davor hebel, fidelity ventures @ tmt.ventures'08 zagreb
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Davor Hebel, Fidelity Ventures - presentation from TMT.Ventures'08 Zagreb (http://tmtevents.eu by New Europe Events)TRANSCRIPT
The Balkans and Central Europe: a land of opportunity for global VCs and Entrepreneurs
How to build, finance and exit successful companies
Davor Hebel, Vice President, Fidelity Ventures
TMT.Ventures’08 Zagreb
p2
Agenda
About us
CEE and the Balkans opportunity for a global VC
Some thoughts on building a successful start-up
Fundraising tips and what to expect from VCs
p3
About us
One of the largest global mutual funds: $2 trillion under management…
…not so long ago
Global VC and growth equity firm with over $1B under management across US, Europe, India and China
Investing €3-30M in venture and growth equity investments in Western and Eastern Europe focused in Internet, Software, Media, and Clean Tech
Vice President in London
Croatian with first hand start-up bruises
McKinsey, HBS
Boards: Asset Control, Seatwave, Newbay
Fidelity Investments Fidelity Ventures European Focus About Me
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CEE and the Balkans opportunity for a global VC
2005: “eBay Buys Skype for $4.1 Billion”
Estonian development
Peer-to-peer VOIP software founded by Friis and Zanstrom (Kazaa)
Global champions Regional champions
2008: “Forticom acquires controlling stake for $92M (~€100M valuation)”
Polish
Largest Polish social network built on Friends Reunited principle
2002: seed funding @ ~$2M valuation
2003/2004: 1st and 2nd rounds of funding
2006: NK founded by student Maciej Popowicz
2007: EFF buy 20% for €2M (€10M valuation)
Source: public references
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Some thoughts on building a successful start-up
• No need to reinvent the wheel (e.g., Nasza Klasa)• 70% of start-up ideas come from previous work• It will change anyhow… but it is like a baby
• Experience counts, passion wins• Complementary skill-sets do work• Different phases bring different challenges
• The game – investors need to make money• Find right capital – stage and risk (equity vs. debt)• Make it last 12-18 months, valuation not key
• Cash is king, profitability queen (especially now)• Build solid foundations - 1st mover not always key• Know your objective - €1M, €10M, €100M, €1B?
• Think about it when you start the company • Technology sale – good for some• Build relationships with potential exit partners
Finding an idea
Building the team
Fundraising
Growing a company
Exiting
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Jaws in Space (the art of a good pitch)
•Keep it simple—VCs see >100 companies for each
one they invest in—Comparables and analogues really
help—Two questions:
–Why’s this one going to be big?–Is it going to be a nightmare?
•Some rules—Don’t make us think too hard (e.g.,
comparables)—Put together a short slide deck and
simple financial model—Science not allowed (usually)—Establish credibility, name
dropping allowed
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How much do you need and how can VCs help?
TypicalPre-MoneyValuation
RequiredIRR
Valuation/Return
30%
50%
70%
100%
<$1M
$2-10M
$10-30M
$40M+
Series BAngel Series A ExpansionStage
$10-15MAnything goes
$3-5M Anything goes
Typical raise
Go-to-marketRecruiting
Connections
General adviceRecruiting
Connections
ProductRecruiting
Connections
ExitRecruiting
Connections
VC help
Old rules: software $30M, chips $50M, SaaS $60M, systems $100M
New rules: web 2.0 <$10M, startup costs much lower (cloud, open source, moore’s law)
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Choosing investors
• Money is increasingly abundant— If the team is credible— If someone has made money doing something similar— If the investors can see a good return in 5 years or less— And can write a big enough cheque (or small enough)
• Investor quality matters but so does fit— Average fund makes no money! (1/3 rule, focus on hits)— Fund size and stage— Have they done something similar before— How can they help (tangibly)
• Use the analogues— Yahoo (Moritz, Sequoia); Google (Moritz); YouTube (Moritz)
• Make them work for you – it is expensive money!