Startups are always looking for ways to grow and often, capital is one of the most important aspects which is needed to fuel that growth. This webinar provides an overview of Venture Capital and how it has evolved with emergence of Open Source and Cloud.
The webinar also focuses on funding, how to pitch throughout the funding process and provides answers to some of the most commonly asked questions like "What does a good pitch look like" or "What are some of the best practices in pitching". The session will also cover tips from top VC's and startups that raised funds successfully.
2. A program designed to provide startups with the resources needed
to get started on AWS. Join some of the fastest-growing startups in
the world and build your business using AWS.
8. Why do we talk about this?
• Work with many startups & APAC’s leading VC’s
• Discuss many startups with VC’s & get feedback on pitches
• Not biased, no agenda, helping AWS startup customers
succeed
13. Venture Capital
VC Fund
General Partners,
Principals, VP’s,
Associates, etc.
Startups
with need for capital
and growth potential
Limited Partners
institutional & high net
worth individuals
14. 2-sided Platform model
Startups
with need for capital
and growth potential
Limited Partners
institutional & high net
worth individuals
Capital & Value Creation
connections, biz dev,
GTM, mentoring, etc
Risk & Return
Reduce Risk & deliver
Financial Returns
16. “2 and 20”
Management Fee. VC raises a fund of e.g.
$100M and gets $2M per year to operate
the fund (staff, expenses, etc.)
2%
Performance Fee. VC returns the profits
from the fund to the LP’s but gets to keep
20% of these profits
20%
21. August ‘08
Nathan
Brian
Joe
January ’09
$20K Accelerator
Y Combinator
November ‘10
$7.2M Series A:
Sequoia
Greylock
SV Angel
& others
July ’11
$112M Series B
Andreessen Horowitz
General Catalyst
& others
April ’09
$600K Seed Round
Sequoia
Youniversity
22. 01 04
idea MVP monetizescale
Product Risk Market Risk Financial Risk
02 03
Product?
Do we have a product?
Can we ship?
How to develop faster?
Better? Cheaper?
Market?
Do people buy?
Do they pay?
Can we scale?
Can we deal with spikes?
Profit?
Can we monetize?
How to keep costs down?
When can we break-even?
Can we get & stay profitable?
23. 01 04
idea MVP monetizescale
Product Risk Market Risk Financial Risk
02 03
Startup 2.0: “Lean Investor” Model
• Incubator / Angel: $0-250K for ‘Product Viability’
• Seed: $250-$1M to ‘Expand Market Distribution’
• Venture: $1M-$5M to ‘Maximize Revenue’
24. 01 04
idea MVP monetizescale
Seed RoundSeed Round
Series A, B, C, etc.Series A, B, C, etc.
Incubator / AngelIncubator / Angel
Product Risk Market Risk Financial Risk
02 03
$0-250K
$250-$1M
$1M-$5M, or more
29. “Amazon Web Services is probably the most
important thing that has happened to mobile
and web app developers that the press just
misses. Jeff Bezos has accidentally or maybe
on purpose powered a whole generation of
applications.”
Steve Blank
30. “Amazon changed the VC industry.
This is mind boggling. That online
book company. Not … or anybody
else. Amazon. 100% of the credit.”
Mark Suster, serial entrepreneur
and MD at GRP Partners
31. 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
1995 – .com
Technology Startups require physical hardware and
proprietary software to build their business
Typical Series ATypical Series A Spent on…Spent on… InnovationInnovation
5-10M
•$2.5: marketing,
sales, etc.
•$2.5M on
infrastructure
•Not a lot, since
experimentation was
costly
32. Typical Series ATypical Series A Spent on…Spent on… InnovationInnovation
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2000: Rise of Open Source
Open source software drove technology costs down by 90%,
which spurred innovation in technology
3-5M
•Less on Software–
LAMP
•More on development
•Still on infrastructure
•A lot more, as
experimentation is
less costly now
33. Typical Series ATypical Series A Spent on…Spent on… InnovationInnovation
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2005: Enter the Cloud
Public Cloud pioneered by Amazon drove total
operating costs down significantly
500K-
3M
•Staff – the battle for
talent
•Customer Acquisition
•Explosion in
experimentation,
innovation, and
Startups
34. 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2007: Micro VC / Seed
Public Cloud led to explosion in the number of Startups
and the emerging of “micro VCs”
AngelsAngels IncubatorsIncubators VC’sVC’s
Angels unite in ‘Super
Angels’ for Seed
investments thru VC-
like setup
Boom in incubator
programs, with micro
investments,
mentoring, etc.
Venture funds that
back early-stage
startups with <$1M
E.g. BANSEA, Angels Den,
Angels Gate, etc
E.g. TechStars, Ycombinator, JFDI,
Kickstart Ventures, etc.
E.g. Matrix Partners, A16H,
500startups
40. What’s always missing?
Business Model
not just WHAT, also HOW
Metrics
not just traction, also unit economics
Strategy
What will you DO? How will you GROW? Execution…
42. 1. Problem
Define the
problem clearly
Explain the impact.
Why bother?
What’s the opportunity?
Market size?
Problem Impact Market
Chip design has gotten
more complex, tools
haven’t improved
Product delays.
Increased costs. Less
collaboration
US$5B market for
Electronic Design
Automation software
49. 4. Business Model Metrics
“I look for signs in a pitch that the founders
understand the mechanics of the business.”
Phil Morle, Pollenizer
50. 4. Business Model Metrics
Acquisition
Install / Sign-up (by campaign / channel)
Conversion (by campaign / channel)
Customer Acquisition Costs (CAC)
Activation:
Monthly Active Users (MAU)
Daily Active Users (DAU)
Usage (login times / length)
Retention:
DAU/MAU
Day 1 / 7 / 30 retention
User lifetime
51. 4. Business Model Metrics
Revenue:
Average revenue per User (ARPU)
Av. revenue per Paying User (ARPPU)
% paying user
% buying in-app
% whale vs dolphin vs minnow
Life Time Value (LTV)
Refer:
K-factor = nr of invites sent per DAU x
% acceptance/conversion rate
52. 4. Business Model Metrics
Engagement
• 30/10/1 rule*: 30% of
registered is MAU, 10% is
DAU, 1% is peak concurrent
• This means DAU/MAU = 0.33
• DAU/MAU > 0.2 is good
Profitability
• 2 key metrics for subscription
business models**:
LTV >3x CAC
Months to
recover CAC
*Source: https://avc.com/2011/07/301010/ **Source: http://www.forentrepreneurs.com/saas-metrics-2/
< 12 Months
54. ????
4. Business Model Metrics
Avg Time
on Site
Avg Time
on Site
Average Basket
Price
Average Basket
Price
Advertising CTRAdvertising CTR
55. 4. Business Model Metrics
Metric / KPI Now Comp A Comp B Comp C Goal
Advertising CTR 1.5% 3% 6% 2.5% 5%
Average time on site 4 9 6 5 10
Average Basket Price $18 $75 $118 $45 $73
Metric 4
Metric N
56. 5. Growth Strategy
Metric / KPI Now Goal Growth Strategy & Actions
1. Advertising CTR 6% 8% 1. A/B test creatives
2. Continuously optimize campaign settings for CTR
3. Hire 1 marketing specialist
2. Website Conversion 5% 10% 1. A/B testing of landing pages
2. A/B testing signup flows
3. Run Marketing campaigns (marketing budget)
3. Conversion to Active Y% 70% 1. Automate email addition for known hosts
2. A/B testing of email account addition UX (UI and flow)
3. Hire UX/UI Designer
4. Conversion to Paid Z% 25% 1. Optimize the product package of Free and Paid
2. Make it easier to pay/transact
3. Develop the product to add new features to paid users
4. Deploy payment gateways & get PCI compliant
5. Hire 3 developers
57. 10. ASK
Metric / KPI Now Goal Growth Strategy & Actions Costs
1. Advertising CTR 6% 8% 1. A/B test creatives
2. Continuously optimize campaign settings for CTR
3. Hire 1 marketing specialist
75K
2. Website Conversion 5% 10% 1. A/B testing of landing pages
2. A/B testing signup flows
3. Run Marketing campaigns (marketing budget)
150K
3. Conversion to Active Y% 70% 1. Automate email addition for known hosts
2. A/B testing of email account addition UX (UI and flow)
3. Hire UX/UI Designer
75K
4. Conversion to Paid Z% 25% 1. Optimize the product package of Free and Paid
2. Make it easier to pay/transact
3. Develop the product to add new features to paid users
4. Deploy payment gateways & get PCI compliant
5. Hire 3 developers
180K
My ASK for funding = $480K
60. 01 02 03 04
idea MVP monetizescale
Seed RoundSeed Round
Series ASeries APitch for Angel Money
Pitch for Seed Round
Pitch for Series A
Bootstrap / AngelBootstrap / Angel
61. Angel Pitch
Show me a
great idea!
1.Problem
2.Solution
3.Business Model
4.Business Model Metrics
5.Growth Strategy
6.Status / Traction
7.Team
8.Competition
9.Roadmap / Forecast
10.ASK
62. Seed Round Pitch
Show me
traction!
1.Problem
2.Solution
3.Business Model
4.Business Model Metrics
5.Growth Strategy
6.Status / Traction
7.Team
8.Competition
9.Roadmap / Forecast
10.ASK
64. Series A Pitch
Show me a
business
&
show me
returns!
1.Problem
2.Solution
3.Business Model
4.Business Model Metrics
5.Growth Strategy
6.Status / Traction
7.Team
8.Competition
9.Roadmap / Forecast
10.ASK
65. So before you pitch…
Ask some important questions
Where is my startup in its lifecycle?
Do I understand my business model, metrics?
Can I explain my growth strategy and justify my ask?
Which TYPE of investor should I target?
66. So before you pitch…
And do your homework…
Decide what you look for in an investor
Easy vs Hard, Dumb vs Smart
Investigate who you want to ‘marry’
Which firm? Which Partner?
Speak with people that know them
Business partners (e.g. AWS), CEO’s in portfolio