Funding and Ecosystems for Startups

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    14-Apr-2017

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Funding- and Eco-systems for Start-ups (ICT)

Jan VorstermansManaging PartnerVentureWise

2Background: Life SO FarGeneralBorn 25 March 1960M.Sc. Telecom Engineering from Ghent UniversityCareer1984 1989: R&D at Ghent University at Siemens (Nokia)1988 1994: Business unit management and business development at Telindus (Proximus) and Nynex (Verizon)1994 2002: Operational, commercial and general management at BT Global2003 2013: COO Telenet

Founder Qunova and Qunova ProjectsCo-founder VentureWiseFounding Partner VoltaInvestor in Limecraft, Kinetura, Viloc, Moovly, Steampunk Wizards, Rabt, Skelia, Valle VerdeNon-Executive Director Invitel and Option, ex-board member iMinds

HAVE STARTUP STOP NEED MONEY STOP PLEASE HELP STOP

The Probability of start-up success is low, we need programs that enhance probability of successMany start-ups, many with similar ideas and great teamsStarting up is hard, 60 % of tech start-ups dont survive (4 year horizon)It is OK to fail (early)Success = having a growing profitable business1 / 40 000 become unicorn

Top reasons for failure:77% product/market fit29% burn rate

Successful entrepreneurs are most of the time not university drop-outsChoose a job you like, and you will never have to work a day in your life (Confucius)

40Average age when they started their business1%Come from rich or poor backgrounds75%75%Worked as employees in other companies for more than 6 yearsRanked in top 30% at school and university60%Started own business because standard work environments did not appeal to them

Are we selecting the right start-ups for incubation and acceleration?

Choose a problem that agitates the crap out of you

Make sure you are the right person to solve the problem

Find the team with which you want to go to war

Define your strategy and funding requirements

Bootstrap the business as long as possible

Do we always need to push for external (risk) investment?Investors do not grow on treesGrowth & comfort dont co-existPeople matterExternal funding means validation and valuation and risk/reward sharingAmbitionBusinessMarketRisk

8The nature of early investments is changing, this requires even more guidance

9Where can we find capital in the early stages of developmentBootstrappingFF&FGovernmentBusiness AngelsIncubatorsCorporate FundsVCInception++++++++++++------Product/MarketFit++++++++----Scale-up---+/-+/-+/-Crowdfunding++++-+/-+/-Funding GapPromising

10Help the start-ups to raise capital from professional investors: TEACH

Be honest (to yourself)Know the business and the market (data, competition, business models, benchmarks)Have a plan, no window dressingIdentify/know potential investorsGet an introduction, find alliesInvestors are extremely busyThis is a sales job,No does not mean outFirst pitch to investors who are likely to be negative

Ensure VCs (that invest early) are part of your eco-system

11Be careful what you TEACH. There is data, and then there is more dataThe Entrepreneur Thinks:The Presentations Says:The Investor Thinks:Everybody will want to buy our productOur projections are conservativeWe will have to take significant haircutsThis product version is really goodThe product is readyThis product will have to be reworkedThe market is really bigOur market will be 50 billion in 2017They dont know where the market isI hope nobody knows the competitionThere is no competition in this spaceThey dont know the competitionOur technology is complexOur solution cannot be copied(Almost) Everything can be copiedA few investors expressed an interestWe have many investors lined upWe are the first investor they speak toI like our teamWe have a proven management teamI see limited experienceThis person at the Fortune 50 company said they would signWe will soon sign-up a Fortune 50 companyIn your dreamsWe are just to clever and agile compared to large companiesThe large companies are too slow/dumbEver been eye to eye with an elephant?

12Crowdfunding as alternative?

13Key trends in crowdfunding

Everybody can be an entrepreneur

European markets are underdevelopedRegulation is key to successCrowdfunding is mainly a local activityCrowdfunding is hard: 70-80% of campaigns fail (US)Global crowdfunding is growing 100% yoy

BELGIUMRewardsEquityAmounts Raised10-25 k150-250 kAverage Investment85700Average Duration30-45 days45-60 days

14

ENTREPRENEUR.

Flanders Innovation ECO-System

Flanders innovation ecosystem

Micro-electronicsCleanTechICTBio-tech

5 University Partners

GovernmentCorporate Partners

iMinds: Flanders ICT research and entrepreneurship hub

DIGITAL RESEARCH

BUSINESS INCUBATIONStrategic researchApplied researchSpin-offsGlobal expansionfor tech businessesStart-up supportfor entrepreneurs

Living lab researchEuropean research projects

iMinds Supporting tech businesses

iDiscover Business Opportunities

iBootDraft Business Proposition

iStartLaunch Start-up Company

Go GlobalGrow CompanyIncubation

Start-upsfrom incubation program120+

ProjectsWit the industryProject Partners380+1100+

PublicationsYearlyResearchers1000+850+R&D Projects

19Belgium: Start-up Communities

5 years5 000 start-ups100 000 jobs

VentureWise: A Growth Eco-system for ICT Start-ups

21VentureWise ?A balanced team strongly embedded in the Tech Eco-systemJan VorstermansCorporate & ManagementTechB2BInternationalInvestorBrendon GrunewaldEntrepreneur & Start-upM&AB2CInternationalFund ManagementBart BecksCorporate & ManagementEntrepreneur & Start-upInternational marketingB2CTechKenny WillemsIncubation/AccelerationOrganization/ProcessCFOB2BInnovation

Digital MediaIoTEnterprise SoftwareMarket Places

The most connected Godfathers

22Financing Gap between Incubation/Seed and later stage funding in EuropeIncubateSeedLater StageScale-up

Limited funding options in the scale-up phaseStart-ups need more than moneyIncubatorsAcceleratorsGovernmentAngelsCrowdPEVCCorporates

(50-100k)(100k-500k)(500-2mio)(+1mio)Consequences:Startups move very early to USPromising startups fold or are overrun due to insufficient fundingStartups pivot to service-orientated companies

23VentureWise ?

Fund ZeroFund 1StudiosEnterpriseDigital MediaIoTEnterprise SoftwareMarket PlacesECO-SYSTEMResourcesSkeilaInThePocketDreams & CreationGrowthGurusIncubatorsiMindsBetaCoWorkRocketInternetAtelierSpecial ServicesCrescoAngel.meBootstrapLabsCorporates

24VentureWise as Investor - key differentiatorsOur growth EcosystemPartnerships with high-quality resource & service providers, working at favorable feesEquity for resourcesOur investment strategyEarly Stage: both Seed (100-500k ) and Scale-up (up to 1,5mio)Spray, not PrayCapital efficient dealsData-driven decision-making for investmentsOur teamEntrepreneurs for EntrepreneursExtensive expertise & network in the selected focus areasHot focus areasCorrespond with current breakthrough trends in TechSignificant follow-up investment opportunitiesGood exit potential (M&A)Geographical reachKnow-how of and access to various EU-countries (beyond BeNeLux)Scaling partners in USA & South-East AsiaFund kickstartIntegration of existing portfolio of investments (fund 0)

25VentureWise Angel.me (crowdfunding) partnershipWith VentureWise:Advice and hands-on supportAccess to the eco-systemDirect Investment from 100K 2 Mio

Too early? Crowdfunding via Angel,meCombines rewards + equityProprietary technologyInternational partner networkGuidance and networking (angel.me sessions and summit)Supporting platform partners: lower fees, more support

To Conclude

The final Frontier

27The value of larger eco-systems has been demonstrated

HOW?The Rules from FastCompany#1Don't Be a Chihuahua#2Don't try to take more than your fair share of the pie#3If you're invited to a wedding, don't outshine the bride or groom#4Don't Be a Two-Timer#5Give to Get#6Be like Fonzie#7Don't be a douche bagMy 5 rules for (tech) eco-systems:

The power of the ecosystem = N!An eco-system requires energy to surviveSuccessful business models get copiedCooperation, win/win, open dataFrom R&D to customer involvement

never loseyourcool

or your sense of humor

Jan Vorstermansjan@venturewise.eu@jvorstermans