Master 2 Ingénierie pour la Santé et le MédicamentUniversité Joseph Fourier, Grenoble 14/10/2015

Alain Rodermann, Managing Partner

Raising VC Moneyand More

1. VC$2. FUNDRAI$ING3. TERM$4. WHERE

VC$

Georges Doriot

Someone, somewhere, is making a product that will make your product obsolete

The Recipe

What is the American Way of VC ?

20 companies in a fund$1b companies candidates (unicorns)2-4 blockbusters (x 10-50)

§ IPOs (big)§ Trade sales (fast)

4-6 write-offs (x 0)3-4 deals a year/ partner

VC  Business  Model

Lifetime 10y+ Management fees 2%/y - Hurdle rate 7%/y- Losses 50%=> average multiple for 0 carry = 5 X

Min Target Multiple = 10 X

VC returns

Source  avc.com

FUNDRAI$ING

The Powerpoint Presentation

Do VCs read business plans ?

How many scenarios ?

Bottom up monthly financial planDon’t underestimate salaries and staff sizeNet income higher than 25% is suspectInclude international business if anyCan you make 10M€, 100M€ or more in sales ?

§ Money availability drives financial strategy

Conservative post money keeps options openTry hiring a good fundraiserVCs don’t sign NDAs

-­‐4

-­‐2

0

2

4

6

8

10

12

14

16

1 2 3 4 5 6 7 8 9

in

out

in  -­‐ out

cash  position

Phasing

21

0,1 0,7 2+

Break-­‐even

Should you accept more money than you need ?

23

Geographical Breakdown

VC selection rate

1/300

European Market

European Market

European Market

Source  dowjones Venturewire ;  nb  of  deals  2Q2014

Biotech IPos

Biotech VC Market

33

Healthcare VC market

34

Healthcare : 30% of EU VC Investments

35

15 Top European Biotech VCs

1. Woodford2. Sofinnova Partners3. TVM4. Abingworth5. Wellington6. HBM7. Sunstone

8. Seventure9. Dievini10. Forbion11. Truffle12. Malin13. Syncona14. Edmond de

Rothschild15. Ysios

36

TERM$

38Guillaume  Bodinier,Contrat  de  mariage  en  Italie,  1831

Founder Dream

A bubble in the USA

Reality Check

The VC Arsenal

Is there a Valuation Magic Formula ?

R)(1FV

R)(1CiNPV n

1

0i ++

+=∑

−n

Rodermann  MagicSystem

⎪⎩

⎪⎨⎧ ∏ −×+−≤

≤+

≤

nDiCpremoney

CpremoneyC

0100

0

0

)1(FV

%50%15

Liquidation Preference Adjustments

1X  Double  dip,  participating 1X  Single  dip

invested shares % nominal premium

founders 100  000,00  € 100000 67% 1,00  € -­‐ €

VC 500  000,00  € 50000 33% 1,00  € 9,00  €

600  000,00  € 150000

Full Ratchet & Washout

Example

Ratchet § investor 2 wants to get 20% for 1M€

48

Series shareholderPre  

Money  k€

k€invested

€ per  share New  shares total  

sharesPost  

money  k€ Options

seed Inception 0 100 1 100000 100000 100

AInvestor    1

100003000

10030000

130000 13000ESOP 3000

Binvestor  2

13001000

10,00100000

500000 50000

ratchet  shares  for  Investor  1 0 270000

Veto Rights

Reps and Warranties

How not to be fired in 6 months ?

Build a balanced board of brilliant directors

Hire an experienced chairman

Pay an experienced specialized coach

Disclose problems as they arriveNever Lie

Write minutes just after board meetings

Do what you promised to do

Becoming Global –Should I stay or Should I go ?

WHERE

Operational efficiency

CLIENTS PARTNERSTALENTS TAX SUBSIDIES

SALES  &  MKT OPERATIONS R&D HEADQUARTERS

EU’s Four Freedoms

Free  movement  Goods

Capital

Services

People  

within  EU's  

28  member  states

Transatlantic Trade and Investment Partnership (in progress)

Access to Funding

VC

Corporate Tax Optimisation

SUBSTANCE=PEOPLE+DECISIONBRPS  :  OECD  Base  Erosion  and  Profit  Shifting  Project

Double  Irish  DutchSandwich

Where will you live ? : Fame

Where will you live ? : Lifestyle

Where will you live ? : Tax

Choose a pill

Alain RodermannManaging Partner

@alroder

Questions