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Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
Final vcj conference  oct 2011
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Final vcj conference oct 2011

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Transcript

  • 1. The State of the Venture Capital Markets Mark Suster VCJ Venture Alpha Conference – October 2011 @msuster
  • 2. What is the State of the VC Market? What Comes After Social Networking?
  • 3.
    • Accenture (software dev)
    • BuildOnline (’ 99)
    • Koral (’ 05)
    • VP Product Mgmt, Salesforce.com
    • Largest VC firm in Southern California
    Both Sides of The Table This Week in VC
  • 4. The Set Up What is Driving Change?
  • 5. It Is Dramatically Cheaper to Start a Company Open source Cloud Developers Start Companies 2000 $5m $500k 2005 $50k 2009 $5k 2011
  • 6. Amazon & Ycombinator Have Fueled the Market
    • 90% reduction in cost
    • Faster time-to-market
    • Great ability to experiment
  • 7. So Founders Much Younger, More Technical
  • 8. Huge Explosion in Tech Startup Creation Seed Deals / Incubation
  • 9. While The Total Number of VCs Has Right-Sized
  • 10. The Opportunities are Much Bigger 2001 2011 100 2,000
    • Always On
    • Higher Speed
    • Payment Ready
    • Socially Linked
    Millions Online
  • 11. Conditions Actually Bode Really Well for VCs Active VCs Seed Deals Revenue Potential +
  • 12. So What Exactly Is Changing in our Industry? Some Goods, Some Bads
  • 13. Mentorship-Led Investing Has Captured Enormous Talent Pool Access to Deals
  • 14. Great New Focused & Disciplined VCs Created Super Early Territory Topic Area (i.e. big data) Early or Classic A Thrive
  • 15. Some Traditional VCs Now Doing Many Seed Deals Seed C-E Round A, B Round
  • 16. This is Driven by FOMO (Fear of Missing Out)
    • High volume, small deals
    • No oversight
    • Purely an “option”
    • Not smart strategy for VC or founders
  • 17. In H1 2011 80% of LP Money Went to Just 7 Firms. The Billion Dollar Club. 7 Firms Total $6.3 $8.1 VC Money Raised ($ billion)
  • 18. Which Begs the Question of Whether It’s Venture Capital or Growth Equity Seed C-E Round A, B Round
  • 19. Fund Size + FOMO Driving Separation from Price & Underlying Value Time $ Historic Value Today’s Market
  • 20. People are Paying Growth Prices for Market Risk Time Valuation Product Risk Growth / Scale Risk Monetization / Competition Risk Market Risk
  • 21. Probably Less Traditional VCs Being Funded Lately. Seed C-E Round A, B Round $25-75m Typical Fund Size $200-300m $500m-$1bn
  • 22. Traditionally VCs Have Focused on Few Companies & Deep Commitments 1-2 deals per partner / year Many deals / year
  • 23. Two great firms have reinvented model by focusing on the “group collective” Ops Support
    • Founder friendly
    • High volume
    • CEO Summits
    • Founder Email Lists
    • X-Company Equity Sharing
    • Heavy focus on “second round capital”
    Winning Follow On $$
  • 24. Some of Best Returns Seem to Be Driven By “Right-Sized” Traditional VCs
    • Public
    • Accessible
    • Though-Leaders
  • 25. Public Openness Helps With Every Major Stage of the VC Lifecycle Access to Deals Winning Follow On $$ Exits Top end of funnel much wider Founders want to work with you VCs work with others they know, like & respect Awareness with buyers for your portfolio
  • 26. So What is the Next Big Investment Opportunity on the Internet? Television. Yes, really.
  • 27. Americans watch 5.3 hours of TV / Day TV Reading < 1 Hour 5.3 Hours Media Patterns Online 3 Hours
  • 28. You Tell Me What the Future of the Internet Is?
  • 29. But VCs Hate Investing in Content – Hits Driven Business?
  • 30. It’s Not Just Dogs on Skateboards Anymore
  • 31. A Disruptive Breed of Digital Content Producer Has Emerged UGC Network TV YouTube TV Production Costs / Minute $100-400 $6,000-8,000
  • 32. These 4 LA Companies Alone Doing > 3 Billion Video Views / Month YouTube TV Costs / Minute
  • 33. YouTube is the New Comcast … And Notice the Change in Branding
  • 34. With YouTube Content Distribution is Much More Predictable Viewer
    • Subscribers
    • Email Lists
    • Facebook Connect
    YouTube Producer
  • 35. Youth Demo Already 1/3 rd of Time Online Watching Video Streaming Video Other Surfing
  • 36. And Revenue Becoming Substantive
  • 37. How Mainstream? 86% of All Internet Watch Online Video
  • 38. Aug 11 42 billion views 185 million viewers 228 videos / person 17 hours
  • 39. 91% of Households Still Pay for TV (91%)
  • 40. This Market Disruption Will Be Enormous – And It’s Arriving Now
  • 41. </end> Thank you

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