Workshop on H2020 and the SME Instrument Presentation by an ESR evaluator Prague, 24 February, 2016
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Workshop on H2020 and the SME Instrument Presentation by an ESR evaluator Prague, 24 February, 2016
AIB Seed Capital Fund Overview
€53m Seed and Early Stage fund
66 investments in 40 Startups
Started in 2008
Expected to deliver 10 to 15% IRR
Building Strong Value through Strong Portfolios
Workshop
Berlin, May 2nd, 3rd
access to finance: what
are investors looking for?
1. Investment Principles and Perspectives
2. Early Stage Company Scorecard
2.1 Crux
2.2 Market & Competitor Analysis
2.3 Product & Opportunity Fit (Projections)
2.4 Promoter Strengths & Weaknesses
Eugene Smyth, Investment Manager
principles Investment Principles: • Triple digit exits on double-digit fundraisings • Scaleable, Profitable, Protectable IPR within Growth Sectors – (Legitimate Advantage) • Enough Opportunity Space to explore wider possibilities • Attractive to good Co-Investors because they will be Repeat Investors • Respect for the Promoters • Respect for the Fund By Reference to Trends...... • Excitement: Tech is always moving - New gadgets, apps, media, materials , industries • And if its a Recession. Plummeting Consumption. Get Real ....or Go Home. Other Considerations: • Does it fit the Portfolio, complementarity and overlap? • Support & Guidance – feedback within reason during evaluation • Active participation post-investment • Does it have residual value if not so successful? – will have to manage the downside
perspectives
Perspectives: If its a Decline, another VC Fund might go with it.....
• LinkedIn: Jeff Clavier, Softech VC
• AirBnB: Chriss Sacca, LowerCase Capital
Fred Wilson, Union Square Ventures
• Amazon: Dave Berkus (Tech Coast Angels)
Bessemer: http://www.bvp.com/portfolio/antiportfolio
historical portfolio includes: network-
• Apple , pre-IPO at $60M valuation: Neill Brownstein technology companies Ciena (IPO) and P-
Com (IPO); Internet-infrastructure services
• Intel: Pete Bancroft such as PSI-Net (IPO), Keynote (IPO), Flycast
(IPO) and Netli (acquired by Akamai); and
• Google, eBay, Paypal, CheckPoint: David Cowan consumer Web sites Hotjobs (IPO), Blue Nile
(IPO) and Playdom (acquired by Disney). In
• Ikanos Semiconductors: Rob Chandra 1995 David co-founded VeriSign as a
Bessemer-funded spinout of RSA and served
• Intuit: Neill Brownstein as VeriSign's initial chairman; his other
• Lotus, Compaq, StrataCom: : Felda Hardymon cyber-security exits have included
Counterpane (acquired by BT), Cyota
• Federal Express: Bessemer passed seven times (acquired by RSA), ON (IPO), Postini
(acquired by Google), Tripwire (acquired by
Thoma Bravo), Tumbleweed (IPO),
Valicert (IPO), Worldtalk (IPO). -
Differing Perspectives on Risk: Investor Vs Entrepreneur
perspectives
Ref: International Journal of Business and Economics
Home -> Tools -> Entrepreneurial Readiness Print | My Account | Login
Tools
Entrepreneurial Readiness Survey Readiness Level Summary
Entrepreneurial Readiness
Risk Readiness
Please fill out the questions below. Rank your answers with
'Strongly Disagree' being the lowest (doesn't apply to me) and Venture Readiness
'Strongly Agree' being the highest (that is definitely me). When Business Plan Readiness
you are finished click on the calculate button to see the results
Innovation Readiness
of your Entrepreneurial Assessment. If you are logged in you
can also click on the save button in order to pick up where you Product Readiness Project Scoring
left off at a later time. Venture Valuation
Capitalization Tables
Entrepreneurial Readiness Results
0% - Credentials Sources:
0% - Capabilities
0% - Character - HBR, Siemens Venture Capital Scorecard
0% - Commitment
0% - Circumstances
- EI, Accenture Study
- BoozAllen Project Analysis
0% - Total Entrepreneurial Readiness Score
- eircom Diversification Project Evaluation
Score >= 90 Investor Ready
Score >= 80 High Performance Venture
Score >= 70 Life-style Venture
Score < 70 More Work Needed
1. What are we
Calculate and Save Scoring PayTools: trying to
Credentials www.venturecapitaltools.com score..?
2. Can’t see the
Select - I have licenses, certifications, or www.venturevaluation.com wood for the
degrees that validate my unique
entrepreneurial qualifications.
trees....
Select - My network of professional and
business contacts will be valuable to
Merits debated in other sources
my business objectives.
Select - My formal education and/or training
applies directly to my entrepreneurial
objectives.
VC blogs:
Select - One or more of my immediate family - AndrewChenBlog.com
members are entrepreneurs.
- AskTheVC.com
Capabilities - VentureHacks.com
Select - I have previous experience as an - StartupCompanyLawyer.com
entrepreneur.
Select - I have small business experience
within my industry.
Select - I have unusually keen insights and
perspectives about the industry,
market, and solutions.
Select - I am comfortable securing money
for my company.
http://ec.europa.eu/easme/en/question-sme-instrument
Scoring
scorecards
1. Crux This is the Business Proposition
2. Market & Competitor Analysis There is/will be Market Space to play in
3. Product & Opportunity Fit This Proposition will Fit the Space
4. Promoter Strengths & Weaknesses This Team Can and Want to Do it
Process, (....generally.....)emphasis appraisal Fund Investment Appraisal & Emphasis
strengths
Promoter Attributes weaknesses
• Always subjective, but CV’s offer weights.
• Are there other Investors , Board Members ..?
• 1+1+1 = ? More than the sum of its parts, looking for a team capability, blending skills
• Who’s doing the selling – CEO or SD?
• Are good Partners attracted? ...Sales Execution is Key
• Who’s building the product? Inhouse or External? Who’s responsible..?
• Good Business plan – reads like a good book
• Good Presentation – they know it, you know it..... (what are they like afterwards?)
• Good Teamwork – different thinking, the different team skills are in evidence
• Consistency through meetings – ‘... this happened as planned’
Dave McClure
Web Guides to VC - Startup Metrics for Pirates
- Zapmeals Sample Pitch Presentation
Presentations and - Blog: Master of 500 Hats
general lessons Steve Blank: 4 Steps to Epiphany, Customer Development
learned.... Methodology
Eric Ries: StartupLessonsLearned
Sean Ellis: Startup-Marketing.comMantaBull: Evaluation Summary – Confidential Humdrum Evaluation: Evaluation Summary Confidential
1. Crux: 1. Crux: Freemium shopping-cart for Facebook e-traders
-. Productising Automated Test Equipment for RF
-. Sensor product development – a list of ideas Score: 8/10. Facebook is, in essence, a walled-garden marketplace and is likely to require mini-
versions of the most popular e-commerce apps to be launched from within the site. This trend
Score: 7/10. There is evidence that ATE market is transitioning to configurable test racks. And there has been spotted and many e-commerce-enablers have emerged from within Facebook.
is a growth market for RF components generally.
2. Market, Competitor Analysis and Market Timing
2. Market and Competitor Analysis
Like any marketplace, Facebook is also a place where vigorous and sustained promotion is
Testing: Market structure is increasingly for OEM’s to: required in order to win the hot contest for popularity when offering new tools. Ease-of-use is
outsource ‘testing design’ to trusted 3rd parties only one factor, viral adoption seems to be key. It is possible to be downloaded by many and
seek configurable automation of test processes yet, to remain unused. It is still early days....
Humdrum has
Product Development: Very IPR intensive and difficult to extract. Requires self-generated
innovation.
Impressive stats on end-user adoption (75,000 users growing at 2,500 per month)
Good partners
The full opportunity breadth, as presented, revolves around leveraging the value-add potential
from established longterm relationships in both areas, ATE and Prod Dev. Less impressive stats on active traders, (20,000 installs,4,000 trader shops, of which 1,000 are
‘active’(putting up products for sale), but only 3% are ‘transacting’.
Score: 6/10 The scoring could be 7 for ATE, and 5 for Prod Dev. For the latter, the relationships No stats on how well its competitors are doing in terms of number of merchants
may change if the offering changes and is seen to be competitive, customers may be less Freemium model can work in this specific case
wllling to disclose design intentions to a free agent. (...but this is speculation).
Score: 4/10. The proposition asks the investor to go in blind, not knowing what popularity the
3. Product and Opportunity Fit competitors have achieved. Good work done on partnerships.
Re: Test Rack - is said to already provide 60% to70% overlap for all customers. The technical 3. Product and Opportunity Fit
proposition, (the ‘how’ is not fully articulated re: commonality of upgrading), is to
standardise the rack for all customers with supplementary bespoke services.
The product is good and can become a lot better. But this does not guarantee success, which is
probably determined by a land-grab strategy. Therefore, the tool itself should contain its own
Re: Product Design – no evidence of ‘Idea Initiation’ and Go to Market capability, the evidence is of
‘make to order’ capability. ‘virality’ as the key ingredient to success. This is planned but not in any new or exciting way.
The roadmap is big but not visibly prioritised. However, much good work has been done on
Score: 6/10 . Same basis as above re: scoring. The Product Development seems notional, though limited resources.
with good experience offered in the domains, if not of actual product inception.
Score: 6/10 . Product is the result of a good, obsessed, developer, though with a rather
4. Promoter Strengths and Weaknesses conservative vision.
Promoters are typified, mature, technology consultants and successful as same. The addition of 4. Promoter Strengths and Weaknesses
an entrepreneurial Chairman offers a new dynamic that is focused on obtaining the
funding required to transform the company profile from a consultancy house to a Product Comes across as an opportunistic pairing, rather than a truly unified team . The Marketeer may
Development house. New Commercial Director offers comfort on required commerciality
have a vision to sell to investors rather than customers. (In other words, there’s a sense of a
The need for funds is a substitute for revenue whilst consultancy becomes internally focused on dot-com, but that’s what seems to go with this territory). Strategic intelligence and vision was
product design. weak.
.Score: 7/10. The proposition is that the guidance of a successful entrepreneur and a savvy Score: 5/10. Good guys, but vision is opportunistic and short-term rather than strategic. The
commercial director will transform consultancy into a well-funded product development ‘ask’ is to ignore how well competitors may be doing.
house.
Overall: 58%. Good work done, needs a lot more pre-investment work, but is likely to get that
5. Overall: Score: 65% from other potential investors. An investor pool conference may be required to shape it.Crux crux (krks, krks) n. pl. crux·es or cru·ces (krsz) 1. The basic, central, or critical point or feature: the crux of the matter; the crux of an argument. 2. The Southern Cross, the smallest stellar constellation visible to the naked eye from Earth
Crux Crux Sample of Study Materials. Typical Executive Summary. Copyright: Help Finance.com, Studymode.com, Sales5.org.
Markets & Competition
Need both:
- Pathfinders
- Drop Zonesmarkets
Market & Competitor Analysis
competitors
1. Pathfinders:
Revert back to Crux: ............Google it
- Get a sense of the sector
- Are there industry reports, overviews...?
- Does web mention same competitors....?
2. Drop Zones:
– Do they know the customer intimately..?
• B2C, profile of consumer – is the predicted behaviour
typical of a consumer.... today, tomorrow?
• B2B, profile of purchaser, budget authority, time to purchase,
internal champion, Scotsman scoring
– Are there potential partners that can hit the target more quickly?product fit
Product & Opportunity Fit
opportunity
Want enough Opportunity Space to explore the wider possibilities......
1. B2C: Micks Garage, 2008: Showing Traction, Good metrics, proven CLV versus CAC
Refs:
– http://www.seomoz.org/blog/holygrail-of-ecommerce-conversion-optimization-91-points-
checklist
– http://www.forentrepreneurs.com/startup-killer/
2. B2B: Visible Thread: Document Analytics & Consistency Checks
B Plan 1, 2009: Financial Services IT , 3 trial customers.
B Plan 2, 2012: US Defence Industry, 60+ customers, 4 of the 5 top Defence
Contractors
New Product: Clarity GraderB2B Projections: Scotsmen
Scotsmen
S.C.O.T.S.M.E.N:.... to prioritise potential buyers,
deprioritise others, and to identify areas which
need converting, in order to achieve the sale.
• Size:
• Solution: • Is the potential order value worth the effort?
• Is there a solution you can supply and support? • Is your company large enough to handle it?
• Is the potential client of a size that you would
• Can it be matched within your companies' normally deal with?
current portfolio? • Money:
• Competition: • Is there a budget allocated?
• Are you aware of who you are competing • How much is it?
against? • Is it approved?
• Originality: • It is reasonable; can you provide a decent
solution for that amount?
• Can you offer something 'original' or unique to • Executive:
this potential sale? • Are you speaking to the right person?
• Timescale: • Do they have the authority to make the decision?
• Are you aware of their timescale? • Do you know who else is involved?
• Is their timescale reasonable? • Need:
• Are you aware of all their needs?
• Does it fall within your own 'sales cycle'
• Can you match them?
criteria?
Not doing Scotsmen analysis does not mean the sale cannot be obtained, but it at least,
http://ezinearticles.com/?Introducing-Scotsmen---A-Simple-But-Highly-Effective- provides some sense of assurance that the dynamics of the sales process have been
Opportunity-Analysis-System&id=360201 assessed.not
hot
What’s Hot and What’s Not..... hot
not
What’s not? –
What’s hot? – every sector that can be fundamentally
transformed/disrupted by software • CTO’s – building a technology stack is not as
challenging
• Vertical Domain Knowledge – Insider understanding • Saas/Cloud re-interpretations of existing platform
of an industry and true identification of an businesses
opportunity • Less than $10m global revenue potential from the
• Good CEO’s – intellect/experience will guide to Unique Selling Proposition
success as opposed to muddling-through • Some Funds have moved away from direct plays in:
• Exclusive Content (Data-Ownership or Data- – Computer peripherals
Distribution Ownership) –look for repositories of – Electronic Instrumentation
data or exclusive access to data – Banking Systems
• Mobile/Tablet penetration of every sector – CPU in – Taxi’s, Cabs
your pocket, the family tablet, the school tablet • Watch out for Acronym Religions : Web 2.0 4G,
• Gaming penetration of Learning and Education Cloud, SaaS......... except for IOT
• Look for new Devices offering good Utility and • Watch out for O/S Projects that are geared toward
SDK’s...... extending technology to SME’s
• And personally.... look at how immigrants transact
and communicate....opportunities Next Gen Growth Sectors offer Major Investment Opportunities
drivers
The Time is Right for more European Mega-Successes Online
The convergence of cloud and mobile adoption is changing everything — from shopping
to playing to learning as the next 6 billion people around the world come online.
E&Y Global Venture Capital Insight and Trends 2014 Report
• Selected ventures in the Connected World can exceed a $50m+ valuation within 5 years of first round
• Seeking out Promoters with executable ideas that can transform industries
High Exitssuccess
What is Necessary? Experts + StartUp People + Adequate Funding
HealthCare ----------------------------------
Energy & Cleantech -----------------------
Government ---------------------------------
Manufacturing ------------------------------
Transportation ------------------------------
Communications/Publishing ---------------
Enterprise & Hiring -------------------------
Banking/Security -------------------------
Others, Education, Retail, Advertising --
Target Sectors
Designing New Apps on Investors
New Platform AEP’s
Scalable Tech Opportunities + €€€’sAnd, lastly, a word about Sales Projections.......
Děkuji Thank You
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