DN Capital is an early-stage technology investor that has raised over €239 million across three funds since 2000. It has invested in over 50 companies and focuses on consumer and enterprise technology across Europe and the US. Some of its exits include companies that were acquired by larger companies, and it aims to continue backing leading entrepreneurs. The document also provides guidance on creating a vibrant venture capital ecosystem, including defining appropriate roles for governments, tax authorities, universities, lawyers, entrepreneurs, investors, and acquirers.
DN Capital - How to build a Silicon Valley-like ecosystem
1. Top performance through backing leading entrepreneurs
US-Poland Innovation Week
19 November 2014
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2. DN is an early-stage and growth technology investor with top quartile performance
• Established in 2000 with operations in London, Palo Alto and Berlin
• 60+ years of combined investment experience
• €239 million raised across 3 funds, investment in over 50 companies since 2000
• 2012 vintage
Fund 3
€144m
raised
• 2008 vintage
Fund 2
€47.5m
• 2001 vintage
Fund 1
€47.5m
Portfolio Highlights
CONFIDENTIAL 2
Exit Highlights
3. DN is a leading investor in consumer and enterprise technology across Europe and the US
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CONFIDENTIAL 3
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How to Create a Vibrant Venture Capital Ecosystem
Before starting… ALIGN OBJECTIVES
Three VERY different types of Venture Capital
Scientific Discovery
[example – Magnetic resonance imaging]
Capital Appreciation
[use – bail out underfunded pension plans]
Cocktail Party Conversation
[Snapchat, Twitter, Facebook]
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How to Create a Vibrant Venture Capital Ecosystem
(1) Role of government
Don’t: Provide direct funding to start-ups
Do: Fund really, REALLY hard problems for Universities to solve
Required Reading:
Secret History of Silicon Valley by Steve Blank
http://steveblank.com/secret-history/
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How to Create a Vibrant Venture Capital Ecosystem
(2) Role of tax authorities
Don’t: Provide tax breaks for general start up investing
Do: Reduce capital gains for entrepreneurs, particularly if they do another start-up
Defer capital gains tax for serial investors
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How to Create a Vibrant Venture Capital Ecosystem
(3) Role of employment laws
Don’t: Change the law to make it easier to be an entrepreneur
Do: Change the law to make it easier to hire and fire fast
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How to Create a Vibrant Venture Capital Ecosystem
(4) Role of universities
Don’t: Encourage professors to leave to do start-ups
Teach theory of entrepreneurship from non practitioners
Do: Encourage Graduate Students to start companies
Facilitate IP transfer
Encourage professors to consult for start-ups
Required Reading:
Notes from Peter Thiel’s 2012 course at Stanford
http://blakemasters.com/peter-thiels-cs183-startup
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How to Create a Vibrant Venture Capital Ecosystem
(5) Role of lawyers
Don’t: Focus on protecting down-side
Do: Focus on finding ways to get things done fast
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How to Create a Vibrant Venture Capital Ecosystem
(6) Role of first time founders
Don’t: Take wild risks
Consciously decide to be an entrepreneur
Do: Start a business that other people think are risky but that you can make less risky
Something to solve what keeps you up at night
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How to Create a Vibrant Venture Capital Ecosystem
(7) Role of successful founders
Don’t: Try to be an angel investor
(at least not immediately)
Do: Encourage your best lieutenants to set up new companies
Give back to the community through teaching
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How to Create a Vibrant Venture Capital Ecosystem
(8) Role of large enterprises
Don’t: Change your business processes for “Intrepreneurship” or “20% time”
Do: Encourage your most entrepreneurial employees to LEAVE (for now…)
Acquire based on strategic importance not financial multiples
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How to Create a Vibrant Venture Capital Ecosystem
(9) Role of acquirers
Don’t: Acquire businesses to enter new geographies
Do: Acquire businesses to enter new markets
Encourage your corporate development team to work with (or eventually join) investment
firms
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How to Create a Vibrant Venture Capital Ecosystem
(10) Role of investors / venture capital firms
Don’t: Hire people from buyout firms, accounting firms or public investors
Do: Hire from industry: engineers turned product managers turned leaders
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How to Create a Vibrant Venture Capital Ecosystem
Five general comments
• Don’t be afraid to do a “copycat” business… but do improve on what is already there
• Three part role of the Venture Capitalist, regardless of geography:
• Build ties across geographies – most of the acquirers will NOT be domestic
• Think like the next person up and down the food chain:
Customer Entrepreneur VC
• Have fun, always be learning, and like who you see in the mirror
Limited
Partner
Capital Source
Selection Anointment Governance
16. Contacts
CONFIDENTIAL
Authorised and Regulated by the Financial Conduct Authority
DN Capital (US) Inc.
2882 Sand Hill Road, Suite 210
Menlo Park, CA 94025
United States of America
Tel: +1 650 561 9300
info@dncapital.com
www.dncapital.com
Nenad Marovac
Managing Partner
Tel: +44 (0)20 7340 1602 nenad@dncapital.com
Steve Schlenker
Managing Partner
Tel: +1 650 561 9300 steve@dncapital.com
DN Capital (UK) LLP
2 Queen Anne’s Gate Buildings
Dartmouth Street
London SW1H 9BP
United Kingdom
Tel: +44 20 7340 1600
Fax: +44 20 7340 1601
The information above is issued by DN Capital (UK) LLP which is authorised and regulated in the United Kingdom by the Financial Conduct Authority. It does not constitute an offer for limited partnership interests in DN
Capital – Global Venture Capital III, LP (“GVC III”). For full particulars of GVC III, prospective investors should refer to the private placement memorandum related thereto (the “PPM”). The contents above are incomplete and
abbreviated, more detailed information is set out in the PPM, which may be made available to qualified investors upon request.
Editor's Notes
Solyndra failed because:
Price of polysilicon fell sharply, so Solyndra’s pitch of low-cost solar panels wasn’t as strong with Chinese competitors entering market quickly
Management made poor decisions on capital expenditures, other financing
Energy department persuaded management to delay layoffs (until mid-term 2010 elections) despite significant challenges
They couldn’t make their payments but DOE along with other family offices decided to invest an additional $75m (primarily loans for gov’t) but has hit bankruptcy
Founders of Google left their pHD to pursue their indexing / search of academic papers to build Google
Tech transfer enables universities to retain high quality faculty and draw revenue from licensing
