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

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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

Google

Zynga

Groupon

FaceBook

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!

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How to Get Your Company Funded Λεφτά Υπάρχουν!!