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Building Sequoias, Not Bonzais

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Steven Coppens
Steven Coppens

Building companies wordclass companies takes a lot, but it all starts at the beginning. go to our blog : ictblog.gimv.com

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Entrepreneurship : Aiming for Bonzais or Sequoias? Alex Brabers Executive Vice-President Gimv ICT ictblog.gimv.com
The Bonzai approach Business plan written in local language (Dutch, French, German) Capital raised with VC: defined by the constraints of local VCs Additional management recruitments (if any) on local market Revenue target for year N+5: 10 mio EUR Addressed market: mainly local whereas neighbouring countries from year N+3 onwards
European Bonzai approach Too many start up companies get venture capital Not enough selectivity regarding the funding of new companies Too little money is invested in these companies Too much drip feeding
The Sequoia approach Business plan in English Revenue target of 25 mio EUR revenue or more in year N+5 Local market can be a test market but overall insignificant given revenue target Business plan determines the funding request with VCs: Good projects will find the required money Local nd international VCs Average VC spending in ICT in Europe over last 5 years was 2.9 bio EUR (VentureOne) International management recruitment Challenged by tough international competition
Why to prefer a Sequoia strategy ICT technology companies play on an international scale with global competition (the world is flat!) Sustainable ICT companies should therefore be internationally positioned or shall disappear Proportionately more value is attributed to larger companies (higher valuation multiples) Some markets: winner takes it all VC overall portfolio return is determined by its stars, not by the dogs in its portfolio
When aiming for a Sequoia, make sure all the pieces of the puzzle are available and in the right place
Conclusions Be ambitious in planning your business Be modest regarding each partys contribution

More Related Content

Building Sequoias, Not Bonzais

  • 1. Entrepreneurship : Aiming for Bonzais or Sequoias? Alex Brabers Executive Vice-President Gimv ICT ictblog.gimv.com
  • 2. The Bonzai approach Business plan written in local language (Dutch, French, German) Capital raised with VC: defined by the constraints of local VCs Additional management recruitments (if any) on local market Revenue target for year N+5: 10 mio EUR Addressed market: mainly local whereas neighbouring countries from year N+3 onwards
  • 3. European Bonzai approach Too many start up companies get venture capital Not enough selectivity regarding the funding of new companies Too little money is invested in these companies Too much drip feeding
  • 4. The Sequoia approach Business plan in English Revenue target of 25 mio EUR revenue or more in year N+5 Local market can be a test market but overall insignificant given revenue target Business plan determines the funding request with VCs: Good projects will find the required money Local nd international VCs Average VC spending in ICT in Europe over last 5 years was 2.9 bio EUR (VentureOne) International management recruitment Challenged by tough international competition
  • 5. Why to prefer a Sequoia strategy ICT technology companies play on an international scale with global competition (the world is flat!) Sustainable ICT companies should therefore be internationally positioned or shall disappear Proportionately more value is attributed to larger companies (higher valuation multiples) Some markets: winner takes it all VC overall portfolio return is determined by its stars, not by the dogs in its portfolio
  • 6. When aiming for a Sequoia, make sure all the pieces of the puzzle are available and in the right place
  • 7. Conclusions Be ambitious in planning your business Be modest regarding each partys contribution