Artturi Tarjanne ( www.nexitventures.com ) spoke about VC-s on Start Smart! event Wantrepreneur 2 Entrepreneur 1. december 2011 in Tallinn, Estonia. www.start-smart.me

1. Nexit Ventures
Artturi Tarjanne
0
EstVCA
What Venture Capitalists Consider
Nexit experiences picking 25 deals out of 5000 Cases
screened in Nordic Countries and Silicon Valley
Agenda
 Background: AT, Nexit, Nexit Strategy and Team
 Selecting the management Team for a VC funded company
Artturi Tarjanne 2.12.2011
Helsinki Stockholm Silicon Valley www.nexitventures.com

2. Artturi Tarjanne
1
From a SW Entrepreneur to a Venture Capitalist
1. SW Entrepreneur
- Independent IT/SW consultant, Movision Ltd, 1983-86
- VP Sales, Venture Investment & Automation, 1986-91
- Co-Founder, CEO, Solid Information Technology, 1992-97
2. Business Angel Founder, Managing Director, ATC Oy, 1997-99
3. Venture Capitalist Co-Founder, General Partner, Nexit Ventures 1999-
Associations and public activities
 FVCA, Ohjelmistoyrittäjät, Hetky, Tietotekniikan liitto
 Ohjelmistoviennin neuvottelukunta, Tekes SPIN, Tekes VERSO,
SW OSKE, JPT OSKE, DIGI OSKE
artturi.tarjanne@nexitventures.com
Helsinki Stockholm Silicon Valley www.nexitventures.com

3. Nexit Ventures
Executive Summary
2
Transatlantic VC fund focusing in mobile & wireless
 Established in late 90’s
 Focus on mobile & wireless and surrounding ICT industry
– Software, enabling technology, service and content opportunities
– The convergence between communication, computing and content
 Activities are targeted to the Mobile hot spots
– Offices in Helsinki, Stockholm and Silicon Valley
– Investing in the Nordic and the US west coast
– 7 Investment professionals
– 25 investments
 Two funds totaling over MEUR 150
– Prominent investors like Tapiola Mutual Pension Fund, Finnish Industry
Investment, and Nokia Corporation
– Several high net worth individuals with relevant experience and network in
Infocom and financial industries
Helsinki Stockholm Silicon Valley www.nexitventures.com

4. Nexit Strategy
Bridging Mobile Opportunities
3
The Nexit transatlantic strategy is generating a strong track record
Acquired by nVidia Partial exit: NTT DoCoMo
[NSDQ:NVDA]
US sales - FIN R&D
Flip from Finland to US
~ 75% revenue from US
Acquired by ON2 and further
by Google [NSDQ:GOOG] Acquired by Sybase
[NYSE:SY]
Acquired by Trilliant
High Growth, profitable and further by Juniper Acquired by HP
~ 90% revenue from US Networks [NSDQ:JNPR] [NYSE:HPQ]
All exits to listed US entities except one to NTT Docomo
Helsinki Stockholm Silicon Valley www.nexitventures.com

5. Strategy Execution
Nexit Management Resources
4
Michel Wendell General Partner (US)
- 25 years of international high-tech business, Silicon Valley resident since 1995
Artturi Tarjanne General Partner (FIN)
- 25 years of entrepreneurial experience in Infocom
Pekka Salonoja General Partner (FIN)
- 21 years in communications industry, VP and GM of Server Products at Nokia
Michael Mandahl Venture Partner (SWE)
- over 20 years of high-tech, 12 in entrepreneurial roles
Patrice Peyret Venture Partner (US)
- Highly successful serial high-tech entrepreneur with 25 years operating experience
Sami Karppinen Investment Director (FIN)
- 15 years of Infocom industry and investment research
Risto Yli-Tainio CFO (FIN)
- 17 years of experience in financial management in Infocom and VC industries
Helsinki Stockholm Silicon Valley www.nexitventures.com

6. The VC target –
Returning 10x or more
5
 VC is a ’hits’ based business
– the real success comes through very few but really great homeruns
 About investor expectations
 0,8 x (1/3x0 + 1/3x1 + 1/3x5) = 1,6 -> IRR ~10%, not good enough!
 0,8 x (1/3x0 + 1/3x1 + 1/3x7) = 2,1 -> IRR ~16%, ok, but….
 0,8 x (1/3x0 + 1/3x1 + 1/3x10) = 3 -> IRR ~24%, YES!
“Entrepreneurs need to understand that VC’s are a sophisticated form of financial investors
who in turn need to satisfy their own investors. At the end of the day VC’s have to provide
their investors with great returns or they aren’t going to be able to raise another fund.”
Helsinki Stockholm Silicon Valley www.nexitventures.com

7. What Venture Capitalists Consider
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1. Management
2. Market potential
3. Exit potential
4. Differentiation and protection
5. Risk analysis and funding need
6. Business model (reflecting the outcome of points 1. - 5.)
Helsinki Stockholm Silicon Valley www.nexitventures.com

8. 1. The Management Team
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 Most important single issue for VCs
 Entrepreneur vs. Inventor
– Global view on market
– Deep knowledge and network within the target market
– Identification of an business opportunity
– Creation of an organization to pursue the opportunity
– Ability to change course in the face of setbacks
– Exit: willingness to sell the company
 Teams win, Superstars loose
– Diversity of the team
– Who has worked together before?
– What is the motivation of the team?
Helsinki Stockholm Silicon Valley www.nexitventures.com

9. Changing The CEO?
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 Different phases of development -> different type of management skills
 Seeking the right business model - speed and agility
 Rapid scaling and building the organization - sales and growth
 Oiling the well functioning engine
 Faces for the Exit - IPO or M&A
 If thing are not working out?
 Sometimes changing the CEO is the only real option left for VC’s
Helsinki Stockholm Silicon Valley www.nexitventures.com

10. Nexit Ventures
Artturi Tarjanne
9
Thank you!
Bridging Mobile Opportunities
Helsinki Stockholm Silicon Valley www.nexitventures.com