Cvcf2009 Senkut Keynote Final

Aydin Senkut – Felicis Ventures Bringing operational excellence & scaling experience to funding start-ups Founder & Active Angel Investor @ Felicis Ventures | 2005 – 2009   Portfolio of 50+ Companies   7 Exits including Mint (acquired by Intuit), Plusmo (acquired by AT&T), Powerset (acquired by Microsoft)   Every other portfolio company had an up round with a reputable VC Strategic Sales and Product Management @ Google | 1999 – 2005   First portal deals in: Japan, China, Korea, Taiwan, Germany, Brazil (closed portal deals of $100M+ revenues)   First site-search deal with Sony (Global Launch in 20+ countries – seeding Enterprise Search Appliance)   First Product Manager / worked for Larry Page (Launched first 10 International sites for Google along with other products) Product Manager @ SGI | 1996 – 1999   Product Manager, Data Mining &Visualization (team of 20 engineers) © 2009 Felicis Ventures LLC

Venture Capital Ecosystem Idea Start up Intro Rollout Growth Expansion Maturity Inv. Banks / PE $10MM - 100MM+ Grants of up to $1MM Acquisition Stage / IPO / Mergers Revenue / EBITDA Angel Investors $10k – $1MM Investment Banks & PE Funds Venture Capital Friends, Family or Funds Grants Individual Angels / Groups / Boutique VCs © 2009 Felicis Ventures LLC

What is an Angel Investor ? Anyone who provides private capital to a [non family] start-up   Usually the first outside investor   Invest with the expectation of a financial return   Invest usually locally and regionally   Participate actively in the investment process   Usually care about the entrepreneurs and the companies they invest in / interested in building personal relationships with companies & employees   Offer advice and guidance to founders * Source: Wall Street Journal – October 31, 2009 © 2009 Felicis Ventures LLC

Angel Investors in the US 225,000 U.S. Estimate Of Estimate of Active Investors In Angel Groups Millionaires Informal Angels Investors (Center For Venture Research) * Source: Angel Capital Association Presentation by Ian Sobieski, Band of Angels, Oct 2007 © 2009 Felicis Ventures LLC

Rising Popularity of Angel Investing 3x Growth in North American Angel Organizations in 7 yrs NUMBER OF ANGEL ORGANIZATIONS * Source: Center for Venture Research (pre 03 data) and Kauffman Foundation/ACEF (04-06 data) © 2009 Felicis Ventures LLC

Angel Investing – Strength in Numbers Angel Groups in the US:   Have 44 members on average (38 median)   Well spread out across the country (in 43 states)   Invest close by (50% invest within a 4 hour drive, 30% invest within State or Region)   Invest around $250-500K per investment round   Leverage their groups for deal-flow, due diligence, and diversification of their investments   Expect an exit around 5-7 years and a multiple north of 10x * Source: Wall Street Journal – October 31, 2009 © 2009 Felicis Ventures LLC

Angel Investments in Perspective In the Context of Venture Capital Early Stage to Late Stage 3,416 Deals Average Deal Size: $7,500,000 51,000 Deals Average Deal Size: $500,000 2007 Angel Investments 2007 VC Investments * Source: University of New Hampshire Center for Venture Research, Price Waterhouse Coopers © 2009 Felicis Ventures LLC

What Makes Silicon Valley Special ? Tolerate Failure, Iterate, Elite Universities, Eco-system   There is no Success without Failure (Twitter, Zappos, Pure Digital - Flip)   The Path to Success is Not Necessarily Straight (Ideas Change, Launch Fast, Iterate Quickly) Average product release cycle of select Felicis companies like Justin.tv is 2 weeks   Elite Universities (with Global, Highly Selected Student Bodies)   Multiple Generations of Successful Entrepreneurs Act as Mentors / Angels © 2009 Felicis Ventures LLC

Silicon Valley Success Story “Internet is the Greatest Legal Wealth Creation in History” Last Valuation Total $Raised Last Valuation ExitType Multiple InYears Founded at IPO or Exit Facebook $716.0 $10,000 - 14 5 2004 2009 Twitter $55.0 $285 - 5 3 2006 2009 Zappos $62.8 $920 M&A 15 10 1999 2009 Adify $27.0 $300 M&A 11 2 2006 2008 Google $25.1 $23,100 IPO 920 7 1998 2005 Bebo $15.0 $850 M&A 57 3 2005 2008 Zimbra $14.5 $350 M&A 24 3 2004 2007 Photobucket $13.5 $300 M&A 22 4 2003 2007 YouTube $11.5 $1,650 M&A 143 1 2005 2006 Last.fm $5.0 $280 M&A 56 5 2002 2007 Note: All amounts in millions  •  Consumer internet still offers best path to high multiple returns •  Key differentiator: capital efficiency •  Virtually all the big successes were first backed by angels © 2009 Felicis Ventures LLC

What Makes a Great Company ? Great People, Passion, Focus, Innovation, Fun   Focus, Critical Use Case, Clarity of Purpose Example: Google Spell Check   Ability to attract great people (team, investors, advisors) Example: Mint   Passion Example: Zappos   Innovation (thinking out of the box, even when resources are tight)   Fun + Unique Culture © 2009 Felicis Ventures LLC

What Does It Take… …To Be A Successful [ Angel ] Investor ?   Strong Personal Brand & Network It takes money AND time, one relationship at a time; add value, create goodwill   Proprietary Deal-flow Have a plan, create an unfair advantage; social friends do not equal to great deal-flow   Ability to Relate to Founders Examples: Mint, Imageshack   Judgment (Domain Expertise, Experience, Timing, Nose for Talent) It might take tens of deals and years [& losses] to find the winners © 2009 Felicis Ventures LLC

Growth is Key to Successful Investing CHINA has the Fastest Growing Internet and Mobile Markets INTERNET USER NET ADDITIONS Global 2007Users Rank Country Added(000s) 2007Y/Y Growth Penetration 1 China 73,000 53% 16% 2 US 9,800 5% 73% 3 Brazil 7,400 17% 26% 6 India 5,000 7% 7% 8 Russia 4,311 17% 21% MOBILE SUBSCRIBER NET ADDITIONS Global 2007 Net Subs Rank Country Added(000s) 2007Y/Y Growth Penetration 1 China 86,228 19% 41% 2 India 67,570 41% 21% 4 Brazil 21,062 21% 64% 5 Russia 19,326 13% 120% 7 US 13,596 6% 85% Source: Morgan Stanley Research, ITU © 2009 Felicis Ventures LLC

Venture Capital / China = Opportunity Venture Investment in China now ~14% of US (up from 1%) [TOTAL FUNDS INVESTED] All amounts in millions US China Source:US Data - NVCA Research 2009; PriceWaterhouseCoopers / China Data: Zero2Ipo Research 2009 © 2009 Felicis Ventures LLC

Venture Capital / China = Upside Funds raised last year roughly 25% of Funds raised in US [TOTAL FUNDS RAISED] All amounts in millions US China Source:US Data - NVCA Research 2009; PriceWaterhouseCoopers / China Data: Zero2Ipo Research 2009 © 2009 Felicis Ventures LLC

China – Local Champions QQ and Baidu winning big in China versus Google SCALE IS BASED ON THE AVERAGE CHINA TRAFFIC OF GOOGLE IN ALL YEARS. Source: Data from Google Insights for Search © 2009 Felicis Ventures LLC

Next Big Things Education • Online Education • Local Search Search •  Subjective Search •  Personal Genomics Health • Electronic Health Records • Data Driven Smart Web Apps Other • Crowd sourcing © 2009 Felicis Ventures LLC

Seeding Future Winners - Incubators LEADING EXAMPLE IN THE US •  Review 600+ companies every 6 months •  Each batch around 20+ companies (~4% acceptance rate)* •  Investment: $5K USD + $5K USD per founder •  Stake: Usually 2-10% INTERESTING FACTS •  25% of accepted companies are international •  Last batch, more than half the companies changed what they were working on •  Last Investor Day included 27 companies and 210 Investors KEY RESULTS Companies Acquired Companies with sizeable VC rounds •  Reddit (acquired by Conde Nast) •  Heyzap •  Justin.tv •  Parakey (acquired by Facebook) •  Loopt •  Xobni •  Omnisio (acquired by Youtube/Google) •  Scribd •  Posterous •  Zenter (acquired by Google) •  Anywhere.fm (acquired by iMeem) © 2009 Felicis Ventures LLC

How Can Incubators Succeed ? Filter, Stress, Mentor, Engage, Eco-system   Strong brand & highly selective (admission ratio of 1-5%)   Limited time (~3 months) to encourage execution and fast iteration   Heavy Mentorship in all key product areas (especially engineering, product, and fund-raising)   Community and participation (Biggest success factor cited by founders)   Active involvement of investors increases funding rate to 75%* * Techstars © 2009 Felicis Ventures LLC

Food For Thought To Many More Internet Leaders from China and HK TOP GLOBAL INTERNET COMPANIES Rank Company Country 2009 Market Cap 1 Google US $102B 2 Amazon US $29B 3 Yahoo US $19B 4 eBay US $15B 5 Yahoo JP Japan $14B 6 Softbank Japan $13B 7 Activision US $13B 8 Tencent China $12B 9 Baidu China $6B 10 Rakuten Japan $6B 11 Electronic Arts US $6B 12 Alibaba China $5B 13 NHN Korea $5B 14 NetEase China $3B 15 Expedia US $2B © 2009 Felicis Ventures LLC

Cvcf2009 Senkut Keynote Final

by Aydin Senkut on Nov 24, 2009

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Cvcf2009 Senkut Keynote Final — Presentation Transcript