My start-up investment portfolio — KPIs and how-tos

I did my first start-up investment in my own start-up company already in 2005. At the time I got the funds from selling our apartment — I was already married to my wife and our first son just turned 1 year old. The start-up failed, but my wife stayed 😀 — and we increased children headcount to three in the meantime.

I started to invest more actively in start-ups then first in 2013 — after I led largest e-commerce player in Slovenia, Mimovrste, through turnaround and significant and successful exit. First, I invested in start-ups personally and then also as Chief Investment Officer and Chief Growth Officer at Swiss company Netcetera.

During the whole period I managed to make quite a few great investments and I want to share some of the KPIs achieved and how I managed to achieve them.

Selected investment performance KPIs:

• Investment focus — early stage (seed / pre-seed)
• Number of companies selected for analysis — 9
• “Survival” index (how many companies are still alive and kicking) — 78% (7 out of 9)
• Period before (bad) companies “died” — 2.5 years
• Average age of companies in the portfolio — 4.1 years
• Multiple achieved across the whole portfolio — 6.1
• Calculated IRR (average annual rate of return) — +55%
• “Potential unicorn” status (how many companies stand out with return multiples well above 10) — 22% (2 out of 9 companies)
• Valuation increases achieved for the mentioned 2 companies — 70-times and 47-times respectively

The secret recipe to achieving the above investment performance results

During the years I managed to observe and determine what differentiates good investment decisions from bad ones. As precondition, if you want to be a good investor, you need to have rather broad knowledge and be able to quickly grasp and understand the idea behind the individual start-up. At the same time, you should adhere to the following:

1. People (founder / founders and the team) are what makes a great company — you need to see their potential and you want to be able to like them as human beings — never invest in “jerks”
2. People need to show business and market understanding — not just single narrow idea focus — that enables them to pivot and steer the company in the right direction, as they will always encounter obstacles on their path and will need to react appropriately
3. Share advice and insights — I was also personally involved with both of two best performing investments — not in an operational role, but in advisory / board role; while my personal involvement does not always guarantee such outcome, I do believe my advice and insights helped both companies build great businesses
4. Understand the business the company is in — you do not need to be the best expert, but you need to understand, what the start-up is trying to achieve; if you do not, you will not be able to support the company and even more importantly, you will not be able to establish, whether the company is actually worth investing in
5. Look for relevant company materials — pitch deck, financials etc. — the company which has well prepared materials (and can back them up with evidence, if needed) shows structure already prior to raising funds and is more likely to show structure also afterwards; this point does not define great company as such, but rather shows whether the company will be able to scale

I could list quite a few more points that are relevant for making good investment decisions, but I will remain with the above five as the most important ones.

I would be happy to share my experiences and help selected funds, family offices and enterprises in making the right investment decisions.

• Are you an investor, a fund or a family office?
• Would you like to get additional advice regarding your investment decisions?
• Do you want to engage credible professional with proven results into your respective investment board or in another capacity?

Reach out via DG180 (www.dg180.ch).