1. Entrepreneurial Finance
Attracting an Appropriate Suitor
American Chamber of Commerce, Estonia
Tehnopol Startup Incubator
Alex Sergiwa
10/19/2016

2. 10Years in Entrepreneurship and Venture Capital
Expertise:
Healthcare and MedTech
Smart Home and IoT
FinTech, Software, and Social Networks
Currently:
Venture Associate
Growth Associate
Background

3. Crowdfunding and other sources of customer acquisition.
Best terms with family and friends.
Sophisticated investors may or may not require sophisticated
risk management solutions: Angels vsVenture Capital firms
(VCs).
Angels provide a reasonable runway before taking on onerous
venture capital terms: $200,000 to $700,000.
VCs take part of the upside but limit downside with onerous
terms that in effect blame the entrepreneur harshly for failure.
Corporate investors are looking to have access to the next
disruptive innovation before it disrupts them.
Ecosystem

4. Responsible for firms that produce 21% of US GDP (Bliss et al.,
2011)
Required to limit downside:
Focus first on most pessimistic startup scenario and de-risk it.
De-risk by comforting the investor:
Team quality, business plan, IP protection, and term sheet.
Require high growth prospects:
Focus on the most optimistic payoff after showing how you de-
risk.
Clustered and invested in a few geographic locations
Where high human capital and technology firms clusters.
Venture Capital are...

5. Exhibited well thought out integrated strategies.
Organizational strategy affects the boundary of the firm.
What is your competitive advantage and what is not?
How will you organize your resources to support your goals?
Marketing strategy affects your product offering.
Is the current market size sufficiently large?
Do you have product/market fit?
Where, when, and how do you deliver value to your customers?
Financial strategy affects your investment offering.
How you will fuel your growth and exit your business?
Attractive Propositions

6. Maintain options that limit downsides of strategic choices.
Focus on customer needs and competitors’ value chains.
Create simpler products and value chains within their
capabilities to execute.
Are data driven: build, test, and learn iteratively.
Delaying external investment may de-risk you to a future
investor if you progress but it may not...
Marketing side-effects: maybe aVC fueled competitor gets
first-to-market successfully, locking-in customers.
Lean Startups

7. Commit to the startup but have career options.
Write a business plan with multiple scenarios.
Test and learn from failure and success
Acquire repeat customers!
Register a C-corporation in the state of Delaware.
Target investors within the startup’s industry focus and be
prepared to relocate.
Accept investments in the early stage ofVC fund lifecycle (1-3
years) with a planned exit within expiration of fund < 7 years.
Milestone linked staged investments keeps you disciplined.
It is not about valuation but risk!
Nota Benes

8. No Hockey Sticks

9. Milestone Driven Growth

10. Thank you
alexander@g51.com
www.linkedin.com/in/alexsergiwa