vc do's and don'ts - jurgen ingels
TRANSCRIPT
Financing & Reporting
Case Study:C2P - NGDATA
Jürgen IngelsFounder & CFO
Oct. 2012
Jürgen Ingels - Background
General:
o ° 16 March 1971o Married & 2 kids
Education:
o Master in Political and Social Scienceso MBA at the University of Antwerpo Bachelor Industrial Engineer (KIHO)
Career:
o Founder, Managing Director & CFO of Clear2Payo Founder NG Data
o Board chairman of CityMesh o Board member of different companies: Projective, Enqio, Itineris, Rightbrain
o Member of investment committee of Vinnof (PMV) & Sniper investmento Co - President Tech Tour – French Benelux 2012
1. Corporate IntroductionClear2Pay
OPERATIONAL START
2001
2002
FIRST COMMERCIALSUCCESS
PAYMENTS VALUECHAIN EXTENDED
2003
OPF LAUNCHED
2004
2005
OPF CONFIRMED
CONTINUEDGROWTH
2006
INTERNATIONALEXPANSION
2007
2008
RAPID CUSTOMER ADOPTION
KICK-OFFOPEN TESTPLATFORM
DEVELOPMENT
CONTINUED EXPANSION
2009
GLOBALROLL-OUT
2010
CAPITALINVESTOR
2011
UNIFIED PAYMENTS
Company History
Clear2Pay - Open Payment Framework
EXTERNAL
INTERNAL
Consulting Open TestPlatform
Open CardSystem
OpenPayment
Framework
Unified Payments for a Diversified World
Unified Product and Service Offering
across the payments spectrum
Global Company with Local Expertise
World-Class Operation Across more than 100 countriesStrategising Globally Over 700 customers
The world’s local payment vendor Developing Regionally +1,300 staff worldwide Operating 22 offices in 13 countries
Clear2pay Key clients
Singapore
Strong Growth - Strong Shareholders
2. Corporate IntroductionNGDATA
Founded in 2009 Experienced Management team: Expertise in Data Management & Apache Hadoop
Big Data ecosystem Funded ING, VCs and Angels HQ in Belgium, offices in San Fran & NYC Delivered Lily 1.3: 8 releases and counting Marquee customers in Banking, Retail & News/Media
A Next Generation Customer Intelligence Company
Driving Customer Loyalty … Customer intelligence at technology companies
streams
context
Social
Enterprise
Operations
Total Data: a combination of internal and external data – aggregated in one platform
Decisions (= Analysis, Insights, Learn, Action) within less than 0.1 second
360°
The Enterprise Reality Today: Not capitalizing on massive customer data …
streams
context
Social
Enterprise
Operations
60°
Fragmented Data: single (or limited) source data - various silos
of data – limited customer overview…
Limited Customer Intelligence leads to moderate results
With Lily: 360 Degree Customer IntelligenceMakes Big Data actionable to drive outcomes …
streams
context
Social
Enterprise
Operations
Sales Intelligence
360°
Maximized Customer Intelligence leads to results and performance
Summary of Key Differentiators
Consumer database: 360 degree consumer view
Unique indexing, search, retrieval Continuous machine learning
Schema flexibility & data variation SDK for building custom apps
Consumer apps such as recommendations & reverse
segmentationEnterprise friendly platform
Reference users
Thousands of downloads per month
NGDATA In Action: Mobile Wallet for BanksPersonalized offers via deep consumer intelligence
Clickstreams OperationsEnterpriseContext Social
Consumer Data
360°
Consumer Location
Merchant Offers
Personalized Offers
Bank
Operations
Merchant
Merchant Profiles (loyalty cards)
in-store purchase: 298$ 4/2/12
Store purchase
web visit: sweaters 5/7/11
points withdrawal: 250$ 6/9/12
CC used: 125$ @ location
Liked “Basket” group
visit
3. Fundraising
Understanding the do’s and dont’s
LIES AND PERSPECTIVES
•January 14, 1995
The Top 10 lies told by Entrepreneurs
Our projections are conservative
(A well know and reputable market research firm) says our market will be
$50 billion in 2015
(A fortune Top 50 company name) is going to sign our purchase order
next week
Key employees have committed to join us as soon as we get funded
No one is doing what we are doing
No one can do what we are doing
Hurry because several other VC’s are interested
(A fortune Top 50 company name) is too bil/dumb/slow to be a threat for
us
We have a proven management team
All we have to do is get 1% of the market
The Top 10 lies told by VC’s
I liked you company but my partners didn’t
If you get a lead investor, we will follow
We are all in the same boat (but we sit priveliged in the lifeboat)
Show us some traction and we will invest
We love to co-invest with other venture capitalists
We are investing in your team
I have lots of bandwidth to dedicate to your company
This is a vanilla term sheet
We can open doors for you at our client companies
We like early-stage investing
Each other's perception
VC’s think entrepreneurs
Are arrogant, young and egocentric
Are stubborn and don’t listen
Forget that they would not be where they are without the money of the VC
Are obsessed with valuation and dilution
Are overly optimistic
Are not good at giving appreciationIf the company is a success, it is an accomplishment of themselves and they had to give up way to much for their stockIf the company is a failure, the VC is to blame because he does not understand the business
Entrepreneurs think VC’s
Are arrogant, inexperienced & egocentric
Are a necessary evil
Are heavily overpaid and somehow believe themselves that the earn this.
Are Risk-adverse and play with other people’s money
Think they can make a difference
Lack operational experience
Are never there but always feel the need to meddle
Are not capable of contributing added value
Are eager for power without taking any responsibility
General preparation
Study and compare other business models used in your sector (Gross margins,
R&D, G&A, S&M, contribution)
Prepare a slide deck of 15 pages – never show a whole business plan on slide
Make sure you can realize a growing bruto margin. If you can’t, don’t look for VC’s
Vc’s spend more time on analyzing numbers then reading your business plan. So
provide detailled and correct numbers !
Present ambitious numbers but be able to defend them
Don’t make a financial plan for more then 3 years
“What you see is what you get” – Avoid window dressing & R&D activation
Prepare as of day 1 a detailled
dataroom with all official documents
(legal, financial, operational)
given a possible due diligence
Hire top management to assist
negociations
Choice of VC
Select a VC and don’t be selected. Select one with a broad network
Send a teaser of max 3 slides and keep some points open. This will make them
curious and will make them contact you
Organise a follow up via mail and contact them on different moments
Realise that Belgian VC’s are relatively young and unexperienced. So don’t
hesitate to go abroad; go to US / UK and take the initative to contact them. Don’t
be modest
Study the companies a potential investing VC has invested in. You can also
contact them and ask for their relation with a particular VC
Choose a VC who can realize added value for your company. Make sure they can
bring business on board
Ask for one investment manager of the VC company to be the contact person
during the whole process. Make sure you have directors who have experinece with
this investing process
Create “buzz” and sell your company – VC’s know each other and talk about
opportunities.
Legal structure
Chose a laywer with experience in VC contracts. Avoid others.
Combine a capital raise with free investor warrants. VC’s don’t like loosing
money
Avoid complex legal structures who will be discussion points in case of a
merger / acquisition, Align the interests of the VC and your own company /
founders.
Avoid different types of shares (blocking majorities)
Try to get different VC’s on your board so they can entertain each other
Negociate an option with a yearly and fix return on a certain number of shares
of the VC
Don’t accept any anti-dillition protection.
You will neigther get a present of the VC
During negocations, include 10% as SOP
and make sure the number holds
Avoid partial payment of shares or funding
in different steps. These will only delay
the business plan and will allow the
VC to take a “second look”
The process
Take control over the whole process
Never present alone. Go with a team and let eveybody speak (no ego’s)
Never give any kind of exclusivity.
Negociate with 2 VC’s untill the end and make them compete
Tell the truth and be honest to VC’s
Know that company valuations aren’t an exact science
Make sure the VC doesn’t sqeeze you when the company is short in cash
Publish press articles during the fundraising process
“if it is on the news, it must be good”
Make sure you have enough people available to prepare and participate in the
discussions
Post fund raising
Don’t burn your cash faster then initally calculated.
If you are short, the VC wil present the bill
Set up direct communication lines with the VC and bring bad news
immediately
Make the VC work. You can expect certain tasks to be executed (studies,
market research, analysis of competitors, ...). Use the network of the VC
Make one reporting tool for all VC’s and avoid send different information to
each
Send your cash position on a regular basis
VC’s like monthly weighted and unweighted sales pipeline
Never forget that VC’s are not joining for charity
4. Reporting financials for non- financial peers
Build up contribution analysis model
AchievoTime registration
Analytical accounting
AnalyticReporting
Man Day Reporting(Achievo)
CONTRIBUTION ANALYSIS
Analysis Contribution evolution
Budget Simulation Tool
Management Tool
Contribution Analysis
28.455 MD 28.808 MD 49.923 MD 52.844 MD 64.616 MD
Price increases MD increase + Acquisitions
Efficiency increases
Growth + ILF increase
2009-2010
FY 2010# of
cos daysservices revenue
services rev.per cos day
maintenanceServ + maint per cos day
3rd Party +Rebilled
total revenue per entity
total revenue per cos day
Total cost of sales
C2P BE 29.435 14.611.287 496 2.067.122 567 45.000 16.723.409 568 12.177.176 C2P Ned 8.119 5.679.576 700 537.664 766 126.000 6.343.240 781 3.503.028 C2P US 5.363 3.600.000 671 726.249 807 - 4.326.249 807 2.834.887 C2P AU 6.731 2.992.805 445 1.637.800 688 - 4.630.605 688 2.963.467 Integri 6.711 3.230.044 481 1.228.948 664 24.000 4.482.992 668 2.919.975 Diagram 8.258 1.853.448 224 2.100.668 479 108.340 4.062.456 492 2.959.868 C2P Group 64.616 31.967.160 495 8.298.451 623 303.340 40.568.951 628 27.358.401 C2P Poland - - - 423.922 423.922 11.204 Total 31.967.160 8.298.451 727.262 40.992.873 27.369.605
FY 2010total cost
per mandaytotal Net
contribution%
Total Net contrib/Mand
ILFRLF
VolumeTotal
Revenuetotal grosscontribution
C2P BE 414 4.546.233 34% 154 4.302.525 302.038 21.327.972 9.150.796 C2P Ned 431 2.840.212 21% 350 2.658.484 - 9.001.724 5.498.696 C2P US 529 1.491.362 11% 278 1.946.428 - 6.272.677 3.437.790 C2P AU 440 1.667.138 13% 248 1.218.750 - 5.849.355 2.885.888 Integri 435 1.563.017 12% 233 1.350.000 - 5.832.992 2.913.017 Diagram 358 1.102.588 8% 134 1.294.020 853.892 6.210.368 3.250.500 C2P Group 423 13.210.550 100% 204,45 12.770.207 1.155.930 54.495.088 27.136.687 C2P Poland 412.718 - - 423.922 412.718 Total 13.623.268 12.770.207 1.155.930 54.919.010 27.549.405
197,63 17,89
2009-2010
H1 2009 H2 2009 FY 2009 H1 2010 H2 2010 FY 2010 Var H1 Var H2 Var FYC2P BE 546 536 541 562 574 568 16 38 27C2P NL 1024 889 946 672 886 781 -352 -3 -165C2P US 503 494 499 635 916 807 132 422 308C2P AUS 590 672 635 713 656 688 123 -17 53Integri 552 512 531 680 658 668 128 146 137Diagram 655 772 714 503 481 492 -152 -291 -222
Group 596 600 598 603 652 628 7 52 30
H1 2009 H2 2009 FY 2009 H1 2010 H2 2010 FY 2010 Var H1 Var H2 Var FYC2P BE 398 405 401 409 419 414 10 14 12C2P NL 368 421 399 428 435 431 60 13 33C2P US 430 390 411 547 517 529 117 127 117C2P AUS 241 445 352 451 426 440 211 -19 88Integri 419 325 370 439 432 435 20 107 65Diagram 421 513 468 358 358 358 -62 -155 -109
Group 383 405 395 422 425 423 38 20 29
Net revenue per COS day (excl. RLFv and ILF)
Cost of Sales per COS day
H1 2009 H2 2009 FY 2009 H1 2010 H2 2010 FY 2010 Var H1 Var H2 Var FYC2P BE 148 132 140 153 156 154 6 24 15C2P NL 656 468 547 244 451 350 -412 -17 -197C2P US 73 104 88 88 399 278 15 295 191C2P AUS 349 227 283 261 230 248 -88 3 -35Integri 133 186 161 242 225 233 109 39 72Diagram 234 259 246 144 123 134 -89 -136 -113
Group 212 196 204 181 227 204 -31 31 1
Net contribution per COS day
Impact mandays 2.406.714(* keep contribution f ixed) Mandays 2009 52.844
Mandays 2010 64.61611.772
* contribution 2042.406.714
Impact higher margin 5.817(*keep number of days f ixed) Contribution 2009 204
Contribution 2010 2040
* mandays 52.8445.817
Net margin variation 2.412.530
Gross Margin 2009 20.099.466Gross Margin 2010 27.136.687
Difference 7.037.221
Impact ILF 4.295.795ILF 2009 8.474.412ILF 2010 12.770.207
4.295.795Impact RLF 284.747
RLFv 2009 871.183RLFv 2010 1.155.930
284.747
Impact Maintenance 233.728RLFm 2009 8.064.723RLFm 2010 8.298.451
233.728
Impact Services revenue 8.916.357 Net Contribution 2.456.679Services 2009 23.050.803 Net 2009 10.753.871Services 2010 31.967.160 Net 2010 13.210.550
8.916.357 2.456.679
Impact Cost of Sales -6.509.408 * + see next slideCOS 2009 -20.848.993COS 2010 -27.358.401
-6.509.408
Impact 3rd party-183.997
3rd/rebilled 2009 487.3373rd/rebilled 2010 303.340
-183.997
Analysis Contribution Evolution
Budget Simulatie Tool
In 2008, the targetted turnover was missed by only 1.4% (39.4 mio EUR versus 38.8 mio EUR) and EBITDA was reached with a difference of 3%(-5.6 mio EUR versus -5.5 mio EUR).
In 2009, the targetted turnover was overachieved by only 0.5% (43.45 mio EUR versus 43.26) mio EUR) and EBITDA was missed with only 45k (-238 kEUR vrs – 195 kEUR)
price increase 0,00%contribution 13.623.268 extra people - extra contribution - ILF increase 0%ILF 12.770.207 RLF increase 0%RLF increase 1.155.930 G&A decrease 0%G&A 7.670.488 R&D decrease 0%R&D 10.234.475 S&M Decrease 0%S&M 6.518.970
EBITDA 3.125.472
price increase 10,00%contribution 17.722.555 extra people - extra contribution - ILF increase 0%ILF 12.770.207 RLF increase 0%RLF increase 1.155.930 G&A decrease 0%G&A 7.670.488 R&D decrease 0%R&D 10.234.475 S&M Decrease 0%S&M 6.518.970
EBITDA 7.224.759
price increase 0,00%contribution 13.623.268 extra people 15 extra contribution 690.010 ILF increase 0%ILF 12.770.207 RLF increase 0%RLF increase 1.155.930 G&A decrease 0%G&A 7.670.488 R&D decrease 0%R&D 10.234.475 S&M Decrease 0%S&M 6.518.970
EBITDA 3.815.482
price increase 0,00%contribution 13.623.268 extra people - extra contribution - ILF increase 10%ILF 14.047.228 RLF increase 0%RLF increase 1.155.930 G&A decrease 0%G&A 7.670.488 R&D decrease 0%R&D 10.234.475 S&M Decrease 0%S&M 6.518.970
EBITDA 4.402.493
price increase 0,00%contribution 13.623.268 extra people - extra contribution - ILF increase 0%ILF 12.770.207 RLF increase 15%RLF increase 1.329.320 G&A decrease 0%G&A 7.670.488 R&D decrease 0%R&D 10.234.475 S&M Decrease 0%S&M 6.518.970
EBITDA 3.298.862
price increase 0,00%contribution 13.623.268 extra people - extra contribution - ILF increase 0%ILF 12.770.207 RLF increase 0%RLF increase 1.155.930 G&A decrease 5%G&A 7.286.964 R&D decrease 5%R&D 9.722.751 S&M Decrease 5%S&M 6.193.022
EBITDA 4.346.669