Post on 17-Oct-2014
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raising money in Estonia. programeter.com story
Mark Kofman, CEO, Programeter.comPhone: +372-517-8945, Skype: kofmanBlog: http://toolsforsoftwareteams.wordpress.comTwitter: http://twitter.com/markkofman
I am Mark Kofman
enterpreneur, 2nd startup, business experience in 5 countries, software offshoring and outsourcing expertise
co-founder, together with Anton Litvinenko, of…
metrics and analytics for
software projects
what is the purpose?
How did 2 programmers try to raise money?
1. friends-family-fools: 50-500KEEK
2. seed – 500K-1.5MEEK3. vc - 3M-30MEEK
definitions first: funding rounds
How did 2 programmers try to raise money?
Step 0: decision to start
Early 2006, 3 architects (read programmers), lots of initiative, no reputation, no business network
Step 1. register the company.
-40,000EEK, -1 founder
Step 2. family friends and fools: +500,000EEK, -20%
2007, quit the jobs, dreams of huge success
Step 3. searching for venture capital: -9 months, + 0EEK
“I have done 500 phone calls in few days to raise this money“ CEO of funded Estonian startup
I spent 3 months in silicon valley meeting top VCs ...
goal: build-up the network for future fund raising and sales
who has the VC money in Estonia?
1. Arengufond: Smartpost, Fits.me
2. ASI (skype co-founders): Programeter, Guardtime, Cats and Dogs, ...
3. MTVP: Rate.ee, aegmaha.com
Step 4. seed round: +$150,000, -10%
who has the seed money in Estonia?
1. ASI (skype co-founders): Programeter, Guardtime, Modesat, MarkIt
2. WNB: Smartdust, Smartpost
3. Your employer: JavaRebel, Sharemind, Toggl
4. Individuals (Rikaste TOP)
Step 5: bootstrapping
Step 6: now in progress of raising multi-million series A round
Results: 200 investor pitches, 50 meetings, 8 negotiations, 2 investment...
sounds good?
… actually not
We have spent more effort on raising money than on product development and increasing value
… costs of raising money- cost of founder/month = 100KEEK
- 1.2x12m. of founders time – 1,44MEEK- cash burned by company - 200KEEK- traveling expenses – 50KEEK
1,690,000EEK
step-by-step money-raising guide
Applies to young founders of startups in Estonia.Tested on B2B startup
1-12m: bootstrap at-least 12 months1-12m: meanwhile build-up network of investors, advisors12-18m: start selling if you can12m-18m: go for seed money – approach your network18-24m: think twice before raising vc money in Tallinn...think again18-24m: make product/service sales support your company daily expenses. 24-33m: secure yourself 6-9 months and talk to all VCs you can
you should plan at least 1 year ahead
but reality is different. baltic startups typically have cash only for 3-6 months
go for internet-(ional) market
opportunity for this region startups:
you need online strategy, suitable business model, specialists, resources
It's not just setting up an e-shop
think pay per new customer
benefit: you can control your budget
think pay per new customer
1. pay per click ads2. make 80% of your sales process online3. monitor converstion rates
customer aquisition cost
1. 100 clicks = $1002. 5 phone calls = $253. 1 online meeting = $254. contract printing costs = $1
think pay per new customer
If new customer aqusition costs you $151, you can run company with even with $1000 in cash
resume:
- grow your network- focus on what you are best at- think pay per new customer
and if you want to invest, call me
raising money in Estonia. programeter.com story
Mark Kofman, CEO, Programeter.comPhone: +372-517-8945, Skype: kofmanBlog: http://toolsforsoftwareteams.wordpress.comTwitter: http://twitter.com/markkofman