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Start-Up Financing and Cultural Differences Silicon Valley vs. Europe

Start-Up Financing and Cultural Differences Silicon Valley vs. Europe. PARTECH INTERNATIONAL. San Francisco, Paris $550M Funds under Management Early Stage IT Integrated Model Institutional Investors. INNOVATION FINANCING. Cultural Differences and Entrepreneurship.

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Start-Up Financing and Cultural Differences Silicon Valley vs. Europe

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  1. Start-Up Financing and Cultural Differences Silicon Valley vs. Europe

  2. PARTECH INTERNATIONAL San Francisco, Paris $550M Funds under Management Early Stage IT Integrated Model Institutional Investors

  3. INNOVATION FINANCING Cultural Differences and Entrepreneurship Venture Capital Overview The Term Sheet: where it all begins A Matter of Perspective

  4. INNOVATION FINANCING Cultural Differences and Entrepreneurship Venture Capital Overview The Term Sheet: where it all begins A Matter of Perspective

  5. THE VENTURE FUND MONEY FLOW $200-500M $5-10M Venture Capital Fund Venture Capital Fund $10-100M Institutional Investor Institutional Investor Entrepreneur IPO/M&A

  6. INVESTMENT SLOWING YET PACE SUSTAINED

  7. YET… SMALLER ROUNDS

  8. MOSTLY IN IT AND HEATHCARE

  9. FOCUSED ON EARLIER STAGE

  10. EXITS: MOSTLY M&A

  11. CALIFORNIA: NEARLY 50% OF US TOTAL Silicon Valley/Bay Area: 33%

  12. EUROPE WAY BEHIND France/US: 1/10 in number of deals, 1/20 in amount Amount Invested (€B) US VENTURE INVESTMENT EUROPE VENTURE INVESTMENT

  13. A CRISIS? Average IRR by Fund Vintage

  14. KEY ISSUE: TIME-TO-EXIT

  15. INNOVATION FINANCING Cultural Differences and Entrepreneurship Venture Capital Overview The Term Sheet: where it all begins A Matter of Perspective

  16. WHY SILICON VALLEY? Many tried… Successful system fosters culture Culture creates system Economic and tax environment: not unique Universities: sure, but many other Good lawyers, PR firms, engineers: not unique • Many VCs: sure, but why are they here? Sunshine, beautiful bay: true, unreplaceable The real reason: culture really hard to reproduce

  17. A LOOK AT THE TERM SHEET Reaction Tells All

  18. INNOVATION FINANCING Cultural Differences and Entrepreneurship Venture Capital Overview The Term Sheet: where it all begins A Matter of Perspective

  19. Decision Making Influence Sharing Capital Sharing Hiring and Firing A Matter of Perspective How cultural context changes everything

  20. Silicon Valley Focus: Act => Fast decisions OK to be wrong, just adjust If you are right 70-80% of the time… Mostly Pragmatic decisions A MATTER OF PERSPECTIVE: DECISION MAKING • France • Focus: Think => Optimized decisions • Avoid mistakes at all costs • Often Emotional decisions • Example: NEU • Decision to focus on market… painfully long meetings • Example: MSY • “I know it is the right decision but…”

  21. Silicon Valley Recognize expertise …and lack thereof Open management communications (including strategic matters) Uneducated about foreign markets, but know it. A MATTER OF PERSPECTIVE: INFLUENCE SHARING • France • Problem delegating to functional experts • Tight-lips management and information control • More educated about Intl. markets, but harder to let local execs drive strategy • Example: INO • Could not give up leadership for larger goal • Example: KTK • We dominate at home, therefore we know…

  22. Silicon Valley Ownership is part of standard compensation Dilution creates value OK to own 5-10% of company at IPO A MATTER OF PERSPECTIVE: CAPITAL SHARING • France • Ownership is founder privilege • Dilution robs founders • Unfair to own 5-10% of company founded • Example: SWY • US: everyone a shareholder – France: 7 shareholders (out of 100+) • Example: TI • Missed exec hires, conflict with French management and board structure

  23. Silicon Valley Employment is business contract One month notice: you’re a softie A MATTER OF PERSPECTIVE: HIRING AND FIRING • France • Employment is moral contract • One month notice: you’re a cold-blooded capitalist • Example: SWY • Hunt versus nurture • Example: IMM • Incapable of hiring execs, looking for perfect match (see also indecision)

  24. The obvious: (most) markets are global Competition can come from anywhere Ex: CLAP didn’t see European competitor emerging Local advantage may be blinding Ex: MIA ignored rise of US giants Cultural advantage may be carry limits Ex: PCT stayed local lifestyle company UNDERSTAND THE LOCAL CONTEXT, BUT… Always keep a global perspective

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