1. Product Development &
Venture Fund Raising
April2010

2. Contents
1. Encore Ventures & DFJ Esprit
2. General themes investors look for irrespective of stage
3. Venture funding stages vs. Product development stages
4. Case study
2

3. Who we are
Encore Ventures - dedicated secondary vehicle under
DFJ Esprit’s umbrella
Encore Fund 1 - £130m purchase of 3i’s European venture
portfolio
Krishna Visvanathan - Partner
DFJ Esprit – leading technology focused European VC
11 years as Venture Capital
Three funds, with >£350m under management investor.
Recently closed our new fund and actively seeking new Previously a partner at 3i
investment opportunities responsible for several successful
investments including Ezurio, Blue
Encore & DFJ Esprit part of DFJ Global Network Lithium, Ubinetics, E2V plc &
Fastnet Systems
Two brands to cater to the requirements of our investors
Currently on the boards of
In essence - 12 highly experienced venture investors with Cambridge Semiconductor, Icera,
Light Blue Optics, Netronome,
>150 years of combined investing experience across all Taptu & The Cloud
stages
Strategic partner of CCL’s with respect to their spin out
activity
3

4. The DFJ network in action
LOCAL PRESENCE, GLOBAL REACH ESPRIT RECENT EXITS
DFJ Esprit
London, UK Holding Cash
EBIT@ Revenue
DFJ VTB Aurora
Company Revenue Exit EV Period Multiple
Moscow, Russia
Exit Multiple
DFJ
Hyderabad, India
(Yrs) Returned
Bengalore, India
DFJ Tamir Flashman
Tel-Aviv, Israel DFJ Athena $29.8m Negative $225.0m 7.6x 3.0 5.3x
Seoul, South Korea
DFJ DFJ DragonFund China
Beijing, China Shanghai, China
Beijing, China $46.0m Breakeven $125.0m 2.7x 1.6 4.8x
$10.6m Negative $123.0m 11.6x 3.6 3.1x
DFJ Frontier
$0.1m Negative $62.2m 1,555x 4.0 3.1x
Sacramento, CA
Santa Barbara, CA Draper Triangle
Draper Fisher Jurvetson Pittsburgh, PA
Menlo Park, CA DFJ Gotham $27.6m Negative $100.0m 3.6x 4.6 10.4x
DFJ Growth Fund & DFJ Incube New York
Menlo Park, CA Element Partners
Element Partners Radnor, PA
Menlo Park, CA Draper Triangle
Pittsburgh, PA
$10.8m Negative $36.9m 3.4x 1.5 1.9x
DFJ Dragonfund China
San Jose, CA EPIC Ventures
Salt Lake city, UT
Zone Ventures Phoenix, AZ
Los Angeles, CA Albuquerque, NM $7.6m Negative $41.5m 5.5x 2.4 2.3x
Access Venture Partners
Denver, CO & Austin, TX DFJ Mercury
Houston, TX
$40.0m Negative $40.0m 1.0x 4.3 1.2x
DFJ FIR Brazil Fund
$0.5m Negative $35.0m 76.1x 9.0 1.1x
Sao Paulo, Brazil
Median $10.8m - $62.2m 5.5x 3.6 3.1x
Average $19.2m - $87.6m 185.2x 3.8 3.7x
4

5. Encore I Portfolio Overview
Digital Media & Hardware & NextGen Telecom Healthcare &
Software CleanTech
Internet Semis & Wireless Biosciences
Current Investments
Pulmagen
Therapeutics
Exits
5

6. Contents
1. Encore Ventures & DFJ Esprit
2. General themes investors look for irrespective of stage
3. Venture funding stages vs. Product development stages
4. Case study
6

7. General Themes Investors Look For Irrespective
of Stage
 There is no generic template for success – huge variations by company/segments e.g.
web vs. software vs. hardware vs. biotech/medtech
 There are always exceptions
 Successful companies/investments share many similar characteristics
 People, people, people - the team we are backing is always key:-
– Vision, ambition, conviction, hunger
 Product meets a need, TAM is sizeable - not a technology looking for a market
 Routes to market
 Competitive landscape
 Business/Revenue model
 Scalability – people, product and business model
 Understanding of what it takes to create a winning product and a winning company
7

8. Contents
1. Encore Ventures & DFJ Esprit
2. General themes investors look for irrespective of stage
3. Venture funding stages vs. Product development stages
4. Case study
8

9. Venture Capital Funding Stages mapped
to Product Development Stages
Funding Stage Product Stage Key Questions
 Pre-seed/Seed  Concept/ Proof of  Illustrates the vision of the founder(s)
Concept (α)  Value proposition – is it credible ?
Just a better mouse trap or something
truly novel?
Visualisation appeals to emotive
aspects of an investor
9

10. Venture Capital Funding Stages mapped
to Product Development Stages
Funding Stage Product Stage Key Questions
 Series A  Prototype/  Does it work?
demonstrator (β)  Is it really better than state of the art?
 Can it be “production-ised”?
Is it defensible – IP/know how?
Customer feedback loop?
10

11. Venture Capital Funding Stages mapped
to Product Development Stages
Funding Stage Product Stage Key Questions
 Series B  Production ready  Form, fit, function
(FCS/GA)  Differentiation/Competitive
benchmarking
 ASPs & BoM costs
11

12. Venture Capital Funding Stages mapped
to Product Development Stages
Funding Stage Product Stage Key Questions
 Series C  Mass production  Scalability & profitability
& beyond  Product Variants  Value potential & metrics
 Roadmap  Sustainability vs. One trick pony
12

13. Venture Capital Funding Stages mapped
to Product Development Stages
Funding Stage Product Stage Key Questions
 Pre-seed/Seed  Concept/ Proof of  Illustrates the vision of the founder(s)?
Concept (α)  Value proposition – is it credible?
 Just a better mouse trap or something
truly novel?
 Visualisation appeals to emotive
aspects of an investor
 Series A  Prototype/  Does it work?
demonstrator (β)  Is it really better?
 Can it be “production-ised”?
 Is it defensible – IP/knowhow?
Customer feedback loop
 Series B  Production ready  Form, fit, function
(FCS/GA)  Differentiation/Competitive
benchmarking
 ASPs & BoM costs?
 Series C  Mass production;  Scalability & profitability
& beyond product variants Value potential & metrics
 Roadmap  Sustainability
13

14. Contents
1. Encore Ventures & DFJ Esprit
2. General themes investors look for irrespective of stage
3. Venture funding stages vs. Product development stages
4. Case study
14

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London SW1E 6LB
United Kingdom