Burnrate is Growing - Startup Funding for Developers (in Norway)

!2013-Oct-28 !Amund Tveit

amund@atbrox.com - http://amundtveit.info - http://atbrox.com

• .. or whenever opportunity or startup itch strikes

You suffer from creative handcuffs

You’re Fired!

You have a big idea

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Personal Reasons for starting?

Personal Reasons for not starting?

You thrive from stability You prefer the Blue pill

You dislike taking risks

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Funding Overview

1. R&D Tax Deductions

2. Innovation Grants

3. Research Grants

4. IFU/OFU

5. Innovation Loans

6. Crowd Funding (non-equity)

7. Customer Funded

1. Angel Investors

2. Accelerators

3. Venture Capital

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• www.skattefunn.no

• How it works?

• Apply for (multi-year) project, up to 11 MNOK/year (5.5)

• Reporting (audit of costs and time)

• Get tax deduction (if surplus), OR Money back (if deficit)

• Dive into your academic network

• Example from Trondheim: MazeMap - http://naeringslivsavisa.no/2013/05/30/tradlose-trondheim-vi-har-utviklet-en-verdensnyhet/

R&D Tax Deductions

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• http://www.innovasjonnorge.no/Finansiering/etablerertilskudd/

• How it works?

• Apply when starting up - 300 KNOK (+)

• Apply before market Introduction - 300-600 KNOK (+)

• Parts of IN motivation - local employment, tax effects

• Example from Trondheim: http://blog.verdandetechnology.com/verdande-technology-investors-raising-8-million-for-the-continued-enterprise-adoption-of-case-based-reasoning

Innovation Grants

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• http://ec.europa.eu/research/

• How it works?

• Project coalitions between universities and companies in European Countries

• Application (50-100 pages), project sizes: millions of Euros

• Partner with the best academics you know

• Example from Trondheim: Atbrox - http://atbrox.com/2013/08/26/atbrox-has-become-a-partner-in-a-research-project-on-cloud-computing/

Research Grants

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• http://www.innovasjonnorge.no/Finansiering/ifuofu/

• How it works?

• OFU - 3 parts: IN, Public org. customer and you

• IFU - 3 parts: IN, Private company customer and you

• Potentially significant amounts (millions of NOK)

• Partner with big/well-known (potential) customer

• Example from Trondheim: Boost - http://www.adressa.no/nyheter/okonomi/article7914743.ece

IFU/OFU

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• http://innovasjonnorge.no/Finansiering/Innovasjonslan/

• How it works?

• 2 types: low-risk loans and innovation loans

• Amounts up to millions of Norwegian kroner

• In many ways similar to your house mortgage

• Note: do you really want to take on debt?

• Norwegian Example: Bipper - http://bippernytt.blogspot.no/2010/06/denne-uken-fikk-bipper-den-gode-nyheten.html

Innovation Loans

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• Services: IndiGoGo and Kickstarter

• How it works?

• Describe your project, schedule and requested amounts

• What backers get (e.g. diplomas, early releases of product etc)

• Works best for: those that have a demonstrable prototype

• Amounts: from low thousands to millions of $

• Norwegian Example (1.5M$) - http://www.kickstarter.com/projects/redthread/dreamfall-chapters-the-longest-journey

Crowd Funding (non-equity)

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• How it works?

• You get advance funding for developing for a customer

• And keep all rights to resell it as a product or service

• Advantage: down-to-earth wrt customer needs early on

Customer Funded

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• Typically 2 types:

• Professional Investors

• Affluent Individuals (serial entrepreneurs)

• How it works:

• Communication through platforms, e.g. angel.co

• Or through personal networks (e.g. linkedin)

• Amounts: thousands to low millions of $ (typically a coalition of angels)

• Example: Irish startup raising $230K in 8 days using Linkedin - http://www.businessinsider.com/irish-company-raises-230000-using-only-linkedin-2010-1

Seed/Angel Investors

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• Training Camp (one to a few months)

• Value(Network+training) > Value(funding)?

• YCombinator:

• Guaranteed follow-up financing

• Amounts: 0 - few hundred K$’ish

• Innovasjon Norge TINC (1 month Palo Alto)

• Oslo: StartupLab.no

Accelerators

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• Typically for large investment amounts (>1M$)

• When your company is ready to scale

• Rough rule of thumb: min. revenue of $1.5-2M

• Long-term commitment

• Many rounds of financing (e.g. series A, B, C, D, E)

• Their goal: big liquidity event (IPO or M&A)

Venture Capital

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!

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• Competitive Advantage

• Scalable and recurring revenue

• Great Team

• Conservative Pre-money Valuation (see angel.co/valuations )

• Disruptive

• Potential for big exit (sale or IPO)

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How to Convince Investor?

• A Working Demo says more than 1000 words

• Remember: Execution >> Idea in Silicon Valley

• Innovation House in Palo Alto is a must to visit

• many Norwegian startups

• Good networking arena

• You probably know someone who knows (e.g. via linkedin)

• 6 degrees is typically 2-3 within IT

• Personal Experience: blogging can interesting open doors

Approaching Silicon Valley

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• Globalization - Everyone/many invests anywhere in the world?

• VCs doing (low-profile) seed/early-stage investments

• Non-Nordic VCs (European and US) investors “underweighted” in Scandinavia

• Transparancy - Investor dealflow becoming commodity?

• angel.co - Angel List Syndicates (individuals doing series-A/B)

• Crowdfunding (equity-based) - In its infancy, but can have massive impact?

• growvc.com

Funding Trends

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