This document provides an overview of venture capital (VC) investing from the perspective of a VC. It discusses key aspects of the VC business model including typical fund structures, returns expectations, and deal terms. The main points are: - VC funds typically invest in 20 companies with the goal of 2-4 becoming "blockbusters" worth 10-50 times the initial investment. Most companies become write-offs worth nothing. - Funds aim to return 10 times the original capital within 10 years to achieve target returns through company exits like IPOs or acquisitions. - Fundraising is highly competitive with VCs only investing in about 1 out of every 300 business plans they review. European VC markets

1. Alain Rodermann, Managing Partner
Technoport – Conference 2015
Raising VC Money –
the hidden side

2. 1. VC$
2. FUNDRAI$ING
3. TERM$

3. VC$

4. Georges Doriot
Someone,
somewhere,
is making a
product that
will make
your product
obsolete

6. The Recipe

11. What is the American Way of VC ?
20 companies in a fund
$1b companies candidates (unicorns)
2-4 blockbusters (x 10-50)
§ IPOs (big)
§ Trade sales (fast)
4-6 write-offs (x 0)
3-4 deals a year/ partner

12. VC
Business
Model
Lifetime 10y
+ Management fees 2%/y
- Hurdle rate 7%/y
- Losses 50%
=> average multiple for 0 carry = 5 X
Min Target Multiple = 10 X

13. VC returns
Source
avc.com

14. A bubble in the USA

15. FUND
RAI$ING

17. Geographical Breakdown

20. VC selection rate
1/300

21. European Market

22. European Market

23. European Market
Source
dowjones Venturewire ;
nb
of
deals
2Q2014

26. The Powerpoint Presentation

28. Do VCs read business plans ?

29. How many scenarios ?
Bottom up monthly financial plan
Don’t underestimate salaries and staff size
Net income higher than 25% is suspect
Include international business if any
Can you make 10M€, 100M€ or more in sales ?
§ Money availability drives financial strategy
Conservative post money keeps options open
Try hiring a fundraiser
VCs don’t sign NDAs

30. Should you accept more money than
you need ?

32. 32

33. TERM$

34. 34
Guillaume
Bodinier,Contrat
de
mariage
en
Italie,
1831

36. Founder Dream

37. Reality
Check

38. The VC
Arsenal

39. Is there a Valuation Magic Formula ?
R)(1
FV
R)(1
Ci
NPV n
1
0
i
+
+
+
= ∑
−n
Rodermann
Magic
System
⎪⎩
⎪
⎨
⎧ ∏ −×+−≤
≤
+
≤
n
DiCpremoney
Cpremoney
C
010
0
0
0
)1(
FV
%50%15

41. Liquidation Preference Adjustments
1X
Double
dip
participating
1X
Single
dip

42. Full Ratchet & Washout

43. Veto Rights

44. Reps and Warranties

45. How not to be fired after 6 months
Build a balanced board of brilliant
directors
Hire an experienced chairman
Pay an experiencedspecialized coach
Disclose problems as they arrive
Never Lie
Write minutes just after board meetings
Do what you promised to do

46. Alain Rodermann
@alroder
Questions ?