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Startup Finance An Entrepreneur’s Manual
About Index Ventures ,[object Object],[object Object],[object Object],[object Object],Index Ventures Selected Investments
Agenda What are the financing options? How to attract and engage investors? Deal structure and what to expect during the investment process Important reflections before you start
A big undertaking ,[object Object],[object Object],[object Object],[object Object],[object Object]
Key questions about you ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Key questions about the business ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Agenda What are the financing options? How to attract and engage investors? Deal structure and what to expect during the investment process Important reflections before you start
Overview of financing options Angel Financing Venture Capital Private Equity Public Stock Markets Self Finance /  Bootstrapping Debt /  Bank Finance Equity Financing Non-Equity Financing
Self financing / bootstrapping ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Debt / bank finance ,[object Object],[object Object],[object Object],[object Object]
Good reasons to raise equity finance Large Potential Market Opportunity Unique Product  Or Concept Passionate Founding Team Pre-requisites Intense competition likely Need to move rapidly Implications… Hiring Infrastructure VC funding supports Rapid Product  Development Internationalisation Partnerships Commercialisation
When NOT to raise VC ,[object Object],[object Object],[object Object],[object Object],[object Object],Application is a feature  not a product Market size is too small Motivation is not financial
Equity Financing ,[object Object],Seed Early Stage Series A, (B) Later Stage (B),C,D… Pre-IPO /  Buy-out Private Equity Potential Sources of Funds  0 - €1m Grant-funding University seed funds Friends and family Angel Investors (Venture Capital) € 2m-€20m Venture Capital (Wealthy) Angel investors  € 5m-€20m Venture Capital € 30m+ Specialist Late stage tech investment funds Hedge Funds Growth Fund
Agenda What are the financing options? How to attract and engage investors? Deal structure and what to expect during the investment process Important reflections before you start
Venture Capital – How the VC makes money ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Angels – How the Angel investor makes money ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Venture Capital – What a good VC will add ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
What does an investor look for?  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Technology $$$ Traction Team
Identifying relevant VC partners ,[object Object],[object Object],[object Object],Has funds  to invest Match of  Size/Stage/ Geography Relevant Portfolio No directly competitive investments Excellent track record Shortlist
Getting on radar screens ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Agenda What are the financing options? How to attract and engage investors? Deal structure and what to expect during the investment process Important reflections before you start
Sharing relevant information ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Pre - first meeting Pre - termsheet Post - termsheet ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],2-4 weeks 1-2 Months
Types of investment ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Understanding a termsheet –  case study ,[object Object],[object Object],[object Object],[object Object]
Case Study – Cap Table
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Venture Capital – “Typical Deal Terms” but that’s so unfair… Photo Source: Philip Greenspun, MIT
Case Study - liquidation preference
Case Study - liquidation preference
Case Study - liquidation preference
Case Study - liquidation preference
Case Study - liquidation preference
Case Study - Antidilution ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Case Study – Reverse Vesting ,[object Object],[object Object],[object Object],[object Object],[object Object]
Choosing the right VC - Valuation should not be the decisive factor Value at exit Probability of getting there % share of business at exit Entrepreneur’s Equation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Key things to consider when choosing an investor ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Right partner at a fair price vs. Any partner at best price
Thank you Ben Holmes Email : benh@indexventures.com Skype : ben_holmes
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Start Up Finance

  • 1. Startup Finance An Entrepreneur’s Manual
  • 2.
  • 3. Agenda What are the financing options? How to attract and engage investors? Deal structure and what to expect during the investment process Important reflections before you start
  • 4.
  • 5.
  • 6.
  • 7. Agenda What are the financing options? How to attract and engage investors? Deal structure and what to expect during the investment process Important reflections before you start
  • 8. Overview of financing options Angel Financing Venture Capital Private Equity Public Stock Markets Self Finance / Bootstrapping Debt / Bank Finance Equity Financing Non-Equity Financing
  • 9.
  • 10.
  • 11. Good reasons to raise equity finance Large Potential Market Opportunity Unique Product Or Concept Passionate Founding Team Pre-requisites Intense competition likely Need to move rapidly Implications… Hiring Infrastructure VC funding supports Rapid Product Development Internationalisation Partnerships Commercialisation
  • 12.
  • 13.
  • 14. Agenda What are the financing options? How to attract and engage investors? Deal structure and what to expect during the investment process Important reflections before you start
  • 15.
  • 16.
  • 17.
  • 18.
  • 19.
  • 20.
  • 21. Agenda What are the financing options? How to attract and engage investors? Deal structure and what to expect during the investment process Important reflections before you start
  • 22.
  • 23.
  • 24.
  • 25. Case Study – Cap Table
  • 26.
  • 27. Case Study - liquidation preference
  • 28. Case Study - liquidation preference
  • 29. Case Study - liquidation preference
  • 30. Case Study - liquidation preference
  • 31. Case Study - liquidation preference
  • 32.
  • 33.
  • 34.
  • 35.
  • 36. Thank you Ben Holmes Email : benh@indexventures.com Skype : ben_holmes