9 Ways to Make Pitching Easier On Yourself

For some who join us at StartupYard, pitching before an audience of 300 is as natural as brushing their teeth. Some people do have a knack for public speaking that can’t exactly be explained. Others have to work at it. This post is for those people- the majority of us, to whom pitching and selling our ideas in front of a bunch of people feels about as unnatural as reciting Shakespeare.

Don’t Overestimate the Role of Talent


Certain people are naturally good speakers. But most great speakers have to work at it. The chances are that if you hear someone who’s great at public speaking, that ability is the result of many years of practice.

On the flip side, many people with genuine talent are unwilling to put the work in, and really use their talents to full effect. I don’t worry about the worst speakers we have at StartupYard- I worry about the talented ones. Those are the ones most likely to slack when it comes to preparing their pitches and really putting in the work. They are used to coasting on their natural abilities, and they often under-prepare for the overwhelming experience of pitching to a big audience.

When the real talents put in the work, we have magical moments. But more often, the best pitches come from the entrepreneurs who thought they couldn’t even do the pitch.

Be the Biggest, Loudest Person in the Room

This also has to do with natural inclination, but also experience. As a result of meeting so many people in the technology field, I’ve come to be able to spot certain things about people that I couldn’t before. For example, Jan Mayer, Founder and CEO of 2015’s TrendLucid, is a lecturer at Masaryk University. When we first met, and when he pitched StartupYard at our final selection rounds last year, I asked him if he was a teacher.

“How did you know that?” he asked, surprised. It was his ability to project his voice, as I like to say, to about 130% of the available space, and to appear larger than the space he occupied. If you watch teachers teaching, they command attention by speaking in a voice which is slightly louder than it needs to be, and addressed to what seems to be a group which is slightly larger than the actual group they are speaking to.

This “4/3s” voice allows the teacher to command the attention of the audience (often unruly teenagers), in a way that a normal speaking voice could not. By giving the appearance of size and energy that is slightly larger than the room, the teacher makes the audience feel as if they are smaller than they truly are.

So be big. Be bigger than the room.


Don’t Pitch or Present. Explain and Share

There is a positive example that you can take from Steve Jobs, and more recently Jony Ive or Tim Cook. The best “pitches,” are really not a sales pitch, but a narrative of events, trends, and technologies that explains why a product is the way it is, and why that makes sense.

In best pitches I hear, the emphasis is not on the fact that something can be done cheaper, or that money can be saved or earned- nor do they lay heavy emphasis on the size of the market (a classic rookie mistake is claiming you’re in a “Gazillion Dollar Industry,” as if that means something).

Pitches that tell me a company will be hugely profitable are at best eye-rollers. If you’re a startup, then that’s not a claim anybody should put much faith in. And anyway, the most important thing is the reason your new idea or business model is revolutionary, not exactly how much money it’s going to make. Those predictions will be useless in 6 months. So focus on what you can control, which is the execution of your vision.

Instead, the best pitches tell a story, which is something we work on at StartupYard quite intensively. The story is shared, and the processes involved are explained. If you approach your pitch with this perspective in mind, then you can relieve yourself of much of the burden that many entrepreneurs place on themselves of “selling,” with something much more organic- something that they do every day with employees, friends and family.

Investors and partners want to see that you can clearly explain and share your vision, so make your pitch about that- not about your ability to sell. This is in many ways easier, because it demands that you stick to your strengths, rather than

Remember, then Talk. Not the Other Way Around

When we’re engaged in normal conversation, sometimes we start a sentence without really being sure where it’s going to end.

Here’s a fascinating exercise- record yourself talking about something casually, and then write it down exactly as you spoke it aloud. What you’ll find, typically, is that it makes almost no sense at all. It will be full of runon sentences that lead nowhere, and ad-hoc phrases that only make grammatical sense if you cross your eyes.

Nobody talks the way they write. But often, founders doing their first pitch will write it, expecting themselves to be able to say it out loud. Well, your mouth and your brain are not accustomed to actually speaking the language that we recognize in writing. That’s just not the way people talk.

Find Your “Beats”

When working with our startups, I constantly harp on the idea of “beats,” in their pitches. A beat is a moment of particular emphasis. It is a phrase or a word, or a particular idea that is central to your narrative. It needs to be remembered.

Great pitches have a clear sequence of important points, or beats, which are memorable. For an example of this, it’s useful to look at someone like Tim Cook, revealing the Apple Watch (go to exactly 1:00:00 in the video.

Cook organizes his beats in a very simple pattern. When he needs to emphasize a point, he says it as a slide appears with the same words and an image behind him. Simple, and elegant. If you’ll notice, he only uses words on the screen when he is making a specific, memorable point. At no other time are there any words on screen.

A common mistake for founders is to make their “big point,” or “ahah moment,” a part of a slide that is so complex and full of information, that the audience is busy looking at it instead of listening to what is said. Your “beats,” have to be moments where nothing else gets the attention but one simple idea.

So Nice, You Said it Twice

I’ve talked in previous posts about repeating the name of your company during your pitch (by the way, repeat the name of your company in your pitch). But this piece of advice is simpler. If something is really important in your pitch, don’t be afraid to repeat it.

Repetition is a powerful way to emphasize what is being said. A very powerful way.

You see? People frequently repeat things when they’re speaking, but they rarely do so in writing- which can make a pitch feel pretty stilted when you haven’t rehearsed it enough.  

Your Slides Are the Plan, Not the Pitch

Our Managing Director Cedric Maloux repeats this same piece of advice to every startup we accelerate: “Your slides are cues, not content.” When we write our presentations, the tendency is to try and accomplish communication with slides that can’t be done verbally. That’s a mistake, because it leads founders most often to try and pack slides with too much information.


Here’s a good general principle: if you can’t say it 10 words, it’s too much information for a slide. Your slides should be nothing more than a framework for what you want to say. Nobody wants to go to a pitch and spend their time reading your slides. They want to hear from you.

German Field Marshal Helmuth von Moltke famously wrote: “no plan survives contact with the enemy.” As I’ve pointed out, one of the downsides of planning a pitch, is that what you end up with is a plan. Whether that’s a plan of exactly what you’ll say, or exactly what you’ll show the audience, that plan is not what is going to happen.

As I often tell my startups, the trick is not to say what you want, but to avoid saying what you don’t want. So be clear, be precise, and don’t over-write your pitch. Organize it into simple chunks.

Use Real Numbers

When I say “real numbers,” I’m going a bit beyond the “big numbers on the screen,” sense of the word “real.” I see plenty of pitches that are full of impressive numbers that, when you actually consider them, don’t say anything about the startup that’s actually pitching.

Worse, I often see pitches that include the numbers of competitors- as if the startup is just going to magically carve out a slice of the pie in their industry just because they showed up at the table. It doesn’t work that way, and investors know that. Even worse than that, I have heard pitches that included the valuation of companies in the same market. Now we’re in La La Land for sure.

Do Vocal Exercises

It’s silly. It’s embarrassing. It really, really works. For the past 2 years, StartupYard has engaged coaches leading up to Demo Day to work on voice training. The impact, over and over, has been startling- and not just for those founders who began as novices in public speaking.

Your voice is like anything else- an instrument of coordination that you use to do certain things. We are all accustomed to talking. But like the difference between walking a kilometer, and doing a pole vault, the body is not accustomed to the feats of energy and strength that we do not practice long and hard.


For those without extensive practice and training, public speaking is surprisingly exhausting. It takes an unexpected amount of strength to use your voice to address more than a handful of people, and adrenaline causes your heart to beat faster and consume more oxygen, meaning you need to breath more deeply and quickly. This all causes a person to expend more energy, to sweat, to be out of breath, and to feel exhausted, even after only a few minutes.

Bonus: Don’t Forget to Smile

This isn’t part of my 9 tips, but it’s important. Smile! And you’ll get smiles back. That’s reassuring, and will make you feel better about what you’re doing.

Introducing: StartupYard Jobs

Every week it seems, we get emails from local software engineers, marketers, sales professionals, and others hoping that we can help them find a new job.

At the same time, we regularly get emails from our startup alumni, complaining about how hard it is to find great people to work for them.

The solution is obvious. So we’re pleased to present: StartupYard Jobs.

This could be your desk. Or, you know, something nicer.

This could be your desk. Or, you know, something nicer.

StartupYard Jobs will be a continuously updated listing of available positions with the startups in our portfolio, including jobs in IT, engineering, design, marketing, sales, administration, and anything else that a startup might need.

Sign Up For our Newsletter:

To keep up with StartupYard news, including new positions at our startups, signup to receive periodic emails from StartupYard. We will never share your email address with anyone else.


Central Europe Accelerator

StartupYard 2016 Applications Are Now Open! Mobile, Data, IoT

StartupYard is happy to announce that applications are now open for StartupYard 2016. This will be StartupYard’s 6th overall cohort of startups, and Managing Director Cedric Maloux’s third.

Applications Close November 1st, 2015

Applications will be open until November 1st, 2015, and as was the case last year, StartupYard will share an application pool with our CEED Tech partners. For startups, this means that all teams who apply to StartupYard will have the opportunity to list any of the CEED Tech accelerators as a “second choice,” and these accelerators will have the opportunity to evaluate those teams when and if StartupYard decides not to invite them to our program.

Acceleration Starts January 2016

Startupyard 2016

The application review process will proceed through November and December, with our selections being made by the new year. Selection will proceed from written applications, to intermediate steps which will be announced to the pool of applicants directly. At the end of the process, we will invite between 15 and 25 finalists to visit StartupYard, where we will make our final selections.

We have decided to make some changes in the way we conduct our selection process, in order to give a fairer and more complete opportunity to every startup that chooses to apply. These changes mostly apply to the middle of that process, where differentiating between startups that are ready for acceleration, and those that aren’t, is the most challenging. We’ll talk more about that in a future post.

As with the previous cohort, we will aim to select between 7 and 10 teams to invite to the program.

For some perspective on the final selections (and how difficult they can be), for the 5th cohort, we invited about 15 teams to final interviews out of a pool of about 240, from which we invited 9 to join the program. In the end, the cohort included 7 teams, of which one was subsequently fired, leaving 6.

It is an accomplishment to be selected for final interviews (less than 10% of companies are), and we do hope to see those who we selected last year applying again this year, if they are still interested.

€550,000 In Available Funding

startupyard 2016

Terms between each of the 5 CEED accelerators are similar, with €30,000 of seed funding available for each of up to 10 teams, per accelerator. For participation in the accelerator program, StartupYard takes a 10% equity stake in each of its portfolio companies.

As part of our program, StartupYard provides office space at our homebase Node5 for the full three months, meals for the first month of the program, dozens of invaluable, exclusive workshops from industry experts, including representatives of Google, Seznam and others, and more than 500,000 Euros in program perks, provided by corporate partners and sponsors like IBM, Microsoft, Mazars, SendGrid, Google, Softlayer, and many others.

In addition to the €30,000 available as part of a European Commission grant program called Fi-Ware, an additional €250,000 in follow-on grants (given free of any equity exchange) will also be available following the 2016 program.

These follow-on grants are given through the EC at the recommendation of StartupYard, and can be awarded in varying amounts, usually tied to the startups also gaining outside investments.

Data, Mobile, and IoT, Global Products, Platforms

CCEA_StartArchitecture_Kroupa 2006_01

As in previous cohorts, StartupYard’s continuing focus will be on companies that leverage data and mobile technologies for products with global applications. We are seeking teams that have a proof of concept, and ideally are already working with a few customers, and looking to scale globally.

What does global mean? In general, it means that StartupYard accepts teams that are working on ideas which can be marketable and disruptive regardless of their geographic location. Language independent, and globally scalable products are our “bread and butter,” and a look at our most recent cohort gives an idea of the sorts of products that we might be interested in.

As you can tell from browsing our portfolio, StartupYard particularly favors companies that are developing unique and valuable platforms that leverage big data and are attractive to mobile users and enterprises.

Some of our biggest successes, including BrandEmbassy, Gjirafa, Travelatus, Shoptsie, Trendlucid, and BudgetBakers, among others, whose technologies now together serve millions of users worldwide, are SaaS platforms that leverage big data sources to provide value to businesses, as well as end users.

At the same time, StartupYard is not afraid of entirely new ideas, and we have considered and accepted startups in the past that are in an earlier stage of development, even without a working proof of concept.

If your team is hard working and passionate enough about your ideas, there is no absolute minimum requirement, either in your level of experience, or in your progress on the project you want to pursue. We invest in people, even more than we do in their ideas. So if you believe in yourself and your ability to follow your passion, then you should definitely apply for StartupYard.

IoT: Big Data Gets Physical

Finally, this year, StartupYard will also be welcoming teams with products in the realm of Internet of Things (IoT). While we are not a device accelerator, and so will not be focusing on design and development of physical hardware, we will consider teams with fresh and interesting ideas about leveraging IoT data and devices to make life better for users, or to help enterprises find new efficiencies.

Conservative estimates, including those of Gartner, suggest that the Internet of Things will encompass at least 26 Billion connected devices by the year 2020. Higher estimates reach up to 10 times that amount.

Clearly then, with an order of magnitude more devices connected to the internet than people in the next decade, there will be an increasing need for platforms and applications which are able to manage, control, analyze and utilize these networks of devices for a universe of new purposes. StartupYard is interested in your take on the future of IoT, and so we will be considering applications from this field with increasing interest this year.

B2B, B2C, B2B2C, Human-Centered

At the same time, StartupYard is most interested in projects that are “human-centered.” Instead of abstract or academic exercises employing IoT, or big data, we prefer projects that speak directly to the human experience, and to human behavior. How can we make people’s daily lives better– either in the way we work or live, or in the way we accomplish the simplest or most complex private tasks?

We have no preference regarding the market for these ideas, whether it is a B2B or B2C idea, as long as that market is a global one.

With one exception: We are not particularly interested in startups whose primary business model is advertising. Startups are much more likely to interest us if they have a transaction-based business model in mind.

Is your startup reliant on the local market, or is it globally scalable? Is it advertising based, or transaction based? Is it just a cool feature, or does it solve a real problem?

These are the questions that any applicant to StartupYard should ask themselves about their product ideas, because they are certainly the first questions we will ask about them ourselves.

TeskaLabs Co-Founder CEO Ales Teska On TechStars and StartupYard; London Vs. Prague

I spoke this week with Ales Teska, Co-Founder and CEO of TeskaLabs, We talked about TeskaLabs’ acceptance to TechStars London, their move to the UK, and their recent successful fundraising. Here’s what Ales had to say:

Ales, it’s been a big summer for you and your team at TeskaLabs. What have you been doing since leaving the StartupYard program?

Well, we were selected for Techstars London immediately following StartupYard, so we’ve been quite busy. We’ve opened a new office in Prague, where our development operations are located, and we’ve moved to London for the Techstars accelerator program. We plan to maintain our sales operation here [in London]. We have also finalized negotiations with a few existing clients, helping us survive this move to London.

But despite all this, I still managed to take a few days off this summer, which is very exciting!

The TeskaLabs team in the UK.

The TeskaLabs team in the UK.

The move to London was a lot of work in itself. Finding accommodation here is not easy, especially if you are working with a startup budget. We had to go back to our student years a bit, but that’s the price you pay, and we are all focused on the future.

We managed to rent a few rooms in a house in East Ham, near a tube station, so I am quite satisfied with the results.

Can you give us your impression of the TechStars London Program. How did it differ from your experience at StartupYard?

At first glance, there are a lot of similarities. The model is generally the same: a 3 month program, in 3 sections. We start with mentoring and networking in the first month, then the “build phase,” which involves a lot of workshops and practical knowledge, and finally a month or so of preparation for the Demo Day. That will be sometime in October.

But the similarities really ended there. The programs are quite different, but they complement each other perfectly, at least in our case. We’ve discussed the differences quite a bit in our team, and I must say it was surprising how different the programs really are.

The TeskaLabs team with other startupers from TechStars London.

The TeskaLabs team with other startupers from TechStars London.

First, I have to emphasize that StartupYard is a world class program- and that’s as honest an appraisal as I can give. StartupYard gives you access to knowledge and people like yourself and Cedric, who can share a great depth of experience when you need it.

Techstars, on the other hand, throws you into the deep water and makes you swim. They just make sure you’re swimming well enough and fast enough. You do a lot more things on your own.  Here too, mentoring has been faster and more intense. Whereas 3-4 meetings with mentors a day in Prague felt fairly intense, here we had 6 or 7 in a half-day. That’s very tough, mentally and physically.

But it hasn’t been all grind. Techstars also treated us to a resort weekend in the mountains with hiking and relaxation.


Ales Teska on the TechStars retreat hike.

That said, again I found that to be a lucky and nice combination for TeskaLabs. StartupYard has a “softer” environment, where things are a bit more personal and you get more individual help. We needed that at the beginning. Techstars is harsher, which suits the business environment here. That’s a transition we needed to make, but I don’t think we could have gotten here without going through StartupYard first. A lot of the skills we are using here, we learned at StartupYard.

How would you describe your experience so far with running TeskaLabs in London? What are some of the striking differences between doing business there instead of in Prague?

I have a nice example from yesterday that highlights the differences. We launched a campaign targeting nationwide transportation and logistics companies recently, and we have already had a meeting with a large international logistics outfit. The very first meeting was concerning a fairly massive project.

Anyway, in Prague, I think it’s fair to say that this first meeting would have involved some skepticism, and action would have been much slower, or possibly non-existent. But this company said to us right away: “we are not afraid of startups. We know they’re a necessary part of the economy.” That’s a striking difference with companies in the Czech Republic.

There, you have pretty high barriers when it comes to cooperating with large companies. To them, startups equal small companies, and not “startups,” which can become big and influential, or which may have novel new processes and ideas that can revolutionize a project. So in Prague, we relied on personal connections and our reputations to get us deals. There was no other way that clients would listen to us or take us too seriously.

But in London, we have been able to establish real relationships with big clients, even through cold-calling. That’s something I can’t imagine happening in Prague, frankly. And because of that, and I know it sounds crazy, but we’ve been converting 100% of our initial meetings so far. There is very little wasted time, no excuses, and more appetite for cooperation and experimentation here. There’s no fear that a startup won’t be able to deliver or will be unreliable- these big companies are willing to accept those risks.

Will you maintain operations in the Czech Republic?

We will absolutely stay in Prague, especially as concerns our R & D operations. We also have important clients there, and hope to have more in the future.

Our sales operation will shift to London for now, and we plan to expand to Germany, Switzerland, and Italy in the near future (possibly as early as the start of next year). In London, it’s been very easy to increase our sales pipeline, even with only one dedicated sales person.

My sense is that we will be concentrating on this market until the end of this year, and opening a seed investment round in at about the same time. By then, we will have validated our model and ability to market our products.

Let’s talk about investment. You’ve raised nearly 350,000 Euros. How did you put together that round so quickly?

There were a few contributing factors. First, mobile security as a market is very hot at the moment, both with clients and investors. There’s an awareness among clients that they are not secure enough, and need to offer more robust solutions to their own users and clients.

From the investor side, there is an awareness of that need that is growing. When you can deliver a product that really works, it’s easy to sell right now.

Our team is another factor, and I think that’s very important. We started as more than just a technical operation. Sales and Marketing have been baked into our team since the beginning, and that has shown investors, as well as clients, that this is not a purely technical operation, and that we are capable of handling business concerns as well as technology needs. You have to be able to do both. We’ve consistently heard from investors: “your team is amazing!”

We were also able to demonstrate quickly that there is a global market for our products, and that we have the aspiration to fulfill that need, and the necessary ambition to get there. We’ve communicated well, and clearly, thanks in no small part to StartupYard, who have been super supportive, and have contributed far more than we expected at the beginning- and we had high expectations I must say.

Credo Ventures, another investor, was considered very early on, partly because of their involvement with Cognitive Security (another security startup), and their relationship with StartupYard, obviously. We liked their team quite a bit, and we chased them from the beginning, making sure they saw that we understood how they could help us and contribute. I’m happy to have them as investors.

Techstars is also huge. We didn’t join because of money, but that came as part of the deal. It’s a validation for people who are looking to invest in us, that we are serious about going global, and using their network has been amazing. You just ask, and you get intros and contacts that are great. They’re very experienced and skilled in dealing with investors and startup challenges in terms of fundraising and hiring.

Are you looking to raise additional capital immediately?

This is a question for us right now. The plan is to open a seed round by the end of the year. We will be asking for 1-2 Million Euros. This will go, as I said, to expanding our success from the UK market to other European markets.

We are well funded for our plans in the UK, including for hiring sales people, but the seed fund will be about expanding on those operations abroad that I mentioned. If anyone reading this is a sales superstar in Europe, then please get in contact. We’re looking for the right people.

Have you faced serious challenges with hiring so far?

Well, I’m not calling it a challenge, but it’s difficult to hire people for startups by default. Particularly the caliber of talent we are looking for.

The Czech talentpool is not as ready for Startup offers as in the UK. We offer stock options for new employees, and people are not as familiar with the value in that, and they look for more traditional compensation. A monthly salary and benefits that we can’t necessarily offer right away.

We also offer participation in our success, which makes negotiations more difficult, but we have still attracted some great talent. When running a startup, a huge amount of your time is taken up seeking talent, so that has become a much bigger part of my role.

We aren’t hiring technical people in the UK, and we’re seeking a very specific profile, which takes time. The type of person we are looking for isn’t necessarily available (they are already employed) and that makes the process slower. But I think thanks to the attractiveness of our products and segment, we have had some initial talks, and it seems to be going well.

What is the state of your product offering to date? What are you currently selling, and what do you plan to provide in the near future?

Our flagship product is the mobile secure gateway, which we call SeaCat. The pricing structure has changed from a license based approach to a subscription model, which shifted us into a much more modern sales approach. I’m happy with the changes we’ve made. It makes us more flexible and more able to sell in different segments.

When you sell licenses, you lock yourself into B2B business, particularly enterprise sales. But with a multi-tier subscription model, you can talk to smaller companies, and find something to offer them as well. This allows us to scale much more smoothly from small to big business.

And from a partner perspective, the subscription model makes a lot more sense. Partners are able to secure recurring streams of revenue by selling our products along with theirs. When a mobile dev house develops something, that comes with a one-time fee. But if they can resell our solution, which is constantly updated and trouble-free for the end-client, the partner can see a monthly revenue stream, and deliver a much better and more secure product at the same time.

It’s a win for everyone, including end clients who don’t need to worry about constantly redeveloping their products to meet new security challenges.

I also have a fairly big announcement, and this is the first place I’m sharing it. We have agreed with Rackspace, Amazon, Microsoft, and Google, that we will cooperate on installing our mobile secure gateway to every data center in their cloud platforms.

This means that there will soon be 60 of our gateways across the globe, available to customers operating their backends on these cloud platforms. A huge win for us. We will cooperate on marketing this solution with the cloud providers. In addition, these providers have given us over 500K USD in services for building this solution into their services. The cost of the infrastructure is free for us.

We will be the only mobile secure gateway available on these platforms, and it will launch within the next few months. That’s a major step for us in bringing TeskaLabs’ solutions to a broad global userbase.

Announcing StartupYard FastLane Prague: September 2nd at Node5

As we announced recently, StartupYard is hosting a series of Fastlane events, giving startups in 7 European cities the opportunity to pitch directly to StartupYard, and advance to our final rounds of selection for StartupYard 2016, kicking off in January.

StartupYard FastLane Prague: September 2nd

Our event in Prague will take place on Wednesday, September 2nd at 6pm, at our homebase, Node5.

Time: 18:00-20:00

Place: Radlicka 50/180, Prague 5

Anyone interested in learning about the StartupYard accelerator program is welcome to attend. We have guest speakers from startups who have attended in the past, and we look forward to being able to answer questions about StartupYard, our partners, and our program.

How to Pitch StartupYard


If you’re interested in pitching your startup to StartupYard, all you have to do is fill in the short form below.

We will inform you the week of the event whether you have been selected to pitch on stage.

Preparing Your Pitch

On September 2nd, StartupYard will host open hours at Node5 from 14:00 to 16:00, which any interested startup may attend. We will also host a pitch training session for those startups that are selected to pitch at the evening event.

But we highly recommend that you start working on your pitch right now. We’ve published a number of pieces about pitching in the last year or so, and those are a good place to start.

6 Things to Remember When You’re Pitching Anyone, Anywhere

Three Pitching Disasters and How to Avoid Them

4 Tips for Targeting Your Elevator Pitch

Making Your Pitch “Real” From Day One

TeskaLabs, a StartupYard Company, Raises €337K in Pre-Seed Round

Today we have the great pleasure of announcing that TeskaLabs, a StartupYard company from our most recent 2015 cohort, has raised €337,000 in “pre-seed” funding from a combination of private and institutional sources including StartupYard, TechStars London, and Czech VC firm Credo Ventures.

The investment round was announced on Forbes.cz yesterday (article in Czech).

TeskaLabs, which produces cutting edge enterprise-grade security for mobile platforms and devices, joined TechStars London shortly after leaving StartupYard in June of this year.

The company will employ this financing to recruit top technical talent, and expand their research and development in Prague, as well as their sales operations in London.

Prague is no stranger to successful high-tech security firms. Avast and AVG, both billion dollar companies that were founded here, have both developed over the past decade into worldwide leaders in the field. AVG became the first Czech company ever to IPO on the New York Stock Exchange in 2012.

Ales Teska, TeskaLabs, StartupYard

Ales Teska, Co-Founder and CEO at TeskaLabs

TeskaLabs: Prague Born

TeskaLabs was founded in 2014 by Teska and Vladimira Teskova. The pair, both highly experienced in enterprise mobility and network operations, started TeskaLabs in response to their experiences with the internal security practices of large enterprises, particularly the challenges of staying up to date with a rapidly changing security environment. TeskaLabs provides an always up-to-date, plug and play security layer which can scale to even the largest of operations, operating on thousands of devices within a single company.

“The really key danger right now in the enterprise mobile and Internet of Things (IoT) security market is that the focus has been from the wrong angle, and existing solutions are difficult to adopt,” said Teska, CEO, TeskaLabs. “We take secured enterprise mobility to a new level with our robust, pervasive protection, active monitoring, and easy-to-implement solution so that organizations can go secure- and do it right now.”

“This is the biggest funding round a company coming out of StartupYard has ever secured in such a short time after leaving the program,” commented Cedric Maloux, Managing Director of StartupYard.


TeskaLabs creates a single pervasive security layer to protect large scale enterprise mobility applications.

“We invest in smart, innovative companies that show creative solutions and promising futures,” said Max Kelly, Managing Director, Techstars London. “We are excited by their vision, approach and its progress toward positioning itself as the leading provider of security solutions for mobile and IoT.”

“We believe in the vision of Ales and his team, and we’re happy to back them,” said Ondrej Bartos, Partner at Credo Ventures. In the emerging field of IoT, we believe security will be of increasing importance, and we are keen to work with TeskaLabs on delivering a solution for it.”

TeskaLabs provides Enterprise-grade Security Solutions for industrial, consumer mobile, and Internet of Things applications. With its robust and efficient plug-and-play security platform for any connected device, they offer an active, up-to-date security layer via software, hardware, and cloud products based on industry best practices.

For more information, visit www.teskalabs.com

Guest Post: VC Andrej Kiska: Term Sheet Guide Part 4

While our regular blogger, StartupYard community manager Lloyd Waldo is on holiday during August, the StartupYard blog will feature a series of guest posts from StartupYard mentor and VC investor Andrej Kiska. 

You can check out Andrej’s  fascinating blog on Medium, and tweet to him @kiskandrej

Term Sheet Guide, pt.4: Equity Investment continued

Final post focusing on the more complex clauses of a standard term sheet

This is the second post devoted to equity-round term sheets and the concluding part of my term sheet guide. If you haven’t read the first part on equity term sheets, I strongly recommend doing so before moving on. For a general introduction to term sheets and the trade-off between high valuation and complex investment structure, please refer to theintroductory post to the guide. For an overview of a convertible loan term sheet, please refer to this post.

Let’s dig into the remaining set of terms entrepreneurs can typically find in an equity-round term sheet, which the first post didn’t cover. They are mostly the complex points, which are often misunderstood and can lead to serious quarrels.

The terms

Liquidation preference: a very important clause that is sometimes overlooked by entrepreneurs. It is one of the key terms used to protect an investor’s downside. Generally you will find one of the two variations of the liquidation preference definition in a term sheet: participating or non-participating, or their combination (i.e. capped participating, even though that’s quite rare in my experience).

The easiest way to explain liquidation preference is using an example. Let’s say an investor invested EUR 1,000,000 for 10% stake in the company. If this investor has a non-participating liquidation preference, he has a right to choose at a liquidation event (i.e. exit, or any kind of transaction that involves a buy-out of existing shareholders, not just a bankruptcy sale, which is the most common understanding of liquidation) whether he would like to receive the preferred return specified in the liquidation preference clause or 10% of the exit price. Most typically, the preferred return is equal to the amount invested (in our example EUR 1,000,000), but can be a multiple of that amount (e.g. 2x liquidation preference corresponds in our example to EUR 2,000,000). Let’s say the investor in our example has 1x (also called “simple”) liquidation preference, i.e. EUR 1,000,000. When the company gets sold, he can choose whether he would like to receive EUR 1,000,000 or 10% of the exit price. Using simple math, it makes sense to choose EUR 1,000,000 if the exit price is below EUR 10,000,000, and choose 10% of the company if the exit price is above EUR 10 MM. Likewise, if the investor has 2x liquidation preference (and thus his preferred return is EUR 2,000,000), the exit price at which it becomes interesting to take the 10% of the company instead of the preferred return is EUR 20 MM.

Things get a bit more complicated with participating liquidation preference. In this scenario, the investor at exit first gets his preferred return, and then the rest of the exit proceeds get distributed pro rata among all shareholders. Let’s take the example above: investor has provided EUR 1 MM for 10% of the company with 1x participating liquidation preference. If the company gets sold for EUR 10,000,000, the investor first gets EUR 1 MM, and then also 10% of the remaining EUR 9 MM for a total of EUR 1.9 MM.

In general, we tend to stick with simple 1x non-participating liquidation preference, which is the most entrepreneur-friendly alternative. Entrepreneur-friendly liquidation preference is also important for attracting future investors or exit partners, who don’t want to see a disproportionate amount of acquisition price going to investors as opposed to entrepreneurs. Nonetheless, if the entrepreneur has unreasonable valuation expectations, we tend to include stricter liquidation preference (2–3x non participating). We recently (and after a heated debate) decided not to use participating liquidation preference in the future, since we consider it too entrepreneur-unfriendly. Simply put, if we can’t reach an agreement on acceptable valuation, we would prefer to walk away from a deal rather than include harsh terms that can cause fights between founders and an investor and deter future investors from investing.

Drag along right: this right allows an investor (or, in case a startup has multiple investors, after agreement among all existing investors) to drag all remaining shareholders (including the founders) to sell their shares if the investor decides to sell his. Typically, this right can only be exercised after certain time period; standard is between 1–3 years after the transaction. Sometimes, the execution of a drag along right has to be approved by startup’s board of directors.

A lot of entrepreneurs worry about this right and it is easy to see why: at first glance, it seems that the investor can decide the fate of the company without consulting the founders. What the founders must realize is that no buyer will buy a company if they don’t want to sell, because the founders and their team are an essential part of what the acquirer is buying. That’s why a drag along can only work in practice if it also endorsed by the founders. We at Credo have never exercised a drag along right before, but still want to have it in the term sheet. It is for the unlikely event that some shareholder (typically a non-essential one, such as a fired angry early employee who has a stake in the company and wants to damage it) will try to block a transaction.

Founder’s vesting: another right that deals with founder quarrels. Essentially, when founders take an outside investment, they will not own their entire equity outright. Instead, it will vest over time. If you are not sure what vesting is, please read Fred Wilson’s post.

Let’s describe the mechanics in an example. Our typical terms are the following: at signing, each founder directly owns 30% of his stake. The remaining 70% of the stake gets vested over the next 4 years. How does this look in practice? Let’s say a founder is supposed to own 50% of the company once the investment is made. According to founder’s vesting, he will own 50% * 30% = 15% of the company outright. In two years, he will own 50%*30%+50%*(1–30%)*(24/48 months)= 32.5%. In four years, he will own the full 50%.

At first glance, this may seem like a very entrepreneur-unfriendly clause. Nonetheless, we use it especially in our seed investments, where the founders are working on their first venture together. It has a simple reason: let’s say there are four founders, where each owns 25% stake in the firm. There are plenty of real life cases where one of the founders gets in an argument with others and leaves. If there is no founder’s vesting, all of a sudden you have a 25% shareholder in your company who not only doesn’t add value to the firm, but may be angry and on a mission to sabotage the rest of the firm just to get back at you. Founder’s vesting thus helps mitigate the consequences of founders’ quarrels.

Reporting: be prepared that an investor will typically want to see a monthly report, or at least a quarterly one in very early stages of startup’s lifecycle. In general, this includes monthly income statement and balance sheet (which your accounting firm can produce) along with a short qualitative commentary from the CEO about most important news of the month. These materials also serve as supporting documents for a board meeting.

Closing remarks

These terms might initially seem quite controversial. That’s why it is very important to sit down with the VC who offered the term sheet, and let him walk you through the logic of each term. If something sounds fishy to you, it is very easy to Google each of the terms. Plus, if you really want to take a deep dive on term sheets, you can always order some literature on it. I can recommend this piece by Alex Wilmerding.

Some people say that accepting an investment from an outside investor is like getting married. It is true that you might spend more time with your investor than with your wife or husband. If that is so, signing of a term sheet is like getting engaged. How often do you see couples starting a happy relationship by having a long argument? Just keep that in mind when you will be negotiating the term sheet. The way you start the relationship with your investor might be very indicative of where it might be heading.

Guest Post: VC Andrej Kiska: Term Sheet Guide Part 3

While our regular blogger, StartupYard community manager Lloyd Waldo is on holiday during August, the StartupYard blog will feature a series of guest posts from StartupYard mentor and VC investor Andrej Kiska. 

You can check out Andrej’s  fascinating blog on Medium, and tweet to him @kiskandrej

Term Sheet Guide, pt.3: Equity Investment

Overview of some of the most common terms in a standard term sheet

In the introductory post to my term sheet guide, we covered a general introduction to term sheets and the trade-off between high valuation and complex investment structure, while the second one focused on the basics of a convertible loan. The goal of this post is to shed some light on terms in a standard equity round term sheet and provide some context as to how we at Credo Ventures look at each of them.

Our term sheets try to mimic what we consider a standard set of rights used by U.S. venture capitalists. By using a “Western” structure since the very early days in its lifecycle, a startup can in our opinion improve its likelihood of raising future rounds from Western investors.

The terms

Investment tranches: right after the investment size and valuation (topics I’ve already covered) you will typically find the investment tranches. In order to protect his downside, investor can split the investment into multiple tranches and include conditions/milestones (customers, revenue, product, etc.) under which each of the tranches will be released. In the seed and Series A level, we tend not to tranche the investment too much, since it is very hard to set meaningful milestones in such early stages. In seed, we tend to give the whole amount at once or sometimes have it divided into two tranches. Series A is very similar; if it is a larger investment we might include an extra tranche.

Stock options plan: I have already devoted this and this post to employee equity. We typically want to devote between 10–15% of company equity in the stock options plan at the seed level. Timing of creation of the SOP is important: if the term sheet says the plan should be created before the transaction is closed, the equity will go from the stake of original shareholders. If the SOP will be created after the transaction, the investor will get diluted as well.

Board of directors: this one is tricky and pretty important, because some investors (especially the non-standard ones or occasional business “angels”) may use the board to usurp the control of the startup.

Since we try to add value by being hands-on in our companies, we typically nominate one director to the board by Series A at the latest. We have some seed investments with no board of directors or with a board consisting only of management. We have never taken majority in a board at seed or Series A level; i.e. the management should, in our opinion, always keep the majority of the votes (by having more directors than the investors have) at this stage. Our boards of directors typically meet monthly. Beware of investors that want to take majority or an equal number of seats as management in the board by Series A.

Important caveat for European entities: board of directors is not always a statutory body of the firm supported by legislative framework in a given jurisdiction; the board can be a newly created body backed up by the transaction documentation of the investment. The board has a list of items that it must approve (e.g. expenses greater than XX EUR, hiring of key people, sale of shares in the company, etc.), some unanimously, some by majority of the vote. The item list is also part of the term sheet.

Lock-up rights: they limit founders’ ability to sell their shares without consent of the investor. The investor invests in the people — why would he want to be part of a company in which the founders can sell their shares and leave at any moment?

Tag-along / co-sale right: based on a similar logic as the lock-up rights, tag-along clause describes the right of an investor to tag along in a sale of the firm if the founders choose to sell a larger portion of their shares. Example: if the founders decide to sell 10% of their stake to a third-party, investor will have a right to sell his entire stake under the same terms as the founders. If the buyer does not want to buy investor’s stake, he can’t buy the founders’ stake either.

Right of first refusal: another right in the same class as the lock-up and tag-along rights. Right of first refusal states that before any shareholder sells his stake to a 3rd party, he must offer his stake to existing shareholders at the same terms. The selling shareholder can only sell the stake if remaining shareholders don’t want to buy it the stake.

Pre-emption / pro rata rights: this clause essentially reserves the right to participate in the future financing rounds. Typically this includes a pro-rata right: let’s say that an investor owns a 20% stake in a startup, which is about to receive additional EUR 5,000,000 investment. A pro-rata right allows the investor to invest EUR 5,000,000 * 20% = EUR 1,000,000 at the same terms as the rest of the investors. In our seed investments, we sometimes include more than a pro-rata right to make sure that we can deploy more capital into really promising companies.

Anti-dilution: this one can also get very tricky, and some investors use it to limit their downside risk. The anti-dilution clause describes how each shareholder gets diluted in a “down round”: a future investment round with a lower valuation than the current investment round. There are two basic concepts: full ratchet and weighted average anti-dilution. While full ratchet essentially means that only the founders will get diluted (i.e. investors don’t get diluted at all), weighted average approach assumes dilutions of both investors and founders. If you want a deep dive on the technicalities of the anti-dilution clauses, check out this post by Brad Feld.

Credo has to my knowledge never used full ratchet, since we consider it very entrepreneur-unfriendly.

I think we have covered more than half of the standard terms. In order for the post to not get too lengthy and complicated, I will cover the 2nd half in the next post in two weeks.

No lawyers

Just one closing remark: I strongly recommend resisting the urge to invite a lawyer to review the term sheet, especially if it is not a Silicon Valley lawyer who has executed hundreds of similar transactions. Most of the local lawyers don’t understand startup investing but want to have as much input as possible so they can clock in (and bill) more hours. Things can get very counter productive very quickly; unfortunately, we had to walk away from a couple of transactions where the startup invited their friend-lawyer to review the term sheet, which resulted in a total mess.

If you want advice on a term sheet, read blogs of other VCs like mine, or get help from respected startup mentors, which any accelerator or angel can recommend. Just please avoid inexperienced lawyers who are more interested in billing their hours than helping the startup succeed.

Guest Post: VC Andrej Kiska: Term Sheet Guide Part 2

While our regular blogger, StartupYard community manager Lloyd Waldo is on holiday during August, the StartupYard blog will feature a series of guest posts from StartupYard mentor and VC investor Andrej Kiska. 

You can check out Andrej’s  fascinating blog on Medium, and tweet to him @kiskandrej


Term Sheet Guide, pt. 2: Convertible Loan

Everything you need to know about convertible loans

This is the second part of my mini series focusing on term sheets. For a general introduction to term sheets and the negative consequences of pushing for high valuations, please refer to the first post.

Before we dig into individual terms, it is important to distinguish between the two most common methods of investing: convertible loans and equity investments. In an equity investment, an investor receives a stake in the company in exchange for cash. Plain and simple. If the investor provides a convertible loan instead, he will provide a loan with a maturity date, interest and a special twist: the right to convert the loan into an equity stake in the company at some point in the future.

The goal of this post is to cover the convertible loan – in general the less commonly used investment method. Nonetheless, it typically contains just a few terms that can easily be covered in a single post.

Definition of a convertible loan

As mentioned above, a convertible loan is short-term debt that converts into equity. Usually it converts at the next investment round. Example: if you receive your seed investment in a form of convertible loan, it will convert to equity when you raise your Series A investment.

The advantage from the perspective of an entrepreneur is that a convertible loan before its conversion behaves very much like a standard loan: the investor typically does not have many of the rights of a preferential shareholder (board seats, liquidation preferences, etc.). Since it is a fairly short and simple document, it also gets executed faster (that’s why convertible loan investment can be processed faster than an equity investment, typically by a couple of weeks). Additionally, a standard convertible loan does not require an immediate payment of interest. Instead, it gets accrued and converted to equity, as explained below.

The disadvantage also comes from the very nature of the loan: until the loan gets converted to equity, the investor has a priority right at maturity date to claim any assets (i.e. cash & hardware for most startups) in order to get the loan and interest repaid. Needless to say, most startups don’t have enough cash to repay the loan at maturity and thus are forced to liquidate all assets and close down the business.

Why and when to use a convertible loan

There are a couple of scenarios when a convertible loan can be used. First, it may serve as a source of “bridge financing” before an anticipated large financing round. Say you raised a EUR 200,000 seed round and are now in the process of raising EUR 2 MM Series A, but still need a few more months to complete the round. So you take a EUR 100,000 convertible loan as an extra cushion for the fundraising process. As mentioned above, convertible loans are faster to execute from a legal perspective, so the whole transaction can get processed in a matter of few weeks. Bridge financing can be tricky, though: if investors are not 100% convinced that things are going well, asking for a quick convertible loan may give rise to major concerns regarding performance and outlook (i.e. the question: why would you need more cash in order to fundraise?). Losing existing investors’ confidence is a very bad way to start the fundraising process.

Second, the convertible loan is used at times when investors and entrepreneurs can’t agree on valuation, especially when they define a conversion discount but not necessarily the valuation cap (explained below). I am not a big fan of this use case: instead of facing a major issue straightaway, both parties decide to shift its resolution to some later point in time. Such a strategy can very easily backfire, creating nasty arguments between investors and entrepreneurs, which can block further fundraising and thus kill a startup.

Convertible loans are also increasingly being used at the seed stage. There is plenty of criticism against this practice from VCs, especially if the notes are overused and include harsh terms. I recommend reading this piece by Mark Suster on the topic.

Terms you can find in a convertible loan

Maturity date: This is the time by which the loan matures. First thing to understand: the investor can require the repayment of the loan at the maturity date. This is used to protect his downside: if the startup is not doing well, the investor can still recoup his investment and interest at the loan’s maturity date (and kill the startup if it doesn’t have enough money to repay the loan).

Interest rate: This is the interest the startup shall pay on the loan. It is typically a PIK (payment in kind) interest, i.e. startup doesn’t actually pay the cash. Instead, interest gets accrued to the principal of the loan. In such case the accumulated interest gets converted into equity together with the principal of the loan. Example: if you raise a EUR 100,000 convertible loan with an 8% interest that gets converted into equity in 12 months, the actual amount that gets converted is EUR 108,000. The most common rates we have seen hover between 6–8%.

Conversion: very important clause that describes the conditions under which the loan is converted to equity. The most typical mandatory conversion scenario is upon “qualifying financing”: once a startup raises more than EUR XX (i.e. raises a “qualifying financing” round), the loan under gets automatically converted into equity. The most investor friendly alternative for conversion is at any time the investor chooses, but this scenario is very rare if the startup has raised additional capital. Typically, if the startup doesn’t raise any new capital before maturity date, the investor has a right to decide whether he wants to convert or not.

Qualifying financing: the minimum amount a startup has to raise in the next financing round in order for the convertible loan to be automatically converted to equity. The amount varies widely depending on whether the startup is raising seed, Series A or more later-stage capital.

Conversion discount: The investor typically converts his loan to equity with a conversion discount in valuation compared to new investors to compensate him for the additional risk of having entered the startup earlier than the new investors. Example: Say new investors are entering the startup at EUR 5,000,000 valuation. If the note has a 20% valuation discount, the holder of such a loan can convert the entire amount of the loan (and interest as explained above) to equity at 5,000,000 * 80% = EUR 4,000,000. A standard discount we typically see on a convertible loan is between 10–30%, with 20% being the most common.

Valuation cap: In addition to a conversion discount, investor can also set a valuation cap, i.e. the maximum valuation at which the loan will convert. Let’s use the example above, but say that the terms also included a valuation cap of EUR 3,500,000. Without the cap, the investor would convert at EUR 4,000,000 valuation, but with the cap, the investor can convert at EUR 3,500,000.

These are the most common terms an entrepreneur can find in a convertible loan, at least based on what we at Credo Ventures have experienced.

Nevertheless, we tend to prefer equity rounds: rather than hiding/avoiding terms or valuations, we agree on the whole structure at the beginning so we can focus on what is important: creating value for the startup. More on how we set the structure and how we think a fair equity round term sheet should look in the next post.

Guest Post: VC Andrej Kiska: Term Sheet Guide, Part 1

While our regular blogger, StartupYard community manager Lloyd Waldo is on holiday during August, the StartupYard blog will feature a series of guest posts from StartupYard mentor and VC investor Andrej Kiska. 

You can check out Andrej’s  fascinating blog on Medium, and tweet to him @kiskandrej


Term Sheet Guide, pt. 1: Introduction to Term Sheets

– Andrej Kiska

And why a high valuation can hurt your startup

In the past five years, seed-stage investing has experienced a boom. In North America, seed funds now represent 67% of all VC funds, up from 33% in 2008. The CEE region is no different: according to European Private Equity and Venture Capital Association, the number of seed deals has increased 19x over the past four years. Even considering the fact that EVCA’s data is not fully comprehensive, since many investments are not announced at all or are not made by EVCA’s members, it still illustrates my point.

Hand-in-hand with the rise in seed funding naturally comes an increasing number of issued term sheets to all sorts of startups in the earliest stages. Most of these, especially in the CEE, are issued to first-time founders who might not have seen a term sheet before. Therefore it is not surprising to see so many entrepreneurs asking for help with or revision of a term sheet received by another investor. This puts me in an awkward spot, since I don’t want to criticize someone else’s term sheet. So I decided to devote a couple of blog posts to this topic in order to create a term sheet guide that should help founders of seed-stage companies in Europe navigate through their term sheets.

What is a term sheet

Before we dive into individual terms, it is important to understand what a term sheet is: a non-binding summary of key terms of the proposed transaction. There are typically just two binding provisions: exclusivity and confidentiality.

Confidentiality limits the amount of information an entrepreneur can share with anyone besides the investors who have proposed the term sheet. Basically, once you sign a term sheet, you should not discuss the terms with anyone who has not signed it. While this clause only becomes valid after the term sheet has been signed (just like exclusivity), it is important to treat the information sensitively even before a term sheet is signed. You will not make your potential investor too happy if you forward his term sheet to other investors to solicit a better offer.

Exclusivity prevents the entrepreneur from negotiating with other investors for some finite period of time. At Credo, this period ranges from 45 to 90 days after the term sheet is signed (the amount of time we expect it will take to close the transaction). The goal of the exclusivity provision, similarly to confidentiality, is to ensure that the entrepreneur doesn’t use the signed term sheet as a negotiation tool to attract more investors / better terms. If the transaction does not occur within the specified time frame, the entrepreneur can resume negotiations with other investors.

Why focusing too much on valuation can damage your startup

Let’s start the discussion with the provision that many entrepreneurs consider the most important: valuation. I have already devoted an entire post to valuations and investment sizes. This post is about structure, not numbers.

I agree that valuation is very important. At the same time, I would argue that many entrepreneurs (especially the first-timers) overemphasize its importance, which entails quite a few risks.

First, you might not get a deal done with the fund you prefer. Sticking with a fund that provides the best valuation can have short-term gains but can cost you in the long run. A fund that competes only on valuation is indirectly saying that such a fund can’t add much value. Choosing the right partner whom you trust can really boost your startup; even if it means a cut to today’s valuation, it can result in a much more valuable startup later on. I have seen too many startups get killed because they chose the wrong investor.

Second, a high seed valuation sets a high hurdle for subsequent rounds as well. Say you want to raise your seed round at EUR 3 MM valuation, and you expect that valuation to triple or quadruple by Series A to make it an attractive proposition for your investors. Do you know how many companies raised a Series A at EUR 10 MM valuations or higher in the CEE? A handful. Would you not prefer to raise your Series A at EUR 5 MM, if you were much more likely to raise such a round? The numbers I’ve used are just for illustration, even though I do strongly believe that you are much more likely to raise cash in subsequent rounds (i.e. once you achieve your product/market fit) if you don’t push too hard on valuation in the earlier stages.

The third and the most important point I want to mention is the structure: the more you focus on valuation, the more incentivized the investor is to include other harsher terms in the term sheet in order to protect its downside. I have borrowed a very simple diagram from Jamie McGurk to illustrate the point.

These terms and the resulting complicated structure can often be much more detrimental to your startup than a lower valuation. As a first time founder, you will have a very hard time going through a complex term sheet and identifying what impact these terms can have on your startup. And that’s precisely the point of my small term sheet guide: to explain to founders each of those terms and the implications they may have for their startup.

The next post will tackle the intricacies of a convertible loan, while the subsequent two will focus on all the terms you can find in an equity round term sheet.