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Confidential and not for Distribution Strictly for Institutional and Accredited Investors Only
The Future of Venture Capital
Startup Istanbul October 10, 2016
AUTHOR OF LEADING BOOK ON VENTURE CAPITAL
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NEW BOOK ON CORPORATE VENTURE CAPITAL - CVC - August 2016
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• Japanese language translation
being conducted by
Development Bank of Japan, WM
Partners & Mori Hamada &
Matsumoto
• Russian Translation by
Moscow VC, sponsored by
Russian gov’t fund
• Chinese by VCs in China
• Seeking new partners to
translate into Turkish,
Arabic, Korean,
Portuguese, Spanish and
other languages
• Contact me if you have any
interest
• We are also raising capital for
our funds
ADVICE TO CORPORATES THINKING OF ESTABLISHING A CVC PROGRAM
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• Outline reasons why the corporate wants to operate a CVC and make all
decisions to achieve these goals
• Get physical signature buy-in from CEO & board and make this your constitution
to drive all decisions that will follow
• Set specific investing budget and stick with it for minimum of 10 years
• Expand the topics you will invest in. Disruption is coming from a direction you
never considered
• Fund of Funds (FoF) immediately gets corporate their list of goals
• FoF as first step followed by direct CVC investing ensures the program will be
profitable
ADVICE TO CORPORATES THINKING OF ESTABLISHING A CVC PROGRAM
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• A profitable CVC program is like a zero cost external R&D innovation program
• Force General Partners (GPs) to share information, intelligence, deal flow and
introduce startups for partnerships, direct investments & M&A
• Investing in financial VCs gets you access to the deals that would never take your
funding for many good reasons and very likely to make a profit
• GPs bring specific deal flow to corporate and teaches them how to invest
• Establish process to approve and execute an investment
• Do not invest into any deals without at least one financial VC investing in the same
round
ADVICE TO CORPORATES THINKING OF ESTABLISHING A CVC PROGRAM
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• Make first investments using outside law firms that do this every day like DLA,
Orrick, etc. Do NOT start with your internal legal department
• Use CVC & M&A to diversify product & service portfolio
• Come up with compensation plan to keep team together for 10 years
• Staff the CVC team with 50% internal execs that have as much power as possible
within the company and 50% external VCs with financial VC experience and
existing networks
• Locate the CVC in San Francisco or Palo Alto - not Detroit, duh!!!!
• Learn from mistakes and successes of the last 30 years of CVC experience
RAISING CAPITAL FROM CVCS
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• Understand the dangers of what can go wrong when taking funding from a CVC
• Understand any strings attached terms, licensing agreements, and legal terms
such as ROFR, ROFN
• Give careful consideration to loosing your neutrality. If you disclose to Cisco that
you took funding from Huawei, can you still get Cisco as a customer or get them to
acquire you? Probably not!
• Take meetings with CVCs to run your startup up the flagpole to the CEO, CTO,
head of a Business Unit you can partner with. Take meetings and be prepared to
decline to take their funding
• Tell war story of CVC with a bad ending
RAISING CAPITAL FROM CVCS
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• Do your homework and find out as much as you can about any strategic
partnerships you can launch with the parent corporation and try to articulate this
when approaching and meeting with the CVC team
• Ask your existing angels and VCs if they understand the CVC’s investment
strategy
• If there are books or blogs that state the exact investment strategy of the CVC
read up on the CVCs play book before you get on the field with them
• Learn about the CVCs process. How do they make an investment decision?
• How is Corporate Development related to the CVC? Is it the same group?!!!
RAISING CAPITAL FROM CVCS
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• Do they have an investment committee?
• Who is on the investment committee?
• How long will the process take to get funding?
• Do they require the signature of a BU head stating they will do business with you
or not try to build what you have internally?
• Do you need to make a sale to the corporate as a customer before getting CVC
funding?
• Ask if they require other strings attached or performance warrants?
• Qualify the check size and stage, sectors and geography they invest in
RAISING CAPITAL FROM CVCS
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• Ask to be referred to 2 or 3 CEOs that they invested in recently
• Don’t be annoying to the CVC when doing all of this qualification and DD :-)
• Keep an eye on your legal bill. You can easily spend $50k per month and never
sign the deal and take CVC funding
• Qualify the check size and stage, sectors and geography they invest in
• Don’t let them pump up your valuation. Always set valuation looking at your next
round valuation
• Try to get a financial VC to syndicate with CVC and establish balance of power.
Financial VC wants to make money. CVC may have another much more important
agenda
RAISING CAPITAL FROM CVCS
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• Consider not giving the CVC a board seat
• Identify conflicts of interest and be open with the CVCs about your concerns over
conflicts of interests and discuss this with your financial VC
• Consider having two sets of board meetings - one without the CVCs present
• Be prepared that the person at the CVC may change jobs before your next
fundraising round or they will cancel the CVC program and you need other plans
to raise capital
• Lower your risk of being orphaned by making more friends at the CVC and BUs
RAISING CAPITAL FROM CVCS
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• Do all the same things you do with a financial VC and more
• Push the CVC hard as hell to get meaningful revenue or other partnerships to
help grow your business internationally. Push hard
• Be prepared for corporate to be slow and not operate at startup or financial VC
speed.
• Getting a wire transfer from a corporate can take 2 months longer than what they
told you to expect
• Never run out of cash
RUBICON VENTURE CAPITAL INVESTMENT FOCUS
GEOGRAPHYENTERPRISE &
CONSUMERSECTOR FOCUS STAGE
US-Focused and opportunistic
internationally with active LPs throughout the
world
Investing in B2B and B2C companies
Broad range of software / internet sector
investments. Ex: Mobile, IoT, MarTech, Big Data,
FinTech, Hospitality Tech, Enterprise SaaS
Late-Seed, Series A and Series B
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LATE SEED,A, BB2B B2C
RUBICON’S LP NETWORK IS A PLATFORM FOR DOING BUSINESS
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We leverage our network to source deals and help our portfolio companies expand into new markets in the US and across the globe
DIVERSE LP NETWORK ADDS VALUE TO STARTUPS
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Rubicon raises capital from corporates, individual high net worth angel investors, family offices and
institutional LPs creating a powerful network ready to help and go to bat for our startup portfolio.
INVESTORS IN FUND II MAY CO-INVEST WITH FUND I AND FUND II CO’SInvestor in Fund II may co-invest with our VC fund in any Fund II or Fund I companies
Our investors have control of which companies they want to invest more into
INVESTMENT
RUBICON FUND
SIDECAR FUND
COMPANY
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MG
MT
FE
EC
AR
RYC
AR
RYM
GM
T FE
E
MAXIMIZE INTERACTION AND INFORMATION AMONG LPS AND PORTFOLIO
• Classic VC has zero contact from big LPs and the portfolio • Rubicon facilitates contact among LPs and the portfolio companies with sidecar
real-time transparency and culture of events and introductions
ANGEL INVESTOR LPs
CORPORATE LPs
FAMILY OFFICE LPs
GENERAL PARTNERS & VENTURE PARTNERS
RUBICON PORTFOLIO COMPANIES
Meeting corporate, family office, institutional and angel investors
to invest in our VC fund
Download this presentation at http://www.slideshare.net/andrewromans
Startups that raised min $2m funding with min $1m revs contact [email protected]
Investors contact [email protected]
