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The 2% - from entrepreneurship to CEO - David Raskino
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The 2% - from entrepreneurship to CEO - David Raskino

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  • Who can guess what this is?
    Global Entrepreneurship Monitor (GEM) findings: "Total human population of 40 GEM countries is almost 4 billion out  of a world population of 6.3 billion; 63% of the world population is  represented in this assessment. Among these 4 billion, 2.4 billion are  in the age range of 18-64 years, which approximates the working years in  most countries. Among this 2.4 billion, about 12% or 297 million are  active in trying to get 192 million businesses past the initial launch  and through the initial three years of operation. The country variation is substantial, from the 19 thousand people in  Iceland trying to establish about 8,000 businesses to 107 million in  India trying to establish 85 million businesses. The countries in Table 6  are rank-ordered by the total number of persons active in  entrepreneurship, so some large countries with low prevalence rates-such  as Russia-may be higher on the list than expected and some small  countries with high rates of activity-such as New Zealand-may be lower  on the list. The adult population survey inquires about any ownership of an  existing business. By adjusting for the size of the ownership group it  is possible to estimate the total number of active businesses in each  country. The total for the 40 GEM countries is about 347 million, from  15 thousand in Iceland to 142 million in China. Using the same  procedures, the number of existing firms that may be considered  entrepreneurial can be estimated at 37 million for all 40 countries,  from 1,000 in Iceland to 19 million in China. While these estimates  could be off as much as 20-30%, they have the advantage of being  standardized across a wide range of countries at different levels of  development. Extrapolation to the other 37% of the world population not covered by  GEM assessments, most in developing countries, would suggest a total of  472 million nascent entrepreneurs are trying to start 305 million  firms; another 89 million owner-managers of 58 million existing  businesses are emphasizing an entrepreneurial focus."   There are substantial national consequences for differences in  entrepreneurial activity. To start with, across the GEM countries about  300 million are involved in trying to start almost 150 million new  firms. Another 57 million are the owner-managers of 37 million  established firms attempting innovation and growth. This is accompanied  by about US$360 billion of informal investments and US$32 billion in  venture capital investments in new ventures. As a global phenomenon,  entrepreneurial activity absorbs a substantial amount of human and  financial resources. People get involved in starting new firms for a number of reasons.  One of the most basic distinctions is between those who seek to take  advantage of unique business opportunities and those who cannot find  suitable work and start a business to survive. The first may be  considered "opportunity entrepreneurs" and the second "necessity  entrepreneurs." They were identified across all GEM countries beginning  in 2001. Using the formula above, I think this means  that with 472 million entrepreneurs worldwide attempting to start 305  million companies, approximately 100 million new businesses (or one  third) will open each year around the world. I think we can safely say  that this stat is the best we can find today.
  • First, let’s cover some basics…
  • Who do you want to be?
  • First, let’s cover some basics…
  • Transcript

    • 1. The 2% - From Entrepreneurship to CEO @DavidRaskino Microsoft Ventures, June 2014
    • 2. * Global Entrepreneurship Monitor, 2013 and EVCA, NVCA, Pitchbook
    • 3. Europe’s 2% (2013) Analysis was conducted based on data from Pitchbook, EVCA, CBInsights and Angel.co • 330 prominent Angel/VC backed startups • Median $0.66MM Seed Series A (54%) • 178 raised a series-A. • Median $3.7MM Series B (36%) • 118 raised a series-B. • Median $8MM Series C (19%) • 62 raised a series-C. • Median $14MM Series D (7%) • 23raised a series- D. • Median $26MM 9% acquired (29) 7% acquired (23) 5% acquired (16) 3% acquired (9)29% acquired (95) 18 months to utilize seed 24 months to utilize Series-A 24 months to utilize Series-B 18-24 months to utilize Series-C
    • 4. Joining the 2% Club Venture & M&A Business Model Product
    • 5. First, some basics • Friends & Family (and Fools): Pre-seed, designed to get you to a basic prototype. Avoid it if you can. Typically $25 - $100k. Early-stageGrowthExit * 2013 Global Tech Exits Report, CBInsights • Seed: Build fully functional product based on deep customer validation. Focus on building sales pipeline to prove out your business model in a few key cities. Typically $500k - $1.5MM (in the US). Take it from smart investors who do follow-on. Get as far as you can before your round. Find an anchor. • Series-A: Your first “institutional round”. Focus on scaling your business model (e.g. national, cross-sector etc.). Typically $2MM - $8MM. • Series-B, C, D+ & PE: Growth capital designed to help companies expand nationally/internationally and cross-sector. • IPO: Initial Public Offering, in which your company goes public and is listed on a stock exchange. • Acquisition: your company merges or is acquired by another company. ~67% of tech acquisitions last year were <$5M “acquihires” *
    • 6. Venture & M&A
    • 7. Series A Crunch “Venture” is now at Seed stage. Not Series-A • Greater need to perform exceptionally well • Strong product and market differentiation • Exceptional execution
    • 8. Account for ~30% of all tech venture investment and 67% of acquisitions. Corporate VCs Corporate VCs are changing the game, motivated by lost-cost: • Business model exploration • market insight • access to talent. Get one to participate in your round Get a commercial partnership going Demonstrate the knowledge & execution of your team
    • 9. Know your Potential Buyer(s) • Know where you fit • Companies get bought, not sold. People buy companies from people they know. Get a BD deal or commercial partnership. • It shouldn’t, but PR matters. If you aren’t getting good press coverage, you’re not known. • Use VC/strategic relationships. Corporations prefer trusted referrals vs cold calls. You need to know someone who knows someone. • Build the right relationships. Generally, Corp Dev does the transaction. The Business buys your company. Not always the case – know your potential buyer.
    • 10. Follow-on financing varies greatly depending on tech category*. * 2013 Seed Investment Report, CBInsights Metrics Matter More Than Ever
    • 11. Business Model
    • 12. Building a Business (e-CommerceExample)
    • 13. Customer Acquisition Costs (CAC) Ratio, A Practical Example (Howtocalculateitandwhyitmatters) • You are an e-Commerce mobile app, selling retail/shopping goods • Its summer time and you have a range of promotions (i.e. marketing expenses) • You brought on an excellent content marketing person • You want to calculate the efficiency (profitability) of your overall Sales & Marketing expenses (i.e. CAC Ratio)
    • 14. Product
    • 15. You can’t manage what you don’t measure. • Web: Google Analytics • Product: New Relic, Flurry, Buddy, Appsee • Business: MixPanel, Localytics • Interpret your metrics. Tie them back to your Business Model & Funnel, otherwise its just data. Avoid building your own. Please. Measure Everything
    • 16. Thanks!