Presentation by Maria Dramalioti Taylor at Mobile Monday Athens (January 16 2012) - 10 non-textbook lessons for entrepreneurs copy

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2. Fundraising in Europe:
10 non-textbook lessons for entrepreneurs
Maria Dramalioti-Taylor
x.Million Capital Ventures
maria@x.xmillioncapital.eu
www.dramalioti-taylor.org
Mobile Monday, Athens
16.01.12

3. Agenda
• Venture/Angel Capital:
– How to decide if you need it
– How to navigate the VC scene
• Raising Capital in EU vs US:
– What is really going on?
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4. x.Million: news kids on the block
What? How much? When &
where?
MOB & WEB STARTUP & SEED
EUROPE
Seed
Retai l
€100k €250k € 500k
Other
€50k €1m
How we work:
- Lean, K.I.S.S.
- Back exceptionally talented people
- Look beyond web 2.0
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5. Portfolio highlights
2011 Pilot fund: €10M
2012 Fund I > €10M
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6. Agenda
• Venture/Angel Capital:
– How to decide if you need it
– How to navigate the VC scene
• Raising Capital in EU vs US:
– What is really going on?
6

7. #1 – Sell shares only when you need speed
ENTREPRENEUR HAS… …AND NEEDS…
…money to move
1 *FASTER* than OWN
Original
THEREFORE FACES…
capital allows
idea …intensifying
competition
2 …SO SELLS shares to
Best-in-market to pay for..
founding team
Hiring
3 Faster product
development
Large potential
Infrastructure
market
Commercialisation
Geographical expansion
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8. THE STARTUP FUNDING SPECTRUM
NET CASH
POSITION
+
- Closed Public SCALE STAGE
ALPHA BETA
1st Revenue
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9. #2- Illuminating but not necessarily true (John Kay)
NET CASH
POSITION
Grants Venture Capital Venture Capital
Bootstrapping Angel Capital Series A Series B,C,D
Family (€2m-€20m) (€5m-€20m)
Venture
Debt
+
- Closed Public SCALE STAGE
ALPHA BETA
1st Revenue
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10. DO IT LIKE A JACANA
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11. #3 – Decode the Business Angels
• Angels invests own money
Angels are • Small amounts, early, at
low valuation
like women: – €10k-€250k at
temperamental valuation €0.5-€2m
& (mostly) • Exit:
– sell at €5-10m
irreplaceable valuation & make 2-5x
– bring VCs, get diluted
(may) make 10x
• FOCUS ON: getting
capital back
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12. #4 – Decode the Venture Capital business
• VCs raise a fund every 2-4
years
VCs run a – Invest other people’s
business. money
They make it • Invest the funds over 5 years
• Exit (sell) via M&A or IPO
sound like • They take:
– 2.5% pa management fee on
Black Magic. funds managed
– Carry = 20% x [Total Return at
IT IS NOT. Exit] – [Total Amount
Invested]
• FOCUS ON: returning 3x-5x
capital back to investors in
4Y-5Y 12

13. TEST: Can you see the (main) difference?
Ca. 2,000 ANGEL UK Typical VC portfolio
investments
10x 10x
10x
9% 10%
10%
Loose
1x-5x Write
your 1x-2x
1x-2x
Loose downs 20%
your shirt 35% shirt 30%
40%
56% 50%
3x-5x
3x-5x
30%
10%
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14. TEST: Can you see the (main) difference?
Ca. 2,000 ANGEL UK 1x-2x
Typical VC portfolio
investments 20%
Angel George
10x
9%
1x-5x
3x-5x
30% 
Write
downs
10x
10%
1x-2x
35% 50% 30%
56%
3x-5x
10%
Angel Dimitris
Angel Maria Fund Investors share of profits
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15. #5 – γνῶθι..τω επινδυτή
Angels may
not let
you fail,
VCs may
give you a
big
success
www. http://www.instigatorblog.com
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16. #6 - Mind the AC/VC disconnect
+
- Closed Public SCALE STAGE
ALPHA BETA
1st Revenue
DISCONNECT
ANGEL /VC
ANGEL CAPITAL VC
£500k £2m
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17. NOTE: The blurring of AC/VC in the US
www.dramalioti-taylor.org
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18. #7 –A new taxonomy of investors
Venture Accelerators
Accelerator academy,
Seedcamp, Astia,
Ycombinator, 500hats,
Springboard…
Super Angels
high batting avg.
Angellab, Cherry Coutou,
Husein Kanji
Lean VCs
treats every
entrepreneur as an
individual
x.Million, pro-founders…
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19. #8 - Connect the fundraising dots
“what they offer”
Fight the vs.
information “what you need”
asymmetry
– Initial capital per idea
Sources – Sector focus: do they
www.thefunded.com understand it?
– Risk tolerance: can they
www.fredestin.com deal with uncertainty?
Angellist – Compatibility: will their
www.Ventureshacks.com pride suffer if you fail?
– Terms (& strings attached)
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20. Agenda
• Venture/Angel Capital:
– How to decide if you need it
– How to navigate the VC scene
• Raising Capital in EU vs US:
– What is really going on?
20

21. #9 - Bust the US VC myth
US VC is big Investment is at a high
Investments per • OVERALL VC INVESTMENTS
capital in US is 5.8x – $7.5 bn, 966 deals, 19% up
– on track to $26 bn & 6th
higher than EU most active year
• INTERNET AT 10-YEAR HIGH
US EU – $2.3 bn (72% up from Q1) 275
deals (46% up from Q1)
– 5/10 top deals in Internet
0.15% 5.8x 0.026%
GDP
GDP
Data: US, Q2/11
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22. #9 - Bust the US VC myth
It is also
…bubbly
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23. #9 - Bust the US VC myth
US VC … VCs invest more
dollars than
fundraising raising…level of
lowest for 15 investment
years unsustainable
withoutexits
and, subsequently,
fundraising…
NVCA, 2011
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Data: Q2/2011, US

24. #9 - Bust the US VC myth
IF VIX >30
THEN
IPOs drop
dramatically
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25. #9 - Bust the US VC myth
IF US VC Exits of the same order
of magnitude need only
½ the VC capital in EU
is big
THEN
EU = 1/2 x USA
EU VC
is
effective
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26. #9 - Bust the US VC myth
US IT is big EU feeds it
Global tech industry is EU companies bought by US
dominated by US companies tech companies using
offshore cash
Source: Hussein Kanji,2011
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27. #10 – Focus on the social graph
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28. #10 – Focus on the social graph
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29. #10 – Focus on the social graph
85% of worlds population
covered by wireless signals
vs
80% of world population
connected to the electrical
grid
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31. #10 – Learn to read the VC barometer
stage-agnostic - likely bias due to large follow on rounds
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32. Post-bubble EU VC industry: survival of the fittest
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33. LESSON 9: Exploit geo-differences, create arbitrage
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34. IRR %
2x 3x 4x 5x 6x 8x 10x
2Y 41 73 100 124 145 183 216
3Y 26 44 59 71 82 100 115
4Y 19 32 41 49 56 68 78
5Y 15 25 32 38 43 52 58
6Y 12 20 26 31 35 41 47
7Y 10 17 22 26 29 35 39
8Y 9 15 19 22 25 30 33
9Y 8 13 17 20 22 26 29
10Y 7 12 15 17 20 23 26 42

35. Time to Exit: Angels vs VCs
http://www.techvibes.com/blog/what-happens-to-exits-when-vcs-invest
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36. Milestones & Rounds
http://vcperspectives.com/wordpress/page/3/
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37. ANGEL ACTIVITY: US vs.UK
US angel activity EU angel activity
0.8x 0.3x

38. ANGEL ACTIVITY: US vs.UK
US angel activity EU angel activity
2.5x
6x

39. HNWI Population by Country, 2010