March 2017 Strictly confidential

How to successfully raise a Series B round?

1. Speaker - Matthieu Lattes

Head of Venture Advisory – Rothschild

Contacts

+33 6 80 57 14 08

matthieu.lattes@rothschild.com

Started M&A advisory in 2003 with JPMorgan

10-year M&A advisory (London / NY / Paris)

Entrepreneur (Isograd / Ader Finance)

40+ transactions in the Tech sector (fundraising / exits)

Managing Fundraising Advisory Team @ Rothschild

Business Angel

HEC Paris (2005)

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1 Rothschild Technology Group

A wide international coverage

Moscow

New York

Montreal Warsaw

Paris London

Lisbon

Prague

Melbourne

Sydney

Wellington

Mexico City

Washington

Toronto

Johannesburg

Mumbai

Singapore

Beijing

Shanghai

Jakarta

Hong Kong Dubai

Kuala Lumpur

Seoul

Abu Dhabi

Istanbul

Athens

Manchester Birmingham

Madrid

Barcelona

Stockholm

Sofia

Tel Aviv

Delhi

Manila

Tokyo

Sao Paulo

Santiago

New York

Chris Lawrence

Nick Melton

Tom Whayne

Johannesburg

Paul Bondi

Moscow

Vitaly Nosovy

Frankfurt

Philipp Gillmann

Lima

Bogota

Madrid

Manuel Menduina

Milan

Nicoloa Ceccarelli

Tel Aviv

Oded Gera

Doron Gurevitz

Philippe Guez

Noah Gringarten

Tokyo

Takashi Ono

Ho Chi Minh City Bangkok

Mumbai

Sanjay Bhandarkar

Kaushik Jha

Los Angeles West Coast

David Baron

Ken Surjadinata

Aleksej Moser

Sao Paolo

Luiz Muniz

Global TMT co-heads

Warner Mandel

Albrecht Stewen

Wellington

Ross Christie

Auckland

Hong Kong

Cynthia Wang

Sydney

Stuart Dettman

Seoul

Howard Lee

Kuala Lumpur

Maryann Tan

Paris

Cyrille Harfouche

Sebastien Proto

Virginie Lazès

Matthieu Lattes

London

Anton Black

Stephan Bocklet

Ben Brodovcky

Leeds Frankfurt

Milan

Rome

Source Rothschild

2

Advisor to

2015

Fundraising by

Advisor to

2016

Fundraising by

Advisor to

2016

Fundraising by

2 An outstanding expertise in Fundraising

Soft / SaaS

Advisor to

2014

Capital increase

subscribed by

Angels & family office

Advisor to

2015

Capital increase

subscribed by

Advisor to

2015

Advices on their

fundraising operations

Marketplaces Media / AdTech

Advisor to

2015

Capital increase

subscribed by

Advisor to

2016

Capital increase

subscribed by

and Family Office

Advisor to

2010

Capital increase

subscribed by

Advisor to

2013

Minority divestment and

capital increase

subscribed by

Advisor to

2014

Equity raising for a

concentrated solar power

project

Industrial / Cleantech

Advisor to

2014

Capital increase

Advisor to

2015

Capital increase

subscribed by Rupert

Murdoch

Advisor to

the shareholders of

2014

Minority divestment and

capital increase

subscribed by

and

Advisor to

2016

€30m capital increase and

disposal of a minority

stake to

Advisor to

Current

€20m

Capital increase

Advisor to

2016

Investment in

Retail / Ecommerce / Online services

Advisor to

2015

Sale of a significant

minority stake to Partech

Ventures

Advisor to

2016

Fundraising by

Advisor to

Current

€12m

Capital increase

Advisor on

Pending

€10m

Capital increase

Advisor on

Current

€50m

Capital increase

Mobility

3

Anonymous

3 VC- / Fundraising-friendly industries

Soft / SaaS / Mobile Media / AdTech

Learning / TalentTech

Marketplaces

RetailTech / Ecommerce Value-added IT Services Fintech

Digital marketing Some asset-light Telco

$

4

4 Startups fundraising rounds vs. appropriate development stages

Launch

Seed

Series A

Series

B / C / D

Exit

Savings / side

jobs

Love money

Incubators

Grants

Friends &

family

Business

Angels

Seed Funds

Crowdfunding

Venture Capital

Corporate

Funds

Corporate

funds

Corporates

Target capital increase

Target revenue range

€10-200k €200k-1m €1-5m

€0 <€1m €1-2m

Venture Capital

Growth funds

Family Offices

Corporate

funds

Corporates

IPO

International

Corporates

Other startups

PE funds

>€5-100m n.a.

>€2m n.a.

Stage to initiate conversations

with Rothschild

Rothschild core focus

Type of investors

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5 A typical process for a fundraising round is c. 6-month long

Preparation Closing Data Room Roadshow

4-6 weeks

Thesis

Vision

Slidedeck

Business Plan

Data room

preparation

8-12 weeks

Selection of

investors

Meetings

Demos

Negotiations

Term sheet

2-4 weeks

Tech audit

Financial audit

Legal audit

2-3 weeks

Negotiations

Signing/Closing

Champagne

Back to work

Total process: 25 weeks ~ 5-6 months

6

6 Structure of an investment pitch deck

Team

2

Ambition

1

Pain

3

Solution

4

Benefits

6

Business

Model 7

Go-to-market

9

Market

8

Competition

11

Achievements

12

Next steps

13

Financials

14

Fundraising

15

Tech

5

Case study

10

7

7 (Good) reasons for startups to raise Series B

1. Accelerate growth

2. Lock a market / Take leadership

3. Finance R&D / Tech

4. Clean Cap Table

5. (Send a signal: new hires, clients, suppliers, investors, competitors)

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8 When should you raise a Series B as a startup?

1. When you have enough runway and still are >6 month from bankrupcy

2. When you have achieved significant milestones since Series A

3. When you have room to justify significant return for Series B investors

4. When you have a knock-out pitch and equity story

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9 Potential financial investors for Series B

France UK, Israel, Germany US

Some specific

Corporate Venture

funds, strategic

investors and Family

Offices with interest

in the Tech area can

also be brought to

the table

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10 VC funds will be looking for 5 things

1. A big addressable market

2. A top-tier management team

3. An outstanding product

4. Strong barriers to entry / unfair advantage created

5. An proven industrialized business

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11 How much should be raised? Valuation Basics

The formula The truth about startups valuation

Number of shares

X Price per share

_____________________________

= Pre-money valuation

+ Funding

_____________________________

= Post-money valuation (Equity Value)

Dilution from funding is also going to be impacted in case

you create stock-option plans for existing or future

managers. Consider fully diluted valuation as the reference.

Careful: startups valuations often assume an Enterprise

Value equal to Equity Value, subject to a cash-free, debt-free

company

Rarely a valuation of the business, valuation is most of the

time the result of an equation made of:

Financing needs on the one side

Market practice acceptable dilution of c. ~20-30% / round

“Give me the valuation and i’ll give you the terms”: make

sure you consider the valuation including all clauses with a

present or future impact on proceeds (liquidation preference,

double dip, ratchet, minimum IRR…

US vs. Europe: differences due to risk / reward profile of

investors, market size, exit history, capital markets appetite

for tech IPOs

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12 Contact / Thanks! / Q&A

Matthieu Lattes Head of Venture Rothschild +33 6 80 57 14 08 matthieu.lattes@rothschild.com

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