Slides from a lecture about entrepreneurship and venture capital at HEC school of Management

1. INSIDE VENTURE CAPITAL
February 2016
Christophe Raynaud – Managing Partner & Cofounder

2. WHO AM I TO SPEAK ?
 HEC graduate (last millenium)
 Entrepreneur…
- Chateauonline
- Netboussole
- Samaris
 …Turned VC (dark side of the force)
- Saeed Amidi (Amidzad partner / plug&play tech center)
- Paris Business Angels
- ISAI
CONTACT : r a y n a u d @ i s a i . Fr / @chraynaud

3. WHAT WILL I BE TALKING ABOUT ?
 What is Venture Capital History ?
 What is an investment thesis ? What’s ISAI’s ?
 How do VC/ISAI source/screen opportunities ?
 What makes a great founder ?

5. WARNING
 NO BULLSHIT RULE
 NOT THE TRUTH, JUST MY OWN EXPERIENCE

6. HISTORY OF
VENTURE CAPITAL

7. GENERAL DORIOT

8. FATHER OF VENTURE CAPITAL
 FRENCH ENGINEER
 HBS MBA 1922
 FOUNDER OF INSEAD
 FOUNDED AR&D in 1946
- $4M RAISED
- FIRST EVER PRIVATE EQUITY / VC FUND
> A FAIL FOR MORE THAN 10 YEARS UNTIL…

9. A $70K INVESTMENT
IN 1958…

10. A $70K INVESTMENT
IN 1958…
…TURNED INTO A
$355M RETURN*
IN 1970
* INCLUDING A $2M LOAN ON TOP
OF THE INITIAL INVESTMENT

11. A $70K INVESTMENT
IN 1958…
…TURNED INTO A
$355M RETURN*
IN 1970
> 5000X MULTIPLE
> 100% IRR
* INCLUDING A $2M LOAN ON TOP
OF THE INITIAL INVESTMENT

13. HBS ENTREPRENEURSHIP ALUMNI
 DRAPER & JOHNSON (DGA)
 PERKINS (KPCB)
- Compaq/Sun/AOL/Netscape/Google
 ARTHUR ROCK (VENROCK)
- 3COM/APPLE/INTEL
- HELPED FAIRCHILD SEMICONDUCTOR
RAISE $1,5M
> BIRTH OF SILICON VALLEY

14. FROM 1957
TRAITOROUS
EIGHT
TO
1st TRILLION $
STARTUP

15. FAIRCHILD SEMICONDUCTOR ALUMNI
 ROBERT NOYCE
& GORDON MOORE
(INTEL)
 EUGENE KLEINER
(KPCB)
 DON VALENTINE (SEQUOIA)
- ATARI/ORACLE/CISCO/YAHOO/YOUTUBE
> BIRTH OF VENTURE CAPITAL

16. RISE OF AN INDUSTRY

17. RISE OF AN INDUSTRY

18. RISE OF AN INDUSTRY 99000

19. … GIVING BIRTH TO MANY WORLD-WIDE Cies

20. … GIVING BIRTH TO MANY NEW INDUSTRIES

21. … WITH HUGE SOCIAL/ECONOMIC IMPACT
 21% OF U.S GDP
2.900.000.000.000 $ (Revenue of US Venture backed Cies)
 80% OF JOBS CREATED
12.1 MILLION JOBS ( AT US Venture Bascked Cies)

22. THANK YOU
GEORGES

23. VENTURE CAPITAL
NOWADAYS

24. MATURITY PHASE & RECENT TRENDS
 CYCLES, WAVES & BUBBLES
BEER INDUSTRY ANALOGY
- BIG BRANDS / MICRO VC
 ENTREPRENEURS’ FUND
 BASICS STILL TRUE :
- US DOMINATED INDUSTRY
- HIT DRIVEN INDUSTRY

25. SUSTAINABLE VALUE CREATION IN THE US
SOURCE QUILVEST VENTURE

26. HYPER CONCENTRATION OF PROFITS
SOURCE QUILVEST VENTURE

27. CYCLES AFFECT RETURNS
SOURCE QUILVEST VENTURE

28. VERY POOR RETURNS IN FRANCE

29. THE US JUGGERNAUT
SOURCE QUILVEST VENTURE

30. MORE RETURNS, MORE MONEY
SOURCE QUILVEST VENTURE

31. 0%
20%
40%
60%
80%
100%
4Q03 2Q04 4Q04 2Q05 4Q05 2Q06 4Q06
Other
Business,
Consumer,
Retail
IT
Healthcare
I.T IS CLEARLY THE DOMINANT SECTOR
SOURCE NVCA

32. # of Active VC Firms
0
200
400
600
800
1000
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
# of Active VC Firms*
GROWTH OF ACTIVE VC FIRMS
SOURCE NVCA

33. TECH BOOM or TECH BUBBLE ?
SOURCE UPFRONTVC /
MARK SUSTER

34. TECH BOOM or TECH BUBBLE ?
SOURCE UPFRONTVC /
MARK SUSTER

35. TECH BOOM or TECH BUBBLE ?
SOURCE UPFRONTVC /
MARK SUSTER

36. TECH BOOM or TECH BUBBLE ?
SOURCE UPFRONTVC /
MARK SUSTER

37. TECH BOOM or TECH BUBBLE ?
SOURCE UPFRONTVC /
MARK SUSTER

38. TECH BOOM or TECH BUBBLE ?
SOURCE UPFRONTVC /
MARK SUSTER

39. Download slides on twitter/chraynaud