Edward Shenderovich: "The investor must be optimistic"
Edward Shenderovich - a man of many and varied talents: a poet, philosopher, philologist, entrepreneur. And to all this - a successful investor, founder and managing director of the management company Kite Ventures. It is possible that it is precisely the combination of various and seemingly contradictory abilities that allow him to invest in the right projects, at the right time, and in the right amounts. In his lecture for students of the specialization "Management in the field of Internet technologies" Edward Shenderovich told the basics of the difficult art of investing.
“Where to get investments?”, - with this question Edward Shenderovich began his lecture. To answer the question, he turned to the example of his own company: “In the fall, we launched the Kite Ventures venture fund and at the moment have already invested in two projects, a mobile service and a game one. And two more projects are currently under consideration. We have a medium-sized venture fund, so for me you can see what the average venture capitalist does. I am attracted by the opportunity to invest in projects of 1 million and more. At the same time, I cannot invest more than 30-12 projects from a fund of 30 million. Here it should be noted that any fund is built in such a way that there is a specific amount of money in the fund itself, some of which are spent on management. From the size of the fund is built and investment strategy. In general, management costs are always attempting to be reduced in order to maximize the available investment capital. ”
Any investment fund chooses projects for investment among a variety of applications. In his lecture, Kite Ventures managing director touched on the scheme of this process and the criteria for project evaluation.
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“To describe the process of defining projects for investment, a metaphor is often used: Draper’s rocket. This refers to Tim Draper, a significant venture capitalist, founder of the DFJ fund. For example, 30000 applications first come to the fund. Only 800 of them meet with owners. Then further negotiations are underway - with 100-150 projects. And only 10-12 of the total volume of the reviewed projects are financed. And in the future, only one of the invested projects will bring significant income. Of course, this is the perfect picture. In Russia, the situation is somewhat different from that described. There are not so many projects and it is difficult to find even 1000 for consideration. For example, from November 1 to December 1, I met with representatives of only 20 companies. Of course, reducing the number of projects depends on the crisis. By the way, I am glad that the decrease in the number of projects is accompanied by an increase in their quality.
When making investment decisions, we consider projects according to three criteria.
1. People
2. Product
3. Market
In my opinion, the main criterion among those listed is the market. A company can make money only if it operates in a market where the money is there. Or can receive money from other markets. Therefore, in any case, it is necessary to clearly understand how the product will make money in a particular market. To illustrate, I’ll talk about two similar products: LiveJournal and MySpace. When we founded SUP, the company's operations began with the purchase of a part of LJ from Six Apart. It was a good start from the point of view that we loudly declared ourselves. Perhaps there were many different mistakes in the initial period of work. But the main thing was that blogs are very difficult to monetize. Not only LJ and not only in Russia, but in the whole market. There are of course exceptions, but rather only in certain vertical segments. LJ was originally conceived by the creator as a non-commercial project - it was a small artisan business, not designed for a market created for friends. And when he became uninteresting - the project was sold. Unlike LiveJournal, MySpace was originally conceived as a commercial product project, the purpose of which was to get money. Now it has grown considerably and is quite a profitable business. Obviously, the ideas of LiveJournal and MySpace were similar, but the approach to the market differed. This determined the further development of these projects. ”
In investing, not only the question “in whom to invest” is important, but also the question “when to invest.” Therefore, separately Edward Shenderovich told about the stages for investing.
"There are various stages of investing companies, and here, as Charlie Chaplin said, paraphrasing Shakespeare," the ins and outs are important. " When to invest? There is a classic timeline for the development of companies, at which the project launch stages are highlighted - when nothing is known, growth, stable existence and stagnation / decline. Most investors enter at the beginning of growth and exit at the end of it. Exit is extremely important when investing. Now, when the IPO for companies is almost closed, the only way to exit is to sell the company. The sale occurs when the investor sees that the growth of the company has slowed down and more profitable to invest in other projects. ”
Answering the question “where” and “when”, the investor answers the question “how much”.
“An equally important question: how much to invest? The most popular way to determine this is contractual, when both interested companies jointly evaluate a project. In this case, the usual financial methods are not applicable here. Therefore, in the Silicon Valley, a special method was invented - the venture one. Evaluation of it is as follows.
1. The estimated value of the company at the output, that is, after the expiration of the investment period.
2. A certain “risk percentage” x (in fractions of a unit) is determined, which shows the probability that the project may “not shoot”.
3. The real value of the company is calculated as the ratio of the predicted value to the amount (1 + x) to the power n, where n is the number of years in the investment period. Of course, this method is not accurate and subjective, but it allows you to have at least some evaluation. ”
During the lecture, Edward Shenderovich answered a number of questions.
- What do you think about the monetization of the project "Classmates"?
- They have an interesting situation. At first it was a service similar to Classmates. Then they began to use a different scheme and technology developed by one Latvian company. When they realized that they had a lot of traffic, they started trying to monetize it. And now they are doing this, I must admit, quite successfully. In the past, KIBe Albert (Popkov) said that in 2008 they should earn 25 million. I can not judge how true this figure is, but the fact that they earn a lot at least on those paid services with which each account is hung, of course.
- Is the ideal investor a pessimist or an optimist?
- Of course, the investor must be optimistic. Otherwise, he will not invest in projects that are just beginning to develop.
- What, in your opinion, is the main mistake of startups when trying to get investments?
- I think the main mistake here is to come too early. After all, a startup will have only one chance.
“Where to get investments?”, - with this question Edward Shenderovich began his lecture. To answer the question, he turned to the example of his own company: “In the fall, we launched the Kite Ventures venture fund and at the moment have already invested in two projects, a mobile service and a game one. And two more projects are currently under consideration. We have a medium-sized venture fund, so for me you can see what the average venture capitalist does. I am attracted by the opportunity to invest in projects of 1 million and more. At the same time, I cannot invest more than 30-12 projects from a fund of 30 million. Here it should be noted that any fund is built in such a way that there is a specific amount of money in the fund itself, some of which are spent on management. From the size of the fund is built and investment strategy. In general, management costs are always attempting to be reduced in order to maximize the available investment capital. ”
Any investment fund chooses projects for investment among a variety of applications. In his lecture, Kite Ventures managing director touched on the scheme of this process and the criteria for project evaluation.
')
“To describe the process of defining projects for investment, a metaphor is often used: Draper’s rocket. This refers to Tim Draper, a significant venture capitalist, founder of the DFJ fund. For example, 30000 applications first come to the fund. Only 800 of them meet with owners. Then further negotiations are underway - with 100-150 projects. And only 10-12 of the total volume of the reviewed projects are financed. And in the future, only one of the invested projects will bring significant income. Of course, this is the perfect picture. In Russia, the situation is somewhat different from that described. There are not so many projects and it is difficult to find even 1000 for consideration. For example, from November 1 to December 1, I met with representatives of only 20 companies. Of course, reducing the number of projects depends on the crisis. By the way, I am glad that the decrease in the number of projects is accompanied by an increase in their quality.
When making investment decisions, we consider projects according to three criteria.
1. People
2. Product
3. Market
In my opinion, the main criterion among those listed is the market. A company can make money only if it operates in a market where the money is there. Or can receive money from other markets. Therefore, in any case, it is necessary to clearly understand how the product will make money in a particular market. To illustrate, I’ll talk about two similar products: LiveJournal and MySpace. When we founded SUP, the company's operations began with the purchase of a part of LJ from Six Apart. It was a good start from the point of view that we loudly declared ourselves. Perhaps there were many different mistakes in the initial period of work. But the main thing was that blogs are very difficult to monetize. Not only LJ and not only in Russia, but in the whole market. There are of course exceptions, but rather only in certain vertical segments. LJ was originally conceived by the creator as a non-commercial project - it was a small artisan business, not designed for a market created for friends. And when he became uninteresting - the project was sold. Unlike LiveJournal, MySpace was originally conceived as a commercial product project, the purpose of which was to get money. Now it has grown considerably and is quite a profitable business. Obviously, the ideas of LiveJournal and MySpace were similar, but the approach to the market differed. This determined the further development of these projects. ”
In investing, not only the question “in whom to invest” is important, but also the question “when to invest.” Therefore, separately Edward Shenderovich told about the stages for investing.
"There are various stages of investing companies, and here, as Charlie Chaplin said, paraphrasing Shakespeare," the ins and outs are important. " When to invest? There is a classic timeline for the development of companies, at which the project launch stages are highlighted - when nothing is known, growth, stable existence and stagnation / decline. Most investors enter at the beginning of growth and exit at the end of it. Exit is extremely important when investing. Now, when the IPO for companies is almost closed, the only way to exit is to sell the company. The sale occurs when the investor sees that the growth of the company has slowed down and more profitable to invest in other projects. ”
Answering the question “where” and “when”, the investor answers the question “how much”.
“An equally important question: how much to invest? The most popular way to determine this is contractual, when both interested companies jointly evaluate a project. In this case, the usual financial methods are not applicable here. Therefore, in the Silicon Valley, a special method was invented - the venture one. Evaluation of it is as follows.
1. The estimated value of the company at the output, that is, after the expiration of the investment period.
2. A certain “risk percentage” x (in fractions of a unit) is determined, which shows the probability that the project may “not shoot”.
3. The real value of the company is calculated as the ratio of the predicted value to the amount (1 + x) to the power n, where n is the number of years in the investment period. Of course, this method is not accurate and subjective, but it allows you to have at least some evaluation. ”
During the lecture, Edward Shenderovich answered a number of questions.
- What do you think about the monetization of the project "Classmates"?
- They have an interesting situation. At first it was a service similar to Classmates. Then they began to use a different scheme and technology developed by one Latvian company. When they realized that they had a lot of traffic, they started trying to monetize it. And now they are doing this, I must admit, quite successfully. In the past, KIBe Albert (Popkov) said that in 2008 they should earn 25 million. I can not judge how true this figure is, but the fact that they earn a lot at least on those paid services with which each account is hung, of course.
- Is the ideal investor a pessimist or an optimist?
- Of course, the investor must be optimistic. Otherwise, he will not invest in projects that are just beginning to develop.
- What, in your opinion, is the main mistake of startups when trying to get investments?
- I think the main mistake here is to come too early. After all, a startup will have only one chance.
Source: https://habr.com/ru/post/50494/
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