What investors look for / yatırımcının aradıkları

1. On What Investors Look For
Ziya G. Boyacigiller
This presentation was created and given by Ziya
Boyacigiller who was leading Angel Investor and a loved
mentor to many young entrepreneurs in Turkey. We have
shared it on the web for everyone’s benefit. It is free to
use but please cite Ziya Boyacigiller as the source when
you use any part of this presentation. For more about
Ziya Boyacigiller’s contributions to the start-up Ecosystem
of Turkey, please go to www.ziyaboyacigiller.com

2. Copyright (c) 2003 Ziya G.
Boyacigiller
What Investors Look For
Based on a Presentation by Andy Rachleff

3. Copyright (c) 2003 Ziya G. Boyacigiller
Venture Capital Food Chain
INSTITUTIONAL
INVESTORS
(Limited Partners – e.g.
Endowments, Pension
Funds)
VENTURE CAPITALISTS
(Finding and Funding
Entrepreneurial Companies)
ENTREPRENEURS
(Starting and Building
Companies)

4. Copyright (c) 2003 Ziya G. Boyacigiller
Asset Allocation for a Limited
Partner

5. Copyright (c) 2003 Ziya G. Boyacigiller
The Trade-off Between Risk &
Return

6. Copyright (c) 2003 Ziya G. Boyacigiller
In which of the following
firms would you rather
invest?
Each invests $1 million per
company in 10 companies:
1. One gets 2x their money on all 10.
2. The other loses all their money in 8 and
gets >20x their money on the remaining
2.

7. Copyright (c) 2003 Ziya G. Boyacigiller
Summary of the Investment
Business

8. Copyright (c) 2003 Ziya G. Boyacigiller
How do you find
Right/Non-Consensus?

9. Copyright (c) 2003 Ziya G. Boyacigiller
How can you recognize
vision?
•Early insight into technology
inflection point (disruptive
innovation)
•The Napkin test

10. Copyright (c) 2003 Ziya G. Boyacigiller
Effect of Management Team
•When a great management team meets
a lousy market market wins
•When a lousy management team meets
a great market market wins
•When a great management team meets
a great market something special
happens

11. Copyright (c) 2003 Ziya G. Boyacigiller
Capital Intensity
•Least Amount of Money = Most Attractive
Business
•Minimize Capital Required by
High gross margins (Unfair advantage)
Rapid escape velocity (Product/Market fit)

12. Copyright (c) 2003 Ziya G. Boyacigiller
Term Sheet
TERM SHEET
FOR SERIES A PREFERRED STOCK FINANCING OF
[Insert Company Name], INC.
[ __, 200_]
This Term Sheet summarizes the principal terms of the Series A Preferred Stock
Financing of [___________], Inc., a [Delaware] corporation (the “Company”). In
consideration of the time and expense devoted and to be devoted by the Investors with
respect to this investment, the No Shop/Confidentiality and Counsel and Expenses
provisions of this Term Sheet shall be binding obligations of the Company whether or
not the financing is consummated. No other legally binding obligations will be created
until definitive agreements are executed and delivered by all parties. This Term Sheet is
not a commitment to invest, and is conditioned on the completion of due diligence, legal
review and documentation that is satisfactory to the Investors. This Term Sheet shall be
governed in all respects by the laws of the [State of Delaware].

13. Copyright (c) 2003 Ziya G. Boyacigiller
How do Valuation & Terms
get established?
•Look at milestones achieved
(aynasi istir kisinin, lafa bakilmaz…)
(credibility is doing what you
promise…)
•Look at comparables
(It’s like buying a house)
•Then it’s up to supply &
demand

14. Copyright (c) 2003 Ziya G. Boyacigiller
Milestones Chart to CF+

15. Copyright (c) 2003 Ziya G. Boyacigiller
It is all about the pie…
50%
10%

16. Copyright (c) 2003 Ziya G. Boyacigiller

17. Copyright (c) 2003 Ziya G. Boyacigiller

18. Copyright (c) 2003 Ziya G. Boyacigiller

19. Copyright (c) 2003 Ziya G. Boyacigiller
Who is the ideal funding
source?
Potential Market
Size
Ideal Funding Source
Small Bootstrap or Angel
Unclear Bootstrap or Angel then VC
Large Venture Capital

20. Copyright (c) 2003 Ziya G. Boyacigiller
How should you choose
among Venture Capitalists /
Investors
•Industry experience / perspective
•Recruiting help (network)
•Partnering/Contacts
•Brand/Credibility
•Price/Stage
•Funding Required
•Location
•Chemistry

21. Copyright (c) 2003 Ziya G. Boyacigiller
Who should you ask for
advice?
•Successful Entrepreneurs
•Top deal lawyers
•Investment bankers
•Frequent advisors to the VCs
- Professors
- Angel Investors
•Inovent
•Endeavor

22. Copyright (c) 2003 Ziya G. Boyacigiller
What VCs Don’t Look For
•Another Microsoft!
•Do you think they care if you
build a long term great company
(beyond their holding period)?
- No benefit to IRR or distributions
- Impacts their reputation