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Live event 'From Start-up to Exit' (19-11-2021, Ghent): summary panel discussion


On 19/11/2021 Key Figures organized the live event 'From Start-up to Exit'. Read a summary of the panel discussion here.


Tom Van De Voorde, Managing Partner, GIMV Smart Industries
Bruno Lowagie, author/entrepreneur
Sara Lambrechts, Managing Partner, Morrow Ventures

Bright Obeng, Managing Partner, Key Figures
Why is business valuation considered a black box by founders, despite mathematical models surrounding it?

Tom Van De Voorde: “Valuation is more art than science. Especially with young companies it is essential to answer certain questions correctly: do you have a business model? What does this model look like? Are you able to pitch this well?… And also: are you the sole manager, or do you work together with other partners? How do your customers act as a sounding board? All these elements provide building blocks for appreciation. However, there is no single formula for the calculation. Many factors have an impact.”

Bruno Lowagie: “I make a distinction between psychological valuation and calculated valuation. Psychological appreciation this applies to both the seller and the buyer of a company. The question arises for the seller for what amount he or she could dispose of the company. At the start of the valuation process, the psychological valuation is higher than what a buyer would be willing to pay. In many cases, the calculated value increases with the psychological rating, because you have more proof points.”

Sara Lambrechts: “Valuation is an important exercise, but not all-consuming. Certain common ranges prevail in the market. As an investor, we can never claim majorities within start-ups: founders remain an indispensable link in the entire process, and they must remain motivated. If you, as a start-up, have the luxury of multiple acquisition offers, you should not focus solely on valuation. The click with acquirers also plays an important role.”

At what point is it interesting as a start-up to approach a venture capitalist?

TVDV: “Personally, I think you should raise capital as late as possible, but also make sure it's not too late. You try to minimize the dilution in your shares. Addressing proof points – which help to frame the valuation – seems more important to me. If you want to tap into new sources of people or resources, then the step to new external capital is obviously appropriate.”

BL: “If you need capital-intensive resources, such as for the production of goods, the move to a venture capitalist seems logical. But in the software sector, the step to a venture capitalist is especially useful if you want to accelerate compared to your direct competitors. After all, with capital you can fully expand marketing and sales campaigns, and thus generate new business. Through smart money you can therefore create important levers to grow your start-up.”

SL: “You sense for yourself when you have a financing need. But to many investors, offering services doesn't sound very sexy, because such companies are not scalable. When approaching a venture capitalist, you as a company must be ready for the entry of an investor. You have to take into account what he or she attaches great importance to. I always look at the team, the product and the market. Personally, I think the team is decisive as a guiding factor.”

What guidelines should company founders follow to properly approach a venture capitalist?

TVDV: “Talk to enough people, including on your board of directors. After all, it is a process that is new to many founders, while experienced professionals often sit on the other side of the negotiating table. Investors have a certain way of introducing points of interest, and that requires the necessary empathy from founders.”

BL: “When I started my company, the financial world was virgin territory for me. We looked very basic at our key figures. When we set up a Board of Directors, we gained more and more insight into specific terms. Now I know that when negotiating with a venture capitalist you need to be able to list some striking key figures on the fly.”

SL: “You should not focus on the valuation aspect. As a venture capitalist I want to be a good sparring partner for a founder, with an eye for dialogue. Each party can add his or her added value. We can start a process together. A founder must also be able to find that added value in venture capital.”

How can founders gain as much knowledge about value drivers as possible, including the right mindset, to grow their business?

BL: “When answering this question, you have to make a distinction between value drivers that are 'nice to have' and drivers that are indispensable to generate business. Clients who use my company's software often inspire me by how creatively they use this software. I can then use that template to work out other interesting business cases.

SL: “Turnover in itself is the ultimate goal, but the way to get there is partly determined by how you build up your customer base. Don't get stuck on one route, but also don't work too diversified in developing your customer strategy. Experimenting is certainly possible, as long as you closely monitor the results.”

Many founders of companies do not think about a possible exit. How do you prepare for this and how do you handle it properly?

TVDV: “At a certain point, as a founder, you have to make the decision whether you want a small percentage of a larger whole, or a larger percentage of a small whole. You determine that direction yourself. We are increasingly seeing the trend towards maximum involvement of venture capitalists and capital rounds. This approach always looks good to the outside world. I am arguing for the necessary realism here.”

BL: “It can be very useful to do an internal M&A thinking exercise. After all, through such a simulation you can find out which factors are possible bottlenecks in the exit of your company. You can use venture capitalists as 'free consultants'. You can then work out a further plan of action with a priority list.”

SL: “Through market research you can find out what is going on in your market and who the most important players are. As investors, we always hope that founders have already done their homework, so that M&A can move faster. A company founder must also be aware of what is going on in the market outside his own company.”

What tips do you have for founders who want to do a capital round?

TVDV: “Avoid blind dates with venture capitalists. And also: ask questions, ask for reference cases. As a founder, you therefore have to go in search of how best to develop the relationship with investors.”

BL: “Venture capitalists come in all shapes and sizes, each with their own specialism. As a founder, prepare yourself well for conversations at capital rounds. My tip is to make an appointment with a generalist investor in order to collect useful information without obligation, which you can then use in real sales files.”

SL: “Make work of a professional presentation. Please note: the best pitches are still done without a presentation, because you quickly discover the drive of the founders.”

Grow in your

Posted by: Key Figures