2. • Recirculating $20m seed fund
• 80% of all early tech investment in SA
• 8-10 investments

3. So What Do VC’s Do?
• Raise money
• Seek & screen opportunities
• Structure opportunities, deals
• Invest
• Work investments
• Seek exit and distribute returns

4. Investment Strategy
• Seed Stage
• Risk elimination at lowest possible cost is
key variable
• What must ‘be in hand’ for next round?
• Series A and up
• Market/Execution risk
• Build business or build to exit

5. Staged Investments
• Optionality
• Funding linked to arrival of new information
• Prod dev
• Market acceptance
• Competition
• Team
• Preserve the option to abandon or invest

6. $100-$300k Round
Build Product & Validate Customer Use
• Structure
• 1-3 founders
• Incubation environment: heavy mentor/advisor assistance
• Test Functional Prototype
• Beta prototype in ~3-6 months
• Develop minimal critical feature set => get to “It works, somebody uses
it!”
• Improve design and usability, set up conversion metrics
• Test small-scale customer acquisition strategy
• Demonstrate Concept, Reduce Product Risk, Test Functional Use
• Develop Metrics & Filter For Stage 2 Investment

7. $750k - $1.5m Round
Focus & Grow Market
• Structure
• 2-10 person team
• Syndicate with Angel Investors / Seed Funds
• Improve Product, Expand Customers, Test Revenue Model
• Beta+ prototype in ~6-12 months
• Scale customer adoption => “Many people use it & they pay!”
• Testing marketing campaign, customer acquisition channels + costs
• Test revenue generation, find profitable customer segments
• Prove Benefit of Solution, Assess Real Market Size
• Test Channel Cost, Revenue Opportunity
• Determine Org Structure, Key Hires

8. $2m - $10m Round
Maxamize Revenue Growth
• Structure
• 5-25 person team
• Syndicate with Seed & Venture Investors in Exit Market
• Make Money (or Go Big), Get to Sustainability
• Production version in ~12-24 months
• Revenue/Growth => “We can make lots of money!”
• Marketing plan => predictable channels/campaigns + budget
• Scalability & Infrastructure, Customer Service & Operations
• Connect with Distribution Partners, Expand Growth
• Expand Market, Operationalize Business
• Optimize for Sustainability / Exit Opportunity

11. Valuation is key
3. Is it a good investment?
• What can we sell the company for
in x years if it achieves its goals?
• What is the probability of achieving
this ‘success’?
• How much $$$ will be needed to
achieve ‘success’?
• What % does this round need to
own to get target portfolio return?

12. 3. Is it a good investment?
• What does success look like?
• Revenue in year 6 $25m
• Enterprise Value 3x
Revenue
• Enterprise Value $75m
• Plus Cash at Bank $2m
• Less Debt $0m
• Equity Value at exit $77m

13. What return do I good investment?
3. Is it a need on my money?
First round investment $1.5m
Probability of success 10%
Portfolio target return 2x investment
Success target at exit $1.5m x 2 / 10% = $30m
Percentage held at exit $30m / $77m = 39%
Assuming no follow on rounds
Investors willing to pay $1.5m for 39% of the company
Post money valuation $1.5m / 39% = $3.9m
Pre money valuation $3.9m – 1.5m = $2.4m