1.
Meet the Investor Workshop Part 1<br />Startup Week 2011<br />Oliver Holle, CEO<br />

2.
Challenges for CEE Start-Ups<br />Great Talent, Great Products, Great Momentum in Vienna – but…<br />Little entrepreneurial experience, network or international sales / BD skills <br />Significant operational gaps in founding team<br />Limited exit possibilites if you stay too local<br />First time entrepreneurs face steep learning curve<br />OUTCOME: Long learning cycles, lots of mistakes<br />

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Phenomenon: Investors as Entrepreneurs<br />Seasoned entrepreneurs are rolling up their sleeves...<br />Cases:<br /><ul><li>Founders, not bankers

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Excellent track record of founder/investor partnerships

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Investors are Business Angels, but also Venture Capitalist and Strategic Investors</li></ul>Reasons:<br /><ul><li>Investors collect tacit knowledge on markets, trends, technologies

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New behavior reduces agency problems based on information asymmetry

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Investor owns the majority of shares, controls the company and influences its strategy.

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VCs’ involvement may not be necessary any more as the amount of money needed is shrinking and entrepreneurs often follow bootstrapping strategies</li></ul>© Stephan Jung, Institut für Unternehmensführung und Innovation, WU Wien<br />

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On SpeedInvest <br />Approach<br />Leading Austrian internet/mobile entrepreneurs come together to form start-up ‘accelerator’ platform for Central Europe<br />Full partnership approach: “hands on” work with cash investment<br />Total funds of EUR 10m <br />3-5 investments per year, dealsize 250,000 - 500,000 EUR<br />Focus<br />Early stage internet/mobile startups<br />Alps and Danube region, closeby CEE/SEE markets<br />4<br />

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SpeedInvest Team<br />EUR 15m<br />EUR 55m<br />EUR 280m<br />EUR 275m<br />EUR 10m+<br />sold to <br />sold to <br />sold to <br />sold to <br />sold to <br />VeriSign<br />Page Jaunes<br />Amdocs <br />CBS<br />Digital River<br /><ul><li>Co-Entrepreneurs = ‘Hands On’

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NO Consultants, NO Bankers

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Network & industry insiders

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Silicon Valley Operations

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Global ‚Smart Money‘ – product, ops, M&A, atc.

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Team since 2004</li></ul>5<br />Team & Market Background<br />

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Partners in Entrepreneurship<br />Operational support “that money can’t buy” for a startup<br /><ul><li>Free housing & office in Santa Cruz, CA

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Erik = 100% dedicated US resource </li></ul>Silicon Valley Operations<br /><ul><li>U.S. business development, fundraising

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Access to mobile industry and media </li></ul>Business/Corp Development<br />Presence in Silicon Valley<br /><ul><li>Social media PR, SEO/SEM Marketing

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Strategy support, corporate planning</li></ul>Marketing & Strategy<br />BusinessDevelopment<br /><ul><li>Quality check, architecture, scalability

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Sourcing / vendor management </li></ul>Technology Support<br />Technology Support<br />Marketing & Strategy Support <br /><ul><li>Public grants, subsidies

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Interim COO, CFO</li></ul>Business Services<br />BusinessServices<br />6<br />Speed Invest in Detail<br />

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Five Investor Myths that are plain wrong <br />VC‘s are stupid<br />You need a hockey stick <br />It‘s all about the right pitch<br />Avoid „dumb“ money<br />Dilution is death<br />

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Find your Ballpark <br />Idea, Businessplan<br />First Subsidy, Prototype<br />Beta (B2C) / 1st Client (B2B)<br />Successful metrics<br />Revenue Growth<br />FF&F<br />(Prof.) Angel<br />Seed Fund<br />Seed / VC<br />VC<br />

24.
Stages of a Marriage<br />1st <br />Meeting<br />Follow <br />Up<br />Term- <br />sheet<br />1st <br />Contact<br />2nd<br />Meeting<br />Face to Face<br />Social proof<br />Be concise, polite & fast<br />Chose your target carefully<br />Everyone is important<br />Flirt, don‘t chase<br />

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Stages of a Marriage<br />1st <br />Meeting<br />Follow <br />Up<br />Term- <br />sheet<br />1st <br />Contact<br />2nd<br />Meeting<br />Start from scratch<br />Build trust: don‘t lie, don‘t oversell, explain yourself<br />Focus is on product and you (your team)<br />Don‘t bore us with tons of slides, numbers<br />Sidenote: it may take a few 1st meetings…<br />

26.
Stages of a Marriage<br />1st <br />Meeting<br />Follow <br />Up<br />Term- <br />sheet<br />1st <br />Contact<br />2nd<br />Meeting<br />Bring your team<br />Have good, concise answers to the hard questions<br />If not, explain why but remain the expert<br />Be numbers driven, be the expert<br />Dont get annoyed: this is grilling time<br />

27.
Stages of a Marriage<br />1st <br />Meeting<br />Follow <br />Up<br />Term- <br />sheet<br />1st <br />Contact<br />2nd<br />Meeting<br />Continue to build relationships<br />Deliver in high quality (this is a test)<br />Make sure you have a „Plan B“<br />Be patient, it always takes longer<br />Sort out any issues you have NOW<br />

28.
Stages of a Marriage<br />1st <br />Meeting<br />Follow <br />Up<br />Term- <br />sheet<br />1st <br />Contact<br />2nd<br />Meeting<br />This is not an ego battle, keep friendly and cooperate<br />Have a (credible) plan B, and you have a negotiation<br />Choose your (few) battles wisely<br />Valuation is overvalued – understand the details<br />Relax, they want you <br />

29.
Stages of a Marriage<br />1st <br />Meeting<br />Follow <br />Up<br />Term- <br />sheet<br />1st <br />Contact<br />2nd<br />Meeting<br />This is not an ego battle, keep friendly and cooperate<br />Have a (credible) plan B, and you have a negotiation<br />Choose your (few) battles wisely<br />Valuation is overvalued – understand the details<br />Relax, they want you <br />$$$$$ <br />

30.
Solution<br />How do you address this need?<br />Why is this better/cheaper/unique?<br />What value for the user/client?<br />Commercially relevant factors neglected<br />Driven by feasibility, not need<br />Prototype<br />Scalability<br />Route to market and its cost not considered<br />How will you capture value?<br />How do you monetize this value?<br />Is this concept scaleable?<br />Business Model<br />Too much focus on technology<br />Just because something works does not mean anyone needs it<br />Data / prototype<br />Patent list<br />Full patent texts<br />Why is it unique / different?<br />How can you defend it?<br />Does it work? Have you proof?<br />Technology<br />Not enough focus on it<br />Not well enough thought through<br />Not enough resources (€, HR…) devoted to execution<br />Anything of relevance<br />The more specific (i.e. closer to reality, action oriented), the better<br />How will you sell it?<br />What resources will you need?<br />What drives buying decisions?<br />Marketing & Sales<br />Anatomy: Ten topics dissected<br />Topic<br />Questions to answer<br />Common fallacies<br />Supporting mat‘s<br />Problem<br />What’s the need you address?<br />How big, significant, urgent?<br />Mission-critical or nice-to-have?<br />Insignificant problem<br />Engineering driven (solution seeking problem)<br />Market research<br />Customer interviews<br />-<br />Source: GCP<br />

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Team<br />Who will implement the plan?<br />Can they do it? track record?<br />Advisors? Recruitment needs?<br />All R&D, no sales / commercial<br />No assessment of future needs<br />Full CVs<br />Reference list<br />Unrealistic/intransparent assumptions (both ways)<br />No clearly identified milestones<br />No linking of risk & return<br />Unrealistic funding requirement (both ways – too lo/hi)<br />Financial Plan, esp. monthly Cash-Flows<br />Milestone Plan<br />Funding requirement & use of proceeds<br />What do you plan to achieve when?<br />What are your assumptions?<br />How do you measure progress?<br />What resources do you need?<br />What will you use them for?<br />Projections, Milestones<br />Anatomy: Ten topics dissected<br />Topic<br />Questions to answer<br />Common fallacies<br />Supporting mat‘s<br />Competition<br />Who else is in the game?<br />Substitutes? Industry food chain?<br />What’s your unfair advantage/USP?<br />“Nobody offers this (yet)”<br />Unknown competitors<br />“Our widget can….”<br />-<br />Not action-oriented<br />-<br />Where are you now?<br />What next?<br />Status & Timeline<br />Introduction rather than summary<br />Written first, rather than last<br />Too long<br />-<br />Give a complete and concise overview of the opportunity on no more than two pages<br />ExecSum<br />Source: GCP<br />

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How to do it right? <br />Focus on your product<br />Save time – choose your targets wisely<br />Build social capital<br />Build up multiple routes (competition)<br />Don‘t be greedy to early<br />

33.
How to get a 5M USD Sequoia A Round!<br />By Erik Bovee, Founder SpeedInvest<br />18<br />

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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! <br />Outcome -12 weeks without a rudder, product delays, you spend all the money, everyone moves back in with parents<br />19<br />

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What Happens in Silicon Valley?<br />The Scene on the Ground is different than what you read in TechCrunch<br />‚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 party<br />20<br />

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More Bad News....<br />Wirtschafts...what? I went to Stanford<br /> -Famous Austrian Engineer Fritz Pfleumer – yes, I had to look him up. 13 Facebook ‚Likes!<br />21<br />

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…The End<br />You will not get funding on Sand Hill Road<br />Thanks for coming, and have a great Startup Week!<br />22<br />

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Who are you and why are you telling me this?<br />Erik Bovee – Founder/General Partner, SpeedInvest<br /><ul><li>Founder Digital Mobility/Digimob – raised 7M USD

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European Managing Director eMeta Corp – sold 30M USD 2006

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Head of Product Management VeriSign (Fortune 500) Enterprise Messaging Services

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VP Business Development Wikitude – RIM, Sony, Verizon</li></ul>Most important – about 1,000,000 unsuccessful VC pitches<br />23<br />

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Seriously...What Does it Take?<br />Careful planning, traction, friends on the ground, being ‚American‘<br />As a foreign company, your idea won‘t sell on its own – VC perceive high risk<br />You need help building relationships – warm intros are essential<br />You need someone on the ground for you in SV year round<br />You need a solid US operational story <br />Your pitch should be 10 slides, and it should be absolutely perfect – (not European ‚perfect‘...Silicon Valley perfect) – get local advice and practice<br />24<br />

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When Should We Go?<br />Go when you have the following:<br />Working product + growth (NOT research showing ‚hockey stick‘ in 2014...seriously, if you have that slide, throw it out)<br />Pitch that you have worked over 500+ times with US help<br />Credible US operational plan – CEO (and founders, sales, marketing) have to move to Palo Alto. Not optional.<br />US Customer or user base (or solid pipeline at least)<br />Carefully selected VC shortlist that you have been courting for 6 months – ask for advice early, soft pitch.<br />A founding team that interacts and presents well together (...spend time coaching the CTO on how to talk to human beings)<br />US-style ‚Passion‘ – ability to express energy and confidence (and you can‘t laugh when you do it)<br />Create media buzz – the appearance of growth, health and energy is essential - TC articles, conferences, etc., etc.<br />25<br />

44.
How Do US VCs Think? – TOP SECRET<br />It really has nothing to do with your idea...<br />They think your pitch is great and want to keep talking...<br />Time is on the VC‘s side<br />They want to see how teams react under pressure<br />They get interested when someone else is interested<br />Do you have a track record in The Valley?<br />They love pre-funding milestones...you will go bankrupt reaching their milestones...<br />You will get a really loooooong ‚NO‘<br />26<br />

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How Do US VCs Think? – TOP SECRET<br />Your best tactics - Create conditions for feeding frenzy<br /><ul><li>Momentum

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Buzz

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Short window of opportunity</li></ul>Get warm intros through us – soft pitch to friends first<br />Create buzz – put massive energy into PR, networking, pitching<br />Be a little arrogant – ‚We‘re raising 2.5M USD by end of Q2. Let us know by February 15 if you are in.‘<br />Set your own milestone agenda<br />‚When you ask for money, you get advice. When you ask for advice you get money.‘<br />Let people know you are shopping, and broadcast success (discreetly) – ‚I hear those guys are already negotiating a term sheet with SVAngel!‘<br />(PS – This stuff won‘t work on SpeedInvest)<br />27<br />

48.
Do you Really Need US Money?<br />US VCs are great if there is a reason to be in the US<br />Can 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)<br />European VCs don‘t play by the same hard rules – closer to home is often a low risk option for seed/series A<br />Risks 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)<br />28<br />

49.
Thank You!<br />Oliver – oliver.holle@speedinvest.com mobile - +4369913205532<br />Daniel – daniel@speedinvest.com mobile<br />Erik – erik.bovee@speedinvest.com mobile - +1 831 239 0061<br />