Making an investment, especially in early-stage businesses and SMEs, can be a difficult and even stressful process. The spreadsheets. The financial projections. The five-year business plans. The valuation models. All of these factors, while undoubtedly important, can overshadow what really matters when determining which businesses you should invest in: the management team, market size, potential to scale, and who else has invested. We at Eureeca would like to help you learn how to cut to the heart of what’s important when investing so you can start making smart investment decisions today. Questions to be addressed: How should you navigate the investment process? What should you look for when assessing an investment opportunity? How does the Eureeca platform improve the investment process?

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How I decide what to invest in

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Investing in private equities — that is, buying shares of
privately owned businesses — is an exciting and often
high-return yielding endeavor…

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…It can also be quite difficult, if you don’t have a smart
strategy and know how to assess whether a particular
business is a good investment.

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Key elements of a private equity investment strategy

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Diversify investments across a number of businesses and
sectors to mitigate against risk -- i.e. don’t put all of your
eggs in one basket
Kauffman Foundation: 27% IRR when angel investors spread
investments across 25 - 50 businesses
“Don't bet the farm.”-- Eli Broad, the only man to build two Fortune 500 companies in two industries

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Out of ten investments: 5-6 will fail; 2-4 will exit with limited
returns; 1-2 will hit it with high multiples (10-30x ROI)
You need a significant number of diversified investments to
optimize returns

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Look for deals with “home run” potential -- 10% of deals
generate 90% of the returns

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Invest in what you know — invest sectors, industries,
business types that you know and understand, which will
allow you make more informed decisions

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Engage with entrepreneurs -- ask questions and get
explanations so you feel comfortable investing in both the
business and the entrepreneur

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Do your own homework and spend time assessing the
investment opportunity….

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What really matters when assessing a business’
“investability"

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“In a startup, no business plan survives first contact with customers.”
— Steve Blank, professor of entrepreneurship, Stanford Business School

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All companies have risks and none are perfect for
investment
Trust your instinct
"First of all I trust my own instinct, experience that I gained over years and feeling when the
moment is right for buying shares." — Alisher Usmanov, Russian business magnate

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Macro factors

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Scalability -- can the business grow quickly, while keeping
costs down?
Look for high growth businesses -- can scale revenue and margins; exit
defined at outset (who will buy, why when); need capital to grow
Eureeca case study: Nabbesh.com — digital marketplace, low
operational costs, huge market potential

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Attractiveness and viability of the market — Is there a
large market for the product or service? Is a clear gap
being filled?
Value proposition must be clear and solid go-to-market strategy
defined
Eureeca case study: Search in MENA — B2B marketplace that brings
businesses online, 85% of regional businesses still offline = filling
huge void in market

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Is there an attractive exit strategy? — Who will buy the
company? When will they buy it?
This needs to be defined and established from the outset
Eureeca case study: Abjjad — Goodreads of the Middle East,
Goodreads acquired by Amazon for $150 - 200 million, Abjjad setting
up itself to be acquired by major player

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Company-centric factors

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The management team — they will be at the helm of
your investment, and largely determine whether it
succeeds or not
“One invests in the guy behind the deal, above all else." - Randall J Kirk, CEO Intrexon

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Have people you trust invested in the deal?
What about investors with lots of experience in the business’ sector/
industry?
Eureeca case study: Foodlve.com — Japanese VC firm invested
heavily in Foodlve.com (a former Oasis500 company) —> exhibits
attractiveness of the deal

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Valuation — Is the entrepreneur offering a fair valuation
of the company? If it’s too high, you’ll be paying too
much for your shares and reducing the multiplier when
exit occurs.

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Term sheet — Is the entrepreneur trying to take
advantage from the beginning with unfair terms? Keep
this in mind. Read carefully!

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How does Eureeca improve the private equity
investment process?

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Equity investment democratised -- no longer limited to the
wealthy few and financial institutions

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Access to steady deal flow of exciting vetted, high-yield
potential investment opportunities

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A secure, regulated investment platform that handles your
investment all the way through the issuance of shares

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Ideal way to diversify your investment portfolio by
adding additional asset class (private equities), across a
variety of sectors

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Can share in the success of your favorite businesses
Eureeca case study: Jobedu — A highly popular consumer brand,
loyal customer base —> funded in record-setting four days

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Can cultivate a following among other investors on platform

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Eureeca makes the investment process easy:
• Invest using your credit card
• Communicate with entrepreneurs seamlessly
• Invest from your living room

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Thank you.
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