Central European Startup Guide
()
About this ebook
After clearing up what a startup actually is, this guide will look at the startup investment cycle, describing what angel, seed, and Series A investments in Central Europe look like. The third section will then give tips on how to approach an investor and negotiate a term sheet without losing all your hair, your startup, or both. The concluding section will tackle one of the least understood and most complex topics in managing a startup: employee motivation & equity.
Related to Central European Startup Guide
Related ebooks
Startup Granules Rating: 0 out of 5 stars0 ratingsStartup Blueprint: 7 Skills For Founders, Builders & Leaders Rating: 0 out of 5 stars0 ratingsDesigning the Successful Corporate Accelerator Rating: 0 out of 5 stars0 ratingsGo Fund Yourself: What Money Means in the 21st Century, How to be Good at it and Live Your Best Life Rating: 3 out of 5 stars3/5Wall Street Meat: My Narrow Escape from the Stock Market Grinder Rating: 4 out of 5 stars4/5Living on the Fault Line, Revised Edition: Managing for Shareholder Value in Any Economy Rating: 3 out of 5 stars3/5Summary of Spencer E. Ante's Creative Capital Rating: 0 out of 5 stars0 ratingsPlanet VC: How the globalization of venture capital is driving the next wave of innovation Rating: 0 out of 5 stars0 ratingsFinancial Performance Measures and Value Creation: the State of the Art Rating: 0 out of 5 stars0 ratingsShowpiece City: How Architecture Made Dubai Rating: 0 out of 5 stars0 ratingsStartup Europe: The entrepreneurs transforming Europe Rating: 0 out of 5 stars0 ratingsRocket: Eight Lessons to Secure Infinite Growth Rating: 2 out of 5 stars2/5Disciplined Entrepreneurship Complete Self-Assessment Guide Rating: 0 out of 5 stars0 ratingsStartup Communities: Building an Entrepreneurial Ecosystem in Your City Rating: 4 out of 5 stars4/5The Venture Capital State: The Silicon Valley Model in East Asia Rating: 5 out of 5 stars5/5The Cul-de-Sac Syndrome: Turning Around the Unsustainable American Dream Rating: 3 out of 5 stars3/5Restarting the Future: How to Fix the Intangible Economy Rating: 0 out of 5 stars0 ratingsStartup Arabia: Stories and Advice from Top Tech Entrepreneurs in the Arab World Rating: 0 out of 5 stars0 ratingsStartup Weekend: How to Take a Company From Concept to Creation in 54 Hours Rating: 5 out of 5 stars5/5Summary of Brad Feld, Matt Blumberg & Mahendra Ramsinghani's Startup Boards Rating: 0 out of 5 stars0 ratingsReputation Economics: Why Who You Know Is Worth More Than What You Have Rating: 3 out of 5 stars3/5The Brand Innovation Manifesto: How to Build Brands, Redefine Markets and Defy Conventions Rating: 4 out of 5 stars4/5F-Growth. Gamification, virality and monetization Rating: 0 out of 5 stars0 ratingsThe Future Is Trust Rating: 0 out of 5 stars0 ratingsFrom Simi Valley to Silicon Valley: A Story of Hard Work, Serendipity, And Questing Rating: 0 out of 5 stars0 ratingsDevOps Patterns for Private Equity: Technology organization strategies for high performing software investments Rating: 0 out of 5 stars0 ratingsHarvesting Intangible Assets: Uncover Hidden Revenue in Your Company's Intellectual Property Rating: 0 out of 5 stars0 ratingsVillage Diary of a Heretic Banker Rating: 0 out of 5 stars0 ratingsBecoming a Digital Unicorn Rating: 0 out of 5 stars0 ratingsTheology and the Disciplines of the Foreign Service: The World’s Potential to Contribute to the Church Rating: 0 out of 5 stars0 ratings
Corporate Finance For You
2023 Series 7 No-Fluff Study Guide with Practice Test Questions and Answers Rating: 0 out of 5 stars0 ratingsMind over Money: The Psychology of Money and How to Use It Better Rating: 4 out of 5 stars4/5Investing and the Irrational Mind: Rethink Risk, Outwit Optimism, and Seize Opportunities Others Miss Rating: 4 out of 5 stars4/5Summary of The Black Swan: by Nassim Nicholas Taleb | Includes Analysis Rating: 5 out of 5 stars5/5Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist Rating: 4 out of 5 stars4/5Guidebook For Million Dollar Weekend Rating: 0 out of 5 stars0 ratingsThese Are the Plunderers: How Private Equity Runs—and Wrecks—America Rating: 4 out of 5 stars4/5Mergers and Acquisitions from A to Z Rating: 4 out of 5 stars4/5Finance Basics (HBR 20-Minute Manager Series) Rating: 5 out of 5 stars5/5Do Cool Sh*t: Quit Your Day Job, Start Your Own Business, and Live Happily Ever After Rating: 3 out of 5 stars3/5Mastering Private Equity: Transformation via Venture Capital, Minority Investments and Buyouts Rating: 0 out of 5 stars0 ratingsBusiness Valuation For Dummies Rating: 4 out of 5 stars4/5The Truth About Taxes: How the Wealthy Elite Play a Different Game Rating: 5 out of 5 stars5/5John D. Rockefeller on Making Money: Advice and Words of Wisdom on Building and Sharing Wealth Rating: 4 out of 5 stars4/5LLC or Corporation?: Choose the Right Form for Your Business Rating: 3 out of 5 stars3/5Double Your Profits: In Six Months or Less Rating: 4 out of 5 stars4/5Financial Planning & Analysis and Performance Management Rating: 3 out of 5 stars3/5Corporate Finance: A Simple Introduction Rating: 5 out of 5 stars5/5Negotiating with Giants: Get what you want against the odds Rating: 4 out of 5 stars4/5The 17 Indisputable Laws of Teamwork Workbook: Embrace Them and Empower Your Team Rating: 0 out of 5 stars0 ratingsRaising Capital: Get the Money You Need to Grow Your Business Rating: 3 out of 5 stars3/5The Financial Advisor's Success Manual: How to Structure and Grow Your Financial Services Practice Rating: 0 out of 5 stars0 ratingsValue: The Four Cornerstones of Corporate Finance Rating: 4 out of 5 stars4/5Understanding Financial Statements (Review and Analysis of Straub's Book) Rating: 5 out of 5 stars5/5
Reviews for Central European Startup Guide
0 ratings0 reviews
Book preview
Central European Startup Guide - Andrej Kiska Jr.
Central European
Startup Guide
by
Andrej Kiska Jr. of Credo Ventures
Andrej Kiska Jr. Copyright © 2018
To the teams of Credo Ventures and Benson Oak as well as all the startups for teaching me all I know, Irma for giving me the idea for this Guide and Geri for making it readable.
Table of Contents
Section I.
Introduction
1. What is a Startup?
Definition of a Startup
So how many startups does our region really have?
Section II.: The Startup Investment Cycle
2. Investing in Startups—How Does It Work?
The History and Evolution of the Investment Cycle
Why Does an Investment Cycle Exist?
The Investment Cycle and Investor Role Overview
3. Fundraising in Central Europe
The Investment Cycle in Central Europe
4. Valuations and Investment Sizes
The Right Investment Size
Valuations
Choosing the right partner
5. How Venture Capital Looks in Practice: The Credo Ventures Case Study
The Team: What Are Its Members’ Roles Internally?
External Roles: How Does the Team Help Its Portfolio Companies?
How Do We Look at Investment Opportunities?
Section III.: Fundraising
6. Five Mistakes to Avoid When Approaching an Investor
Your Startup Doesn’t Fit the Investor’s Criteria
You Cold Call Potential Investors
Your Introductory Email Doesn’t Contain Relevant Information
You Have Hired an Advisor
Your Startup Doesn’t Make Sense
7. Fundraising: From the First Meeting with a VC to a Term Sheet
Before the First Meeting
During the First Meeting
After the First Meeting
The Terms
8. Term Sheet Guide, Pt. 1: Introduction to Term Sheets
What a Term Sheet Is
Why Focusing Too Much on Valuation Can Damage Your Startup
9. Term Sheet Guide, Pt. 2: Convertible Loan
Definition of a Convertible Loan
Why and When to Use a Convertible Loan
Terms You Can Find in a Convertible Loan
10. Term Sheet Guide, Pt. 3: Equity Investment
The Terms
No Lawyers
Random Remarks
11. Why Not to Fundraise in the United States
The Art of Self-Promotion
The Reasons for Higher Investment Size
Don’t Take Seed / Series A from a Blue Chip U.S. Fund
When to Go to Silicon Valley
12. How to Build a Financial Forecast That Will Look Attractive to Investors
When to Build a Forecast
What to Avoid
What to Follow: The Approach of Series B and Beyond
How to Build a Forecast for Your Series A
Section IV.: Employee Equity
13. Why Employee Equity is Important to Your Startup
Advantages of Employee Equity
Right Communication is Key
14. How to Structure Employee Equity in Europe
Four Steps to Set Up Your Plan
Notes
Citations
Section I.
Introduction
Six years. Thousands of business plans. Yet the same questions.
When I first started investing in technology companies in Central Europe six years ago, I didn’t even know that the word startup
existed. Or coworking space.
Or accelerator.
Or unicorn.
Sure, we were the first backers of AVG Technologies (one of very few companies from Central Europe that went public on the New York Stock Exchange and surpassed a billion dol ar valuation), but nobody told us we should call AVG a startup or a unicorn.
A lot has changed since then, even in our region. Sometimes it feels like everyone has a startup. There are plenty of coworking spaces, accelerators, blogs, and mentors. Even success stories show up every now and then.
Yet when I listen to entrepreneurs pitch today, I can’t help but notice some sort of . . . uncertainty. Yes, everyone in the conversation throws around the unicorns, startups, and non-participating liquidation preferences. But how many really know how to differentiate between a startup and a small and medium-sized business (SMB)? Or when to ask for a seed investment and from whom, or how to negotiate a term sheet? Our startup community seems full of buzzwords imported mainly from Silicon Valley, but do we really know what those buzzwords mean and how to apply them to the realities of Central Europe?
Thanks to all the bloggers, entrepreneurs, and investors willing to educate our ecosystem. I have a biweekly blog as well, and I fully understand how difficult and consuming such work is. The goal of this Guide is to support that effort: I have compiled a few of my blogs to help entrepreneurs find a lot of resources in one physical place that should aid them in navigating the murky waters of the Central European startup ecosystem.
After clearing up what a startup actually is, we will look at the startup investment cycle, describing what angel, seed, and Series A investments in our region look like. The third section will then give tips on how to approach an investor and negotiate a term sheet without losing all your hair, your startup, or both. The concluding section will tackle one of the least understood and most complex topics in managing a startup: employee motivation and equity.
This book has no ambition of becoming a complete guide to the startup ecosystem. I’ve only tried to address a few topics that I’ve noticed entrepreneurs continuously struggle with over the years. There are many more to cover, and I hope to do so over the upcoming years. If you feel something is missing from the Guide, or you disagree with me on any points, please get in touch at kiska@credoventures.com. After all, the investors should learn as much from the startups as the startups learn from the investors.
Andrej Kiska, Partner at Credo Ventures
1. What is a Startup?
I am sick and tired of the word ‘startup’. It seems like everyone and their mother has a startup today. I might even start calling the grocery store next door a food startup.
This is a quote I have been