Dave Vicary May 15 2008

© Surve Inc. | Restricted and Confidential

Practicing with VC Money

May 2008

© Surve Inc. | Restricted and Confidential22

ResultsGraduated top of classBNR here I come

Age – 48, SurveLive – HardPlay – HardWork – Hard

Dave’s résumé

Age – 19, high schoolLive – HardPlay – HardWork – Not so hard Age – 22 University

Live – HardPlay – HardWork – Not so hard

Age – 27, University againLive – HardPlay – HardWork – Hard

Resultskicked out of three high-schoolsA&P here I come

Building a serial entrepreneur?

ResultsForced to take a degreeMarried, divorcedFull-time A&PPart-time UWO

Age – 32, BNR NortelLive – HardPlay – HardWork – Hard

LTW

ResultsLed a team of 600 on 3 continentsCut team to 150Resigned

Age – 42, NakinaLive – HardPlay – HardWork – Hard

ResultsRaised millions in financingBrought in millions in revenuesFired OOPS

PlansNo VC financingNew business modelAngel investment opportunity

High tech


Lessons learned

1. Live hard, play hard, work hard– Experience is the best teacher

• I may be a little slow to learn

2. Take advice with a grain of salt– Recommended readings – Business Philosophy

• The Prince – Machiavelli• The Art of War – Sun Tzu

3. Understand your risk tolerance– Only risk I worry about is the risk of stagnation

Know your strengths, weaknesses, and desire


Sun Tzu – The Art of War

Knowing the other and knowing oneself,In one hundred battles no danger.Not knowing the other and knowing oneself,One victory for one loss.Not knowing the other and not knowing oneself,In every battle certain defeat

…and know the terrain


Geographic Perceptions

The Bay Startup

Business acumen – A

Technology acumen – B

The Venture Capitalist

Top Quartile

Incentive to win

Go-to-market

Prototype the concept

Market the concept

Refine the product

The Ottawa Startup

Business acumen – B

Technology acumen – A

The Venture Capitalist

Novice and unproven

Incentive not to lose

Go-to-market

Develop the product

Test/refine the product

Introduce the product

True or false – perception is reality


Canadian VC Performance

Canadian industry performance influenced by:– Industry is young and timing has been unfavorable– Selection process to direct the money to good managers not efficient– Many funds are (too) small– Capital allocation by stage is inefficient and financings are too small– Companies not driven to large exits –We need to build strong

companies by global standards Gilles Duruflé

Myth busting – VC money is smart money

•Canadian horizon returns are negative on all horizons•On a 10 year horizon, Canada lags the US by more than 30% and the EU by nearly 10%

•Canadian horizon returns are negative on all horizons•On a 10 year horizon, Canada lags the US by more than 30% and the EU by nearly 10%

1 YR 3 YR 5 YR 10 YR

Canada -3.9 -9.9 -11.5 -3.0

S&P TSX 15.9 11.5 -0.6 8.1

Canadian Horizon Returns

2006-07-02

http://www.cvca.ca/


The Cost of Money

Time to ROITime to Market

Ret

urn

on In

vest

men

tC

ost o

f Mon

ey

PersonalFinances

VCSoprano'sLending

Services

Friends&

Family

Angel

Government

DebtFinancing

Costs as measured by:• Expected return• Control of the company

Find a better way– Change the business model

– Reduce the Time to Market

– Cut the “Proof of Concept” costs


The Founder’s Dilemma

Company Maturity

Foun

der’s

Impo

rtan

ce

Financing commitments:– Build a product

– Build a team

– Build a customer base

– Build revenues

– Build a business

And if you are successful

…work yourself out of a jobInitial

financing secured


VC Discussions

The OpportunityThe TechnologyThe TeamThe Plan

The EntrepreneurObjectivemaintain as much control as possible such

that you can build a company and realize a vision. Making some money along the way would be great too.

You should ask1. Do you have money to invest2. Do you invest in this area3. What is your average investment

The Venture CapitalistObjectivemake as much money as possible in as short

a time as possible with as little risk as possible

Common statements1. We invest in people2. You need more money3. We will leverage our connections4. Who else is interested

Know yourself, know the investor, you win