'Meet the investor' workshop @ Startup Week 2011
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This document summarizes an investor workshop discussing challenges for startups in Central and Eastern Europe and strategies for obtaining funding. It notes that early-stage entrepreneurs in the region face challenges like limited experience, networks, and international sales skills. It then discusses how seasoned entrepreneurs are taking on investor roles to provide hands-on support. One such group is SpeedInvest, a startup accelerator focused on early-stage internet and mobile companies in Central and Eastern Europe. The workshop advises entrepreneurs on effectively engaging with investors, including building relationships, demonstrating traction, and being prepared to answer tough questions about their product, team, finances, and plan to scale.
'Meet the investor' workshop @ Startup Week 2011
- 1. Meet the Investor Workshop Part 1Startup Week 2011Oliver Holle, CEO
- 2. Challenges for CEE Start-UpsGreat Talent, Great Products, Great Momentum in Vienna – but…Little entrepreneurial experience, network or international sales / BD skills Significant operational gaps in founding teamLimited exit possibilites if you stay too localFirst time entrepreneurs face steep learning curveOUTCOME: Long learning cycles, lots of mistakes
- 3. Phenomenon: Investors as EntrepreneursSeasoned entrepreneurs are rolling up their sleeves...Cases:Founders, not bankers
- 4. Excellent track record of founder/investor partnerships
- 5. Investors are Business Angels, but also Venture Capitalist and Strategic InvestorsReasons:Investors collect tacit knowledge on markets, trends, technologies
- 6. New behavior reduces agency problems based on information asymmetry
- 7. Investor owns the majority of shares, controls the company and influences its strategy.
- 8. VCs’ involvement may not be necessary any more as the amount of money needed is shrinking and entrepreneurs often follow bootstrapping strategies© Stephan Jung, Institut für Unternehmensführung und Innovation, WU Wien
- 9. On SpeedInvest ApproachLeading Austrian internet/mobile entrepreneurs come together to form start-up ‘accelerator’ platform for Central EuropeFull partnership approach: “hands on” work with cash investmentTotal funds of EUR 10m 3-5 investments per year, dealsize 250,000 - 500,000 EURFocusEarly stage internet/mobile startupsAlps and Danube region, closeby CEE/SEE markets4
- 10. SpeedInvest TeamEUR 15mEUR 55mEUR 280mEUR 275mEUR 10m+sold to sold to sold to sold to sold to VeriSignPage JaunesAmdocs CBSDigital RiverCo-Entrepreneurs = ‘Hands On’
- 11. NO Consultants, NO Bankers
- 12. Network & industry insiders
- 14. Global ‚Smart Money‘ – product, ops, M&A, atc.
- 15. Team since 20045Team & Market Background
- 16. Partners in EntrepreneurshipOperational support “that money can’t buy” for a startupFree housing & office in Santa Cruz, CA
- 17. Erik = 100% dedicated US resource Silicon Valley OperationsU.S. business development, fundraising
- 18. Access to mobile industry and media Business/Corp DevelopmentPresence in Silicon ValleySocial media PR, SEO/SEM Marketing
- 19. Strategy support, corporate planningMarketing & StrategyBusinessDevelopmentQuality check, architecture, scalability
- 20. Sourcing / vendor management Technology SupportTechnology SupportMarketing & Strategy Support Public grants, subsidies
- 21. Interim COO, CFOBusiness ServicesBusinessServices6Speed Invest in Detail
- 22. Five Investor Myths that are plain wrong VC‘s are stupidYou need a hockey stick It‘s all about the right pitchAvoid „dumb“ moneyDilution is death
- 23. Find your Ballpark Idea, BusinessplanFirst Subsidy, PrototypeBeta (B2C) / 1st Client (B2B)Successful metricsRevenue GrowthFF&F(Prof.) AngelSeed FundSeed / VCVC
- 24. Stages of a Marriage1st MeetingFollow UpTerm- sheet1st Contact2ndMeetingFace to FaceSocial proofBe concise, polite & fastChose your target carefullyEveryone is importantFlirt, don‘t chase
- 25. Stages of a Marriage1st MeetingFollow UpTerm- sheet1st Contact2ndMeetingStart from scratchBuild trust: don‘t lie, don‘t oversell, explain yourselfFocus is on product and you (your team)Don‘t bore us with tons of slides, numbersSidenote: it may take a few 1st meetings…
- 26. Stages of a Marriage1st MeetingFollow UpTerm- sheet1st Contact2ndMeetingBring your teamHave good, concise answers to the hard questionsIf not, explain why but remain the expertBe numbers driven, be the expertDont get annoyed: this is grilling time
- 27. Stages of a Marriage1st MeetingFollow UpTerm- sheet1st Contact2ndMeetingContinue to build relationshipsDeliver in high quality (this is a test)Make sure you have a „Plan B“Be patient, it always takes longerSort out any issues you have NOW
- 28. Stages of a Marriage1st MeetingFollow UpTerm- sheet1st Contact2ndMeetingThis is not an ego battle, keep friendly and cooperateHave a (credible) plan B, and you have a negotiationChoose your (few) battles wiselyValuation is overvalued – understand the detailsRelax, they want you
- 29. Stages of a Marriage1st MeetingFollow UpTerm- sheet1st Contact2ndMeetingThis is not an ego battle, keep friendly and cooperateHave a (credible) plan B, and you have a negotiationChoose your (few) battles wiselyValuation is overvalued – understand the detailsRelax, they want you $$$$$
- 30. SolutionHow do you address this need?Why is this better/cheaper/unique?What value for the user/client?Commercially relevant factors neglectedDriven by feasibility, not needPrototypeScalabilityRoute to market and its cost not consideredHow will you capture value?How do you monetize this value?Is this concept scaleable?Business ModelToo much focus on technologyJust because something works does not mean anyone needs itData / prototypePatent listFull patent textsWhy is it unique / different?How can you defend it?Does it work? Have you proof?TechnologyNot enough focus on itNot well enough thought throughNot enough resources (€, HR…) devoted to executionAnything of relevanceThe more specific (i.e. closer to reality, action oriented), the betterHow will you sell it?What resources will you need?What drives buying decisions?Marketing & SalesAnatomy: Ten topics dissectedTopicQuestions to answerCommon fallaciesSupporting mat‘sProblemWhat’s the need you address?How big, significant, urgent?Mission-critical or nice-to-have?Insignificant problemEngineering driven (solution seeking problem)Market researchCustomer interviews-Source: GCP
- 31. TeamWho will implement the plan?Can they do it? track record?Advisors? Recruitment needs?All R&D, no sales / commercialNo assessment of future needsFull CVsReference listUnrealistic/intransparent assumptions (both ways)No clearly identified milestonesNo linking of risk & returnUnrealistic funding requirement (both ways – too lo/hi)Financial Plan, esp. monthly Cash-FlowsMilestone PlanFunding requirement & use of proceedsWhat 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?Projections, MilestonesAnatomy: Ten topics dissectedTopicQuestions to answerCommon fallaciesSupporting mat‘sCompetitionWho else is in the game?Substitutes? Industry food chain?What’s your unfair advantage/USP?“Nobody offers this (yet)”Unknown competitors“Our widget can….”-Not action-oriented-Where are you now?What next?Status & TimelineIntroduction rather than summaryWritten first, rather than lastToo long-Give a complete and concise overview of the opportunity on no more than two pagesExecSumSource: GCP
- 32. How to do it right? Focus on your productSave time – choose your targets wiselyBuild social capitalBuild up multiple routes (competition)Don‘t be greedy to early
- 33. How to get a 5M USD Sequoia A Round!By Erik Bovee, Founder SpeedInvest18
- 34. We just won ‘Go Silicon Valley’/AWS pre-seed/grandma died, and our CEO is moving to Sunnyvale for 12 weeks to get US funding! Outcome -12 weeks without a rudder, product delays, you spend all the money, everyone moves back in with parents19
- 35. What Happens in Silicon Valley?The Scene on the Ground is different than what you read in TechCrunch‚You have a local/social/mobile shopping app? Cool! That was my MSc thesis at Stanford in 2007. We got funded, but went bankrupt in 2009...I‘m doing a Jedi robot start-up this year.‘ –annoying guy at the YCombinator party20
- 36. More Bad News....Wirtschafts...what? I went to Stanford -Famous Austrian Engineer Fritz Pfleumer – yes, I had to look him up. 13 Facebook ‚Likes!21
- 37. …The EndYou will not get funding on Sand Hill RoadThanks for coming, and have a great Startup Week!22
- 38. Who are you and why are you telling me this?Erik Bovee – Founder/General Partner, SpeedInvestFounder Digital Mobility/Digimob – raised 7M USD
- 39. European Managing Director eMeta Corp – sold 30M USD 2006
- 40. Head of Product Management VeriSign (Fortune 500) Enterprise Messaging Services
- 41. VP Business Development Wikitude – RIM, Sony, VerizonMost important – about 1,000,000 unsuccessful VC pitches23
- 42. Seriously...What Does it Take?Careful planning, traction, friends on the ground, being ‚American‘As a foreign company, your idea won‘t sell on its own – VC perceive high riskYou need help building relationships – warm intros are essentialYou need someone on the ground for you in SV year roundYou need a solid US operational story Your pitch should be 10 slides, and it should be absolutely perfect – (not European ‚perfect‘...Silicon Valley perfect) – get local advice and practice24
- 43. When Should We Go?Go when you have the following:Working product + growth (NOT research showing ‚hockey stick‘ in 2014...seriously, if you have that slide, throw it out)Pitch that you have worked over 500+ times with US helpCredible US operational plan – CEO (and founders, sales, marketing) have to move to Palo Alto. Not optional.US Customer or user base (or solid pipeline at least)Carefully selected VC shortlist that you have been courting for 6 months – ask for advice early, soft pitch.A founding team that interacts and presents well together (...spend time coaching the CTO on how to talk to human beings)US-style ‚Passion‘ – ability to express energy and confidence (and you can‘t laugh when you do it)Create media buzz – the appearance of growth, health and energy is essential - TC articles, conferences, etc., etc.25
- 44. How Do US VCs Think? – TOP SECRETIt really has nothing to do with your idea...They think your pitch is great and want to keep talking...Time is on the VC‘s sideThey want to see how teams react under pressureThey get interested when someone else is interestedDo you have a track record in The Valley?They love pre-funding milestones...you will go bankrupt reaching their milestones...You will get a really loooooong ‚NO‘26
- 45. How Do US VCs Think? – TOP SECRETYour best tactics - Create conditions for feeding frenzyMomentum
- 46. Buzz
- 47. Short window of opportunityGet warm intros through us – soft pitch to friends firstCreate buzz – put massive energy into PR, networking, pitchingBe a little arrogant – ‚We‘re raising 2.5M USD by end of Q2. Let us know by February 15 if you are in.‘Set your own milestone agenda‚When you ask for money, you get advice. When you ask for advice you get money.‘Let people know you are shopping, and broadcast success (discreetly) – ‚I hear those guys are already negotiating a term sheet with SVAngel!‘(PS – This stuff won‘t work on SpeedInvest)27
- 48. Do you Really Need US Money?US VCs are great if there is a reason to be in the USCan you differentiate against US market/competition – ‚Me, too!‘ products can find solid exits in Europe (and you might not even know your product is ‚Me, too!‘ until you spend 12 weeks in SV)European VCs don‘t play by the same hard rules – closer to home is often a low risk option for seed/series ARisks and costs of US market penetration have to be weighed carefully – even a 12 week CEO trip can be expensive (...and not just in terms of money)28
- 49. Thank You!Oliver – [email protected] mobile - +4369913205532Daniel – [email protected] mobileErik – [email protected] mobile - +1 831 239 0061