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Launcher at Conference Startup Pirates 2015

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  1. 1. Startup Pirates Bratislava Finance & Investment 24 June 2015 Michal Nepor Investment manager Launcher and Crowdberry
  2. 2. Presentation for Startup Pirates 2015 PREDSTAVENIE Michal Nepor 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. 2
  3. 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 (VCs) Crowdfunding platforms 3 Further funding sources Where to find non-cash support International investors Final recommendations Contact
  4. 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. 4
  5. 5. Presentation for Startup Pirates 2015 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! 5
  6. 6. Presentation for Startup Pirates 2015 INVESTOR TYPES AND COMPANY STAGES 6 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. 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 tencl 4. Business Accelerators Slovakia + CEE 7
  8. 8. Presentation for Startup Pirates 2015 EARLY STAGE INVESTORS (VC) 4. Seed VCs + VCs + Corporate VCs 5. Strategic Investors (Corporations) 8
  9. 9. Presentation for Startup Pirates 2015 CROWDFUNDING / -INVESTING PLATFORMS 6. Reward based crowdfunding 7. Equity based crowdinvesting 9
  10. 10. Presentation for Startup Pirates 2015 OTHER FUNDING SOURCES 8. Banks Bakning products and loans for entrepreneurs (rather rare) 9. EU funds 10. Awards 10
  11. 11. Presentation for Startup Pirates 2015 NON-CASH SUPPORT 11. Co-working 12. Enterprise programs for startup support 11
  12. 12. Presentation for Startup Pirates 2015 NON-CASH SUPPORT II. 13. Consulting 14. Mdia 15. Public agencies 12
  13. 13. Presentation for Startup Pirates 2015 INVESTORS MINDSET Its all about Value (Overall, capture, measurement etc.) When assessing opportunities: How big is the opportunity? The right people & structure to succeed? What tangible evidence of the above? But! Not every good research project/invention becomes a good business idea, Not every good business idea becomes a good company, Not every good company becomes a good investment deal Usual attrition rate: 95-98%!!! 13
  14. 14. Presentation for Startup Pirates 2015 INVESTORS MINDSET 14 85 - 90% 10 - 15% 1- 2% Attrition Rate: Not every great idea becomes a great technology... Not every great technology has a great commercial application... No every great commercial application is a great business concept... Not every great business concept becomes a great company... Not every great company becomes a great investment deal... AND: not every great investment deal becomes a success ;-)) Immediate Drop-Out Management Business model Sector Stage Capital requirement Consistency Close View Negotiation Competition Due Diligence Investment
  15. 15. Presentation for Startup Pirates 2015 INVESTORS MINDSET MILESTONE CONCEPT 15 Diminishing risk Increasing valuation Early stage Most company resources dedicated to product development Expansion Most company resources dedicated to market & business development Time Milestone Reduces... illustrative PRE-SEED STAGE SEED STAGE EXPANSION STAGE EARLY STAGE Prototype 1st Customer Successful pilot Crit. mass post launch Break Even Exit R&D / Tech Risk Market Risk Financial Risk Investment Risk Proof of Concept Proof of Market Proof of Bus. Model Proof of Inv. Thesis GROWTH STAGE
  16. 16. Presentation for Startup Pirates 2015 APPROACHING AN INVESTOR TIMING Some General Tips Have your docs ready (ExecSum, Inv pres, Business Case/Financial plan, etc.) Do your homework which investor is the best for you? Industry focus Stage focus Geography Investment size Track record (experience!) request and do reference calls with CEOs Previous investment history does the investor have a main competitor of your company in his portfolio? Have a look! Get in shape and ready for due diligence (get your house in order) Get a recommendation find a way in via your advisory board, business friends, conferences, networking or otherwise. Preferably, you want the investor to get to know you way before fundraising starts. Cold call should always be last option. 16
  17. 17. Presentation for Startup Pirates 2015 INVESTORS DOCU CONTENT OVERVIEW ANATOMY OF A GOOD PITCH 1/3 Some General Tips As often in life, its useful to put yourself in the others position Nobody reads business plans (the plan is nothing, planning is everything) K.I.S.S.S. (Keep It Short, Simple and Sexy): Whats well understood can be communicated clearly Get high and stay high dont get lost in the details, provide a big picture that sticks with the audience Make information relevant, put it into context, answer the SFW... E.g. tech is worthless, unless commercially relevant, i.e. shown to generate cash at some time... 17
  18. 18. Presentation for Startup Pirates 2015 ANATOMY OF A GOOD PITCH 2/3 18 Topic Questions to answer Common fallacies Supporting mats Problem Whats the need you address? How big, significant, urgent? Mission-critical or nice-to-have? Solution How do you address this need? Why is this better/cheaper/unique? What value for the user/client? Insignificant problem Engineering driven (solution seeking problem) Commercially relevant factors neglected Driven by feasibility, not need Market research Customer interviews Prototype Scalability Route to market and its cost not considered Too much focus on technology Just because something works does not mean anyone needs it - Data / prototype Patent list Full patent texts Why is it unique / different? How can you defend it? Does it work? Have you proof? How will you capture value? How do you monetize this value? Is this concept scaleable? Tech Business Model Not enough focus on it Not well enough thought through Not enough resources (, HR) devoted to execution Anything of relevance The more specific (i.e. closer to reality, action oriented), the better How will you sell it? What resources will you need? What drives buying decisions? Marketing & Sales
  19. 19. Presentation for Startup Pirates 2015 ANATOMY OF A GOOD PITCH 3/3 19 Topic Questions to answer Common fallacies Supporting mats Competition Who else is in the game? Substitutes? Industry food chain? Whats your unfair advantage/USP? Team Who will implement the plan? Can they do it? track record? Advisors? Recruitment needs? Nobody offers this (yet) Unknown competitors Our widget can. All R&D, no sales / commercial No assessment of future needs - Full CVs Reference list Unrealistic/intransparent assumptions (both ways) No clearly identified milestones No linking of risk & return Unrealistic funding requirement (both ways too lo/hi) Not action-oriented Financial Plan, esp. monthly Cash-Flows Milestone Plan Funding requirement & use of proceeds -Where are you now? What next? What do you plan to achieve when? What are your assumptions? How do you measure progress? What resources do you need? What will you use them for? Status & Timeline Projections, Milestones Introduction rather than summary Written first, rather than last Too long -Give a complete and concise overview of the opportunity on no more than two pages ExecSum
  20. 20. Presentation for Startup Pirates 2015 DEAL STRUCTURE KEY AGREEMENTS Term Sheet Short document summarising key terms of the investment. Most of the time non-binding. Shareholders Agreement Detailed agreement outlining cer
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