Chicago nw presentation 5-24-11

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Entrepreneurship and Venture Capital presentation to Northwestern University

Entrepreneurship and Venture Capital presentation to Northwestern University

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  • Every entrepreneur exhibits high level of passion (characteristic of success)--Greater Need to Change the world than there is to make money--That’s how the great entrepreneurs think. The money is nice and appreciated, but, as mentioned before, it’s almost never about the money. It’s about passion, following a dream, and changing the world (with plenty of craziness along the way). --The purpose of this book is to share the magic formula of how great entrepreneurs team with VCs to create valuable companies from raw start-up.
  • Voiceovers:Over the next decade, the evolution of computing and the Internet will produce faster, increasingly intelligent devices. More of our possessions will contain sensors and computers that log our activities, building digital dossiers that augment our memories, help us make decisions and tame information overload.In the next decade as conjured by Forrester Research analyst James McQuivey, all that information will be available instantaneously, anywhere. He also thinks we'll all use this technology just to keep up with everyone else.Craig Mundie, Microsoft Corp.'s chief research and strategy officer, believes we are near a long-wished-for era of computers that respond to speech, gestures and handwriting.The 2000s saw Google become one of the world's most powerful companies because it helped us get a grip on the sprawling content of the Web. What we will need next, however, is a company that doesn't just organize data. Google, or the next Google, will have to synthesize all that information and help us understand what it all means.It used to be we investors focused on how to innvoate in the context of the $50B software industry. Now we are focused on innovating in the $15T GDP economy and
  • VC Investments are very, very concetrated in the US. 70% of all VC $ flows into 3 states.Massachusetts has always been a strong #2 to California. But when you look at the numbers on a per capita basis (which is what entrepreneurs care more about – after all, it’s not very relevant how much capital is invested in China, what’s relevant is how concentrated that capital is)…


  • 1. Entrepreneur @ NW
    Jeff Bussgang
    General Partner
    Flybridge Capital Partners
    May 24, 2011
  • 2. Entrepreneurship is About Passion
  • 3. And Ingenuity
    “It's 106 miles to Chicago, we've got a full tank of gas,
    half a pack of cigarettes, it's dark, and we're wearing sunglasses."
  • 4. Summary View
    We are in the middle of an unprecedented boom in technology and innovation
    A true “Golden Age” for innovation and entrepreneurship
    Growth opportunity ahead of us is more rapid, and global, than ever before
    Despite many changes, Venture Capital plays a critical role in the ecosystem
  • 5. Context for My Perspective
    General Partner at Flybridge Capital Partners, early-stage VC firm based in Boston, $560M under management
    • 50+ portfolio companies, investing out of Fund 3 ($280M)
    Entrepreneur-in-Residence at Harvard Business School
    Former entrepreneur
    • Cofounder/President Upromise (acq’d by SallieMae)
    • 6. VP at Open Market (IPO ‘96)
    Author: Mastering the VC Game
  • 7. Today Are Glory Daysfor Technology and Innovation
    We have made unprecedented advances in technology over the last 10 years…
    …and we ain’t seen nothing yet!
    • Social media and networking
    • 8. Broadband penetration
    • 9. The “i” generation, training “Net Natives – iPod, iPhone, iPad
    • 10. ‘Cloud computing’
    • 11. Nanotechnology
    • 12. Completion of the Human Genome Mapping project
    • 13. Synthetic Biology
    • 14. Green consumer
    • 15. Renewable energy
    An explosion in computing power, connectivity and entrepreneurship with an outlook for accelerated growth over the next 10 years
  • 16. Bubble-Driven orFundamentals-Driven?
    IPO, $10B valuation
    $8-10B valuation
    $10B valuation
    IPO Filed
    $65B valuation
    $15-25B valuation
  • 17. Why Is This Happening Now?
    Ingredients for a Vibrant
    Start-Up Ecosystem
    • Intellectual Capital – academia, innovation, diverse industries and ideas
    • 18. Venture Capital
    • 19. Advisors, Angels, Accelerators
    • 20. Successful Companies – to partner, poach and/or sell to
  • Why Now? Contextual Forces
    Lean Start-Ups
    Cloud Computing
    Moore’s Law
    Reduced Cost To Experiment
    Opportunity for Angels & VCs
  • 21. VC Impact: Huge Leverage
    $2.9 trillion – VC-backed businesses combined sales (20% of total business revenues in US)
    12 million – jobs at venture-backed companies (12% of US work force)
    1,000 – number of active VCs who make investment decisions
    $4 billion in initial investments
    • Give me a lever long enough, and I will move the Earth. - Archimedes
  • Venture Capital:
    Regional Comparison
    Total VC Investment 2010: $22B
    Illinois: $0.6B
    Boston: $2.4B
    New York: $1.3B
    California: $11.0B
    Source: NVCA 2011 Yearbook
  • 22. Why Raise VC Money?
    Experience Matters:
    VCs have “seen the movie” over and over again and can help avoid pitfalls to find the path to success
    Deep Pockets:
    High risk tolerance and additional funding for follow-on rounds
    VCs provide domain experience, industry contacts, and strategic planning
    Swing Big:
    VCs don’t invest in niches, they invest in transformative ideas that can build large companies
  • 23. Typical Investment Criteria
    Tangible things investors like to see:
    Very big market
    Unfair advantage
    Attractive business model
    Unique technology or business model approach
    Intangible things investors like to see:
    “Pied Piper” – an ability to recruit and retain a great team, partners
    Interpersonal chemistry
    Movie, not a snapshot
  • 24. VCs vs. Angels
    • Will want some control (voting, board, veto)
    • 25. Will want to own 20-40% each
    • 26. Will want to be very actively engaged (they get paid to do this!)
    • 27. Can add tremendous value and be great business partners
    • 28. Can be total disasters
    • 29. Typically rational actors, commercially-driven, but if inexperienced…
    • 30. Will want no control (“send me an annual email”)
    • 31. Will want to own 1-10%
    • 32. May want to be engaged or not (often a hobby, sometimes a personal mission)
    • 33. Can add tremendous value and be great business partners
    • 34. Can be total disasters
    • 35. Typically rational, but if unsophisticated: naïve irrational, emotional
  • Changes In VC Landscape
    Liquidity Challenges
    Secondary Markets
    Angels, Super Angels and Seed Funds
    Competing to be “Entrepreneur Friendly”
  • 36. Shrinkage: VC Commitments
    VC CapitalCommitments $ Billion
    Source: NVCA 2011 Yearbook
  • 37. Conclusion
    Unique and special time for entrepreneurship
    Unique and special time for technology and innovation
    Role of VC critical, valuable, evolving but rare
  • 38. THANK YOU!
    Jeff Bussgang
    General Partner
    Flybridge Capital Partners
    May 2011
    Twitter: @bussgang