AVDA.

DIAGONAL 593 7ª PLANTA 08014 BARCELONA (ESPAÑA)

8 FANEUIL HALL MARKETPLACE 3RD FLOOR BOSTON MA 02109 (USA)

Oriol Juncosa

The Founder Institute

Principal at Nauta Capital Twitter: @ojuncosa - September 2013 -

ADDING VALUE BEYOND THE INVESTMENT

ADDING VALUE BEYOND THE INVESTMENT
ADDING VALUE BEYOND THE INVESTMENT

Agenda

Nauta Capital Venture Capital process Fundraising in practice Final message

Sep 2013

2

Nauta Capital: a leading venture capital fund based in Barcelona, London and Boston

Internet/ eCommerce, Mobile, Software

>$200m AUM

Investing in Europe and in the US
>60% outside Spain

Focus: Round A
-Seed and Round B opportunistically -1st ticket: €0.75m to €3.5m -Total investment up €5/6m

Helping the best entrepreneurs building great companies
Sep 2013 3

Nauta Tech II and III – Selected portfolio companies by sector / geography
Spain UK US Germany

Enterprise

Consumer

(1)

(1) Sold to Nice Systems in 2011

Sep 2013

4

Agenda

Nauta Capital Venture Capital Fundraising in practice Final message

Sep 2013

5

VC industry: US vs. Europe (I)

VC investment - US
40 34,5 33,1 31,1 30 3.110 25 2.859 3.049 24,3 3.116 3.363 2.500 5,0 20 2.759 2.000 4,0 1.500 3,0 2,0 29,3 3.000 3.506 6,0 1.429 35,1 29,7 4.000 9,0 8,0 6,3 7,0

VC investment - Europe
7,6 7,7 1.800 1.600 7,0 6,8 1.700 1.451 5,7 5,7 1.366 1.200 1.000 1.257 1.211 800 1.074 600 400 Amount raised (US$bn) 500 1,0 0,0 2006 2007 2008 2009 2010 2011 2012 Number of rounds 200 0 1.400

35

3.500

15

10 Amount raised (US$bn) 5 Number of rounds

1.000

0 2006 2007 2008 2009 2010 2011 2012

0

Avg. amount raised (2006-12): $10m
Amount raised by VC backed companies Source: Turning the Corner, VC Insights , E&Y 2013

Avg. amount raised (2006-12): $5m

Sep 2013

6

VC industry: US vs. Europe (II)

VC backed M&A - US
70 590 60 536 58 548 54 600 700 45

VC backed M&A - Europe
400 42 40 35 338 327 250 25 25 21 20 15 27 203 214 208 150 25 23 200 28 250 400 300 350

50 526 46 40

445

427 61

500 30

40 30 32 20 25 Median value (US$m) 10 Number of transactions 100 5 0 2006 2007 2008 2009 2010 2011 2012 0 2006 2007 200 10 433 300

100 Median value (US$m) Number of transactions 145 50

0

0 2008 2009 2010 2011 2012

Avg. transaction value (2006-12): $45m
Source: Turning the Corner, VC Insights , E&Y 2013

Avg. amount raised (2006-12): $20m

Sep 2013

7

VC industry: US vs. Europe (III)

VC backed IPO - US
12,0 Amount raised (US$bn) 10,0 80 8,0 57 6,0 40 4,0 3,7 2,0 0,6 0,0 2006 2007 2008 2009 2010 2011 2012 8 8 10 0,9 0 0,0 2006 3,3 5,4 1,0 30 7,5 47 50 46 50 Number of transactions 80 70 60 1,5 2,0 96 2,1 11,2 90 2,5

VC backed IPO - Europe
120 Amount raised (US$bn) Number of transactions 100

80

1,1 1,0 0,6 0,5 10 3 0,0 2007 2008 0,2 18 2009 2010 15 2011 16

60

40

46 20 0,5

20

0 2012

Avg. amount raised (2006-12): $110m

Avg. amount raised (2006-12): $35m

How should VCs and entrepreneurs think differently about VC investments and exits in Europe vs. the US in order to be successful?
Source: Turning the Corner, VC Insights , E&Y 2013

Sep 2013

8

Financing Life Cycle

Disposal / IPO

Sep 2013

9

The VC process

Ideally: fast decision making
Exit Sourcing and screening

Reality: lots of meetings and longer decisions

Value Creation

Due diligence

Investment

What are the key strategies for entrepreneurs to ensure a smooth fund raising process?
Sep 2013 10

What do VCs look for?

Minimum
Large and growing market Clear customer need/ problem Product / solution with sustainable competitive advantage Scalability A strong team with a clear execution plan STRONG METRICS (key: CLTV vs. CAC)

Wish list
Proven revenue model Clear path to profitability Low technology risk Experienced founders with prior exits Limited competition Low capital consumption

What are the top three requirements?
CLTV: customer lifetime value, CAC: customer acquisition cost
Sep 2013 11

Agenda

Nauta Capital Venture Capital in context Fundraising in practice Final message

Sep 2013

12

When to raise capital?

Idea -> FFF (€10K to €100K)

MVP -> Angels / Seed (€100K - €1M)

Developed product and market traction -> Series A (€1M - €5M)

Significant revenue level and growth -> Series B (€5M - €10M)

Profitable or almost profitable -> Growth equity (>€10M)

Sep 2013

13

How do you identify and qualify target investors? Relevant sector and stage investment experience

Value added: contacts with other potential investors and (even) with potential clients, technology experience, strategic approach coupled with useful advice on selected operating decisions,..

Responsiveness to the entrepreneur and potential challenging key decisions

Agreement with entrepreneurs on the key drivers of the business plan and key elements of the execution plan

Location: the earlier the start up, the closer the VC needs to be
What is better: maximise amount raised, maximise valuation or maximise quality of investor?
Sep 2013 14

How much capital to raise?

Historical cash burn

Business plan cash consumption estimates

Expected timing until next round

Margin of safety / minimum cash balance
What is the factor most frequently underestimated by entrepreneurs?
Sep 2013 15

Use of proceeds of the round Product Marketing People IT Working capital Minimum cash balance M&A Cash out
Sep 2013 16

What is usually the priority in: • Seed? • Early stage? • Later stage?

What are typical investment structures and deal terms?

Capital structure
Minority shareholding Angels / Seed funds: 1% to 10% / 20% VCs: 20% to 35% - earlier rounds 10% to 20% - later rounds Syndication amongst different investors ESOP pool

Deal terms
Investment amount Pre-money valuation Preferred vs. Common stock Liquidation preference Founder vesting Board seats Consent matters Drag and tag along Information rights Antidilution

Sep 2013

17

Agenda

Nauta Capital Venture Capital in context Fundraising in practice Final message

Sep 2013

18

Final message

There is no better time to start up a company than NOW!

Low start up costs

Low opportunity costs

Large talent pool available

Significant angel/ seed funds available

Fast new technology development and adoption

…and crisis will not last forever

Sep 2013

19

Your turn

Q&A
Oriol Juncosa – Principal at Nauta Capital – Twitter: @ojuncosa

Sep 2013

20

Disclaimer

The ideas presented in this document are only the author’s views This document does not represent the position of Nauta Capital or of any of its affiliates Any error or omission is only atributable to the author This document is solely intended for the participants at Founder’s Institute

Sep 2013

21

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