Startup Turkey 2016 - Martin von Haller Groenbaek

Martin vonHallerBird&Bird

'Tech startups in the periphery of Europe: The

Nordic tech success story'

StartupTurkey 25 February 2016

Martin von Haller Grønbækpartner

StartupTurkey© Bird & Bird LLP 2016

Agenda

●The Nordic success story

●Building a tech startup ecosystem (Case study #CPHFTW)

●Lowering transaction costs in angel investing

StartupTurkey© Bird & Bird LLP 201

Martin von Haller Groenbaek● Partner, Bird & Bird CPH● Co-founder of First Tuesday (1998), Co-

founder of Danish eBusiness Association (1996), Co-founder Danish Open Source Vendors Association (2004), Co-lead Creative Commons DK

● (Mikro) angel investor● Chairman of #CPHFTW foundation● "Open source advocate”

© Bird & Bird LLP 2016

The Nordics

• Sweden, Denmark, Finland, Iceland and Norway

• Brothers and sisters in love-hate relationship - but family

• Fierce internal competition!• Region not countries!• Nordic network with hubs or

clusters


The Nordic numbers

• Each nordic country’s per capita nominal GDP is in top16(2014)

• Combined GNP is 1.7 trillion USD (2014)• 7-8th largest economy in the world• 3,425,804 square kilometers (incl.

Greenland) , the 7th-largest country in the world

• Population of around 26 million people.

https://en.wikipedia.org/wiki/List_of_countries_and_dependencies_by_area

https://en.wikipedia.org/wiki/List_of_countries_and_dependencies_by_area


“Nordic internal market”

• History, Language (+English), Culture

• Legal infrastructure• Minimal corruption• Internal trading• Exporters


Business in the Nordics

• Sweden, Denmark and Finland in top10 of most innovative countries (Iceland and Norway in top20) - https://www.globalinnovationindex.org/

• Nordic countries in top12 in Ease of Doing Business - http://www.doingbusiness.org/

• Nordic countries in top19 of “networked readiness" - http://www.weforum.org/

• Nordic Countries are "Mostly Free" in Economic Freedom - http://www.heritage.org/


The Nordic societies

• WORLD HAPPINESS REPORT • HUMAN DEVELOPMENT INDEX• WHERE TO BE BORN INDEX • COUNTRY STRENGTH INDEX • GOOD COUNTRY INDEX• GLOBAL COMPETITIVENESSS

REPORT • SOCIAL PROGRESS INDEX • ENVIRONMENTAL PERFORMANCE

INDEX


The Nordic tech startup success

• A hotbed for worldclass innovative tech startups

• Broad range of sectors (eCommerce, web, apps, games, ERP, eGovernment, IoT, hardware, health, fintech, BigData)


The “Nordic startup”

• “Nordic startups”• Helsinki, Stockholm and Copenhagen as

hubs• Born regional and global• Integration of HR and finance• Branding leverage and financial

diversification• Geopolitical stability• Sustainable growth


The “Nordic investor scene”

• Plenty of funding!• Supply vs. demand• Few local VCs • - but more international tier1 VCs invest

directly• More smart angel money• Less dependency on government money • (But no local market for exits)


Nordic +1B USD exits


Nordic tech investments

• With only 3% of Europe’s population, the Nordics have taken on 11% of Europe’s VC investment and turned that into $3.9 Billion yearly in exit value over the last ten years. (source: Creandum)


Nordic +1B USD exits

• Since 2005, 9% percent of global Billion dollar exits have come from the Nordics.

• (Rest of Europe accounts for 8% of the world’s Billion dollar exits despite having the remaining 97% of Europe’s population.)


Ratio of GDP to +1B USD Exits


Compared to Rest of Europe

IoT&OpenSource© Bird & Bird LLP 2015

Nordic Tech Startup communities● The power of the hashtag

• #nordicmade• #sthlmtech• #Siliconfjord• #CPHFTW

● Conferences• SLUSH• Nordic Startup Conference• Many more meetups…


CPHFTW

• A Startup Community• "Startups for Startups by Startups"• #CPHFTW• (https://medium.com/@neilswmurray/

copenhagen-for-the-win-a282b3c3d32c#.lvjufv4r8)

• Leveraging the existing community• Improving the ecosystem (the tech

startup c-suite)


CPHFTW Organisation

• "Doocracy" (open source)• Transparent communication• Circle meetings• Townhall Meetings• CPHFTW IVS• CPHFTW Foundation• 80+ founders• 100+ Euros raised


CPHFTW Activities

• Townhall meetings• Circles (BizDev,

ProductDesign, HR)• Newsletters• Databases (jobs and events)• VC Dinners• AngelNext• International coop


CPHFTW future

• Databases (OpenAPI, financial statistics)

• 8-12 VC Dinners• Angle networks facilitation• International visibility• A +1B USD startup in

Copenhagen!

New documents for angel investing

"or "The first thing we do, let's kill all the lawyers", Henry The Sixth, Part 2 Act 4, scene 2, 71–78

http://www.enotes.com/henryvi-ii-text/act-iv-scene-2%23killlawyers


Transaction costs in Angel investing• Relatively small investment sums• More investors• Legal fees are proportional too

high• Often inexperienced parties on

both sides• "The paradox of angels and their

term sheets"• Bad angel terms lowers chance of

further funding


The potential and the solution

• More angel investing• More syndication• Higher amounts (eliminating need

for seed/pre Series A funding)• Easier due diligence in next round

financing• Less adversarial negotations• More fair (market) terms• International standardized

investment documents!


The typical Angel investment

• Equity!• Convertible note but still equity• Discussion of valuation pre-money• Maybe also discussion of other

valuations• Negotiation of entire SHA• Adversarial atmosphere• Potential distrust• Too many (or too few) lawyers


The SAFE documents

• yCombinator• (simple agreement for future

equity)• Not a debt instrument• No interest • No SHA• No Valuation• Only valuation cap• High resolution financing!


The SAFE documents cont.

• Shares are issued in future round of financing

• Number of shares are based on the valuation cap

• If valuation in the next round is lower then the lower valuation applies

• Same rights as new investors• Conversion is automatic, no

repayment option


The SAFE documents cont.

• Certain protective provision (Change of control)

• Variations• Safe: Cap, no Discount• Safe: Discount, no Cap• Safe: Cap and Discount• Safe: MFN, no Cap, no Discount

Thank YouMartin von Haller Groenbaek

Startup Turkey 2016 - Martin von Haller Groenbaek

Internet

Transcript of Startup Turkey 2016 - Martin von Haller Groenbaek