Pilgrim Beart

1
Adventure or Venture?

• Pilgrim Beart
• CHASE ConferenceWhere Angels dare and VCs also
  tread
• 10th October 2002

2
Anagrams

• Startup Entrepreneur
• Ensnare utter Ruppert
• Business Angel
• Senile Ass Bung
• Venture Capitalist
• An Evil Pact Its True
• Pilgrim Beart
• Gerbil Armpit

3
Venture
Adventure
vs.
4
Starting out

• Everyone said Watch out for VCs!
• VC cash is real cash

5
Perception
6
Power Evolution
Share class
Ordinary
Options
Founder
Angels
Employees
Founder
7
The illusion of reducing risk
Risk
Protective Provisions
8
Levers work both ways!

• Protective provisions arent
• VC Preference shares (esp. multiples)
• Uni IPR claw-back
• O shares for all
• Keeps everyone on the same side
• Prevents factions

9
Partnership

• Unequal partners
• Trust

10
Investment - Valuation

• By definition company doing something new and
  unique
• Risk high
• Accurate predictions impossible
• Temptation to inflate/accelerate projected
  revenue to make company attractive to VC.
• DCF is meaningless
• Almost no start-up achieves its first year
  figures
• Few tech companies can project 1 year.
• VCs are financial people but running a
  business on the bottom line when it has none is
  nonsensical.

11
Money, money, money!

• Success cannot be rushed
• A self-fulfilling prophecy?

12
Timing

• Boom
• VC used to be a multiplier for
  already-successful businesses
• Then became an adder- could start a business on
  VC
• Now back to normal
• VCs just dont understand early-stage

13
All in the same boat
14
Factions in Conflicts of Interest
Founder
Angels
Ordinary Shareholders
Employees
15
Factions in Conflicts of Interest
Founder
Angels
VC
CEO
Ordinary Shareholders
Chairman and Board
Employees
16
Objects in this mirror are more valuable than
they appear
17
Immoral, Anti-Social or Illegal?

• Principles
• Can you live with yourself?
• Relationships
• Can you live with others?
• Laws
• Can you live in jail?

18
Check-out your partners
19
VC is not compulsory
20
Adventurers or mere amateurs?

• Whats missing is not money
• its knowledge
• Technology Accelerators
• SeedCorp
• AVCP
• Saviso
• Ten Sails

21
Conclusions

• Does it have to be this way?
• Understanding the VC-startup machine
• Share the knowledge and experience
• Technology Accelerator
• Keep Angels on the board
• It is an adventure and a venture.