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Presentation held by Mikko Suonenlahti, DFJ Esprit, at the Nordic Seed Capital Summit in Stockholm, 19 may 2011.
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Mikko Suonenlah- May 2011
Global Venture, Local Capital Nordic Seed Capital Summit
DFJ Esprit: Who We Are
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Formed in 2006 and UK HQ’d we have grown to $1 billion of VC funds
Have invested in over 200 European high growth technology companies
European associate of top Eer Silicon Valley VC firm Draper Fisher Jurvetson (DFJ)
Investments include CSR, Lovefilm, The Cloud, Skype, Tesla, Hotmail
AcEvely invesEng new funds – across all tech sectors, $1m -‐ $30m rounds
13 European partners based in London, Dublin, Cambridge, Helsinki and Paris
DFJ manages $6 billion+ VC globally across USA, China, India, Brazil, Israel, Korea, Russia
We invest in and help start-‐ups who want to change the world and become global leaders
The Good News about VC in Europe
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Never been cheaper to start a company!
The Angel market has grown up in Europe!
Move back to early stage from successful VC’s
Lots of noise – a difficult market to understand but we believe it is successful and can be scaled up for more growth
The VC model
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A fund invests in a por^olio of 20-‐30 high growth companies across stages
Companies are generally loss making and have no access to debt
Companies are typically creaEng new markets and much of the spend is on quality jobs (engineers, salespeople, management)
Many don’t succeed, the winners pay for the losers and an overall return is generated
1/3rd return 5x or more, 1/3rd return 1x, 1/3rd return nothing = Net a 2x return aeer fees
Europe matches the US for successful exit values at around $400M ...
Source: Dow Jones VentureSource
Average Exit Cap ($ 100M+ Exits) US$ million
Large ($100M+) exits in Europe for VCs reached about 1/3rd of US level
Source: VentureSource, DFJ Esprit analysis
• Volume is c.100 per year in US in normal markets (95-‐98, 04-‐07), drops to 50 per year in poor years, avg.
• Avg. major exits running at 33 a year in Europe for 5 years pre crash
• Since US VC-‐industry invests 5 Emes more on average, more $ 100m+ exits per VC invested in Europe
• USA has already rebounded – Europe is starEng to in 2011
USA Europe
Number of $ 100M+ Exits Over Time in US and Europe
The Model Works
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100 major exits x $400m = $40 billion of value created each year
Assume 70% to VCs suggests returns of $32 billion
Over 2004-‐2008 the VC market grew to $32b per annum = no return
Now rightsizing at $16b per year = generaEng a 2x return
33 major exits x $400m = $13 billion
Assume 70% to VCs suggests returns of $10 billion
Industry can support $5 billion per annum and return 2x
And no reason why Europe can’t grow to 100 major exits a year -‐> investment constrained
(UK could be 50% of this)
USA
Europe
The 4 Steps to the Epiphany
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Applicable to almost every business and business model
The Path to Disaster: The Product Development Model
The Path to Epiphany: The Customer Development Model:
Customer Discovery
Customer Valida:on
Customer Crea:on
Company Building
How do we help our companies grow?
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DFJ Partners include successful serial entrepreneurs, operators, marketers and financiers
The DFJ Global Network “IntroducEons to anyone, anywhere at anyEme”
We are here to:
Help you hire senior execs and a board Make strategic decisions regarding the direcEon of the company
Introduce you to new customers and partners
Help maximise the value of your company
DFJ Case Study
Building Tech Businesses – Case “Dynamite”
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2005 2006 2007 2008 2009 2010 2011
€ Raised 2.3 2.9 16.8 17.5 16.6 S-‐1 filed 13 May
€ Post money valua-on 16.6 58.2 87.3 170
€ Revenue 0.1 1.8 6.8 15.9 32*
Source: Venture Source, *NY Times
Ques-ons?
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