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VITALYM.GOLOMB|GENERALPARTNER
@VITALYG
THECASEFORSEEDINGEUROPE
BELGRADE | MAY 16TH, 2014
K E E N P R I N T. C O M
+Investor
C E E D . V C
EUROPEANECOSYSTEMDRIVER&BRIDGETOSILICONVALLEY
“BLACKJACK”SEEDFUNDLAUNCHINGIN2014
INVESTINTHESEEDROUNDSOFTOPEUROPEAN
STARTUPSWITHSPECIALEMPHASISONTHE
HIGH-POTENTIALCEEMARKET
MISSION
THESILICONVALLEYFUNDINGSTACK
BOOTSTRAP/FriendsFamily&Fools
ACCELERATORS
ANGELS/SEEDVCs
$100M+VCFUNDS
GROWTHEQUITY
circa 20...
BOOTSTRAP
ACCELERATORS
ANGELS/SEEDVCs
$100M+VCFUNDS
GROWTHEQUITY
EUROPEANFUNDINGSTACKcirca 2014
/FFF
M&A/IPO
2001 DOT COM CRASHUS VC FUNDS RAN AWAY FROM EUROPE
few, STRONG EUROPEAN VC FUNDS SURVIVED
…andpre-date
LARGEFUNDTHESISAREBASED
ON$5M+FIRSTROUND
LIMITEDBIGDEALS
+
LIMITEDEXITS
=
MOSTREGIONAL
FUNDSTOOBIG
TOPROVIDEGOOD
RETURNS
YESTERDAY’SSEEDISTODAY’SSERIESA/B
YESTERDAY’SIPOsARETODAY’SACQUIHIRES
SOURCE: STEVE BLANK
SOURCE: SEED DB
MEDIANEXIT=$20M
$300MFUND=$1.8B
MINIMUMACCEPTABLEVCRETURN
20%IRROR6XONCASH
MODELBROKENEVENINSILICONVALLEY
TOPQUARTILE=2.1X
SOURCE: STEVE BLANK
DOYOUFEEL
LUCKY?
WELLDO
YOU,PUNK?
EUROPEPRODUCESHIGHER
MULTIPLESTHANU.S.
EXITARE25%SMALLER,BUT…
ENTRYVALUATIONSARE3-4XLOWER
EUROPEPRODUCES
1/2ASMANYEXITSASU.S.
AND1/3OF$100M+EXITS
WITHONLY20%OFU.S.VC
MEDIANCASH-ON-CASH
$100M+EXITMULTIPLE
4.5X
US
7.2X
EUROPE
2005-2011 SOURCE: EARLYBIRD, DOW JONES VENTURE SOURCE
REPEATENTREPRENEURS
INVCFUNDEDCOMPANIES
SOURCE: EARLYBIRD GLOBAL ENTREPRENEURSHIP REPORT
1 9 9 8 2 0 0 7
93%NEW
7%REPEAT
5...
4.5%
5.2%
7.4%
8.5%
9.0%
NUMBEROFLATENTEUROPEAN
ENTREPRENEURSGROWING
2 0 0 0
2 0 1 2
2 0 0 6
SOURCE: EARLYBIRD GLOBAL ENTR...
DEALFLOWGROWING
12%CAGR
BLACKJACK
SPLIT
MULTIPLE
INVESTMENTS
INTHESAME
THEME
DOUBLEDOWN
INCREASE
OWNERSHIP%
ASRISKIS
REMOVED
$500K@$8MVAL
=
14%OWNERSHIP
(POSTDILUTION)
$200K@$4MVAL
=
12.5%OWNERSHIP
(POSTDILUTION)$100K@$1MVAL
=
10%OWNERSHIP
✓ $100K...
CASH-ON-CASHEXITMATH
$30M
5.25X
$50M
8.75X
$100M
17.5X
TYPICALFUNDNEEDSATLEASTTWO
30XEXITSOUTOF10-20INVESTMENTS
“BLACKJACK”FUNDHAS10XMORECHANCES
OLDMODEL
OUTDATED
traditional$250M+fundmodelisbasedona$5M+firstround
investmentandpredatesdistributionplatforms&techthat
m...
DOW JONES VENTURE SOURCE
EUROPEISANUNDERSERVEDOPPORTUNITY
EUROPEANEXITSARE25%SMALLER
BUTENTRYVALUATIONSATEALYSTAGE
ARE3-4X...
A STARTUP IS...
an experiment in search
of a business model- steve blank
SCALABLE

STARTUP
transition company
business model found
product/market fit
repeatable sales model
managers hired
break-e...
A STARTUP IS A COMPANY
THAT IS CONFUSED ABOUT:
!
1. WHAT ITS PRODUCT IS,
!
2. WHO ITS CUSTOMERS ARE,
!
3. HOW TO MAKE MONE...
“A STARTUP’s default
state is #failure. as a
founder, you have to
work to unfail it.”- VITALY M. GOLOMB
so what’s a goodstartup?
solves a painful problem
for a specific customer
measure everything
internet-driven
customer acquisition
nothinG matters
more than traction
main ingredient: team
BUSINESS
DESIGN ENGINEERING
balanced startup team
FUND+ECOSYSTEMDRIVER
INVESTMENTSCONFERENCES & EVENTS EDUCATIONAL PROGRAMS
LEADINGSTARTUP
GATHERINGINCEE
BRIDGE TO SILICON ...
DESIGN BUILD FUND
“ISKATETOWHERETHE
PUCKISGOINGTOBE,
NOTWHEREITHAS
BEEN.”
!
WAYNEGRETZKY
want the slides?
follow @vitalyg
The Case for Seeding Europe - Keynote #FundraiseIT 2014 #Belgrade @ceedvc
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The Case for Seeding Europe - Keynote #FundraiseIT 2014 #Belgrade @ceedvc

  1. VITALYM.GOLOMB|GENERALPARTNER @VITALYG THECASEFORSEEDINGEUROPE BELGRADE | MAY 16TH, 2014
  2. K E E N P R I N T. C O M +Investor C E E D . V C
  3. EUROPEANECOSYSTEMDRIVER&BRIDGETOSILICONVALLEY “BLACKJACK”SEEDFUNDLAUNCHINGIN2014
  4. INVESTINTHESEEDROUNDSOFTOPEUROPEAN STARTUPSWITHSPECIALEMPHASISONTHE HIGH-POTENTIALCEEMARKET MISSION
  5. THESILICONVALLEYFUNDINGSTACK BOOTSTRAP/FriendsFamily&Fools ACCELERATORS ANGELS/SEEDVCs $100M+VCFUNDS GROWTHEQUITY circa 2014 M&A/IPO
  6. BOOTSTRAP ACCELERATORS ANGELS/SEEDVCs $100M+VCFUNDS GROWTHEQUITY EUROPEANFUNDINGSTACKcirca 2014 /FFF M&A/IPO
  7. 2001 DOT COM CRASHUS VC FUNDS RAN AWAY FROM EUROPE few, STRONG EUROPEAN VC FUNDS SURVIVED
  8. …andpre-date LARGEFUNDTHESISAREBASED ON$5M+FIRSTROUND
  9. LIMITEDBIGDEALS + LIMITEDEXITS = MOSTREGIONAL FUNDSTOOBIG TOPROVIDEGOOD RETURNS
  10. YESTERDAY’SSEEDISTODAY’SSERIESA/B
  11. YESTERDAY’SIPOsARETODAY’SACQUIHIRES
  12. SOURCE: STEVE BLANK
  13. SOURCE: SEED DB MEDIANEXIT=$20M
  14. $300MFUND=$1.8B MINIMUMACCEPTABLEVCRETURN 20%IRROR6XONCASH
  15. MODELBROKENEVENINSILICONVALLEY TOPQUARTILE=2.1X
  16. SOURCE: STEVE BLANK
  17. DOYOUFEEL LUCKY?
  18. WELLDO YOU,PUNK?
  19. EUROPEPRODUCESHIGHER MULTIPLESTHANU.S.
  20. EXITARE25%SMALLER,BUT… ENTRYVALUATIONSARE3-4XLOWER
  21. EUROPEPRODUCES 1/2ASMANYEXITSASU.S. AND1/3OF$100M+EXITS WITHONLY20%OFU.S.VC
  22. MEDIANCASH-ON-CASH $100M+EXITMULTIPLE 4.5X US 7.2X EUROPE 2005-2011 SOURCE: EARLYBIRD, DOW JONES VENTURE SOURCE
  23. REPEATENTREPRENEURS INVCFUNDEDCOMPANIES SOURCE: EARLYBIRD GLOBAL ENTREPRENEURSHIP REPORT 1 9 9 8 2 0 0 7 93%NEW 7%REPEAT 50%NEW 50%REPEAT
  24. 4.5% 5.2% 7.4% 8.5% 9.0% NUMBEROFLATENTEUROPEAN ENTREPRENEURSGROWING 2 0 0 0 2 0 1 2 2 0 0 6 SOURCE: EARLYBIRD GLOBAL ENTREPRENEURSHIP REPORT
  25. DEALFLOWGROWING 12%CAGR
  26. BLACKJACK
  27. SPLIT MULTIPLE INVESTMENTS INTHESAME THEME DOUBLEDOWN INCREASE OWNERSHIP% ASRISKIS REMOVED
  28. $500K@$8MVAL = 14%OWNERSHIP (POSTDILUTION) $200K@$4MVAL = 12.5%OWNERSHIP (POSTDILUTION)$100K@$1MVAL = 10%OWNERSHIP ✓ $100K -INITIALTRACTION,CEEDFIRSTINSTITUTIONALINVESTOR
 (100-130INITIALINVESTMENTS) ! ✓ $200K -CONTINUEDGROWTH,CO-INVESTWITHLARGERVC
 (20-30SECONDCHECKS) ! ✓ $500K+-ABOUTTOBREAKOUT,CONTINUECO-INVESTING
 (~10THIRDCHECKS) “BLACKJACK”3STAGEINVESTMENTPATH(INEUROPE)
  29. CASH-ON-CASHEXITMATH $30M 5.25X $50M 8.75X $100M 17.5X
  30. TYPICALFUNDNEEDSATLEASTTWO 30XEXITSOUTOF10-20INVESTMENTS “BLACKJACK”FUNDHAS10XMORECHANCES
  31. OLDMODEL OUTDATED traditional$250M+fundmodelisbasedona$5M+firstround investmentandpredatesdistributionplatforms&techthat makestoday’searlystagestartups10Xmorecapitalefficient siliconvalleyisbroken- topquartilefundsstartat 2.1Xreturn7.7%IRRvs20-40%promised <$250Mfundsproduce muchbetterresults 10Xhigherchanceof5X+returns earlystagefundsoutperform otherfundtypes(1981-2010) 70%OFTHETIME SOURCES: ! 2013 NATIONAL VENTURE CAPITAL ASSOCIATION ANNUAL YEARBOOK! SILICON VALLEY BANK. “DIALING DOWN: VENTURE CAPITAL RETURNS TO SMALLER SIZE FUNDS”, MAY 2010! CAMBRIDGE ASSOCIATES LLC, “US VENTURE CAPITAL INDEX AND SELECTED BENCHMARK STATISTICS”, SEPT 2012 todaymajorityofVC-backedexitsare$10M-$80Macquisitions $300M+exitsneededtomakelargefundsworkareexceptionallyrare VENTURECAPITALISTRANSFORMING
  32. DOW JONES VENTURE SOURCE EUROPEISANUNDERSERVEDOPPORTUNITY EUROPEANEXITSARE25%SMALLER BUTENTRYVALUATIONSATEALYSTAGE ARE3-4XCHEAPER TODAYEUROPEPRODUCES 1/2ASMANYEXITSASU.S. AND1/3OF$100M+EXITS WITHONLY20%OFU.S.VC onlyafewstrongeuropeanVCssurvivedthe2001DOTCOMCRASH U.S.VCsretractedfromEuropeandhavebeenslowtoreturn MEDIANCASH-ON-CASH $100M+EXITMULTIPLE 4.5X U.S. 7.2X EUROPE DEALFLOWISGROWING 12%CAGR
  33. A STARTUP IS... an experiment in search of a business model- steve blank
  34. SCALABLE
 STARTUP transition company business model found product/market fit repeatable sales model managers hired break-even profitable rapid scale new senior management ~150 people “a startup is not a smaller version of a large company”- steve blank
  35. A STARTUP IS A COMPANY THAT IS CONFUSED ABOUT: ! 1. WHAT ITS PRODUCT IS, ! 2. WHO ITS CUSTOMERS ARE, ! 3. HOW TO MAKE MONEY - DAVE MCCLURE
  36. “A STARTUP’s default state is #failure. as a founder, you have to work to unfail it.”- VITALY M. GOLOMB
  37. so what’s a goodstartup?
  38. solves a painful problem for a specific customer
  39. measure everything
  40. internet-driven customer acquisition
  41. nothinG matters more than traction
  42. main ingredient: team
  43. BUSINESS DESIGN ENGINEERING balanced startup team
  44. FUND+ECOSYSTEMDRIVER INVESTMENTSCONFERENCES & EVENTS EDUCATIONAL PROGRAMS LEADINGSTARTUP GATHERINGINCEE BRIDGE TO SILICON VALLEY REAL VALUE ADD physicalpresence,establishednetwork and partnershipswithtopinvestors, platforms,andmajorenterprises hands-onmarketingandgrowth consultingforportfoliocompanies connectiontoaworldofmentors
  45. DESIGN BUILD FUND
  46. “ISKATETOWHERETHE PUCKISGOINGTOBE, NOTWHEREITHAS BEEN.” ! WAYNEGRETZKY
  47. want the slides? follow @vitalyg
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