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Start-up Ecosystem | Investor Selection | Screening Female Founder Summit 2017Christian K. Winkler, Principal at btovFemale Founder SummitZurich, November 06, 2017
Introduction
Part 1: The start-up investment industry
Part 2: Selecting your investor
Part 3: The screening of your business by potential investors
Agenda
About btovbtov, founded as brains to ventures
More than 250 btov investors On average >20 transactions p.a. (43 deals in 2016) 25-35 pre-screened ventures are introduced p.a. 2 major events p.a. in Germany and Switzerland Focus on tech-based ventures from Seed to Growth
btov…
was established in 2000
has about EUR 330mn assets under management
managed 46 transactions in 2016
makes 80% of its investments in DACH, and about 20% in Europe, the U.S., and Israel
has 25 friendly employees and unusual offices in Berlin, Luxembourg, and St. Gallen
Five venture capital funds focusing on: Digital Tech or Industrial Tech
Ringier Digital Ventures, Zurich Helvetia Venture Fund, Berlin/St. Gallen Discretionary mandate for a major Swiss family office CHF 125mn investment volume
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2002 to 2005 studied economics & business administration (BSc) at University Maastricht
2006 to 2006 Production Readiness intern at Volkswagen Group China in Beijing
2005 to 2007 MSc and CEMS Master at Erasmus University Rotterdam and WU Vienna
2007 to 2010 Consultant at Corporate Development at Credit Suisse in Zurich and Analyst at Investment Banking strategy and Corporate M&A Americas in New York
2010 to 2014 Business manager for the UHNWI and Family Office coverage for the Latin American market area at Credit Suisse in Zurich and Bogota
2014 to 2016 Senior Project Manager and front expert for the investment and advisory process in Digital Private Banking at Credit Suisse in Zurich and Singapore
2014 to 2015 Start-up fundraising for Gaia Technologies, Green Roofing solutions
2015 to 2016 Start-up boating charter & sharing platform
Since 2016 btov Partners AG, started as Investment Manager, then appointed Principal in the Private Investor Network and Managed Partner Funds teams
Member of the Community of European Management Schools (CEMS) group, responsible for VC and Entrepreneurship related issues for students and alumni
About Christian K. Winkler
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Introduction
Part 1: The start-up investment industry
Part 2: Selecting your investor
Part 3: The screening of your business by potential investors
Agenda
Early Stage
Expansion / Growth
Bridge / IPO
MBO/MBI
Financiers
Selected financiers on the DACH mapDACH = Germany, Austria & Switzerland
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Bootstrapping, FFF
Incubators / Accelerators
Canton/Government programs/aids
Business Angels, Crowdfunding/-investing
Venture Capitalists
Private Equity
Capital markets
Banks / Debt Financing
Priv
ate
VCs
Cor
pora
te V
Cs
https://www.startupticker.ch/en/news/october-2017/startupticker-lanciert-verzeichnis-von-finanzierungsmoglichkeiten?utm_source=newsletter286&utm_medium=email&utm_campaign=newsletter286
CH: >60
The Venture Capital business model
| Initial investment of Sequoia in WhatsApp: USD 250k in October 2009| Second investment of Sequoia in WhatsApp: USD 8m in April 2011| Third investment of Sequoia in WhatsApp: USD 50m in July 2013
Total Investment = USD 58‘250‘000.
| Company was taken over by Facebook: USD 19b in February 2014
| Sequoia is said to have had a stake in WhatsApp worth about USD 3b| The rule of the game is (simplified) to pay back the investors their investment (USD 58.25m). | Off the residual of USD 2‘941‘750‘000, 20% go back to Sequoia as Carried Interest, i.e. USD
588‘350‘000.
| They have about 80 confirmed employees, let‘s make it an even 100, for the sake of the argument
| The potential Carried Interest payout to each employee would be about USD 5.8m per person
A Venture Capital Dreamcase
The "battlefield" after 10 years of start-up investmentsArguably the asset class with the highest investment risk
50%30%
20%
Investments that failed completely
Walking dead
Stars and superstars
Introduction
Part 1: The start-up investment industry
Part 2: Selecting your investor
Part 3: The screening of your business by potential investors
Agenda
Manage your investor selection carefully(there are certain similarities to «online dating»)
How much capital do you plan to raise? How much revenue does your company make?
What’s the present stage of your company?
What’s your industry?
What is/are your market(s)?
Additional requirements regarding the investor?
Result: «Long list» of potential investors
See: http://www.bvkap.de/privateequity.php/cat/78/title/Suche_nach_Beteiligungskapital
Short presentation or executive summary
Long presentation or 20-30 page (max!!) business plan
Due diligence data room Financial DD Legal DD Technical DD Commercial DD
Your own draft version of a term sheet (more on that later in this session)
A person you trust to prove-read whatever term sheet you plan to sign
What you need
Introduction
Part 1: The start-up investment industry
Part 2: Selecting your investor
Part 3: The screening of your business by potential investors
Agenda
Investment Process of a VC
btov investment decision process ensures a thorough consideration of all relevant aspects
200 ventures
>3’000ventures
p.a.
10-20 deals
20-30ventures
Identification Screening ExecutionFirst examination Term sheet Due diligence
| Active acquisition| Venture
approaches b-to-v| btov network
| First screening and first discussion with founders
| Presentation in front of investment team
| Tracking within proprietary CRM system
| Examination of investment case, market environment, performance and team
| Terms negotiation| Investment
memorandum
| Final examination of business and legal aspects
| Consultation of advisory board
| Deal examination by 1-3 investment professionals
| Consultation of experts & angel network
| Competitive analysis, team interviews, etc.
| Execution of deal by investment team
| Negotiation of contracts with external legal support if necessary
Entire Investment Teamagrees on next steps
Entire Investment Teamagrees on deal
One team membertakes ownership
Investment committee agrees on deal[1]
Investment committeemakes final decision[1]
Investors look for outliers
show them what your outlier quality is or why your company has the potential to be an outlier
understand investors and never be frustrated by rejections!
Investors should invest in strength, not in lack of weakness
do not even try to pitch your company as the “picture-perfect-daughter-in-law” – firstly, because that’s not you and secondly, because that’s not even the goal
play the game actively, i.e. talk about your strengths and weaknesses and do not allow investors to find out about them trust!
Summary of Marc Andreessen’s monologue
Screening
Check and cross-check
Executive Summary
Team
Product &Service
Market & Competition
Business Model
Financials (PY/Act/Budget)
Terms and Conditions of Investment
Roadmap (Founders & Investors)
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So this is all complicated / unclear what now?
Check and cross-check
Executive Summary
Team
Product &Service
Market & Competition
Business Model
Financials (PY/Act/Budget)
Terms and Conditions of Investment
Roadmap (Founders & Investors)
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So what about numbers? Importance of unit economics
ABANDONED CART RATE
Grasping unit Economics?
COST OF CUSTOMER ACQUISITION
LIFETIME VALUE
PRODUCT/BRAND ASSORTMENTINCENTIVE PROGRAMS
ACTIVE CUSTOMERS/MO.
CUSTOMER CHURN/MO.FREQUENCY PURCHASE TRENDS
NEW CUSTOMERS/MO.
TICKET SIZE PURCHASE TRENDS
#ITEMS PURCHASE TRENDS
# CLICKS TO CHECK-OUT
REVENUE BY DAY/WEEK/SEASONGROSS PROFIT/TRANSACTION
COST PER SKUS
INVENTORY TURNS
SHRINKAGEPICK RATES
DELIVERY TIME
MRRCOST OF CUSTOMER SERVICE
CUSTOMER CONTACT RATE
5.CAPITAL
EFFICIENCY
But mistakes are inevitable…
This is how you work your way from Screening to Due Diligence
Check & cross-check
Executive Summary
Team
Product &Service
Market & CompetitionBusiness
model
Financials(PY/Act/Budget)
Terms & Conditions ofInvestment
Roadmap (Founders &
Investors)Commercial DD
Technical DD
Legal DD
Financial DD
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Discussion & Questions
Thank you!
Contact Details
Christian K. WinklerPrincipal
btov Partners AGBlumenaustrasse 36CH-9000 St. Gallen
T +41 71 242 2002 M +41 78 665 14 [email protected]
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