raising money in Estonia. programeter.com story

Mark Kofman, CEO, Programeter.comPhone: +372-517-8945, Skype: kofmanBlog: http://toolsforsoftwareteams.wordpress.comTwitter: http://twitter.com/markkofman

I am Mark Kofman

enterpreneur, 2nd startup, business experience in 5 countries, software offshoring and outsourcing expertise

co-founder, together with Anton Litvinenko, of…

metrics and analytics for

software projects

what is the purpose?

How did 2 programmers try to raise money?

1. friends-family-fools: 50-500KEEK

2. seed – 500K-1.5MEEK3. vc - 3M-30MEEK

definitions first: funding rounds

How did 2 programmers try to raise money?

Step 0: decision to start

Early 2006, 3 architects (read programmers), lots of initiative, no reputation, no business network

Step 1. register the company.

-40,000EEK, -1 founder

Step 2. family friends and fools: +500,000EEK, -20%

2007, quit the jobs, dreams of huge success

Step 3. searching for venture capital: -9 months, + 0EEK

“I have done 500 phone calls in few days to raise this money“ CEO of funded Estonian startup

I spent 3 months in silicon valley meeting top VCs ...

goal: build-up the network for future fund raising and sales

who has the VC money in Estonia?

1. Arengufond: Smartpost, Fits.me

2. ASI (skype co-founders): Programeter, Guardtime, Cats and Dogs, ...

3. MTVP: Rate.ee, aegmaha.com

Step 4. seed round: +$150,000, -10%

who has the seed money in Estonia?

1. ASI (skype co-founders): Programeter, Guardtime, Modesat, MarkIt

2. WNB: Smartdust, Smartpost

3. Your employer: JavaRebel, Sharemind, Toggl

4. Individuals (Rikaste TOP)

Step 5: bootstrapping

Step 6: now in progress of raising multi-million series A round

Results: 200 investor pitches, 50 meetings, 8 negotiations, 2 investment...

sounds good?

… actually not

We have spent more effort on raising money than on product development and increasing value

… costs of raising money- cost of founder/month = 100KEEK

- 1.2x12m. of founders time – 1,44MEEK- cash burned by company - 200KEEK- traveling expenses – 50KEEK

1,690,000EEK

step-by-step money-raising guide

Applies to young founders of startups in Estonia.Tested on B2B startup

1-12m: bootstrap at-least 12 months1-12m: meanwhile build-up network of investors, advisors12-18m: start selling if you can12m-18m: go for seed money – approach your network18-24m: think twice before raising vc money in Tallinn...think again18-24m: make product/service sales support your company daily expenses. 24-33m: secure yourself 6-9 months and talk to all VCs you can

you should plan at least 1 year ahead

but reality is different. baltic startups typically have cash only for 3-6 months

go for internet-(ional) market

opportunity for this region startups:

you need online strategy, suitable business model, specialists, resources

It's not just setting up an e-shop

think pay per new customer

benefit: you can control your budget

think pay per new customer

1. pay per click ads2. make 80% of your sales process online3. monitor converstion rates

customer aquisition cost

1. 100 clicks = $1002. 5 phone calls = $253. 1 online meeting = $254. contract printing costs = $1

think pay per new customer

If new customer aqusition costs you $151, you can run company with even with $1000 in cash

resume:

- grow your network- focus on what you are best at- think pay per new customer

and if you want to invest, call me

raising money in Estonia. programeter.com story

Mark Kofman, CEO, Programeter.comPhone: +372-517-8945, Skype: kofmanBlog: http://toolsforsoftwareteams.wordpress.comTwitter: http://twitter.com/markkofman