From Idea to InvestmentVenture Capital workshop one-day program
About the facilitator
Wharton MBA JP Morgan Vice President - IB Technology, Global
Markets Internet Marketing
Parallax Capital Management Co-founder and MD - Venture Capital
Extream Ventures Co-founder and MD - S$20 million VC fund
Expara Founder and MD - IDM Ventures Incubator, fund, advisory, training
NUS Adjunct Associate Professor, Business School, Entrepreneurship
Sasin Visiting Professor, Venture Capital
Risk and return are highly correlated
You cannot increase return without taking more risk
Why do companies raise investment?
Lifestyle or scalable?
Paycheck or payout?
A big piece of a small pie?
A small piece of a big pie?
Why invest in venture capital?
As of June 30, 2014. The Cambridge Associates LLC U.S. Venture Capital Index is an end-to-end calculation based on data compiled from 1,508 U.S. venture capital funds (963 early stage, 165 late & expansion stage, 374 multi-stage and 6 venture debt funds), including fully liquidated partnerships, formed between 1981 and 2014. (1)Pooled end-to-end return, net of fees, expenses, and carried interest.(2) 2007-2015 Sources: Cambridge Associates LLC, Barclays, Dow Jones Indexes, Frank Russell Company, Standard & Poor's, Thomson Reuters Datastream, and Wilshire Associates, Inc
Case Shiller Real Estate Index 4.1Expara IDM Ventures (2) 43.03
SEA exit markets at an inflection point
Exit activity in SEA, especially in Singapore, exploded in 2013 Increased investment in startups since 2007 is beginning to yield results
Number of exits increased from 6 in 2010 to 20 in 2013
Singapore alone has had 30 exits since 2007, 13 in 2013
Value of exits increased from 51 MM in 2010 to 400 MM in 2013
Some recent exitsCompany Country Acquiror Price Year
ZopIM Singapore Zendesk US$29.8MM 2014Non-Stop Games Singapore King US$ 100MM 2014sgCarMart Singapore SPH S$60 MM 2013DS3 Singapore Gemalto S$50 MM est. 2013Asian Food Channel Singapore Scripps Networks Undisclosed 2013Reebonz Singapore MediaCorp and Existing investors S$250MM 2013Yfind Singapore Ruckus Wireless Undisclosed 2013Techsailor Singapore TO THE NEW Undisclosed 2013travelmob Singapore HomeAway Undisclosed 2013Catcha Digital Media Singapore Opt Inc Undisclosed 2013GridBlaze Singapore Undisclosed Silicon Valley Startup Undisclosed 2013Viki Singapore Rakuten US$200MM 2013SGE Singapore Tech In Asia Undisclosed 2013ThoughtBuzz India To The New Undisclosed 2013AyoPay Indonesia MOL AccessPortal Undisclosed 2013Tongue in Chic Malaysia PopDigital Undisclosed 2013Ocision Malaysia Star Publication US$ 4.36MM 2013Glamybox Vietnam VanityTrove Undisclosed 2013PaymentLink Singapore Wirecard US$41.2MM 2013Dealguru Singapore iBuy S$34.28 MM 2013Buy Together Hong Kong iBuy S$21 MM 2013Dealmates Malaysia iBuy S$10 MM 2013PropertyGuru.com Singapore ImmobilienScout24 S$60 MM 2012HungryGoWhere Singapore Singtel S$12 MM 2012AdMax Network Singapore Komli Media Undisclosed 2012TheMobileGamer Singapore Singtel US$1.5 MM 2012
Key elements for success
Solve a problem for customers Value proposition
Develop an innovative product Innovation
Identify your customers Market identification and analysis
Reach your customers Marketing strategy
Compete when others enter - Sustainable competitive advantage
Make money Business model and financial plan
Team A team or B team
Key venture finance terms
Funding required & equity offered
Use of Proceeds
Exit Strategy and ROI
Company valuation methods
Price to earnings (p/e)
Multiple of book value
Discounted Cash Flow (DCF)
How much equity does the investor receive?
Pre-money valuation Amount invested by VC (Agreed pre-money value of business
+ Amount invested by VC) $3MM pre + 1 MM VC = 25% VC equity
Post-money valuation Amount invested by VC post-money valuation $4MM post = 25% VC equity
How do VCs make money?
Trade sale sell to another company
IPO sell to the public through listing on an exchange
Trade sale or IPO?
How does a venture capital fund work?
Fund Investors VC
$ 10 mm
$ 10 mm
$ 58 mm
Fund size 10,000,000$ Life of the fund 7Management fee 2.5%Investable 8,250,000$ Investment size 1,031,250$ Companies 8Fail 4 50%Break even 2 25%Exit 2 25%
Investor's required ROI 35%Fund multiple return 5.76Fund size at exit 57,600,000$ Carry @ 20% 9,520,000 Distribution 48,080,000$ Fund return multiple 4.81Fund ROI 35%Required return per exit 28 times
Equity per company F/D 15%Required value of equity at exit 28,800,000$ Required co value at exit 192,000,000$
Stages and sources of funds
Series A, B, C
Mezzanine Pre-Exit Exit
VC hurdle rates 60-100% 40-60% 20%
Incubators corporations government
Customers, suppliers, strategic partnersVCs, Banks for VC loans
R&D Establishment GTM/Rollout Accelerated Expansion MaturityEnablement growth
Calculate investors ROI including dilution
Key elements of a venture deal
Board of directors
Amount of financing
VC-Start-up negotiation game
Expara Pte. Ltd.
65-6323-3084, 65-9780-5381 (hp)
Block 71 Ayer Rajah Crescent, #02-10/11 Singapore 139951
Slide Number 1About the facilitatorVC mindsetWhy do companies raise investment?Why invest in venture capital?SEA exit markets at an inflection pointSome recent exitsKey elements for successKey venture finance termsCompany valuation methodsHow much equity does the investor receive?How do VCs make money?Trade sale or IPO?How does a venture capital fund work?Stages and sources of fundsCalculate investors ROI including dilutionCap tableKey elements of a venture dealVC-Start-up negotiation gameContact us