Talk at the Greek stochastics conference 22 Decembre 2018

1. Can we pick winners among
technology startups?
ARISTOS DOXIADIS
BIG PI VENTURES

2. €50 million capital
Target: 3x return = €150 million from exits
€42 to invest in 20+ companies
Average €2m, but initial ticket €1m.
Follow-ons in 5-8 cases
Fund economics 1/2

3. To get back €150m, we need:
Two exits that will return €50m each
Three to eight exits that will return €50m in total
Fund stake in each exit: 15% to 20%
Valuations: €250m to €350 for stars; €50m for successes
Fund economics: exits 2/2

4. We will receive 500 to 2000 proposals (in 3 to 5 years)
We will examine 50 to 100 in some depth
We will invest in 20 to 25
We hope to have 3 to 8 successful exits
Funnel

5. Pre-seed and seed stage, therefore:
No metrics for the specific venture
Data when we decide: people; a prototype; a business plan;
(maybe) a few users
Is it like: stock picking OR predicting a revolution OR
predicting a hurricane?
Nature of problem

6. Scalability
Global market
Innovation
Geography
Filters

7. Team
Technology (product)
Trenches (defense: IP or network effects)
“TAM” = Total Addressable Market
Traction (initial sales OR sales growth)
Timeline
Criteria: Five Ts (plus one)

8. Experience
Age? 30 to 50 (Azoulay et. al.)
Complementary skills (2-3 founders)
International
Degrees and employers
Focus
Heuristics: Team

9. Patents (substance)
Publications
Design
Community (basis for network)
Heuristics: Trenches

10. Initial users: quality and engagement
If there are numbers of users: retention, monthly growth
Heuristics: Traction

11. Horizontal vs vertical markets (dilemma)
Big today, or growing?
Heuristics: TAM

12. Big Pi 12 Π
3 Ts for Research-based teams
Defense
Patents
Trade secret(s)
Superior know-
how
Team
Key technology
contributor(s)
Product vision, ideally
from the core team
Understand the space
FULL TIME!
Product
A practical problem
that affects users
At least one large
user category

13. Big Pi 13 Π
Targets for research-based ventures
Stage 3
Sales growth
Operations
Stage 1
IP, trade secrets, know-
how
Minimum Viable Product
(MVP) => prototype
Relation of IP to MVP
Stage 2
Real clients
Sales process
Business model
• tech or product
• big or small clients

14. … and if we can do it systematically:
a. Will it change the focus of innovation?
b. Will venture capital survive?
So: Can we predict winners?