Maria Dramalioti-Taylor's Rules for Entrenpreneurs

x.Million Capital Ventures1

Maria Dramalioti-Taylorx.Million Capital, Managing Partner

Angellab#1, Founder

19.03.2013

Startup Capital in Europe

10 non-textbook lessons for entrepreneurs &

angels

2

Agenda

• Venture/Angel Capital: – How to decide if you need it– How to navigate Angels & VCs

• On raising Capital in UK/EU

UK Entrepreneur: “Why bother? I am off to the US”

UK Investor: ”Go, but not before you see this…”


Large potentialmarket

Originalidea

Best-in-market founding team

ENTREPRENEUR HAS……money to move

*FASTER* than OWN capital allows

HiringFaster product developmentInfrastructureCommercialisationGeographical expansion

#1 - Sell shares only when you need

SPEED

1

2

3

…intensifying competition

THEREFORE FACES…

…AND NEEDS…

…SO SELLS shares to to pay for..


#2- Know your place in the FUNDING SPECTRUM

+

NET CASH

POSITION

Closed

ALPHA

Public

BETA

SCALE- STAGE

1st Revenue

Venture Debt

GrantsBootstrappingFamily

Angel CapitalVenture CapitalSeries A (€2m-€20m)

Venture CapitalSeries B,C,D (€5m-€20m)

5

DO IT LIKE A JACANA

6

#3 – Decode the Business Angels

• Angels invests own money

• Small amounts, early, at low valuation– €10k-€250k at valuation €0.5-€2m

• Exit:– sell at €5-10m valuation & make 1.5-3x

– bring VCs, get diluted (may) make 5-10x

• AIM: 2x capital (but mostly get capital back)

Angels are like women: temperamental & (mostly)

irreplaceable

7

#4 – Decode the Venture Capital business

• VCs raise a fund every 2-4 years– Invest other people’s

money

• Invest the funds over 5 years• Exit (sell) via M&A or IPO• They take:

– 2.5% pa management fee on funds managed

– Carry = 20% x [Total Return at Exit] – [Total Amount Invested]

• AIM: ONE 10x home run

VCs run a business. They make it sound like

Black Magic.

IT IS NOT.


#5 – γνῶθι…τω επινδυτή

SOURCE: www. http://www.instigatorblog.com

Angels may not let you fail, VCs may give you a big success


VCANGEL CAPITAL AN

GEL /

VC

DIS

CO

NN

EC

T

€ 500k € 2m

+

Closed

ALPHAPublic

BETA

SCALE- STAGE

1st Revenue

NET C

AS

H P

OS

ITIO

N

#6 - Series “A” Crunch: MIND THE GAP


Germany & UK are more affected by the VC/AC disconnect

US , 4,705 US , 5,585

US , 14,339

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

< $ 0.5M $0.5M - $2M >$2M

Dea

l V

olu

mje

( n

on

US

)

-

100

200

300

400

500

600

700

800

900

Dea

l V

olu

me

(US

)

UK

Germany

Russia

Source: Data from ThomsonOne, Period: 10 years

ICT Deal volume per deal size bracket

#6 - Series “A” Crunch in NUMBERS


NOTE: The blurring of AC/VC in the US is coming to Europe (maybe)

www.dramalioti-taylor.org

Maria Dramalioti-Taylor

I am also concerned that this comes so late after silide 4


#7 – A new taxonomy of investors

#Venture Accelerators Astia (for female geeks)SeedcampSpringboardAccelerator Academy500 stratupsY-Combinator….# Super Angelswww.AngeLLab.eu www.angel.co

# The NEW lean VC They treat every entrepreneur as an individual

Aim for the one that suits your needs best Interesting blog:http://disruptivegrowth.wordpress.com/2010/10/14/do-accelerators-help-raise-funds/

http://www.angellab.eu/

http://www.angel.co/

http://disruptivegrowth.wordpress.com/2010/10/14/do-accelerators-help-raise-funds/





#8- Connect the fundraising dots

Fight the information asymmetry

Sourceswww.thefunded.comwww.fredestin.comventurehacks.com earlystageadventures.comwww.adventurista.com

“what they offer” vs. “what you need”

– Initial capital per idea– Sector focus: do they

understand it? – Risk tolerance: can they

deal with uncertainty?– Compatibility: will their

pride suffer if you fail?– Terms (& strings attached)

http://www.thefunded.com/

http://www.fredestin.com/

http://www.fredestin.com/

14

Agenda

• Venture/Angel Capital: – How to decide if you need it– How to navigate the VC scene

• On raising Capital in UK/EU…

UK Entrepreneur: “Why bother? I am off to the US”

UK Investor: ”Go, but not before you see this…”

15

#9 - The US VC is prone to “bubbles”, when they burst startups become

orphaned

US

0.15%GDP

EU

5.8x 0.026%GDP

Investments per capital in US is 5.8x higher than EU

US VC is big &… … some say already in a “bubble”

16

#9 – US VCs face an IPO crunch

IF Index >30 THEN IPOs drop dramatically

CBOE @ 06.11.12:

17

#9 – Startups in the US need 2x avg. capital to build £100m business

EU = 1/2 x USA

Source: Early Bird Ventures, 2012

18

#9 – US tech acquisition of EU companies is a well travelled road to

exit

#US tech companies hold record offshore cash

Source: Zephyr M&A, 2012

0%

20%

40%

60%

80%

100%

20122011201020092008200720062005200420032002

EU acquisitions by US companies non EU acqusitions by US companies


Go. See. Come back.


# 10 - EU Growth drivers to ride on

EU-5$292

EU-5$172

2010 2015

eCommerce ($bn)

The $172bn eCommerce market in Europe will grow 1.7x between 2010-15

EU5: 1.7x in 5 Yrs

$172 bn < 10% of EU-5 retail



$1,299

$122

2011 2015

EU-5 Mobile Ad spending will grow 10x between 2011-2012 (2x as fast as in the US)

EU5 growth: 10x in 4 Yrs

Mobile Ad Spending (mn)



0.62

6.52

1.73 0.1 0.88

11.8610.71

1

Fixed ( excl POTS) Mobile Short Range Other ( MAN, Satellite)

2011: 8.99bn connected devices1.8 connected devices per person

2020: 24bn connected devices6.6 connected devices per person

Internet of Things:The ratio of Devices /Humans is expected to grow 3x by 2020

23

85% of worlds population covered by wireless signalsvs80% of world population connected to the electrical grid

Wireless connectivity flattened our world

Source: Mary Meeker, KPCB, 2012


Your turn to talk

25

European consumers are shifting online…

United States

East & West Europe

Internet Users

90M

150

M

26

European consumers are going mobile fast …

United States

East & West Europe

Mobile Subscriptions

2004, Mobile subscriptions EU > US

27

2x

…and are more social than most

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