Confidential information – This does not constitute an investment offer

Meet the Investor Workshop Part 1

Startup Week 2011Oliver Holle, CEO

Challenges for CEE Start-Ups

Great Talent, Great Products, Great Momentum in Vienna – but…

Little entrepreneurial experience, network or international sales / BD skills Significant operational gaps in founding teamLimited exit possibilites if you stay too localFirst time entrepreneurs face steep learning curve

OUTCOME: Long learning cycles, lots of mistakes

Approach– Leading Austrian internet/mobile entrepreneurs come together to form

start-up ‘accelerator’ platform for Central Europe

– Full partnership approach: “hands on” work with cash investment

– Total funds of EUR 10m

– 3-5 investments per year, dealsize 250,000 - 500,000 EUR

Focus– Early stage internet/mobile startups

– Alps and Danube region, closeby CEE/SEE markets

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On SpeedInvest

SpeedInvest Team

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• Co-Entrepreneurs = ‘Hands On’

• NO Consultants, NO Bankers• Network & industry insiders

• Silicon Valley Operations• Global ‚Smart Money‘ –

product, ops, M&A, atc.• Team since 2004

Team & Market Background

EUR 55msold to VeriSign

EUR 15msold to

Page Jaunes

EUR 275msold to

Amdocs

EUR 10m+sold to

Digital River

EUR 280m

CBSsold to

Five Investor Myths that are plain wrong

1. VC‘s are stupid2. You need a hockey stick 3. It‘s all about the right pitch4. Avoid „dumb“ money5. Dilution is death

Find your Ballpark

Idea, BusinessplanFirst Subsidy, PrototypeBeta (B2C) / 1st Client (B2B)Successful metricsRevenue Growth

FF&F(Prof.) AngelSeed FundSeed / VCVC

Stages of a Marriage

1st Meeting

2ndMeeting

Follow Up

Term- sheet

1st Contact

Face to FaceSocial proofBe concise, polite & fastChose your target carefullyEveryone is importantFlirt, don‘t chase

Stages of a Marriage

1st Meeting

2ndMeeting

Follow Up

Term- sheet

1st Contact

Start from scratchBuild trust: don‘t lie, don‘t oversell, explain yourselfFocus is on product and you (your team)Don‘t bore us with tons of slides, numbersSidenote: it may take a few 1st meetings…

Stages of a Marriage

1st Meeting

2ndMeeting

Follow Up

Term- sheet

1st Contact

Bring your teamHave good, concise answers to the hard questionsIf not, explain why but remain the expertBe numbers driven, be the expertDont get annoyed: this is grilling time

Stages of a Marriage

1st Meeting

2ndMeeting

Follow Up

Term- sheet

1st Contact

Continue to build relationshipsDeliver in high quality (this is a test)Make sure you have a „Plan B“Be patient, it always takes longerSort out any issues you have NOW

Stages of a Marriage

1st Meeting

2ndMeeting

Follow Up

Term- sheet

1st Contact

This is not an ego battle, keep friendly and cooperateHave a (credible) plan B, and you have a negotiationChoose your (few) battles wiselyValuation is overvalued – understand the detailsRelax, they want you

Stages of a Marriage

1st Meeting

2ndMeeting

Follow Up

Term- sheet

1st Contact

This is not an ego battle, keep friendly and cooperateHave a (credible) plan B, and you have a negotiationChoose your (few) battles wiselyValuation is overvalued – understand the detailsRelax, they want you

$$$$$

Anatomy: Ten topics dissected

Topic Questions to answer Common fallacies Supporting mat‘s

Problem What’s the need you address?How big, significant, urgent?Mission-critical or nice-to-have?

Insignificant problemEngineering driven (solution seeking problem)

Market researchCustomer interviews

Solution How do you address this need?Why is this better/cheaper/unique?What value for the user/client?

Commercially relevant factors neglectedDriven by feasibility, not need

Prototype

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Too much focus on technologyJust because something works does not mean anyone needs it

Data / prototypePatent listFull patent texts

Why is it unique / different?How can you defend it?Does it work? Have you proof?

Technology

ScalabilityRoute to market and its cost not considered

How will you capture value?How do you monetize this value?Is this concept scaleable?

Business Model

Not enough focus on itNot well enough thought throughNot enough resources (€, HR…) devoted to execution

Anything of relevanceThe more specific (i.e. closer to reality, action oriented), the better

How will you sell it?What resources will you need?What drives buying decisions?

Marketing & Sales

Source: GCP

Topic Questions to answer Common fallacies Supporting mat‘s

Competition Who else is in the game?Substitutes? Industry food chain?What’s your unfair advantage/USP?

“Nobody offers this (yet)”Unknown competitors“Our widget can….”

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Team Who will implement the plan?Can they do it? track record?Advisors? Recruitment needs?

All R&D, no sales / commercialNo assessment of future needs

Full CVsReference list

Not action-oriented -Where are you now?What next?

Status & Timeline

Unrealistic/intransparent assumptions (both ways)No clearly identified milestonesNo linking of risk & returnUnrealistic funding requirement (both ways – too lo/hi)

Financial Plan, esp. monthly Cash-FlowsMilestone PlanFunding requirement & use of proceeds

What do you plan to achieve when?What are your assumptions?How do you measure progress?What resources do you need?What will you use them for?

Projections, Milestones

Source: GCP

Anatomy: Ten topics dissected

Introduction rather than summaryWritten first, rather than lastToo long

-Give a complete and concise overview of the opportunity on no more than two pages

ExecSum

How to do it right?

Focus on your productSave time – choose your targets wiselyBuild social capitalBuild up multiple routes (competition)Don‘t be greedy to early

How to get a 5M USD Sequoia A Round!By Erik Bovee, Founder SpeedInvest

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We just won ‘Go Silicon Valley’/AWS pre-seed/grandma died, and our CEO is moving to Sunnyvale for 12 weeks to get US funding!

Outcome - 12 weeks without a rudder, product delays, you spend all the money, everyone moves back in with parents

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What Happens in Silicon Valley?The Scene on the Ground is different than what you read in TechCrunch

‚You have a local/social/mobile shopping app? Cool! That was my MSc thesis at Stanford in 2007. We got funded, but went bankrupt in 2009...I‘m doing a Jedi robot start-up this year.‘ –annoying guy at the YCombinator party

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More Bad News....

Wirtschafts...what? I went to Stanford

-Famous Austrian Engineer Fritz Pfleumer – yes, I had to look him up. 13 Facebook ‚Likes!

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…The End

You will not get funding on Sand Hill Road

Thanks for coming, and have a great Startup Week!

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Erik Bovee – Founder/General Partner, SpeedInvest• Founder Digital Mobility/Digimob – raised 7M USD• European Managing Director eMeta Corp – sold 30M USD 2006• Head of Product Management VeriSign (Fortune 500)

Enterprise Messaging Services• VP Business Development Wikitude – RIM, Sony, Verizon

Most important – about 1,000,000 unsuccessful VC pitches

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Who are you and why are you telling me this?

Seriously...What Does it Take?

Careful planning, traction, friends on the ground, being ‚American‘

As a foreign company, your idea won‘t sell on its own – VC perceive high risk

You need help building relationships – warm intros are essentialYou need someone on the ground for you in SV year roundYou need a solid US operational story Your pitch should be 10 slides, and it should be absolutely perfect –

(not European ‚perfect‘...Silicon Valley perfect) – get local advice and practice

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When Should We Go?

Go when you have the following:Working product + growth (NOT research showing ‚hockey stick‘ in 2014...seriously, if you

have that slide, throw it out)

Pitch that you have worked over 500+ times with US helpCredible US operational plan – CEO (and founders, sales, marketing) have to

move to Palo Alto. Not optional.US Customer or user base (or solid pipeline at least)

Carefully selected VC shortlist that you have been courting for 6 months – ask for advice early, soft pitch.

A founding team that interacts and presents well together (...spend time coaching the CTO on how to talk to human beings)

US-style ‚Passion‘ – ability to express energy and confidence (and you can‘t laugh when you do it)

Create media buzz – the appearance of growth, health and energy is essential - TC articles, conferences, etc., etc.

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How Do US VCs Think? – TOP SECRET

It really has nothing to do with your idea...

They think your pitch is great and want to keep talking...Time is on the VC‘s sideThey want to see how teams react under pressureThey get interested when someone else is interestedDo you have a track record in The Valley?They love pre-funding milestones...you will go bankrupt reaching their

milestones...You will get a really loooooong ‚NO‘

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How Do US VCs Think? – TOP SECRET

Your best tactics - Create conditions for feeding frenzy• Momentum• Buzz• Short window of opportunity

Get warm intros through us – soft pitch to friends firstCreate buzz – put massive energy into PR, networking, pitchingBe a little arrogant – ‚We‘re raising 2.5M USD by end of Q2. Let us

know by February 15 if you are in.‘Set your own milestone agenda‚When you ask for money, you get advice. When you ask for advice you

get money.‘Let people know you are shopping, and broadcast success (discreetly) –

‚I hear those guys are already negotiating a term sheet with SVAngel!‘(PS – This stuff won‘t work on SpeedInvest)

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Do you Really Need US Money?

US VCs are great if there is a reason to be in the US

Can you differentiate against US market/competition – ‚Me, too!‘ products can find solid exits in Europe (and you might not even know your product is ‚Me, too!‘ until you spend 12 weeks in SV)

European VCs don‘t play by the same hard rules – closer to home is often a low risk option for seed/series A

Risks and costs of US market penetration have to be weighed carefully – even a 12 week CEO trip can be expensive (...and not just in terms of money)

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Thank You!

Oliver – oliver.holle@speedinvest.com mobile - +4369913205532Daniel – daniel@speedinvest.com mobileErik – erik.bovee@speedinvest.com mobile - +1 831 239 0061