Tech Startups: Rodolfo Carpintier, Internet Investor

Today, April 15th 2011 was the last class in IE Tech Startups.  We learned even more about what investors value in a startup and how they view things.  The class started an hour and a half earlier than the previous classes, resulting in more than half the class missing the session.  Unfortunately, I was feeling a bit under the weather so my ability to focus was highly varied … but it was still an excellent class, just like all the others.

Instead of going through a PowerPoint deck, the speaker, Rodolfo Carpintier of Digital Assets Deployment led us through how an investor would look at a business by having one of my classmates diagram her business, Watchfit, on the board.  Going through such things as expected valuation, equity distributed between equity and partners, and the expected sales it was a thought provoking exercise and I wish I had it on video to replay as I am sure it would be useful in understanding the thought process of investors.

Something that I thought was especially significant for me as a co-founder of DealBoss in Spain is the impact that the country of operation has on valuation and obtaining investment.  For example, because Spain is a relatively small market the valuation of startup companies here tends to be about half of that in the UK.  In addition, there are less angels here in Spain which reduces the choices you have for investment.

Lastly, here are some additional points I noted:

• In a business plan, have no more than 15% percent of revenue come from advertising.  This is because you need a lot of users to make revenue from ads, in the hundreds of thousands.  So if you are Google or Facebook, I guess you can make some money this way but otherwise it’s tough sailing.
• You should know who are your competitors, who has invested in them, the number of people needed after 5 years. etc.  I guess I had better get to work on this point – I generally just know how the competitors software works. 🙂  Perhaps that’s OK for handling the technical side of the business?
• There is a great potential for bubbles in social network type of things.

A reference below that I didn’t get the chance to see until now:

http://www.dad.es/en/information/business-model-video – describes how the DAD process works when considering an investment.

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