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Things startups need to know if they want to raise capital from Silicon Valley

Apr 21, 2017

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  • What you need to know if you want to raise capital from Silicon Valley

    Jeff Clavier Founder & Managing Partner

    Kima Ventures Portfolio Day Dec 9, 2013 Paris, France

  • SoftTech VC in a Nutshell Founded in 2004, SoftTech VC has backed 143 seed

    stage startups in consumer internet, devices and Saas Geographies:

    80% of the portfolio is in Silicon Valley, 10% is in New-York, the rest is in SoCal, Boulder and Toronto/Waterloo

    To date: 30+ companies have generated $1.5B in total exit

    consideration 70+ companies have raised $1.5B in follow-on financing Top quartile performer in all funds

    SoftTech is very much a startup it just happens to operate in the VC market. It was bootstrapped for 3 years (Fund I) and then scaled by raising $155M (Fund II, III, IV). And yes, it had zero chance of being a success.

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    Jeff Clavier

    Charles Hudson

    Stephanie Palmeri

  • A few SoftTech Exits

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    July 10 May 10 Dec 09

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    Apr 13

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    3

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    Oct 11

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    Feb 12

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    Dec 05 Aug 06 Dec 06 Aug 07 Aug 07 Dec 09

    Acquired by

    July 10

  • If you remember ONE thing from this talk

    The only real mistake is not trying, anything else is part of an entrepreneurs journey

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  • Here Is the SV/NY Funding Ecosystem

    Pre-Seed < $500K

    Bootstrapping/Friends and family/Crowdfunding Incubators and Accelerators (YC, Techstars, AngelPad, SeedCamp)

    Seed $1.2 to $2.5M

    Syndicates of micro-VC firms, angels and (potentially) traditional VCs AngelList and Crowdfunding services as alternative or fill up opportunity

    Series A $4M tp $10M

    One traditional VC, with micro VCs investing pro-rata and adding strategic angels Family Offices, Strategics, Micro-VCs + Crowdfunding pools as alternative

    Series B $6M to $15M

    Another traditional VC (or two), with insiders coming in for pro-rata Same mix as Series A for alternatives

    Growth $20M+

    Mix of traditional/growth VCs, PE firms, hedge funds. In parallel, secondary transactions. Alternative: direct co-investments from LPs, hedge/mutual funds, cash rich corporates

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  • Challenges to Raising Capital in the US

    Visas for Founders and Executives

    Financeable Idea: Big, Bold, Global Vision

    Limited/Inexistent Network for employees and investors referral

    Team/Product Credibility vs. Traction

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  • Two Practical Ways To Get To The Valley

    As an Employee Get a large US co to sponsor

    your visa and move you Network your way into the

    local community of entrepreneurs and investors

    After 2 to 4 years, youre local and you can figure out your way into a new visa, startup, funding, etc.

    Takes time, but works well if you are committed to the US

    As an Entrepreneur Raise seed financing in

    France/Europe for a global product, validated locally

    Raise a Series A/B in Europe with a global footprint target

    Raise a Series B/C in the US to expand/grow

    If your startup has 2+ years, transfer visas (L) is a possibility

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  • What Silicon Valley Investors Consider

    Market Opportunity

    Vision

    Team/Bench

    Traction

    Competition

    Distribution

    Marketing

    Monetization

    Economics

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  • What Silicon Valley Investors Consider

    Market Opportunity Huge ($Bs)

    Vision Big, Ballsy, Impactful

    Team/Bench World class/Experienced

    Traction Proof that the shit works

    Competition Know your ecosystem

    Distribution Most critical

    Marketing Whats unique about yours

    Monetization What brings the dough

    when

    Economics Do the CAC vs. LTV maths

    work

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  • Big No-Nos

    Expecting well move you Most investors will want to

    see commitment to US

    Traction in France is enough to get US funding Need global ambition and

    European traction

    Assume every VC is a potential investor Previous European deal is

    a strong indicator

    Expecting that its easy Convincing US investors

    is unbelievably hard Research how it worked

    for SoundCloud, Klarna, Unity, Criteo, Songkick, Skype, Rovio, etc.

    A detail: the Exit slide in the deck Well show you the exit

    door

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  • Finally a Few Recommendations

    You need to understand the right source and amount of funding for your startup Based on the vision and market opportunity Depending on your stage, and industry

    Crunchbase and AngelList are great sources of information re who funded what

    Remember: most professional investors will only consider opportunities coming through a referral Other successful European entrepreneurs are probably best

    Incubators offer a real opportunity to get early stage financing in the US

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  • Any Questions?

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