Challenges In The Startup Ecosystem - Stanford Innovation Group (March 2010)Presentation Transcript
Challenges in Startup Ecosystem For Stanford Innovation Group 3/29/2010
Why am I talking? Co-Founder of [Startup Digest] 20k+ subscribers in less than 3 months Insight into 32 local startup hubs worldwide
Unsolved Problems in Ecosystem VC Branding problem VC Math Problem Platform exits Startups Co-Founder matching problem Speed to monetization Mentor advisor problem
VC: Branding Problem Source: http://www.entrepreneur.com/vc100/stage/early.html
VC: Branding Problem
VC: Math Problem VC’s paid thru (2%) mgmt fee + carry Incentive to be larger = $ Risky so 3x gross returns. Ie $600m fund needs to generate $1.8b return Investor owns on avg 20% of company Assume most companies will fail (7/10) Need to assume $1b+ exits Source: http://www.avc.com/a_vc/2009/04/the-venture-capital-math-problem.html
VC: Math Problem Source: http://paul.kedrosky.com/archives/2006/03/22/no_more_billion.html
VC: Math Problem Point: Traditional VC is a hard game.
VC: Platform Exits (tangential) Creating industries vs. Platform Exits New focus on $50-$150m deals Platform buys working model then adds distribution New focus product risk, minimize customer risk, relationships with acquirers
Startups: Co-Founder Matching Problem Consistently most clicked items in Digest No real market solution out their right now Source: http://entrepreneurialactivism.com/2010/03/25/the-co-founder-matching-problem/
Speed to Monetization You have $25k investment per founder. At $2k a month that’s 12 months NOT including travel, dev, exp, etc
Speed to Monetization We need to think of creative business models Subscriptions Transactions Job Boards Events T-Shirts ETC
New Words to Live By "Make money don't stop.“
- Krutal Desai, aka "Brutal with a K"
Mentor/Advisor Problem Mentors and Advisors are the most consistently asked question How do you find great mentors with experience in your space? Operational vs. Experiential advice No market mechanism for this
Contact / Q&A How to I come up with a business idea? How do I get more involved at Stanford? Where can I meet cool people? Best sources for funding? Contact: Chris@thestartupdigest.comTwitter: @cmccann7Signup at: www.thestartupdigest.com Have you heard of Startup Waffles? Why should I go to in person events? What are some of the most exciting platforms? How do I meet a business co-founder How do I get people to use my product?