startnowhow - stage financing for ventures

STAGE FINANCING FOR VENTURES Dr. Joachim Behrendt

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StartNowHow

• Open seminar series for active and prospective entrepreneurs

• 10 sessions on monthly basis until summer 2016

• Covers relevant theoretical and practical aspects of entrepreneurship

• Based on lecture „entrepreneurship“ @Bogazici University

• Based on experiences of entrepreneurs, investors, mentors and consultants

• Each session with guest speaker (entrepreneurs, investors, mentors, etc.)

• Language: English / Turkish

• Thursdays 17.15h – 19.30h

• Next session: Thu 12. May 2016

• Topic: The Investment Process – Pitching, Negotiations and Termsheet

• Certificate provided for participants joining at least 70% of the sessions

• Early registration for each session required (eventbrite), limited capacity!

• Priority for regular participants

Startnowhow – Seminar 8 13.04.2016 2

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StartNowHow - Seminar Topics (preliminary)

1. Thu 1.10.15: The entrepreneurial ecosystem in Turkey

2. Thu 15.10.15. Entrepreneurship as a profession

3. Thu 12.11.15: Opportunity recognition and evaluation

4. Thu 10.12.15: Planning, developing and testing a business model

5. Thu 7.1.16: Market and competitor research

6. Thu 11.2.16: Financial planning for startups

7. Thu 10.3.16: Digital Marketing planning and control

8. Thu 14.4.16: Funding the startup – stage financing for ventures

9. Thu 12.5.16: The investment process – pitching, negotiations and termsheet

10. Thu 9.6.16: Success and failure as an entrepreneur


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Initial New Venture Losses

13.04.2016 4 Startnowhow – Seminar 8

Source: Timmons, J.A./Spinelli, S., New Venture Creation, p.427

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Low-Budget vs. Big-Money-Models


Source: Volkmann, C.K./Tokarski, K.O./Grünhagen, M., Entrepreneurship in a European Perspective, p.291

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6 Startnowhow – Seminar 8 13.04.2016

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Startup Life Cycle

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Life Cycle Financing


Source: Timmons, J.A./Spinelli, S., New Venture Creation, p.433

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R&D Grant Programs

Startnowhow – Seminar 8

Source: Novicor

13.04.2016 8

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Business Failure Rates


Source: Shane, Ihe Illusions of Entrepre-

neurship, New Haven / London 2008

US study UK studies

Source: Stokes / Wilson, Small Business

Management, p. 87

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Lemons and Pearls


Source: Timmons / Spinelli, New Venture Creation, p. 158

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Venture Life Cycle and Target Returns


Source: Leach, J.C./Melicher, R.W., Entrepreneurial Finance, p.255

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BIC

• Agreement BIC – Investors

• BIC Angel Investments is a brand of BIC Behrendt International Consulting A.Ş., owned 100% by Joachim Behrendt

• BIC provides angel investment services but does not invest itself

• Joachim Behrendt invests himself alongsinde other BIC angels

• Interested investors enter into a service agreement with BIC

• By invitation only / ends anytime one party decides not to continue

• Contains limited confidentiality provisions

• Exptected (but not obligatory): At least two investments per year, minimum ticket size normally 25,000 TL

• Angel Investments

• Investors invest directly into the startup and become shareholders in A.Ş.

• All BIC angels (including Joachim Behrendt) belong to the same shareholder group in proportion to their investment, protected by minority rights

• Termsheet and definitive agreements (template-based) are provided by legal advisors of BIC, quick agreement with startups targeted

• BKS application process for startup handled by BIC

12 Startnowhow – Seminar 8 13.04.2016

BIC Angel Investment Network: Legal Framework R

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Investment Process of Business Angels


Source: Volkmann, C.K./Tokarski, K.O./Grünhagen, M., Entrepreneurship in a European Perspective, p.300

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VC‘s Organizational Structure


Source: Smith, J.K./Smith, R.L./Blisss, R.T., Entrepreneurial Finance, p.90

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VC Capital Investment Process


Source: Smith, J.K./Smith, R.L./Blisss, R.T., Entrepreneurial Finance, p.95

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• $3.5m investment in a company

• Expected to earn $2.5m per year in 5 years

• VC expects to make 50% per year on invested capital

• Comparable companies trade at 15X price / earnings ratio

The VC Valuation Method - Example

Source: Bürkan Beyli, Buran Ventures

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New Venture Valuation: Market Multiples

13.04.2016 17 Entrepreneurship

Source: Grichnik, D./Bretttel, M./Koropp, C./Mauer,R., Entrepreneurship, p.101

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• The VC must own enough to realize 50% return per year

(1 + 0.50)5 x ($3.5 million) = $26.6 million

• After five years, the company is expected to be valued at

15 x $2.5 million = $37.5 million

• $ 26.6 / $ 37.5 = 70.9%

• Implied (post-money) valuation today:

$3.5 million / 70.9% = $4.9 million

The VC Valuation Method- Example (2)

Source: Bürkan Beyli, Buran Ventures

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K StartNowHow - Outlook

• Today‘s materials will be made available to participants for downloading

• Next Seminar: „The investment Process – Pitching, Negotiatons and Termsheet“

• Guest Speaker: Mehmet Onarcan, BIC Angels / Mentors Network Turkey

• Thursday, 12.5.2016, 17.15 – 19.30h

• Don‘t forget to register early (eventbrite) - capacity 50 people!

• Priority for participants / registrants from today‘s session

• General rule: Allocation of seats according to participation

• Regular participation = certificate (70% participation)


BIC ANGEL INVESTMENTS Dr. Joachim Behrendt

Phone: +90 212 328 1939 Fax: +90 212 328 1933

www.bicangels.com http:/twitter.com/joachimbehrendt http://tr.linkedin.com/pub/joachim-behrendt/18/706/a7a

Email: [email protected]

http://twitter.com/joachimbehrendt

http://tr.linkedin.com/pub/joachim-behrendt/18/706/a7a

