - The Seed Gap - - - ---

15. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
GlobalFunds/PEwith>$2bnunderManagement
 Traction in Seed Stage >10m user
 Profitable in Seed Stage / strong growth
 After Early Stage revenue > $5-10m
 Sales activity in US / US customers
Pre-requisites for engagement
 ‘Killer Team’ with a ‘Killer Product’
 Personal network to leaders (P. Thiel)
What investors or incubators can do
 Sequoia
 Accel Partners
 A16z (Andreessen Horrowitz)
 Stripes
 KPCB
 Index
Sample Firms or Corporations
 Ruckus (2006), Innovid (2012)
 Flaregames (2012)
 Cyphercloud, Aliphe, LookOut (2012)
 Netbicuits (2012)
 Cooliris (2008), Pinger (2011)
 Cyphercloud, LookOut (2012), Number4
Sample T-Venture Portfolio Deals

16. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
VCfirms<2ynewfundingwith<$150m
 Traction <10m users in B2C
 1-2 signed B2B customers
 Tech focused / trend area of VC firm
 Part of consortium with biz dev potential
Pre-requisites for engagement
 Generate traction on B2C product
 Support PR work through contacts
 Identify VC partner for this segment
 Align possible consortium of investors
What investors or incubators can do
 Atomico
 Earlybird
 Xange
 Creathor
 Capnamic
 Shortcut Ventures
Sample Firms or Corporations
 6Wunderkinder (2011)
 6Wunderkinder (2012)
 -
 Netbiscuits (2011), Zimory (2010)
 -
 -
Sample T-Venture Portfolio Deals

17. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
Governmentalvehicleswithregionalfocus
 Private VCs/CVCs act as lead investor
 Prepare for very formal processes
 Decisions not based on VC terms +/-
Pre-requisites for engagement
 Embrace role as lead investor
 Evaluate as partner for mirroring invest
 Evaluate business risks caused by rules
What investors or incubators can do
 IBB Bank
 NRW Bank
 Bayern Capital
 L Bank
 KFW
 HTGF
Sample Firms or Corporations
 Clipkit (2012), Moviepilot (2010)
 -
 -
 -
 myTaxi (2011), apprupt (2010)
 Zimory (2010), 6Wunderkinder (2011)
Sample T-Venture Portfolio Deals

18. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
CorporationsinvestfromBalanceSheetorCVCs
 Needs strong strategic impact for invest
 May demand certain terms from VCs
 Excludes potential competitors
Pre-requisites for engagement
 Investigate potential corporations
 Check with other investments before
 Evaluate Exit potential of corporation
What investors or incubators can do
 Holtzbrinck Ventures (€145m)
 BDMI / Bertelsmann
 eVenture / Otto
 Intel Capital / Intel
 Tengelmann Ventures / Tengelmann
 Daimler Mobiliity Services / Daimler
Sample Firms or Corporations
 Dropgifts (2012), Mindmatics (2008)
 Contentfleet (2011)
 KaufDA (2009)
 C&B (2008), DeliveryAgent (2012)
 -
 myTaxi (2012)
Sample T-Venture Portfolio Deals

19. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
BAs,Crowdfunding,Incubators<$100kperdeal
 Low valuation to be attractive
 Less funding needed in the future to avoid
dilution of angels
 Strategic fit with portfolio interest
 Optional ESOP for mentors/BAs
Pre-requisites for engagement
 Network with BAs on events / meet ups
 Engage with their portfolio companies
 Get dealflow from BAs to invest
What investors or incubators can do
 Lars Hinrichs / hackfwd
 Founders of Idealo
 Founders of Check24
 Founders of adcloud
 Companisto
Sample Firms or Corporations
 myTaxi (2012)
 Tripodo (2012)
 Gini (2012)
 -
 -
Sample T-Venture Portfolio Deals

20. Thomas Grota – Investment Director T-Venture Holding GmbH – @thomasgr
ChallengestoreceivenewFundingin2013
 Why should they invest?
 Why does Hubraum
need another co-
investor of this size?
 What is the potential for
their return?
BAs / other Incubator
 Does the company/
product has traction?
 Can company attract
international funds?
 What is the long term
investment strategy?
Series A from VC
 Where is a strategic fit?
 What are the deal terms
and conditions?
 How is Telekom’s view
on company / product?
Corporation Deal
 Who will take the lead role for this investments?
Mirror Investments with governmental vehicles
Option A
Option A & B
Option BOption C

21. Goodluckforreaching
aFollowOninvestment….