The GreenHouse Start-up accelerator

Last Wednesday saw the first of a series of 10 start-up bootcamps. We were lucky to have David Kirk “in-country” and able to present this event in person. The session took place in the excellent “Office Ireland” facilities in Castletroy Limerick.

The evenings event was crammed full of information as David squeezed in two topics: “The Business of Business” & “The Business of Investing”. While it was a lot of information to cram in one evening it was valuable as it addressed a lot of important issues that a lot of start-ups tend to forget as they get carried away in their enthousiasm to develop a product or service. Topics discussed were CAP tables, dilution, equity, shares issued, shares authorised, share options etc. David made clear how getting these things “right” at the beginning can avoid a lot of problems later down the line. If you get your CAP table wrong it can lead to an incorrect valuation later on or the founders equity share can get diluted to nothing when you go looking for outside funding.

Next was a revelealing insight into different types of funding (Friends & Family, Angels and Venture). It showed the differences between the different types, at what stage they are mostly applied and what he benefits and drawbacks of each type of funding are. The insight provided in how VC’s actually make their money and how that impacts on how and when they invest was particularly interesting. The fact that the number that you have put in the box for your year-5 revenue at the back of your financial projection included with your business-plan might have more influence on the VC’s decision to invest than *anything* else in your business-plan is a startling revelation to quite a lot of people.

Also worth considering when looking at the possibilities of securing VC funding is that out of 10 companies that a VC invest in they (on average) expect 3 to fail and another 3 to only return the investment (at best). That means that the remaining 4 companies need to generate a high enough return to pay the VC’s management fee, carried interest and still generate sufficient return for the VC’s Limited Partners. In simple terms that means that you will need to show an average of 10 – 15 times return for every euro that a VC invests in your company.  Food for thought……