2. OCTOPUS INVESTMENTS
A SHORT INTRODUCTION
We back teams rather than sectors
Invest £100k to £5m
£2.8bn FUM
100# Octopus Venture Partners
[Always] Open Office
Early Stage – Realised IRR of 39% +
Growth – Realised IRR of 28%
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3. ALLIOTT COLE
HOW TO CONTACT ME
acole@octopusventures.com
@alliott
Alliott.co
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4. Agenda
Venture capital in 21C
Venture capital and YOU?
Raising venture capital
Key investment terms
Resources
Q&A
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5. VENTURE CAPITAL IN 21C
MULTI-DECADE LOW CAPITAL SUPPLY (UK)
Net Bank Lending to SMEs Venture Capital Fund Raising
120
7
£m per working day
100
80 6
60 5
40 4
20 £bn
3
0
-20 2
-40 1
0
Jan-08
Mar-08
Jan-09
Mar-09
Jan-10
Mar-10
May-08
May-09
May-10
Jul-08
Sep-08
Nov-08
Jul-09
Sep-09
Nov-09
Jul-10
Sep-10
Nov-10
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09
Year
The Equity Gap is continuing to widen
Banks’ depressed lending to SMEs is likely to be prolonged
Lack of VC fundraising is exacerbating the effects of the banking crisis
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Source 1: Bank of England
Source 2: NESTA
6. VENTURE CAPITAL IN 21C
EVOLVING INDUSTRY
Imprecise term: wide array of investors
Funds: geography, stage, sector and/or “thesis”
New entrants:
Full time Angels
Crowd platforms
Incubators
Accelerators
Stage of investment determines return requirement
Seed – 15x
Series A – 10x
Series B – 5x
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7. VENTURE CAPITAL
IS IT RIGHT FOR YOU AND YOUR BUSINESS?
Very inefficient market: 3000 plans >>> 8 investments
Can your business be worth £100m - £1bn? Really?
Several alternatives:
Friends Family Fools (FFF)
Angels
Family Offices
Grants
Your customers
Adopt a rifle approach – and then listen to feedback
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8. RAISING VENTURE CAPITAL (I)
COMPETITIVE TENSION
1. To get good terms, you need multiple offers.
2. To get multiple offers, you need to tell a good
story to multiple investors at the same time.
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9. RAISING VENTURE CAPITAL (II)
APPROACHING VENTURE CAPITALISTS
Endorsement from a trusted partner
Treat a VC = Customer
Short email with bullet points
Rifle shot approach
Don’t cold call
Cf. Venture Hacks example email
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10. RAISING VENTURE CAPITAL (III)
WHAT TO PRESENT
Sell the vision and excitement.
Short 10 Slide Deck
Team
Product
Traction
Market Sizing
Route to market
Competitive landscape
Barriers to entry
Bottom up, assumptions led forecast
Acquirer landscape
Funding and allocation
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11. RAISING VENTURE CAPITAL (III)
WHAT TO PRESENT
Appendix
Very clear milestones / deliverables
Explicit tech road map
Clean and recent sales pipeline
Relevant KPIs
Share capital table
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12. RAISING VENTURE CAPITAL (IV)
HOW TO PRESENT – GOLDEN RULES
Meet In the Morning
Arrive Early
Don’t hang out in reception
Assume no knowledge of your sector or business
Always speak to a slide deck
10 Slides Maximum
25 Minutes
Video Kills the [pitch]
Remember their Q&A
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13. RAISING VENTURE CAPITAL (V)
KEY TERMS
Valuation
25% dilution for £x
Competitive tension is key
Structure
Understand the differences: simple, participation
Anti- dilution – walk away
Option Pool
Structure against specific hires
Reverse Vesting
Founder friendly
Leaver Provisions
Portfolio Due Diligence
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14. RAISING VENTURE CAPITAL
RESOURCES
Surviving Fundraising – Paul Graham
Lines Not Dots – Mark Suster
AVC – Fred Wilson
A16Z.com
FredDestin.com
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15. THANK YOU FOR LISTENING
ANY QUESTIONS
@Alliott
acole@octopusventures.com
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Notes de l'éditeur
HistoryEntrepreneurVenture Partner groupMoney to investEntrepreneurs as customer - Open office- every Wednesday
HistoryEntrepreneurVenture Partner groupMoney to investEntrepreneurs as customer - Open office- every Wednesday