THE INVESTMENT PROCESS – PITCHING, NEGOTIATIONS AND

TERMSHEET Dr. Joachim Behrendt

INTR

OD

UC

TION

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 9.June 2016

• Topic: Success and Failure as an Entrepreneur

• AWARD CEREMONY

• 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 12.05.2016 2

INTR

OD

UC

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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 / AWARD CEREMONY

Startnowhow – Seminar 8 12.05.2016 3

Investment Closing

4 BIC Angels Investments 12.05.2016

• Post investment process

(mentoring etc.) starts

immediately after termsheet

• Startup has to set up AŞ and

provide full initial funding

• (If not already established)

• Asset deal with old startups‘

company at arm‘s length

principle possible

• Short due diligence

• Financials if established

• Legal

• Personnel / reference check

• Definitve legal agreements

standardized

• Articles of Association, Share

Purchasing Agreement

• Employment / Noncompete

• Techncal Service Agreement

• Legal support (lawyers)

• If BKS investment: Application

process in parallel, managed by

BIC

• Full capital payments

immediately after BKS approval

/ signing definitive agreements

TH

E INV

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RA

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MO

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Venture Life Cycle and Target Returns

12.05.2016 5 Startnowhow – Seminar 8

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

VA

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New Venture Valuation: CF Multiples

12.05.2016 6 BIC Angels Investments

Source: Smith, J.K./Smith, R.L./Bliss, R.T., Entrepreneurial Finance, p.422,423

VA

LUA

TION

• $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

VA

LUA

TION

New Venture Valuation: Market Multiples

12.05.2016 8 Entrepreneurship

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

VA

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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

OU

TLOO

K StartNowHow - Outlook

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

• Next Seminar: „Success and Failure as an Entrepreneu“

• Guest Speaker: Utku Subakan, Bionluk

• With Certificate Award Ceremony

• Thursday, 9.6.2016, 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)

• BIC101 Acceleration Kickoff Event:

• Thu, 2.6., 9.00 – 12.30h

• Kolektif House Levent

Startnowhow – Seminar 8 12.05.2016 10

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: j.behrendt@bicangels.com