Presentation created by Investment Manager from the Slovak startup and innovation studio. Experienced Launcher's team member, Michal Nešpor, held the speech at Startup Pirates event in Bratislava: worthful overview and explanation from the investment universe. The important aim of the presentation was to show aspiring entrepreneurs what is the business side of startups and how to understand terms as pitch, crowdfunding and investor's mindset. The worldwide event Startup Pirates is focused on such topics, at most to show new projects how to develop a business idea successfully.

1. Startup Pirates Bratislava
Finance & Investment
24 June 2015
Michal Nešpor
Investment manager
Launcher and Crowdberry

2. Presentation for Startup Pirates 2015
PREDSTAVENIE
Michal Nešpor
Investment manager at the innovation studio LAUNCHER
and the equity based crowdinvesting platform
CROWDBERRY.
10 years experience in front, next and in start-ups.
5 years with a VC investments firm in Vienna, Austria. Early-
stage investments in AT, DE, CH and HU. CFO in a VC
funded startup, Austria / USA. Fundraising support for
various startups.
LAUNCHER supports innovations, build startups and make
them into real companies with international ambitions.
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3. Presentation for Startup Pirates 2015
AGENDA
The right time for an investment
Who is the right investor for me
Investors types and company stages
Investors overview PRE-SEED and
SEED
Investors overview EARLY (VC’s)
Crowdfunding platforms
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Further funding sources
Where to find non-cash support
International investors
Final recommendations
Contact

4. Presentation for Startup Pirates 2015
THE RIGHT TIME FOR AN INVESTMENT
What should a startup achieve before raising funds from investors? *
Obtian market feedback (validation of primary product idea)
Develop a functional prototype
Launch / Public beta towards the target customer group
Readiness to institutionalize (company incorporation and relationships between founders)
The above should be achievable within a short time span (3-6 months), with relatively low ressource
allocation (1-2 people, even next to a day-job) and with low cash investment (usually own).
* Relates to first time fundraising, not for follow-on funding rounds.
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THE RIGHT INVESTOR
What should a startup consider when choosing an investor
Invesor type, enterpreneurship or pure financial background
Investor focus (industry, stage focus, geography, investment size)
Investor strategy and network (strategic investors vs. financial return oriented investors)
Recommendations and track record (previous investments and investment experience)
Wrond investor can lead to an unsolvable or even fatal situation.
Look for smart money!
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INVESTOR TYPES AND COMPANY STAGES
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START-UP CORE PRODUCT DEVEL MARKET ENTRY MARKET EXPANSION
Typical Investors
FFF
Business Accelerators
Business Angels
Business Angels
Seed VCs
Strategic Investors
VCs
Corporate VCs
Strategic Investors
Growth VCs
Buy-Out
Strategic Investors
Investment Size 5-50k EUR 100-500k EUR 1-5m EUR 10m+ EUR
Startup Age 0-3 months 3-18 months 18-36 months 36month+
Number of Employees 2 3-10 11-50 100+
Regional Examples
HubRaum (PL)
Pioneers Ventures (AT)
Launcher
Neulogy Seed Capital
Credo Ventures
Neulogy Venture Capital
J&T
Penta
Global Examples
Y-Combinator (US)
Seed Camp (UK)
500 Startups (US)
Eden Ventures (UK)
Sequoia Capital (global)
Accel Partners (global)
Index Ventures (global)
PRE-SEED STAGE SEED STAGE EARLY STAGE GROWTH STAGE
TIME
F
U
N
D
I
N
G
Idea
Prototype
PoC
Public Beta
Launch
Traction
Profitability
Intl. Expansion

7. Presentation for Startup Pirates 2015
PRE-SEED A SEED INVESTORS
1. Own cash from savings or better, from revenue
2. FFF - Family & Friends & Fools
3. Business Angels + Entrepreneurs (e.g. from IT or other industries)
Anton Zajac Michal Truban Michal Štencl
4. Business Accelerators – Slovakia + CEE
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EARLY STAGE INVESTORS (VC)
4. Seed VCs + VCs + Corporate VCs
5. Strategic Investors (Corporations)
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CROWDFUNDING / -INVESTING PLATFORMS
6. Reward based crowdfunding
7. Equity based crowdinvesting
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OTHER FUNDING SOURCES
8. Banks – Bakning products and loans for entrepreneurs (rather rare)
9. EU funds
10. Awards
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NON-CASH SUPPORT
11. Co-working
12. Enterprise programs for startup support
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NON-CASH SUPPORT II.
13. Consulting 14. Média 15. Public agencies
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FINAL RECOMMENDATIONS
Chose wisely! Every investor has an influence on a company.
Don‘t lose focues, building the product and the company is more important than chasing after investors.
If possible, raise more money, which will give you more runway for realizing your goals.
Don‘t get hung up too much on how much ownership you give away, look at the bigger picture.
If your business model and your company stage allows it, the best source of funding is your own cash from
operations (selling your products or services).
GOOD LUCK!
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DISCUSSION & QUESTIONS
Do I need a business plan?
What is an investors slide deck?
Do I need an excel calculation?
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CONTACT
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17. BACKUP SLIDES

18. Presentation for Startup Pirates 2015
BUSINESS ANGELS
Private persons – support the company building process with capital but
also entrepreneurial know-how and network
Goal: private support of company set-up and grow, where banks consider
the risk too high and for institutional investors the funding need too low is.
Business receive a share in the company.
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BUSINESS ANGELS
Bring capital, entrepreneurial and/or industry know-how and network
Have fun creating something new
EUR 50 – 500k investments
Superangels (USA) – successful entrepreneurs that can invest multiple
millions in a company
Return expectation – various but at least 20% p.a.
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BUSINESS ANGELS – IMPORTANT
QUESTIONS
Entrepreneur:
Am I ready to open up my company? – Insight into the company and the
perception of losing control
Growth ambitions?
Realistic valuation?
Long-term management of the company?
Need of capital vs. know-how and network?
Why should the BA go with me?
What return opportunity do I offer to the BA?
Where do I find BAs?
How much investment experience does the BA have – Value Added?
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21. Presentation for Startup Pirates 2015
BUSINESS ANGELS – IMPORTANT
QUESTIONS
BizAngel:
Personal fit with the entrepreneur?
Why should the entrepreneur go with me?
„Skin in the game“ of the entrepreneur
Product / service unique and realistic?
Market share, scalability and exit realistic and achievable?
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22. Presentation for Startup Pirates 2015
BUSINESS ANGELS VS. PRIVATE EQUITY
Business Angels:
- invest own money
- provide network
- add credibility (bank, suppliers)
- invest long-term
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Private Equity Fonds:
- invest primarily 3rd party money
- Fund management service for a
fee
- provide network
- add credibility (bank, suppliers)
- invest for definite periode (Exit!!)

23. Presentation for Startup Pirates 2015
VENTURE CAPITAL OVERVIEW
Venture Capital is an Investment Business (Who is the VC‘s customer?)
Goal: Generate risk-adjusted returns
Success factors
The right asset, in the right hands, at the right time
Create an environment where everybody has the right incentives & adequate
resources to succeed
Focus on upside is the best downside protection
Put your money where your mouth is
Exit / Sale of the company is as important as investment
Process: Invest in potential – create & enhance value – realise value
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24. Presentation for Startup Pirates 2015
VENTURE CAPITAL INDUSTRY
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Fund Management
Company
VC Fund
Managed
Funds
Exit Scenarios Trade
Sale
IPO Secondary
Sale
Buy
Back
Write
Off
Hands On
Management
Equity %
Return
Equity %
Investors Banks
Insurance
Co‘s
Pension
Funds
HNWI
PFC 1 PFC 2 PFC 4PFC 3 PFC 5
Portfolio companies

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VENTURE CAPITAL INDUSTRY
VC FUND
Entity separate from the Management Company
Lifetime: 10 years
Typical portfolio: 10 – 20 companies (depending on fund size and fund
industry focus)
Holding period: 3 – 7 years
High return expectation
20-30%+ p.a. on the fund
50%+ p.a. or 5x / 10x on invested capital in portfolio companies
Strict investment strategy (industries, stages, geographies)
Careful investment selection and pressure to sell high and fast 
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26. Presentation for Startup Pirates 2015
VENTURE CAPITAL INVESTMENT PROCESS
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Source of
Investment
Partner
Networks,
Consultants,
other VCs
Screening &
Investment
Review
Weekly
Review:
• Screen
• Reject
• Allocate to
team
Prepare
Investment
Case
Term Sheet
Due Diligence
Deep Review
Prepare Investment
Committee Paper
Living with
the
Investment
Reporting
Updates
Contacts&
Introductions
Strategy & Peer
Reviews
Board Seat
Planned Exit
Exit
Planned Exit
Approval by IC
Execute
usually 6 – 9 months usually 3 – 7 years
IC Review
Finalise
Contract
Close Deal
Close
Deal
2 - 3 m
Getting
ready
Teaser
Investors
presentation
Business Case
Data room for
DD

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ENTRY OF AN INVESTOR INTO A COMPANY
MECHANICS
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Equity
Old shares
(30%)
Debt
(70%)
Liabilities
Σ 100
Fixed Assets
Current Assets
Cash
Assets
Σ 100
Capital raise
Acquisition of
NEW SHARES
+ 30
Σ 130
Equity
Old shares
(23%)
Debt
(54%)
Liabilities
+30 equity (23%)
New Shares

28. Presentation for Startup Pirates 2015
VC MODEL: VALUE – CREATE & REALISE IT
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Impact of Equity Investor on Company Value
(Illustrative)
0
Company
value
Buy
(low)
(hands-on) financial investors directly
and indirectly influence all of these
Internal sources of value
 Earnings & revenue growth (organic and through
acquisitions)
 Multiple expansion (e.g. management &
profitability improvement)
 De-leveraging
 Company positioning & strategy
 Etc.
External sources of value
 Market dynamics
 Market appreciation in exit situation
 Etc.
Sell
(high)
Add value
(loads)

29. Presentation for Startup Pirates 2015
VALUE CREATION CASE STUDY
INTERNET SERVICE PROVIDER
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Post-Money
Valuation
Investors
Founders
Multiple
2004-2005
>4x
>3x
>3x
ISP value development
2004-2005 (€m)
0
Revenue
growth
Profitability
increase
Debt
decrease
Management
improvement
Additional
Equity
2004
Expansion
round
€20m
2005
Exit:
M&A transaction
€95m
10
20
30
40
50
60
70
80
90
100
€m
ILLUSTRATIVE
Win-Win for all
VC contribution
 Brought in CFO
 Restructured balance sheet
 Managed turn-around
 Increased profitability
 Focus on exit and initiation
of trade sale
 Built walk-away position
Value driver influenced by investor only
Value driver influenced by investor & other factors
Value driver influenced by external factors (e.g. market dynamic)Source: GCP
 Realised Return for investors:
365% p.a. IRR

30. Presentation for Startup Pirates 2015
RETURN CALCULATION (INDICATIVE)
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BizAngel Early-stage VC Expansion VC
Investment € 0,5m for 20% € 2m for 33% € 5m for 30%
Return Goal 20x 10x 5x
Exit Multiples 2-3x Revenue
8-10x EBITDA
Exit Valuation € 100m
Year 1 2 3 4 5 6 7 8 9
Revenue € 0,1m 0,5m 1m 2,5m 6m 10m 15m 25m 50m
EBITDA € -0,2m 0,3m -1.5m -0.5m 1m 2m 3m 5m 10m
Investment € 0,5m 2m 5m
INVESTMENT
COMPANY GROWTH

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