I work with the founders on commercial activities.
This includes marketing, sales and business development,
as well as finance and legal.
When we meet a team,
we first need to understand the technology,
product and vision of the founders.
Then we soon get to work on commercialization.
Who are the customers and which problem do we solve
for them? What are the revenue streams?
What are the current marketing and sales channels?
How do we think about market size?
Who are the competitors and how do we think about
defensibility of our product and service in the long term?
Basically, we zoom in on the value proposition,
the current traction and the growth potential.
On the cost side,
we look at implications of the commercialization strategy
on the organization and cash flow.
So we basically use the financial model as a tool
to structure our work with the teams on commercialization and
capital requirements. Do we have the right revenue model
and pricing in place?
How will marketing and sales channels scale over time?
What are the relevant KPIs to measure our performance?
Do we need to raise further equity financing and how much?
What are the relevant milestones to attract
such funding at that stage?
Do we see alternative or additional financing options,
for example, access to debt,
or other non dilutive financing instruments?
Whom do we need to attract in terms of talent?
How do we manage the team growth?
How should we think about the organizational structure,
processes and management tools such as OKRs?
Usually these discussions continue in parallel
to our due diligence and contract drafting.
So we're actually on board very early as soon as
we share the vision,
feel aligned on the plan for commercialization and understand
how we can help on this mission.
Given our focus on early stage tech companies,
equity funding is an important part of our work with
the teams. We help crafting the presentation and financial model,
technology, product and roadmap, market, commercialization, team.
All of that needs to be well understood and clearly
communicated. Then we help identify and get in touch
with the right investors.
Every funding round is an opportunity to bring on
additional know-how, experience and network.
So it's important to thoroughly consider who would be the
right investor at this stage.
Also, we need to think about the long term financing strategy.
How will the cap table look after this
and future financing rounds?
Does it make sense to issue something like a convertible
or go for a priced round?
Can investors also support in the future funding rounds?
In the next step,
we support through due diligence and help negotiate fair and
balanced terms. This is usually an intensive and delicate process.
It is important to understand which terms really
matter and how to think about them.
Governance and reserved matters,
liquidation preferences and downround protection, right of first refusal,
tag along, drag along – how does a fair warranty regime look?
Not only do these terms need to properly
align the interests of the current parties,
they also need to provide a solid framework for future
financing rounds. It is helpful to build on experience
and a trusted network for the different funding stages to
accelerate this process and avoid the pitfalls that can either
derail such a process or even the whole company somewhere
down the road. Depending on the stage of the
company and the team situation,
we adjust our level of involvement.
We only do one or two investments per year,
so we only work with very few teams,
and we have a unique financial and legal setup that
gives us extraordinary flexibility to support the teams
hands on as they need it.
At Lilium, for example,
we were still in the process of recruiting
the commercial team back in 2017,
when the time was right for a Series B fundraise.
So the team invited me to serve as Interim CFO.
Another important asset is our founder network.
For every decision,
there's somebody in our portfolio who has already done it
or who can provide at least relevant experience.
So we make sure that the teams are well connected
among each other and within our networks.
If you want to do fundraising,
you need to have a sound understanding of your finances.
A good financial plan should be over a period
of five years, with the first two being on
a monthly basis. The reason for a financial plan are twofold.
The first two years give the investor a feeling
for the milestones that can be achieved with the funding.
The years 3 to 5 show how big the
startup can really get.
I advise startups to have different tabs for each of
the critical business areas to make the financial planning neat.
These business areas include profit and loss statement,
cash flow statement, a revenue statement where you split
the revenues between the different channels,
where the revenues are coming from, a teams tab where
you say what employees you need to hire when and
lastly, a general cost tab where you have all
your variable and fixed costs in there.
In addition, you can add different tabs for each
of the different critical business areas that you have
in your specific case.
So, for example, in direct to consumer case such as
YFood or air up,
you would definitely include a tab for production and marketing as well.