Silicon Valley Start-up from Idea to Liquidity Event


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Silicon Valley Start-up from Idea to Liquidity Event by Zarko Maletin

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Silicon Valley Start-up from Idea to Liquidity Event

  1. 1. Liman –DRŽAVA! about
  2. 2. me- Born and Raised in Novi Sad- GTZ Largest Consultancy in Germany- Cambridge MBA Stanford- Heading Investment and Investment Banking Armof the Largest hi-tech Center in the Valley with over 380 start-ups.- Personally Working with over 60 start-upsCoordinating relationship with:--180 VC Firms--150 Large Hi-tech Corporations--350 Angel Investors and 6 Angel Groups in the Valley about
  3. 3. Silicon Valley Start-up from Idea to Liquidity Event about
  4. 4. flip flops-- silicon valley
  5. 5. stanford and/or nice weather-- silicon valley
  6. 6. 2 bedroom & $1M-- silicon valley
  7. 7. sand hill vs. wall street-- silicon valley
  8. 8. giants-- silicon valley
  9. 9. social networking map-- silicon valley
  10. 10. really…-- silicon valley
  11. 11. center of the world- More than World ICT sector growth 40% of the US and 8.0% about 30% of global Venture 4.9% 5.2% 4.4% Capital 2.9% More than 1.5% 75% of the US Venture USA EU World Capital invested inSource: EITO, Forrester 2008-2009 2011 the Silicon Valley start-ups silicon valley
  12. 12. or? How do you make a billion dollars in two years? silicon valley
  13. 13. a billion $ in 551 days? instagram
  14. 14. before instagram
  15. 15. after instagram
  16. 16. lots of buzz no business model Free photo sharing program launched in October 2010 that allows users to take a photo, apply a digital filter to it, and then share it on a variety of social networking services, including Instagrams own. Kevin Systrom, 28-year-old Mike Krieger (co-founder) Launch Date: March 2010 Funding:$57.5M iPhone, iPad, iPod Touch, Android Distributed via the iTunes App Store and Google Play Acquired: $1 billion Revenue: $0. instagram
  17. 17. $500/month & forced vacate instagram
  18. 18. the teamKevin Systrom•Stanford University in 2006 with a BS in Management Science & Engineering.•No formal computer-science training. Side projects, he says, help him learn code.•Intern at Odeo that later became Twitter.•Two years at Google Corporate Development team.Mike Krieger•joined later•Brazilian-born 25-year-old engineer•worked at Meebo•Stanford University where he studied Symbolic Systems with a focus in Human-Computer Interaction.•While in university, he actually worked on a photo-sharing project for a class.•Interned at Microsofts PowerPoint. instagram
  19. 19. burbn •2009, Foursquare beginning popularity •An iPhone app that would combine elements of Foursquare with elements of Mafia Wars (Zynga) •HTML5 check-in project Burbn on mobile photography •HTML5 latency issues •Photography category super saturated. •Hipstamatic no social. •Scotch no filters buggy. instagram
  20. 20. over cocktails •$500k from both Baseline and Andreessen Horowitz. •“Focus on being really good at one thing.“ •Adding the photo feature was by far the most popular. •Scrap Burbn almost entirely in order to build an entirely new app. •Eight weeks to build •10,000 users within hours •end of the first week of the companys launch, Instagram had been downloaded 100,000 times •middle of December, the community had grown to a million users. instagram
  21. 21. $20m post •February 2011, a group of investors led a Series A financing of $7 million. •Led by Adam DAngelo—an early casual advisor of Systrom, whod founded Quora—Jack Dorsey, Chris Sacca, Baseline Ventures, and Benchmark Capital, valued the company at $20 million. •Other investors doubled down Andreessen Horowitz would ultimately bet against the company. •It took Picplz six months and two platforms to reach 100,000 users. Instagram acquired that many users within the first week. •“We were a little bit stuck,” Mr. Horowitz recalled. “He did a pivot into a company we’d already invested in.” •4 employees, San Francisco. •No permanent Web address instagram
  22. 22. 27 million users •February 2011, 1.75 million members, uploading 290,000 photos per day. •January 2012, the company had 15 million registered users. •By March, that number jumped 27 million. •Demurred from adding premiums to generate revenue. •$0 revenue. •Series B: April 2012, •Sequoia Capital, Thrive Capital, Greylock Partners, Benchmark Capital, and Baseline Ventures. Four full days later—those investors enjoyed a 100% return on their investments •Zuckerberg noted that Facebook was "committed to building and growing Instagram independently“ •Facebook Needs Strong Mobile Leadership. Facebook is not a small company. It employs thousands of talented engineers and product managers. From the outside, it looks like the company could benefit from some strong oversight on its various mobile initiatives instagram
  23. 23. Silicon Valley Start-up from Idea to Liquidity Event about
  24. 24. not about: -Outsourcing companies -Service companies -"Feature" vs. "Companies" -International Start-ups (with International HQ) -"I want to learn English" Companies -"I know code and I am looking for a job or gig" from Idea to liquidity event
  25. 25. ingredients Idea Market Advisers Business Funding a Good Exit Team Luck from Idea to liquidity event
  26. 26. idea•BIG•Pain Point•Your Own Problem•Something One is Obsessed with•Very well informed about the space•Experience in the space from Idea to liquidity event
  27. 27. market •Big Market •Underserved or Undiscovered Market •Traction •Some Traction •Some Customers •Hockey-stick •Barriers to Entry •Viral Growth
  28. 28. advisers•Friends•Referral•Equity Based•Paid Board Members•Attorneys•Investors•"Entrepreneurs in Residence"•Investment Bankers•Brokers/Dealers•Large Investment Banks from Idea to liquidity event
  29. 29. business•Persuasion and Selling skills•Listening Skills•Networking Skills•Presentations Skills•Marketing Skills•Strategic Thinking•Guts to Give up on "Your Baby"•Focus•Promotion•Staged Approach•Lean Start-up•Minimum Winning Game from Idea to liquidity event
  30. 30. Investors•Money in Exchange for Your Equity•Confused with the Real Goal•Smart Money•Connections•Board•Vested Interest•A Lead investor•A Tier 1 VC•Previous Experiencewith the Investor•2-3X-12X from Idea to liquidity event
  31. 31. where is it coming from?•Own or family money•Some Savings or a Credit Card•Seed round•Convertible Notes (Loan)•Bridge•Angels•Accredited (Sophisticated) Investors•MicroVC or a Super Angel•VCs (Seed, Series A, Series B.... )•Strategic Investors•Corporate Venture Arms(Strategic or Financial)•Venture Lenders•Private Equity from Idea to liquidity event
  32. 32. Securing Resources while Keeping Ownership•General Partnerships•Limited Partnerships•Partners•Managing Directors•Senior Associates•Associates•Analysts•Decision Makers•Partnership Meeting•Term Sheet•Negotiation Process•Extremely Relevant and•Extremely Irrelevant Stuff•Ownership of Your Company•Ownership of the VC•Ownership of the future Employees•(Options Pool)• Due Diligence Process•Money in the Bank from Idea to liquidity event
  33. 33. superstars and “hurdle mentality”"This is Not a Job for Individuals Who Have an Issue with Making Decisions in theEnvironment of the Uncertainty"Hellen Keller:“Security is mostly a superstition. It does not exist in nature, nor do the children ofmen as a whole experience it.Avoiding danger is no safer in the long run than outright exposure.”Bessemer Anti-portfolio "Stamps? Coins? Comic books? Youve GOT to be kidding," thought Cowan. "No-brainer Cowan’s college friend rented her garage to Sergey and Larry for their first year. She tried to introduce Cowan to “these two really smart Stanford students writing a search engine”. Students? A new search engine? Cowan asked her, “How can I get out of this house without going anywhere near your garage?” BVP had the opportunity to invest in pre-IPO secondary stock in Apple at a $60M valuation. BVPs Neill Brownstein called it "outrageously expensive." from Idea to liquidity event
  34. 34. exitsAcquisition•Talent Acquisition•Neutralizing Competition•IP Acquisition•Asset and Equity Sale•Strategic Acquisition•Financial Acquisition•Depends on AcquirerThe right timing. The right market. The right place.Rules you know about multiples, comparable benchmarks just buckle under thepressure of momentum.IPO•Rare•Private to Publicly Traded Companies•Significant and Stable Revenues•Investment BanksSelling to General Public•Benefits and Downsides ofRunning a Public Company from Idea to liquidity event
  35. 35. team•Greed•Ambition•Hassling•Guts to Leave your Family & a Stable Job Behind•Hard Work•Passion•Drive•Sacrifice•Team Work - Complementaryand if Possible Old Friends•Experience in the Space•IPO•Great if Formal Education•Drop-Outs from Idea to liquidity event
  36. 36. being local and immigrant•Trust•Familiarity and Predictability•Control and Security•Visa or a Passport•Good Language Skills and Lingo•Language“Almost 350 out of every 100,000 immigrants create a new business every month,versus 280 out of 100,000 native-born U.S. adults, according to KauffmanFoundation, an entrepreneurship and education research group.”“Immigrants are more likely than native workers to choose self-employment 5.1%vs 3.7% native-born citizens.” Source: Census Current Population Surveymicrodata files, September 2010–August 2011.“An outstanding characteristic of these immigrant entrepreneurs is their courageto take risks. In Massachusetts, immigrants, who make up only 14% of the state’spopulation, founded 61% of its new businesses in 2008.” BabsonEntrepreneurship Monitor from Idea to liquidity event
  37. 37. immigrantseBay France Pierre Omidyar 1995Garmin Taiwan Min Kao 1989Google, Inc. Russia Sergey Brin 1998LinkedIn France Jean-Luc Vaillant 2003NVIDIA Taiwan Jen-Hsun Huang 1993PayPal Ukraine Max Rafael Levchin 1998Sun Germany/India Bechtolsheim and Khosla 1982WebEx India Subrah S. Iyar 1997Yahoo! Inc Taiwan Jerry Yang 1994YouTube Taiwan Steve Chen 2005 Sergey Brin Bechtolsheim and Khosla Andrew Grove Country of origin: Russia Country of origin: Germany and Country of origin: Hungary Claim to fame: Co-founder, India Claim to fame: Co-founder, Intel Google Claim to fame: Co-founders, Sun Microsystems from Idea to liquidity event
  38. 38. luck Luck Prefers-Prepared Mind! zarkomaletin end
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