Ready for VC? A short check list. Olivier Witmeur 1
Sep 14, 2014
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Ready for VC? A short check list.
Olivier Witmeur
Galileo Venture Academy - Olivier Witmeur ©2010
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First seek to understand,then to be understood.
Stephen Covey, The Seven Habits of Highly Effective People, Habit 5
Galileo Venture Academy - Olivier Witmeur ©2010
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The name of the game
• The VC business is to make money with equity position in non listed firms:– Invest and sell (exit)– Make 3 to 10 times the investment over 3-7 years
• Growth potential and timing are mission critical.• Money is invested to support growth: R&D, S&M, internationalization…• VC help/support entrepreneurs to grow their business (partner)
• Main VC criteria (beyond a strong BP):1. Management team2. Uniqueness3. Growth potential4. Exit
Galileo Venture Academy - Olivier Witmeur ©2010
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1. Do your Homework.
Team IPPositionBoard Partnerships
Investor Presentation
Executive Summary
Pitch
Mantra
MarketResearch
Environment Analysis
(Competition incl.)Benchmarking NetworkingProof of
Concept
Business Model Vision (Exit incl.)
From BP To Pitch Formal Aspects
Sales & MarketingFinancial
PlanProduction / SCM
R&D
OrganizationFinancings
Milestones / Stages
Risk & sensibility Analysis
Key Success Factors
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2. Understand that it is a people business!
YOU
Experience
Commitment
Competences
TrustworthyAdaptable
Passion
Vision
Open Mind
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What makes you (truly) unique
?
Team, know-how…
Technology, secrets,
patents…
Partnerships, exclusivity…
Business model
First Mover Advantage
Brand, location…
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4. Scalability, Growth, and Speed
Speed
• Internal capabilities vs outsourcing
• Direct vs indirect sales
• Sales process duration
• Repeated business
Growth
• Focus on a niche• Market
diversification (international)
• Product diversification
• Upstream & downstream integration
Scalability
• Production constraints
• Sales & Marketing constraints
• Investment required• Additional
developments
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5. The exit route
• Main exit routes :– Trade sales– IPO– Buy-out– (Convertible Debts)
• Multiple aspects to take into consideration when analyzing exit path and timing:– Management / Founders Personal
life impact!– Company Development stage– Investor Funding cycle– Market Market conditions
Galileo Venture Academy - Olivier Witmeur ©2010
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6. Focus on the deal (not on entry valuation)
Critical Negotiation Items
• Governance• Use of funds• Key People• Milestones• Options• Exit organization
Contingent valuation
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About Valuation
• VCs value the future performance, not the past.– V = F (future cash-flows, value @ exit, exit time, expected return)– Typical expected return:
• Seed 60-100%• Start-up 50-60%• Early development 40-50%• Growth 30-40%
• VC are not looking for majority position as such, especially during first rounds.
• Current valuation are on the (very) low side …… but valuation correction mechanisms can be very important.
Galileo Venture Academy - Olivier Witmeur ©2010
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7. Pitch (again and again)
• Having a mantra helps
• The problem or ‘the pain’ (must be obvious)
• Your solution (is unique and ready)
• Market size (is big)• (A little bit on) Competition• Business model (value
creation is for sure)• Team (is great)• Achievements to date (are
impressive)• Credentials• You need … € and a meeting!
• Be:- Smiling (fun is OK!)- Humble but not modest- Passionate …- … but realistic
• Avoid:- Too technical- Too much numbers- Too much names- Jargon (Argh!)
• Prepare and rehearse
I WANT IT NOW!
Galileo Venture Academy - Olivier Witmeur ©2010
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Where to go?
• VCs organize multiple financial rounds:– Seed & Start-up stage: <500k€ with Business Angels and local
investors– Early growth: 1M€-2M€ with national VC firms– Fast growth: >2M€ with international VC syndicate, often lead by A
national VC• National VC association in most countries
– BVA in Belgium: www.bva.be– AFIC in France : www.afic.asso.fr– BVK in Germany: www.bvkap.de– BVCA in UK: www.bvca.co.ok– …
• EVCA at European Level: www.evca.com
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Final thought
You never get a second chanceto make a first impression.
Galileo Venture Academy - Olivier Witmeur ©2010
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Thank you
CONTACT:Olivier WitmeurSolvay Brussels School Of Economics and ManagementUniversité libre de Bruxelles