Basic's, DO's and DON'Ts from the perspective of an early stage VC.

1. ApproachingVCs: Basics, DO’s and DON’Ts
Berlin, 23.7.2013

2. Early-stageVenture Capital firm based in Berlin
investing internationally (focus Europe)
SaaS
Network
effects
Commerce
Current key investment themes and examples:

3. Currently Point Nine Capital Fund II (40m Euro)
• PNC I - 6m Euro (launched 2009/10)
• PNC II - 40m Euro (launched 2012)
• Investment size: 100k - 1m Euro + follow-on
• Stage: seed / series-A

4. Early stage investment landscape (largely simplified)
Angels / Accellerators /
Incubators
VCs

5. VC investment landscape looking from Berlin
(super simplified, based on perception and not exhaustive :-)
Stage
Investment
size
Seed Series A Series B
€100k
Business
Angels
€500k
€1-5M
€5M+
F&F
Accel-
erators
Grants

6. Other investor types / financing sources:
•BANKS (need collateral / cash flow / history)
•CORPORATES (can make sense, support, but issues with exit)
•STATE SUPPORT (varies over time / by region)

7. Good reasons to raiseVC money

8. Do you really need VC?
VC ≠ Sales
Dilution is your
enemy!
Investors = bosses?
?
Lifestyle business
Forced to grow

9. When not to raiseVC money

10. What a goodVC can give you

11. VCs tend to specialise, but in general they look for:
•Amazing teams
• Great products
• Huge / fast growing / not very competitive market opportunities
• Great unit economics
•Traction
• Exit

12. VCs look at a lot of companies
Point Nine Capital in 2012:
- 2500 business plans
- 10 investments
=> we invested in 0.4% of business we have seen in 2012. other
investors will have a similar rate

13. TheVC process
Startup
First Screening
Intro
Outgoing
Due Diligence
Deal Memo Term Sheet Legal DD
Deal
Support
Exit
Pass
Negotiation

14. How do you get on the radar screen?
... and network...

15. Approach - have a Deck!
+/- 10 slides - be visual + numbers
english only
no paper
no 50 page business plan
no NDAs
=> the initial info needs to grab attention and
explain basics, not everything!

16. NDAs are bad for you
1000s of projects / year => admin
Many similar projects, we do compare
“backend of the idea” is the value + execution
Too lazy to copy your idea anyway
Slow down
No feedback
Layman

17. „We invest into lines, not dots“Mark Suster
Stay in touch & be persistant

18. The termsheet
• Price - X% shares forY$
• Liquidation Preference (who gets the money when)
• Anti-Dilution
• Controlling rights
• Future rounds (pro-rata, right of first refusal)
• Drag Along
• Vesting (when founders can lose some of their shares)
• Board
• Information rights (what to tell your investor)
• Costs
• Exclusivity
• Binding (Legal)

19. Negotiations
Competitive pressure + high quality (traction,
product, team) win

20. Contract (lawyers make money)
Can be smooth
Can be long
Not done until done

21. Quick case study 1
• Berlin based
• One founder - coded - simple, but first users
• Co-founder in the pipeline
•Approached referring to SaaS
• Spent quite some time educating us on the space
• Ended up investing with a London based fund

22. Quick case study 1I
• New Zealand based
•We approached proactively, while reviewing the global POS space
• Best product, some traction
• Small company - 5 guys, tens of paying users
•We invested in NZ without having been to NZ

23. Get prepared!
Read (blogs > books):

24. Good luck!
@pawell
www.pawel.ch
pawel@pointninecap.com