Alain Rodermann, Managing Partner Technoport – Conference 2015

Raising VC Money –the hidden side

1. VC$2. FUNDRAI$ING3. TERM$

VC$

Georges Doriot

Someone, somewhere, is making a product that will make your product obsolete

The Recipe

What is the American Way of VC ?

20 companies in a fund$1b companies candidates (unicorns)2-4 blockbusters (x 10-50)

§ IPOs (big)§ Trade sales (fast)

4-6 write-offs (x 0)3-4 deals a year/ partner

VC  Business  Model

Lifetime 10y+ Management fees 2%/y - Hurdle rate 7%/y- Losses 50%=> average multiple for 0 carry = 5 X

Min Target Multiple = 10 X

VC returns

Source  avc.com

A bubble in the USA

FUNDRAI$ING

Geographical Breakdown

VC selection rate

1/300

European Market

European Market

European Market

Source  dowjones Venturewire ;  nb  of  deals  2Q2014

The Powerpoint Presentation

Do VCs read business plans ?

How many scenarios ?

Bottom up monthly financial planDon’t underestimate salaries and staff sizeNet income higher than 25% is suspectInclude international business if anyCan you make 10M€, 100M€ or more in sales ?

§ Money availability drives financial strategy

Conservative post money keeps options openTry hiring a fundraiserVCs don’t sign NDAs

Should you accept more money than you need ?

32

TERM$

34Guillaume  Bodinier,Contrat  de  mariage  en  Italie,  1831

Founder Dream

Reality Check

The VC Arsenal

Is there a Valuation Magic Formula ?

R)(1FV

R)(1CiNPV n

1

0i ++

+=∑

−n

Rodermann  MagicSystem

⎪⎩

⎪⎨⎧ ∏ −×+−≤

≤+

≤

nDiCpremoney

CpremoneyC

0100

0

0

)1(FV

%50%15

Liquidation Preference Adjustments

1X  Double  dipparticipating

1X  Single  dip

Full Ratchet & Washout

Veto Rights

Reps and Warranties

How not to be fired after 6 months

Build a balanced board of brilliant directors

Hire an experienced chairman

Pay an experienced specialized coach

Disclose problems as they arriveNever Lie

Write minutes just after board meetings

Do what you promised to do

Alain Rodermann@alroder

Questions ?