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…
The 2% - From
Entrepreneurship to CEO
Microsoft Ventures, June 2014
* Global Entrepreneurship Monitor, 2013 and EVCA, NVCA, Pitchbook
Europe’s 2% (2013)
Analysis was conducted based on data from Pitchbook, EVCA, CBInsights and Angel.co
• 330 prominent
• Median $0.66MM
Series A (54%)
• 178 raised a
• Median $3.7MM
Series B (36%)
• 118 raised a
• Median $8MM
Series C (19%)
• 62 raised a
• Median $14MM
Series D (7%)
• 23raised a series-
• Median $26MM
9% acquired (29) 7% acquired (23) 5% acquired (16) 3% acquired (9)29% acquired (95)
Joining the 2% Club
Venture & M&A
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.
* 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
• 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” *
“Venture” is now at Seed stage. Not Series-A
• Greater need to perform exceptionally well
• Strong product and market differentiation
• Exceptional execution
Account for ~30% of all tech venture investment
and 67% of acquisitions.
Corporate VCs are changing the game, motivated by
• 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
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
Follow-on financing varies
greatly depending on tech
* 2013 Seed Investment Report, CBInsights
Metrics Matter More Than Ever
Customer Acquisition Costs (CAC) Ratio,
A Practical Example
• 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)
You can’t manage what you don’t
• Web: Google Analytics
• Product: New Relic, Flurry, Buddy,
• Business: MixPanel, Localytics
• Interpret your metrics. Tie them back
to your Business Model & Funnel,
otherwise its just data.
Avoid building your own. Please.