3. Partners-owned
20 people organisation, 20 years existence
Licensed asset manager – AIFMD compliant
Over € 250 million under management
Capricorn Venture Partners
3 All rights reserved
ICT
€ 15 million
CLEANTECH
€ 112 million
Quest for Growth
€ 106.8 million*
* December 31, 2012
Quest Cleantech Fund
€ 11.0 million*
* December 31 , 2012
HEALTHTECH
€ 42 million
Head office, Leuven, Belgium
4. DISCLAIMER
The views expressed in this presentation do not necessarily reflect
the views of the Capricorn Venture Partners or its investment
managers.
4 All rights reserved
5. HOW TO VALUE YOUR COMPANY?
Capricorn Venture Partners
5 All rights reserved
6. Venture capital reality
6
Most capital get raised to address specific operational needs before
significant value has been created. In those instances the strategic
interest of new and existing investors to obtain or maintain a certain
percentage interest in the company prevails over the valuation models.
In most cases traditional valuation models become only relevant at
exit.
All rights reserved
9. Alternative Valuation Techniques
9
• Peer comparison
• Technology value
• Pre-money versus post-money
• 1/3 sweat - 1/3 IP – 1/3 €’s
• Your value is 1 to 2 times the money you can raise
• The price a fool is prepared to pay
All rights reserved
10. Who is afraid of dilution?
10 All rights reserved
What do you prefer?
11. Pre-money versus post-money
• Always differentiate between pre-money and post-money
• pre-money = value of the company before the transaction
• post-money = value of the company after the transaction
• post-money = pre-money + capital increase
• post-money = invested amount / percentage in the company
• post-money = total number of shares after the transaction x price per share
• Always differentiate between actual and fully diluted shareholding
• fully diluted = including all shares resulting from conversion, stock options,
warrants, or any other rights related to securities of the company
• Use price per share and total number of shares fully diluted as the
legally binding values
• Keep it simple
11 All rights reserved
12. A simple cap table example
12
price per share investment shares seed series A series B series C series C + SOP
€ € #
founders 100.000 1.000.000 80% 44% 28% 22% 20%
seed investor 1 250.000 250.000 20% 11% 7% 5% 5%
Series A investors 2 2.000.000 1.000.000 44% 28% 22% 20%
Series B investors 3 4.000.000 1.333.333 37% 29% 26%
Series C investors 4 4.000.000 1.000.000 22% 20%
stock option plan 509.259 10%
pre money 1.000.000 2.500.000 6.750.000 14.333.333
post money 1.250.000 4.500.000 10.750.000 18.333.333 20.370.370
total 10.350.000 5.092.593
All rights reserved
13. A simple cap table example - exit
13
price per share investment shares series C + SOP exit multiple
€ € # €
founders 100.000 1.000.000 20% 15.709.091 157
seed investor 1 250.000 250.000 5% 3.927.273 15,7
Series A investors 2 2.000.000 1.000.000 20% 15.709.091 7,9
Series B investors 3 4.000.000 1.333.333 26% 20.945.455 5,2
Series C investors 4 4.000.000 1.000.000 20% 15.709.091 3,9
stock option plan 509.259 10% 8.000.000
pre money
post money 20.370.370 80.000.000
total 10.350.000 5.092.593 7,7
exit value 80.000.000
stock-options 10%
All rights reserved
15. Measuring non-financial value
• Separate KPIs/VIPs for the current year and towards exit
• 2013 points should reflect management KPI’s and our priorities
• By preference “measurable” or “achieved yes/no” points
• Not every cell needs to be filled
• Colour coded
• Blue : status at start of year/neutral/work in progress
• Green : realised
• Orange : critical but solution identified
• Red : critical no solution identified
• Italic : changed versus previous quarter
15 All rights reserved
17. THE PITFALLS FOR START-UPS
Capricorn Venture Partners
17 All rights reserved
18. 5 reasons why you will fail
18
1. Don’t underestimate the time to market
4. It is not easy to convince a million consumers
5. In love and in business you have to let go sometimes
3. Big data is not a free for all
2. Beware of “It’s kind of a …”
All rights reserved
19. 2 reasons why you will be succesful
19 All rights reserved
Team IP strategy
20. Team
• Get business & entrepreneurial experience in the team
• Do not force researchers in a CEO role
• Build multidisciplinary teams (not all engineers!)
• International exposure and language skills
• Humans are not scalable
• Hiring new key persons that you have to pay more as the founders?
• No function in a start-up company is forever
• Keep you friends as friends
• Foresee “good leaver – bad leaver” conditions in shareholders
agreement and stock option plans
20 All rights reserved
21. IP strategy
• Define and challenge your IP strategy!
• Protection or freedom to operate?
• Does a patent has value without the associated business?
• Is a licence model a valid business model?
• Are you prepared for a patent due diligence by a US law firm in view
of a $ xxx million acquisition?
• Any change of control clauses in your contracts with customers,
suppliers, license agreements
21 All rights reserved
22. IP strategy is more than patents
• Trademarks
• Website
• Trade Secrets
• Contractual IP
• Employment and assignment of invention agreements
• Consultancy contracts
• Contracts with suppliers and customers
• License agreements
• Your network
22 All rights reserved
23. Importance of patents
• Patents are important in any phase of a VC investment !
• As an information source for deal selection
• Before making an investment
o Strong and clean IP
o Full ownership of patent(s) by the company remains the preferred model!
o Exclusive license with transfer rights and right/obligation to defend source
IP?
o FTO - Freedom to operate is key
• During the investment period
• At exit (most likely via M&A transaction)
23 All rights reserved
25. Pitching is a lot like dating
25
1. Don’t order the most expensive thing on the menu
4. Have realistic expectations
5. Learn how to deal with disappointments
3. Be aware that you will be stuck with eachother for a while
2. Be yourself
All rights reserved
26. For further inquiries
Contact:
Tom Vanhoutte (tom@capricorn.be)
Capricorn Venture Partners
Lei 19/1, B-3000 Leuven, Belgium
Tel +32 16 284100 Fax +32 16 284108
http://www.capricorn.be
26 All rights reserved