entrepreneurship workshop yerevan -building value and startup funding
TRANSCRIPT
Entrepreneurship WorkshopYerevan, ArmeniaBuilding Value & Startup FundingValto Loikkanen
Grow VC Group ++ www.growvc.com ++
@growvc ++
Copyrights © Grow VC Group 2015
About me
My Evolution As an Entrepreneur
● Entrepreneur● International entrepreneur● International serial entrepreneur● International portfolio entrepreneur
As an Entrepreneur● 20 years as international Serial Entrepreneur (US, EU, Asia) &
Portfolio Entrepreneur, with personal hard earned success & failures
● 17 years experience in developing web based tools for various business processes
● 6 Years of developing equity crowdfunding and other digital investment market solutions globally
● 5 years for Startup Ecosystem development combined with online support tools, platforms & metrics
● For two years, being part of three EC Horizon 2020 Groups:○ Access to Risk Finance, ○ Spreading Excellence & Widening participation ○ International Cooperation
As a Business Advisor● 10 years of startup mentoring
○ with 2000+ one to one mentoring sessions and workshops○ with 1000+ entrepreneurs and hundreds of startups around the
world at various development stages and industries
● In parallel 10 years developing Startup Support services, with entrepreneurial mind and lean methodology (fast ideation, implement and measure cycle)
● 5 years of “living lab” development for Startup Ecosystem in Finland with City of Helsinki
About Grow VC Group"The global pioneer of securities crowdfunding, peer to peer marketplaces and new investment models."
Grow Advisors provide consulting and knowledge resources for Digital Investing Marketplace and Startup Ecosystem development
Ecosystem Back-end infrastructure and Support to manage, measure & peer benchmark Startup ecosystems
Deal Index offers Visibility to Professional & International Investors and real time investment Market Data
Digital Investment Marketplace Back-end solutions and Development
Other Grow VC Group Companies & Services For Economic Development
Local Investors & Equity Crowdfunding
International Growth
$$$
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Local Startup Ecosystem
International Investors & Multinational Corporations
Talent, Startups &Support Services
Grow Advisors provide consulting and knowledge resources for Digital Investing Marketplace and Startup Ecosystem development.
Ecosystem Back-end infrastructure and Support to manage, measure & peer benchmark your ecosystem.
Deal Index offers Visibility to Professional & International Investors and real time investment Market Data.
Digital Investment Marketplace Back-end solutions and Development
$$$ $$ $$
Talent & InvestmentsGrowing Startups
$$$
The leading global pioneer of digital investment market solutions for private securities.
Other Grow VC Group Companies & Services For Economic Development
Peer Benchmarking
What is a Startup?
A B
C D
High Growth Ambition and very scalable business model
Low Growth Ambition and/or Non Scalable business
Market validated business
model
Unvalidated business model
"a kiosk"
"new startup"
“New Startup”
Startup stages
http://en.wikipedia.org/wiki/Startup_company
Startup Development?
?
Startup Development
Startup Development Phases
Build / Release Validate / Iterate
IdeationScalable product or service idea for a big enough target market. Some initial business models for how it would make money. One person or only a vague team; no confirmed commitment or no right balance of skills in the team structure yet.
ConceptingClear and meaningful target with direction for at least 3 years with milestones how to get there, -> 3, 6, 12, 24, 36 months… Team of two or three core founding partners with balanced ownership. Can also already have some extended team with lighter commitment (stock options and or cash compensation)
CommitmentCommitted and balanced founding team. Able to develop the product or service (Minimum Viable Product) without dependency of uncommitted external resources, or already an initial product or service in place. Existing signed shareholder agreement between founders, with milestones, committed time and money use, for at least 2+ years with vesting.
ValidationCan demonstrate some user growth and or revenue (initial traction). Continue to attract additional resources (money or sweat equity) for equity or future revenue. Looking for clear market validation (Product Market Fit), to move into scaling.
ScalingShowing a clear, growing and measurable user and or market traction in a big or rapidly growing target market. Can and wants to scale fast. May have attracted significant funding.
EstablishingAchieved great growth, that can expected to continue. No longer needs to struggle to get resources and can acquire those easily. Continues to grow and often wants to culturally continue behaving like a "startup" for as long as possible. Founders exit or continue business as usual.
Minimum Viable Product
This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License.To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/
or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.
www.startupcommons.org
Vision > Target > Mission Growth
Idea / Team Fit Product / Market Fit Business Model / Market Fit
STARTUP DEVELOPMENT PHASES
● Business Model Canvas● Co-founder Team Building Scale / Expand
-2 -1 30 21
Securing Early-Stage Funding
Securing Early-Stage Funding● Equity Financing (Angel and VC investments)● Crowdfunding● Non-equity Funding (self-funding, grants, bank
financing, etc.)
But remember also!● Bootstrapping● Customer funding (revenue)
Build / Release Validate / Iterate
IdeationScalable product or service idea for a big enough target market. Some initial business models for how it would make money. One person or only a vague team; no confirmed commitment or no right balance of skills in the team structure yet.
ConceptingClear and meaningful target with direction for at least 3 years with milestones how to get there, -> 3, 6, 12, 24, 36 months… Team of two or three core founding partners with balanced ownership. Can also already have some extended team with lighter commitment (stock options and or cash compensation)
CommitmentCommitted and balanced founding team. Able to develop the product or service (Minimum Viable Product) without dependency of uncommitted external resources, or already an initial product or service in place. Existing signed shareholder agreement between founders, with milestones, committed time and money use, for at least 2+ years with vesting.
ValidationCan demonstrate some user growth and or revenue (initial traction). Continue to attract additional resources (money or sweat equity) for equity or future revenue. Looking for clear market validation (Product Market Fit), to move into scaling.
ScalingShowing a clear, growing and measurable user and or market traction in a big or rapidly growing target market. Can and wants to scale fast. May have attracted significant funding.
EstablishingAchieved great growth, that can expected to continue. No longer needs to struggle to get resources and can acquire those easily. Continues to grow and often wants to culturally continue behaving like a "startup" for as long as possible. Founders exit or continue business as usual.
Minimum Viable Product
This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License.To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/
or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.
www.startupcommons.org
Vision > Target > Mission Growth
Idea / Team Fit Product / Market Fit Business Model / Market Fit
STARTUP DEVELOPMENT PHASES
● Business Model Canvas● Co-founder Team Building Scale / Expand
-2 -1 30 21
-2 -1 30 21
Public services & funding
Private service providers & investors
Supporting Startup Development
Startup Knowledge - Money & Connections
Startup Key Milestones
-2. Ideation-1. Concepting 0. Commitment 1. Validation 2. Scaling 3. Establishing
From “investors” point of view
“Investor”
- anyone that makes meaningful resource investment purely for ROI
money, work, project, time, skills, contacts etc..
Valuation?● typically used and know from investing money to company ● is needed also for other calculation purposes● is also needed for founders ownership % estimates & sweat
equity investments (for work, services, contacts etc.)● acts as a measure of company development● is a core "deal tool" at all stages
About valuation● for cash investment the valuation is typically lower than for
other types● is only as real as validated with an actual deal(s) made -
anything else is "guesstimate"● typical valuation levels do exist for different stages● early stages more based on promise and later stages more
based on results so far + estimated development curve
Ideation● Potential scalable product/service idea● Some initial business models for how it would make money
●One person or vague team●no real commitment confirmed ●and/or no right balance in the team structure yet
-2 3210-1
“Investors” view
"pie in the sky"
– a lot of work to get involved....
3-2 210-1
Valuation level
$0
3-2 210-1
Business Potential
More PotentialBig MarketMarket growingMarket pullScalable
Less PotentialSmall market
Market shrinkingMarket PushNot scalable
Concepting● Have set some clear meaningful target
● clear direction (3y+) with key milestones to get there● …36, 24, 12, 6, 3 months -> 3, 6, 12, 24, 36 months…
● Team of two or three core people ● but can also have additional team with lighter
commitment
-2 -1 30 21
Team
Idea
Market
-2 -1 30 21
“Investors” view
“hmmm..., maybe there is something here...”
still very risky.... money does not really help here...
-2 -1 30 21
Valuation level
$0 - 100k
-2 -1 30 21
Commitment● Committed skills balanced founding team ● Able to develop the product/service (without dependency of
uncommitted external resources) ● OR already have initial product/service developed● Shareholder agreement with “right things” in it
● milestones & committed time/money usage ● founding team commitments for min. 2+ years with
vesting, etc.
-2 -1 30 21
Founding Team & Talent
Idea
Market
-2 -1 30 21
“Investors” view
“Looks like this may have real potential..?
Time to get in for a good deal...? Still very risky..... Maybe join as Advisor...?”
-2 -1 30 21
Valuation level
$300 - 500k
-2 -1 30 21
Team Validation
More PotentialGood TeamBalanced SkillsCommittedDoer AttitudeRight Culture
Less PotentialSolo Entrepreneur
Uneven SkillsNot committedTalker AttitudeWrong Culture
Commission and/or
Stock Options
Founders or Regular Shares
With Vesting
Advisor Stock Options
Commission Trainee OrStock Options
Proven Talent & Reliability
Unproven Talent Or Reliability
Motivated by Vision & Challenges
NOTE: Salary option available only when there is enough revenue.
StartupBetween Phases -1 to 1
Motivated By Money & Vision
Validation
● Can already show some user growth and/or revenue (initial traction)
● And/or continue to attract external resources (money / additional people/work) for equity or future revenues
-2 -1 30 21
Overall Team Talent
Product
Market
Customers
1 3-1 0-2 2
“Investors” view
“This is starting to get interesting...”
Join now? - Later I may not get in or it's going to be out of my range…
-2 -1 30 21
Valuation level
$500k - 2M
-2 -1 30 21
Between Phases 1 & 2
● Is where assumptions get validated
● If selected market and team is good…
-> The idea and business models can be (and often is) changed or pivoted several times
Commission and/or
Stock Options
Seed Investors Shares
Commission
Regular SharesWith Vesting
Advisor Stock Options
Commission
Trainee OrStock Options
Equity Crowdfunding
Proven Talent & Reliability
UnprovenTalent Or Reliability
Motivated by Vision & Challenges
NOTE: Salary option available only when there is enough revenue.
StartupBetween Phases 1 to 2
Motivated By Money & Vision
Scaling
● Showing clear and growing user/market traction, momentum and or growth
● And/or is able to attract significant funding
-2 -1 30 21
Team Talent
Product
Market
CustomersOrganization
21 3-1 0-2
Market
Customers
ProductPeople
Organization
-2 -1 30 1 2
“Investors” view
awesome! :) OR
Oh, I missed the boat :( earliest time when good VC's start to get interested....
-2 -1 30 21
Valuation level
$1 - 10M
-2 -1 30 21
Commission and/or Salary
Seed, VC Or Strategic Investors
Shares
Salary / Commission
Stock Options
Regular SharesWith Vesting
Equity Crowdfunding
Trainee
Equity Crowdfunding
Proven Talent & Reliability
UnprovenTalent Or Reliability
Motivated by Vision & Challenges
StartupAfter Phase 2
Motivated By Money & Vision
Establishing● Pretty clearly is going to make it● Often wants to culturally continue behaving like a "startup"
for as long as possible● No longer need to "try" get resources and can get those
easily ● Continue to grow ● Founders make exit or continue biz as usual
-2 -1 30 21
Valuation level
$5 - 10M+
-2 -1 30 21
Market
People
Organization
Products
Customers
Markets
-2 -1 30 1 2
Salary / Commission
Stock Options
Regular SharesWith Vesting
Commission and/or Salary
VC & Strategic Investors Shares
IPO or Equity Crowdfunding
Trainee
IPO or Equity Crowdfunding
Proven Talent & Reliability
UnprovenTalent Or Reliability
Motivated by Vision & Challenges
StartupAround 3
Motivated By Money & Vision
Salary / Commission
Stock Options
Regular SharesWith Vesting
Commission and/or Salary
VC & Strategic Investors Shares
Stock Market Trainee
Proven Talent & Reliability
UnprovenTalent Or Reliability
Motivated by Vision & Challenges
StartupAfter 3
Motivated By Money & Vision
Securing Early-Stage Funding● Equity Financing (Angel and VC investments)● Crowdfunding● Non-equity Funding (self-funding, grants, bank
financing, etc.)
Valto [email protected]
+358 400 421 551 (FIN)+1 415 854-0546 (US)
Grow VC Group ++www.growvc.com ++
@growvc ++
Thank You!