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Global beta ventures Short Deck

A short overview of our new beta-driven venture fund.

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Global beta ventures Short Deck

  1. 1. Global Beta Ventures - confidential 1 Global BetaVentures V
  2. 2. Global Beta Ventures - confidential 2 A massively diversified early-stage quantitative venture fund This document is confidential and only for distribution to selected persons, to whom the investment structures herein can be promoted in accordance with relevant laws. The information in this document is for discussion purposes only and shall not constitute an offer to sell or any type of solicitation or form the basis of or be relied upon in connection with any contract or be taken as investment advice. We do not accept responsibility for any omission, error or inaccuracy in this document or any action taken in reliance thereon. Full disclosures would be part of a set of legal offering documents. Disclaimer Global BetaVentures V
  3. 3. Global Beta Ventures - confidential Read Me … 3 Most startup businesses aren’t worthy of investment, and no one, regardless of experience or expertise, is capable of routinely identifying which startups are worthy. Despite this, angel investing when done correctly really can produce a consistent IRR in the 25-30 percent range.” “ – David Rose, founder of Gust.com, author of Angel Investing
  4. 4. Global Beta Ventures - confidential Global Beta Ventures is … 4 Give LPs access to this tax-efficient asset class Give angel investors a better way to invest Index-like returns Scalable to at least €1 billion per year (5-10% market share) Smoothest return profile of any VC/PE fund in the world Goals A new fund to capture Angel-stage returns at world scale Focus on new software companies 100% model driven (no decision-making) Massive diversification (portfolio of > 400 companies) More consistent returns than other VCs* Start in UK, then Europe, then worldwide Overview *See the Kaufmann Foundation report, We Have Met the Enemy, and He is Us.
  5. 5. Global Beta Ventures - confidential Target Startups 5 Software start-ups only Seed stage (first money in), typically raising £100-350k No more than 50% of seed round Other investors must have industry experience Not planning to raise more than €2m, ever (according to business plan) No unicorns! Sector, strategy, and geographic diversity We are not zealots. If we could find better returns in another asset class, we would change our strategy, but seed software investments is a huge untapped opportunity with surprisingly good economics for all involved. We don’t make decisions. Our model chooses for us …
  6. 6. Global Beta Ventures - confidential Scalability 6 Use the angel platforms and accelerators to find deals Marketing/branding helps startups find us Simple, automated application process Use standard documentation Goal is ten hours per transaction No board seats No follow-on investments Build software tools to track thousands of companies Use web to help companies with what they need Work hard to find next investors Work hard to find acquirers We are building a machine to invest in thousands of startups worldwide. Here’s how …
  7. 7. Global Beta Ventures - confidential Our Market 7 $10 billion per year in software seed investment* 35% IRR: US historical 14-year returns ($6b/year)** 22% IRR: UK historical 16-year returns (£220m/year)*** Angel market Right Side Capital, San Francisco (model driven) Kima Ventures, Kima 15, France (cherrypicking) 500 startups (cherrypicking) Beta venture funds *$1 billion for software in Europe and $6 billion in the US, total at least $10 billion worldwide **Robert Wiltbank, Returns to Angels in Groups ***Robert Wiltbank, Siding with the Angels report. The following venture funds use a quantitative approach with huge diversification to capture returns correlated with the asset class:
  8. 8. Global Beta Ventures - confidential We Harvest Capital Efficiency … 8 Seed Early stage A round Angel VC Capital-efficient companies Venture-funded Capital efficiency is the main driver of our returns. Capital-efficient companies never even talk to a venture capitalist. They outnumber those that do by about 4 to 1. See Kevin Dick’s blog post on this. B round … Accepting venture capital substantially increases the risk that founders will not see a significant payout. Valuations must be very high for founders to benefit. See Kevin Dick’s blog post on this. Early acquisition Public Acquisition
  9. 9. Global Beta Ventures - confidential 9 Right Side Capital’s calculation, based on Robert Wiltbank’s US data. The magic number is 200 investments to make sure LPs get at least 2x. By dialing up the risk and reducing the exposure, we create a high- performing fund that has very good downside protection. For details, see Kevin Dick’s blog post. … with Massive Diversification
  10. 10. Global Beta Ventures - confidential A Proven Model 10 Right Side Capital created this beta model. Their first fund has 290 startups and is ahead of their predictions. They expect an IRR above 25% to LPs. Right Side is raising their second fund now. Our approach is identical to theirs. They are making investments in North America. We are using the same techniques to harvest early-stage returns in the rest of the world, starting with the largest, most proven markets first. Between the two separate funds, we hope to deploy $1b per year into this $10b market and produce strong, diversified returns for LPs.
  11. 11. Global Beta Ventures - confidential Initial Target: Europe 11 Our market is substantial, about four times the size of the VC market. Source: EIF report Early-stage VC funds €2b Business Angels €5.5b Crowdfunding €80m
  12. 12. Global Beta Ventures - confidential Starting in the UK … 12 £800 millionIs the amount UK angels invested in 2014.* Software/ICT accounts for 28% or £220m. About 200 new software companies look for seed funding each year. Our goal is about 80 UK deals per year, through online platforms and offline partnerships, like the 21 digital innovation centres, shown at right. *Source: Center for Entrepreneurs’ report, Nation of Angels.
  13. 13. Global Beta Ventures - confidential Financial Fiction 13 Note the conservative assumptions: 65% losers 78% under €20m 5% equity only 10% of exits above €40m No unicorns What do you think the IRR will be? (See next slide.) This is a model. By definition, it’s wrong. But it’s useful for thinking through the project … (thousands of euros)
  14. 14. Global Beta Ventures - confidential Financial Fiction 14 Compare this with historical returns of all UK angels at 22% gross IRR. We can do better, because we avoid the classic mistakes. We outperform other VC funds, because we have few co- investors and faster exits. Our conservative estimate is consis- tent 18-22% returns to investors after fees, regardless of market conditions. The IRR is 34%. (thousands of euros)
  15. 15. Global Beta Ventures - confidential Team So Far … 15 Serial entrepreneur, CEO, board member, author, angel Wrote the first book on web design, author of The Culture Deck, www.linkedin.com/in/siegelventures David Siegel Growth strategist, advisor uk.linkedin.com/in/marcusbsvensson Marcus B. Svensson General management Business development Partner Sourcing and execution Legal TBD CFO TBD Partners CTO TBD We have received generous advice from the partners at Right Side Capital in San Francisco. To learn about their US fund, contact Jeff Pomeranz: jeff@rightsidecapital.com This person is a very visible and active member of the fin-tech communities both in Zurich and London. Name disclosed to interested qualified parties.
  16. 16. Global Beta Ventures - confidential 16 2.5% for each of first three years 1% for each of next three years Nothing after that Management fee 20%Performance fee TBDFund domicile TBDFund administrator TBDLegal support TBDAuditor TBDFund vehicle Goal is to make it as tax-advantageous as possible for initial investors. Tax considerations David Siegel: david@dsiegel.comContact 60m eurosTarget Global BetaVentures V

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A short overview of our new beta-driven venture fund.

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