Post on 27-May-2020
Το μοντέλο της Silicon Valley στην Ελλάδα
Καινοτομία
Καινοτομία
Επιχειρηματικότητα Χρηματοδότηση
Thanasis “A.K.” Kalekos Managing Partner, Odyssey Venture Partners akalekos@odysseyvp.com
Who is “A.K.” Kalekos
Anatolia class of ‘74
Electrical Engineering Degrees in the States
Worked in High Technology for over 20 years
General Partner, Telos Venture Partners, 8 years
Founded Odyssey Venture Partners in 2011
Wednesday, October 16, 2013
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“Seminal” experience
1985-1989: Cadence Design Systems Revenue grew from $0 to $100M
Stock options at $0.07 /share
Publicly traded in 1988 (IPO)
1989 share price $7.40
1993-1997: Cadence Design Systems Revenue grew from $320M to over $1Billion
Share price rose from $8.00 to over $160.00
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“Seminal” experience
1985-1989: Cadence Design Systems Revenue grew from $0 to $100M
Stock options at $0.07 /share
Publicly traded in 1988 (IPO)
1989 share price $7.40
1993-1997: Cadence Design Systems Revenue grew from $320M to over $1Billion
Share price rose from $8.00 to over $160.00
The joy of growing a business: Priceless!
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Introduction to Venture Capital
What are your burning questions about VC?
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Funding Sources to Start Your Business
You can work and save
The three “F’s”
Friends, Family, and…Fools!
Banks
Government and European Union Grants
Find early customers, bootstrap the business
Venture Capital
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What Do These Companies Have In Common?
Cadence Design Systems
Amazon
Zynga
Groupon
They were all venture capital funded!
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First VC Qualification Criterion
Does the company have the potential to become very large?
Over $50M revenue in 3 to 7 years
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Do we have to build a BIG COMPANY?
NO: if you are building a “lifestyle” company
YES: if you want venture capital funding
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What is a “Lifestyle” Company?
Has limited growth opportunity
May be highly profitable
Requires a small team
Requires relatively small initial investment
Is NOT a candidate for venture capital funding
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“Lifestyle” Company Example
In three years a business can grow to $3M annual revenue with 30% operating margins. It can maintain this revenue and profitability indefinitely.
It requires initial investment of €65,000.
It is an excellent choice
for an individual or a small team
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Dare to Think Big!
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What is a Big Idea?
A big idea can serve as the cornerstone
in building a BIG COMPANY
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About Your Big Idea
It does not have to be complicated Potato chips vs. silicon chips
Who has the smarter business?
Innovative idea Wikipedia: Innovation differs from invention or
renovation in that innovation generally signifies a substantial positive change compared to incremental changes.
Innovative ideas can change the world
What motivates you?
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Changing the World
My Apple is better than your
Do you want to continue selling sugared water or do you want to change the world?
-Steve Jobs recruiting Pepsico CEO John Sculley to Apple
As American as Apple - Fill in the blank answer by a third grade student in 1990
Innovative ideas create
a new reality!
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Orange
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Computer
What is YOUR Big Idea?
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How to Get VC funding
Flow of Venture Capital
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Limited Partners
(LP’s)
General Partners
(GP’s)
Exit (Acquisition
IPO, …) Distribution
Return: Principal + (100-Carry)% of Profit
Return: Carry % of Profit
$$$$$$ Investments (Portfolio
Companies)
Investments (Portfolio
Companies)
$$
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Invested € 5M
for 25%
Flow of Venture Capital – An Example
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Limited Partners
(LP’s)
“MyVCFirm” (GP’s)
Exit IPO €220M
Distribution 25% of €220M
= €55M
Return: €5M+ (1.00-.20) * €50M = €45M
Carry: 20% Return: 50X0.20= €10M
Fund € 80M
Carry 20% Investment “YourBigIdea”
6 years Later
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How does Venture Capital Work?
General Partners manage the two sides:
Fund Portfolio Management
Portfolio Company Investment Process
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Limited Partners
(LP’s)
General Partners
(GP’s)
$$$$$$ Investments (Portfolio
Companies)
Investments (Portfolio
Companies)
$$
Fund Portfolio Management
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GP’s have specific investment strategies
Industry sectors
Stage of companies they invest in
Geographic focus
Fund strategy determines:
Size of fund
Size of investment in each company
Number of companies in portfolio
Portfolio Company Investment Process
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If your company is a rocket,
venture capital is the fuel
that launches it
Think of a multi-stage rocket
Each stage is a funding round
Example: Multiple Funding Rounds
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Multi -stage Rocket Stage 1
Funding Round Series A
Pre-money Valuation ($M) 3
Size of Investment ($M) 2
Post Money % ownership
- Founders (%) 60%
- VC Investors (%) 40%
- Series A Investors 40%
- Series B Investors
- Series C Investors
- Public
Post Money Valuation ($M) 5
- Founders ($M) 3
-VC Investors ($M) 2
- Series A Investors 2
- Series B Investors
- Series C Investors -Public
Stage 2
Series B
20
5
48%
52%
32%
20%
25
12
13
8
5
Stage 3
Series C
100
20
40%
60%
27%
17%
17%
120
48
72
32
20
20
IPO!!!
500
200
29%
71%
19%
12%
29%
29%
700
200
500
133
83
200
200
Is it “half full” or “half empty”?
What is your mindset?
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Example: Multiple Funding Rounds
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Multi -stage Rocket Stage 1
Funding Round Series A
Pre-money Valuation ($M) 3
Size of Investment ($M) 2
Post Money % ownership
- Founders (%) 60%
- VC Investors (%) 40%
- Series A Investors 40%
- Series B Investors
- Series C Investors
- Public
Post Money Valuation ($M) 5
- Founders ($M) 3
-VC Investors ($M) 2
- Series A Investors 2
- Series B Investors
- Series C Investors -Public
Stage 2
Series B
20
5
48%
52%
32%
20%
25
12
13
8
5
Stage 3
Series C
100
20
40%
60%
27%
17%
17%
120
48
72
32
20
20
IPO!!!
500
200
29%
42%
19%
12%
12%
29%
700
200
500
133
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200
200
Half-empty view!
Half-full view!
The FaceBook Funding Story…
Founded in 2004, $500,000 from Peter Thiel
$12.7M at $100M pre-money valuation from Accel Partners
$25M at $500M pre fromGreylock & Meritech in 2006
$240M at $15B pre from Microsoft in 2007
$800M at $50B pre from Goldman Sachs & others in Jan. 2011
IPO on May 18, was valued at $110B
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Typical VC Investment Checklist
Value proposition
Market opportunity/size
Competition/barriers to entry
Defensible competitive advantage
Technology and product readiness
Team and hiring needs
Financial plan Revenue growth, Gross Margin, Expenses, Operating Margin
Capital needs & Investment terms
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The Founders’ Investment Checklist
Is our idea big enough for VC funding?
Are we approaching the right VC firms?
Are we talking to the right partner in the firm?
Do we have a clear vision of our business model?
Have we properly documented it?
Are we prepared and able to work with VC’s?
Is our plan well designed and documented?
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Business Plan Design: Like Solving a Puzzle…
Arrange the four pieces to form a square
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Your Business Plan is More Challenging…
You could create many shapes
You may not have all the pieces
You may have extra pieces
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Suggestions for Your Business Plan Design
Build early prototypes
Talk to your customers right away
Use their feedback to improve your
product, service and business plan
See it in your “mind’s eye” first!
Do not confuse designing your business plan with documenting it
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Suggestions for Outside Communication
Your 2 minute description (elevator pitch)
Your executive summary (1-2 pages)
Your introductory presentation (approx.10 slides)
Your business plan document with financials
Demonstrations, brochures, video clips and other collateral materials
Guy Kawasaki 10/20/30 Presentation Rule
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Dealing with VC Feedback
Be ready to receive comments & suggestions
Respond tactfully
Ignore what does not make sense
Do not change your plan just to get funded
Do not read too much in questions you are asked Collecting information?
Finding out how you think?
Testing your confidence and resolve?
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If …
You are talking with the right VC firm…
And the right partner…
And they like your plan…
After they have met with you a few times…
They may be interested to invest and…
You will receive a term sheet!
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Common vs. Preferred Shares
Founders and employees receive Common shares
VC’s receive Preferred shares
Typical preferences
Anti-dilution
Liquidation
Pro-rata participation in future funding rounds
Board representation
Other provisions…
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Employee Stock Option Pool (ESOP)
VC’s will typically insist in the creation of an ESOP
Used to grant stock options to new employees
Indicates founder willingness to hire the right people
Stock option rules Cliff vesting
4-year vesting period
10-year option
Founder stock may be subject to vesting 40% vest upon signing, 60% vest over 3 year period
Un-vested portion subject to re-purchase by the company
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The Odyssey Approach - Business Know-How Knowledge, experience and competence in:
Transforming innovation into a business plan
Access to global markets and customers
Recruiting (the right people at the right time)
Fund raising
Executing to plan
Enabling the virtuous cycle of success
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Virtuous Cycle of Success
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Odyssey Venture Partners Value Added: Business Knowhow and Access to Capital
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Wait a second… have you not heard?
This is Greece!
And we are facing a crisis!
«Το Κράτος» is falling apart!
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Λεφτά Υπάρχουν!!
Total VC USA Investment, past 5 years
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Year # of Investments $$'s Invested
2007 4,140 31,848,274,600
2008 4,128 30,012,895,200
2009 3,080 20,132,636,800
2010 3,564 23,343,932,100
2011 3,752 29,119,041,600
Source: PricewaterhouseCoopers/National Venture Capital Association
MoneyTree™ Report, Data: Thomson Reuters
Globalization of Innovation
Internet: Global access to information
High speed Communications and Computing
Low infrastructure cost
Innovation is no longer
the exclusive province of Silicon Valley
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Thanasis Kalekos Managing Partner, Odyssey Venture Partners akalekos@odysseyvp.com
Dare to Think Big!
Wednesday, October 16, 2013
How to Get Your Company Funded Λεφτά Υπάρχουν!!