davor hebel, fidelity ventures @ tmt.ventures'08 zagreb

The Balkans and Central Europe: a land of opportunity for global VCs and Entrepreneurs

How to build, finance and exit successful companies

Davor Hebel, Vice President, Fidelity Ventures

TMT.Ventures’08 Zagreb

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Agenda

About us

CEE and the Balkans opportunity for a global VC

Some thoughts on building a successful start-up

Fundraising tips and what to expect from VCs

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About us

One of the largest global mutual funds: $2 trillion under management…

…not so long ago

Global VC and growth equity firm with over $1B under management across US, Europe, India and China

Investing €3-30M in venture and growth equity investments in Western and Eastern Europe focused in Internet, Software, Media, and Clean Tech

Vice President in London

Croatian with first hand start-up bruises

McKinsey, HBS

Boards: Asset Control, Seatwave, Newbay

Fidelity Investments Fidelity Ventures European Focus About Me

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CEE and the Balkans opportunity for a global VC

2005: “eBay Buys Skype for $4.1 Billion”

Estonian development

Peer-to-peer VOIP software founded by Friis and Zanstrom (Kazaa)

Global champions Regional champions

2008: “Forticom acquires controlling stake for $92M (~€100M valuation)”

Polish

Largest Polish social network built on Friends Reunited principle

2002: seed funding @ ~$2M valuation

2003/2004: 1st and 2nd rounds of funding

2006: NK founded by student Maciej Popowicz

2007: EFF buy 20% for €2M (€10M valuation)

Source: public references

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Some thoughts on building a successful start-up

• No need to reinvent the wheel (e.g., Nasza Klasa)• 70% of start-up ideas come from previous work• It will change anyhow… but it is like a baby

• Experience counts, passion wins• Complementary skill-sets do work• Different phases bring different challenges

• The game – investors need to make money• Find right capital – stage and risk (equity vs. debt)• Make it last 12-18 months, valuation not key

• Cash is king, profitability queen (especially now)• Build solid foundations - 1st mover not always key• Know your objective - €1M, €10M, €100M, €1B?

• Think about it when you start the company • Technology sale – good for some• Build relationships with potential exit partners

Finding an idea

Building the team

Fundraising

Growing a company

Exiting

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Jaws in Space (the art of a good pitch)

•Keep it simple—VCs see >100 companies for each

one they invest in—Comparables and analogues really

help—Two questions:

–Why’s this one going to be big?–Is it going to be a nightmare?

•Some rules—Don’t make us think too hard (e.g.,

comparables)—Put together a short slide deck and

simple financial model—Science not allowed (usually)—Establish credibility, name

dropping allowed

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How much do you need and how can VCs help?

TypicalPre-MoneyValuation

RequiredIRR

Valuation/Return

30%

50%

70%

100%

<$1M

$2-10M

$10-30M

$40M+

Series BAngel Series A ExpansionStage

$10-15MAnything goes

$3-5M Anything goes

Typical raise

Go-to-marketRecruiting

Connections

General adviceRecruiting

Connections

ProductRecruiting

Connections

ExitRecruiting

Connections

VC help

Old rules: software $30M, chips $50M, SaaS $60M, systems $100M

New rules: web 2.0 <$10M, startup costs much lower (cloud, open source, moore’s law)

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Choosing investors

• Money is increasingly abundant— If the team is credible— If someone has made money doing something similar— If the investors can see a good return in 5 years or less— And can write a big enough cheque (or small enough)

• Investor quality matters but so does fit— Average fund makes no money! (1/3 rule, focus on hits)— Fund size and stage— Have they done something similar before— How can they help (tangibly)

• Use the analogues— Yahoo (Moritz, Sequoia); Google (Moritz); YouTube (Moritz)

• Make them work for you – it is expensive money!

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Reminder…you miss 100% of shots you don’t take

Send me questions & thoughts: davor.hebel@fil.com