go silicon valley - investor: best practice + q&a
TRANSCRIPT
INVESTOR: BEST PRACTICE + Q&A
Markus Wagner
26th of Feb. 2015; @MarkusWagner
CEO - i5growth Inc. (Palo Alto) – www.innovationcenter.eu
Chairmen of Adv. Board - i5invest seed capital (Austria/Vienna)
Board AustrianStartups – Austrian Startup Association (non-profit)
Investment Committee Member – SpeedInvest (seed and Series A fund in Austria)
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MADE in AUSTRIA & Successful in the US (Silicon Valley)
CONGRATULATIONSTHIS WILL BE AN EXCITING TIME FOR YOU
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…known for – Music & Culture
…part of your job will be educating aboutAustrian tech & startup scene
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Notable EXITS (starting by 2010):• 2010: fatfoogoo – Digital River• 2010: greentube - Novomatic• 2010: jajah - Telefonica• 2010: 123people - PagesJaunes• 2011: RF-iT Solutions – Enso Detego• 2011: sensordynamics - Maxim• 2011: silverserver – Tele2• 2011: redcoon – Metro’s Media Saturn• 2011: dynaTrace - Compuware• 2011: payolution – Moneybookers / Skrill• 2011: checkfelix.com - KAYAK• 2012: Kununu - Xing• 2012: Tupalo – Herold / European Directories • 2012: Arztsuche24 – Herold / European
Directories • 2012: Blue-tomato – Zumiez Inc.• 2012: paysafecard - Skrill• 2013: tripwolf – German Publisher • 2013: SolveDirect – Cisco• 2013: Runtastic – Axel Springer• 2014: Immobilien.net – ImmobilienScout24• 2014: Wikidocs – Atlassian• 2014: MobFox – Matomy Media Group
(MTMY:LSE)
Notable Events (starting by 2012):
• 2012: Andreessen Horowitz/Citi Ventures investment into Jumio
• 2012: Blossom investment of seedcamp
• 2013: CodeShip investment of seedcamp and Techstars
• 2013: Former Expedia CEO invests in TourRadar
• 2014: CodeShip receives US Series A
• 2014: Foundertalks.org launches (brings YC alumni to Austria for experience exchange)
• 2014: Ulmon investment of Global Founders Capital
• 2014: 100% Austrian Team in YC patch
• 2014: Talenthouse investment of ProSiebenSat.1 Media AG
• 2014: Austrian team joins YC producthunt.com (founding team member)
• 2014: Austrian flatout joins Cisco’s EIR program
• 2014: Austrian Crate.io TechCrunch Disrupt Europe Winner
• 2015: ChatGrape Betaworks (US) investment
Austrian Ecosystem Exits / Notable Events
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AUSTRIAi5invest
USAi5growth
WE ARE LONG TERM PARTNERS (through all stages, 2/year):
START-UP MENTORING
SEED FUNDING
CORPORATE DEVELOPMENT / M&A ADVISORY
WE ARE LAUNCHPAD FOR THE US MARKET:
US MARKET ENTRY / STRATEGIC PARTNERSHIPS START-UPs EUREOPEAN VCs / ACCELERATORS OLD ECONOMY
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Who we are – Our Team in Vienna – what‘s new
Founded 2007, Vienna - partner i5growth Inc. in Palo Alto
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Herwig SpringerCEO Corp. Dev.,M&A
+43 650 530 8976
Patrick ProkeschDirector Corp. Dev.,M&A
+43 676 303 4854
Paul WeinbergerPartner
Markus WagnerChairman ofAdvisory BoardCEO - i5growth Inc./ USA
AlexanderIgelsboeckAdvisory Board
Martin BrunthalerAdvisory Board
Georg NovakExecutive Assistant
+43 676 841 282 150
Bernhard LehnerPartner
Vlad GozmanPartner
Advisory Board Partner
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66%
0.00
0.50
1.00
1.50
2.00
2.50
3.00
Europe USA
Enterprise Value / Sales - Jan 2015
Enterprise Value / Sales
How do capital markets look at Internet Companies?
Source: Capital IQ & i5invest Analysis
US-based companies trade at a 66% premium above their peers in Europe.
Companies in the Anglo-Saxon Regiontrade at higher multiples in general.
Does being in the US add value for the sake of being in the US?
0.00
1.00
2.00
3.00
4.00
5.00
6.00
-
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
7,000.0
8,000.0
9,000.0
10,000.0
United Internet AG(DB:UTDI)
Yandex N.V.(NasdaqGS:YNDX)
Telecity Group plc(LSE:TCY)
Top 3 "European"
Enterprise Value EV / Revenues
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
-
50,000.0
100,000.0
150,000.0
200,000.0
250,000.0
300,000.0
350,000.0
Google Inc.(NasdaqGS:GOOGL)
Facebook, Inc.(NasdaqGS:FB)
eBay Inc.(NasdaqGS:EBAY)
Top 3 American
Enterprise Value EV / Revenues
What are the big players and their valuations?
USD in bn
US vs. EUROPE – IT’S A BIG GIRL’s & BOY’s GAME!
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US vs. EUROPE - IT IS EXPENSIVE THERE!
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Factors that should be considered when talking about a bubble
Interest rates are basically 0%
Total tech investments incl. M&A close to 2000
Rising pre-money values
IPOs with negative Earnings
Rising tech salaries
We are in Europe (with still big global potential)
BUT: We need to improve the ecosystem and create serial entrepreneurs with international exits
1
2
5
3
4
-
2,000.0
4,000.0
6,000.0
8,000.0
0
200
400
600
800
Tech investments
Number of Deals
Investments (USD in m)
2
4
0
20
40
60
80
100
The percentage of IPOs with negative earnings
3
0
20
40
60
80
100
Pre-Money Valuations
Later RoundSecond RoundFirst Round
(USD in m)
5
86000
88000
90000
92000
94000
96000
98000
2009 2010 2011 2012 2013 2014
Software Engineer Base Salary
(USD)
Source: i5invest analysis, PwC, DJ VentureSource, Jay R. Ritter / Business Insider and Glassdoor / BI.
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What are investors looking for?
1. Amazing management team (facebook, google, airbnb, …)2. Strong IP / technology – protection of IP3. It needs to solve a clear problem - clear product market fit4. User traction, great growth5. Revenues - proof of revenue potential6. Huge market size 7. Competitive landscape: Defensibility, entry barriers8. Capital needs9. Clear sales & go-to-market strategy10. Clear exit strategy 11. Sources of credibility & trust: known team-members, angels,
accelerators, …12. Office location: US / Silicon Valley / SF13. Visa issues: none
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…in the end supply and demand for investment opportunities drive the valuation
Star
tup
inve
stm
ent
oppo
rtun
ities
Angel investors
(Deals) experience and points of reference for
valuation
Industry knowledge
Angel network
Supply Demand
What is the value of a startup?
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THE BAD NEWS: The supply is huge, no euro investments
Hundreds of accelerators, incubatorsTens of thousands of startupsThousands of founder teams of ex-googlers, facebook, NASA, tesler, Microsoft, EA, …
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THE GOOD NEWS: Funding follows Success
Use your time in the valley to work on your success:• Think big – most probably your idea serves a too small market for
the valley (think 10x = 10 times as big)• Success means product – market – fit• Success means traction
• KPI’s• Customers• Revenues• Users, Traffic, conversions
• You will need a rock star team, with rock star execution skills• Build your network, you will need it later• Fail well = fast, learn, there are valuable leftovers, keep on going• Be open, the outcome might be different to what you think
• You might move & flip• You might change your product, customers, business plan, team• You might go back to Europe and even be more successful there
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Come prepared 1
1. Create a great linkedin presence (premium)2. Create a great Angel.co presence 3. Create a great crunchbase presence 4. Choose a time of interesting industry events5. Look for the right place to work (bay vs. SF, …)6. Look out for interesting accelerator programs 7. Look out for experts, evangelists in your space, they might
become angels later8. Meet competitors, connect with peers 9. Meet former employees of competitors and potential future
team members10.Act as you always have been here for a long time11.Bring a unlocked phone, multiple credit cards (or check)12.Bring English business cards, pitch deck, train the pitch
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Come prepared 2
13.Watch silicon valley show: http://www.hbo.com/silicon-valley#/
14.Start-up Class from Y Combinator Sam Altman in Stanford: http://startupclass.samaltman.com/
15.Reading Advice: http://www.amazon.com/Zero-One-Notes-Startups-Future/dp/0804139296
16.Start to read techcrunch frequently 17.Watch great company pitches on youtube, i.e.
TechCrunch Disrupt18.Learn about growth hacking: #500Distro
https://www.youtube.com/user/500startups19.Look for the right meetups (www.meetup.com) 20.Sign up for newsletter: http://www.aicsv.at/21.Go Silicon Valley - Austrian Pavilion Group
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Startup Mentoring and Seed Funding
Venture 1 Venture 2 Venture 3 Venture 4 Venture 5
Innovation Management and Product Strategy
Go-to-Market Strategy
Company Setup and Office Infrastructure
IT Dev. & Operations, Accounting, Finance
Seed Funding, Business Planning & Public Funding
HR & Recruiting
Marketing, PR & Media Planning
Social Media Marketing and SEO
Development
Project Management
Product Management
Development
Project Management
Product Management
Development
Project Management
Product Management
Development
Project Management
Product Management
Development
Project Management
Product Management
help ideas to grow
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