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Douglas Abrams
About the facilitator
• Wharton MBA
• JP Morgan – Vice President
IB Technology, GM Internet Marketing
• Parallax Capital Mgmt – Co-founder and MD
Private Equity
• Extream Ventures – Co-founder and MD
S$20 million seed fund
• Expara – Founder and MD
IDM Ventures Incubator, advisory, training
• NUS – Adjunct Associate Professor, Business
School, Entrepreneurship, Sasin – Visiting
Professor, Venture Capital
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Douglas Abrams
2000 20152000 2002 2004 2006 2008 2010 2012 2014
Parallax
BANSEA
Expara
Sasin
EIDMV I Expara Thailand
Expara Malaysia
i4-X
NUS KIMBA Extream EIDMV II EV III
Expara timeline 2000-2015
3Overview of Expara
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Douglas Abrams
VC mindset
• Risk and return are highly correlated
• You cannot increase return without taking more risk
Return
Risk
Potential outcomes
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Douglas Abrams
Why invest in venture capital?
As of June 30, 2014. The Cambridge Associates LLC U.S. Venture Capital Index® is an end-to-end calculation based on data compiled from 1,508 U.S. venture capital funds (963
early stage, 165 late & expansion stage, 374 multi-stage and 6 venture debt funds), including fully liquidated partnerships, formed between 1981 and 2014. (1)Pooled end-to-end
return, net of fees, expenses, and carried interest.(2) 2007-2015 Sources: Cambridge Associates LLC, Barclays, Dow Jones Indexes, Frank Russell Company, Standard & Poor's,
Thomson Reuters Datastream, and Wilshire Associates, Inc
Case Shiller Real Estate Index 4.1
Expara IDM Ventures (2) 43.03
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Douglas Abrams
Impact of VC on a diversified portfolio
Private Equity and Strategic Asset Allocation. 2007 Ibbotson Associates
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SEA exit markets at an inflection point
Exit activity in SEA, especially in Singapore, exploded in 2013
• Increased investment in startups since 2007 is beginning to yield results
• Number of exits increased from 6 in 2010 to 20 in 2013
• Singapore alone has had 30 exits since 2007, 13 in 2013
• Value of exits increased from 51 MM in 2010 to 400 MM in 2013
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Some recent exits
Company Country Acquiror Price Year
ZopIM Singapore Zendesk US$29.8MM 2014
Non-Stop Games Singapore King US$ 100MM 2014
sgCarMart Singapore SPH S$60 MM 2013
DS3 Singapore Gemalto S$50 MM est. 2013
Asian Food Channel Singapore Scripps Networks Undisclosed 2013
Reebonz Singapore MediaCorp and Existing investors S$250MM 2013
Yfind Singapore Ruckus Wireless Undisclosed 2013
Techsailor Singapore TO THE NEW Undisclosed 2013
travelmob Singapore HomeAway Undisclosed 2013
Catcha Digital Media Singapore Opt Inc Undisclosed 2013
GridBlaze Singapore Undisclosed Silicon Valley Startup Undisclosed 2013
Viki Singapore Rakuten US$200MM 2013
SGE Singapore Tech In Asia Undisclosed 2013
ThoughtBuzz India To The New Undisclosed 2013
AyoPay Indonesia MOL AccessPortal Undisclosed 2013
Tongue in Chic Malaysia PopDigital Undisclosed 2013
Ocision Malaysia Star Publication US$ 4.36MM 2013
Glamybox Vietnam VanityTrove Undisclosed 2013
PaymentLink Singapore Wirecard US$41.2MM 2013
Dealguru Singapore iBuy S$34.28 MM 2013
Buy Together Hong Kong iBuy S$21 MM 2013
Dealmates Malaysia iBuy S$10 MM 2013
PropertyGuru.com Singapore ImmobilienScout24 S$60 MM 2012
HungryGoWhere Singapore Singtel S$12 MM 2012
AdMax Network Singapore Komli Media Undisclosed 2012
TheMobileGamer Singapore Singtel US$1.5 MM 2012
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Key elements for success
• Solving a painful problem for customers – Value proposition
• Developing an innovative product – Innovation
• Customers and competitors – Market identification and analysis
• Reaching customers – Marketing, sales and distribution strategy
• Competing when others enter - Sustainable competitive advantage
• Make money – Business model and financial plan
• Team – A team or B team
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Key venture finance terms
Business model
Financial projections
Valuation
Funding required and equity offered
Use of Proceeds
Exit Strategy and ROI
Cap table
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Company valuation methods
• Price to earnings (p/e)
• Dividend yield
• Multiple of book value
• Comparables
• Discounted Cash Flow (DCF)
• VC method
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How much equity does the investor receive?
• Pre-money valuation
– Amount invested by VC ÷ (Agreed pre-money value of business
+ Amount invested by VC)
– $3MM pre + 1 MM VC = 25% VC equity
• Post-money valuation
– Amount invested by VC ÷ post-money valuation
– $4MM post = 25% VC equity
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How do VCs make money?
• Trade sale – sell to
another company
• IPO – sell to the
public through listing
on an exchange
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Stages and sources of funds
Founder’s
Capital
Seed/
Angel
Series
A, B, C
Mezzanine Pre-IPO IPO
VC hurdle rates 60-100% 40-60% 20% Why are these rates so high?
OM
F,F&F
Incubators
corporations
government
Customers, suppliers,
strategic partners
VCs, Banks for VC loans
