Startnowhow - The Investment Process
Transcript of Startnowhow - The Investment Process
INTR
OD
UC
TION
StartNowHow
• Open seminar series for active and prospective entrepreneurs
• 10 sessions on monthly basis until summer 2015
• 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.)
• Seminar materials can be downloaded after the event
• Thursdays 17.15h – 19.30h
• Next session:
• ALT 1: Thu, July 9th, 2015
• Award ceremony will take place at 9.7. as well
• TOPIC: Success and Failure as an Entrepreneur
• SPEAKER: tbd
• Certificate provided for participants joining at least 7/10 sessions
BIC Angels Investments 01.06.2015 2
INTR
OD
UC
TION
StartNowHow - Seminar Topics (preliminary)
1. Mon, 20.10.: The entrepreneurial ecosystem in Turkey
2. Mon, 10.11.: Entrepreneurship as a profession
3. Mon, 8.12.: Opportunity recognition and evaluation
4. Mon, 12.1.: Planning, testing and developing a business model
5. Thu, 19.2. – lot of snow but no seminar -
6. Thu, 19.3.: Market and competitor research
7. Thu, 16.4.: Financial planning for startups
8. CANC: Marketing planning and control – the role of key performance indicators
9. Thu, 14.5.: Funding the startup – stage financing for ventures
10. Thu, 1.6.: The investment process – pitching, negotiations and termsheet
11. Thu, 9.7.: Success and failure as an entrepreneur / Graduation
BIC Angels Investments 01.06.2015 3
PR
E-IN
VES
TMEN
T: H
OW
WE
SELE
CT
Success Rates
4 BIC Angels Investments 01.06.2015
PITC
HIN
G P
RO
CESS
12 slides is all you need
Cover Page/Introduction
Overview
Problem
Market
Team
Technology/Solution
Customers/Revenue Model
Go to Market
Competition
Financials
Milestones
Summary
PITC
HIN
G P
RO
CESS
01.06.2015 BIC Angels Investments 5
PR
E-IN
VES
TMEN
T: H
OW
WE
SELE
CT
Stage 1: Sourcing and Initial Screening
6 BIC Angels Investments 01.06.2015
Target: 16 / month
Ratio: ??
1/month 2/month 4/month PR
2/month
PITC
HIN
G P
RO
CESS
PR
E-IN
VES
TMEN
T: H
OW
WE
SELE
CT
Stage 2: First Pitch and First Analysis
7 BIC Angels Investments 01.06.2015
Target: 16 / month
Ratio: 25%
= 25% total
4x market analysis
Target: 4 / month
PITC
HIN
G P
RO
CESS
PR
E-IN
VES
TMEN
T: H
OW
WE
SELE
CT
Stage 3: Second Meeting / Full Analysis
8 BIC Angels Investments 01.06.2015
Target: 4 / month
Ratio: 50%
= 6.25% total
2x fin.analysis
Target: 2 / month
PITC
HIN
G P
RO
CESS
PR
E-IN
VES
TMEN
T: H
OW
WE
SELE
CT
Stage 4: Agreement
9 BIC Angels Investments 01.06.2015
Target: 2 / month
Ratio: 50%
= 6.25% total
PITC
HIN
G P
RO
CESS
Presentation Delivery
• Know your deck – own your deck
• Be flexible – know where your slides are
• Don’t read the bullet points – have a conversation
• Use visuals / logos /graphics
• Preparation: Do your homework and know your audience
• Ask questions (e.g. any competing deals they are looking at?)
• Take notes
• No more than two of you should present
Practice, practice, practice and let your enthusiasm and passion show!
PITC
HIN
G P
RO
CESS
01.06.2015 BIC Angels Investments 10
How To Get To Investors
• Develop a strategy for fundraising
• Find a connection through someone the investor trusts
• via exec of the investors portfolio company
• Banker
• Lawyer
• Accountant
• Networking events
PITC
HIN
G P
RO
CESS
01.06.2015 BIC Angels Investments 11
INV
ESTM
ENT:
CLO
SIN
G T
HE
DEA
L Investment Process
12 BIC Angels Investments 01.06.2015
• Standardized termsheet / legal
documents based on
international benchmarks
• Legal support Moroglu &
Arseven
• Post investment process
(mentoring etc.) starts
immediately after termsheet
• Startup has to set up AS 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
• Full capital payments
immediately after signing
Target: 6 / year
Ratio: 50%
= 3.13% total
Target: 1 / month
INV
ESTMEN
T PR
OC
ESS
BEFO
RE ıN
VESTM
ENT
LEGAL STEPS BEFORE INVESTMENT
01.06.2015 BIC Angels Investments
• Establishing company
• AoA should be ready;
• Taken notary and trade registry approval;
• 2-3 weeks period.
• All previous legal and tax issues should be clarified.
• BKS approval – (1 -1,5 month)
13
DU
RıN
G ıN
VESTM
ENT P
RO
CESS
LEGAL STEPS OF INVESTMENT
01.06.2015 BIC Angels Investments
• Term sheet
• Company’s business description;
• Closing conditions;
• Dividends;
• Liquidation preferences;
• Right to Participate in Future Rounds;
• Anti-dilution rights;
• Right of first Refusal/ Co-sale (tag-along) rights;
• What about drag along right?
• Lock-up;
• Voting rights;
• BOD;
• Protective provisions;
• Non-Competition and Non-Solicitation Agreements;
• No Shop/Confidentiality.
14
DU
RıN
G ıN
VESTM
ENT P
RO
CESS
LEGAL STEPS OF INVESTMENT
01.06.2015 BIC Angels Investments
• SHA
• BOD minutes
• Updated AoA
• General assembly minutes
- 1-2 months
15
AFTER SıG
NA
TUR
ES
LEGAL STEPS AFTER SIGNATURES
01.06.2015 BIC Angels Investments
• Bank letter
• Trade registry office approvals
• Release money !!!
• 1 week
Full investment process can be finalized in 2-3
months!!
16
VA
LUA
TION
New Venture Valuation: Market Multiples
01.06.2015 17 BIC Angels Investments
Source: Grichnik, D./Bretttel, M./Koropp, C./Mauer,R., Entrepreneurship, p.101
VA
LUA
TION
New Venture Valuation: CF Multiples
01.06.2015 18 BIC Angels Investments
Source: Smith, J.K./Smith, R.L./Bliss, R.T., Entrepreneurial Finance, p.422,423
VA
LUA
TION
New Venture Valuation: DCF Valuation
01.06.2015 19 BIC Angels Investments
Source: Smith, J.K./Smith, R.L./Bliss, R.T., Entrepreneurial Finance, p.416
VA
LUA
TION
Estimating Risk-Free Rate of Return
01.06.2015 20 BIC Angels Investments
Source: Smith, J.K./Smith, R.L./Bliss, R.T., Entrepreneurial Finance, p.397
VA
LUA
TION
Estimating Beta
01.06.2015 21 BIC Angels Investments
Source: Smith, J.K./Smith, R.L./Bliss, R.T., Entrepreneurial Finance, p.401
VA
LUA
TION
Estimating Beta
01.06.2015 22 BIC Angels Investments
Source: Smith, J.K./Smith, R.L./Bliss, R.T., Entrepreneurial Finance, p.403
VA
LUA
TION
New Venture Valuation: VC Method
01.06.2015 23 BIC Angels Investments
Source: Smith, J.K./Smith, R.L./Bliss, R.T., Entrepreneurial Finance, p.424
VA
LUA
TION
New Venture Valuation: First-Chicago-Method – Required Share %
01.06.2015 24 BIC Angels Investments
Source: Leach, J.C./Melicher, R.W., Entrepreneurial Finance, p.378
OU
TLOO
K StartNowHow - Outlook
• Today‘s materials will be made available to participants for downloading
• Next Seminar: „Success and Failure as an Entrepreneur“
• Guest Speaker: tbd
• Thursday, 9.7.2015, 17.15 – 19.30h
• Award Ceremony will take place at Thu 9.7. as well
• 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)
BIC Angels Investments 01.06.2015 25
BIC ANGEL INVESTMENTS Dr. Joachim Behrendt
Phone: +90 212 328 1939 Fax: +90 212 328 1933
www.behrendt.com.tr www.nexum.com.tr http:/twitter.com/joachimbehrendt http://tr.linkedin.com/pub/joachim-behrendt/18/706/a7a
Email: [email protected]