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Fundraising for Startups

VBI Park15. Marts 2016

Søren MunkInvesteringschefInsero Horsens

For [VC-backed] startups,escape velocity has to dowith becoming thedominant vendor andgrowing indefinitely

David Cummings

bulletsForøge/Formindske

for at skifteforskellige niveauer

Most (early stage) investments fail.A few work out ok. Only one in ten make a home run.

Outcome Return of capital Frequency ROILoss 0 30% 0Troll 1 30% 0,3Small win 2 30% 0,6Skyrocket 10 10% 1total 100% 1,90



Why 95+ % of startups fail

• No problem

• Product, but nocustomers

• No product-market fit

• Premature scaling

• Not enough cash



Development phases and investor types

•Confirm you aresolving ameaningful problem

•Does anybody care

Discovery

•Who’s the customer•What’s the need•Business model•Product-market fit

Validation•Refine businessmodel

•Improve efficiencyof customeracquisition

Efficiency

•Grow aggressively•Expand to newmarkets

Scale•Trade sale or IPO

Exit

6

Bootstrapping, business angels, FFF,crowdfunding, accelerators, grants, etc.

Business angels, VC, corporate investors,private equity

Eric Ries: The Lean StartupSteve Blank: Customer Development

Pivot

MVP

Pre-seed0-1M

Seed1-2M

Startup3-10M

Series A-B-C-10+ M

Sources of Venture Capital

7

Source Motivation(other than ROI)

Pros(other than capital)

Cons

Founders Making their dream a reality You are in charge You are alone

FFF To support someone they care about... They trust youFast decision making

Emotional issues

Government Investors(DK = “Innovationsmiljø”)

Scientific development for society’s greater good.Job creation

Some network Limited validationHigh dilution

Crowd Lending / donation To be involved in something No dilution! Time consuming

BusinessAngels

A sense of ”giving back”To be involved in something

KnowledgeFlexible terms

InterferenceHigh dilution

Crowd Equity To be involved in something Market validation Messy cap table

Corporate Partners Synergy with core business Synergy Dependency

VCs Nothing but ROI… from portfolio companies thatmatch their investment profile

ValidationNetworkValue creation

Complex termsLess control

Banks? NOT a VC source!



Finding the right (equity)investor

Targeted approach

1. Target the investor type that matches thestage you’re at

2. (Be ready to) Quit your job

3. Research the investor and pick the rightone (check for competition)

4. If possible, get a “warm” intro

5. Send the pitch deck

Shotgun approach (works well in parallel)

• Get connected

• Be visible

You should try to avoid corporate financeadvisors: They normally get in the way andthe investor only wants to talk to you

www.inno-overblik.dk



The Pitch

9

Your primary aim is to get a

second meeting

CONTENT

1. Problem and solution

2. The market

3. Competition and alternatives

4. Diffentiation (Unique Selling Point)

5. Go-to-market strategy

6. Business and revenue model

7. Status and traction (quantitative)

8. Team and competencies

9. Budget and ask

10.Exit

REMEMBER

• Share your belief

• Don’t omit key information

• Don’t go into details

• Learn from feedback and re-iterate



What do VC’s look for?

• Value Proposition• GTM strategy• Scalable biz model• Capital efficient

• Valuation• Terms• Exit opportunity

• Problem / Solution• Market size• Competition• Timing

• Complimentary• Experience• Execution• Entrepreneurial

TeamTeam OpportunityOpportunity

BusinessModel

BusinessModelDealDeal



VC Deal Flow and Process

https://www.quora.com/How-does-deal-flow-apply-to-VC-firms



VC exit calculation

Marketsize

Marketshare

ProjectedRevenue /EBITDA

Industry(exit)

Multiples

Enterprisevalue at

exit

Investedcapitaland

ownership

PotentialVC return

13

Dato

Preferably> $1bn

Scalablebusinessmodel

Preferably> $500m

Preferably> $100m

If executedwell >10 %

Similarexits

Typical upto 20 %



Værdisætning, ”Høker metoden”

14

Dato2 + 0,25 + 0,5 = 2,75 mio.

Source: www.keystones.dk



Common Mistakes When Raising VC Money

• Finding the wrong investor• Instead, pick an investor that shares your vision for the opportunity and will provide value beyond capital

• Asking too soon• Gaining traction in the market will decrease risk and increase valuation

• Asking for a signed NDA before sending a plan• Professional investors don’t sign NDA’s

• Being unprepared• Getting a meeting is a big deal. Be prepared with a bulletproof pitch deck

• Unrealistic terms• Base your valuation on historical performance of your company, and don’t expect equal terms

• Misjudging the time needed• Finding the right investor and getting the money may take 6+ months, depending on the case

15



16

Fundraising is not what willmake you successful. It's just ameans to an end. Your primarygoal should be to get it over withand get back to what will makeyou successful—making thingsand talking to users

Paul Graham: How to Raise Money



Tracking ofunpowered assetswww.trusted.dk

First Investment 2011

Your business data –securely stored


Assisting clinicians involumetric

segmentation of thebrain


Identification andlocalization of faults

in PV panels


Conversion of excessheat into coolingwww.ac-sun.com


Exit to Apator Powogaz,April 2015

Telemedicine solutionfor patient

empowerment


Insero Venture Portfolio



Team & Contact

Søren Munk

• Joined Insero 2009

• Senior businessdevelopment positions inMaersk, Systematic

• M.Sc. Robotics + EBA

18

Morten Dahl Iversen

• Joined Insero 2013

• Senior sales positions inSiemens, RTX, Motorola,Bsquare

• M.Sc. EE + E-MBA

Contact:• +45 41 32 98 36• [email protected]

Contact:

• +45 41 77 24 59

• [email protected]

fundraising for startups - vitus beringvitusbering.dk/.../2016-03-15-fundraising...insero.pdf ·...

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