Your SlideShare is downloading. ×
Building 500 Startups + Changes in VC
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Building 500 Startups + Changes in VC

4,054
views

Published on

slides from my talk at Endeavor Investor Network (Jakarta, Feb 2014)

slides from my talk at Endeavor Investor Network (Jakarta, Feb 2014)

Published in: Technology

1 Comment
10 Likes
Statistics
Notes
  • Sir; I am looking for some start up money to complete my patent work, 3-d drawings, DVD'S, through design company. My company name is Farque Industries, LLC, in Lake Charles, La. 70611. I have a website: farqueindustries.com, which has my invention called the HHWW-Trailer, the most unique universal utility trailer ever
    designed for the outdoors. This trailer is a portable hunting blind with swivel seats for comfort, I have spent up to $ 15,000.00 of my own money and now and am in need of a small investment to finish all work and get this trailer before manufactures throughout the U.S. This trailer can be used by anyone, also amputees and the crippled with ease, as the rear gate will drop for wheel chair use or other unit to set the individual in place to hunt or just watch the wildlife. This unit is covered with camouflage covering and zipper shooting ports , made into the canvas, all around the trailer. This covering can be removed and then can be used as a work trailer, which can carry 500 lbs. plus. It is sleeper if needed and is 6 feet in length, 34 inches in width. It may be used to as an open air vehicle to enjoy a ride. The seats are removed easily with pre made holes in the floor of the unit with rubber seals, to close up the holes. This trailer is built for strength, durability, front wheel disc brakes, 16 inches extended axles beyond the unit, with ATV tires, for better steering control, coil springs, a ' Z' tongue for ease of towing and with stress plates built into the unit for better endurance. It will take up to 5 or 6 other so called trailers to do what this one unit can do.
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
No Downloads
Views
Total Views
4,054
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
96
Comments
1
Likes
10
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Changes in Venture Capital + Building 500 Startups Ecosystem @DaveMcClure - 500 Startups Jakarta, Indonesia - Feb 2014
  • 2. This Talk • What is 500 Startups? • Changes in Tech + Venture Capital • “The Lean VC”: Quantitative Approach to VC • Building 500 Startups: #500STRONG • Global Entrepreneurship • Q&A !2
  • 3. Dave McClure
 Founding Partner & Chief Troublemaker, 500 Startups 00’s & 10’s: • VC: Founders Fund, Facebook fbFund, 500 Startups • Angel: Mashery, Mint.com, SlideShare, Twilio, Wildfire, SendGrid • Marketing: PayPal, Simply Hired, Mint.com, oDesk, O’Reilly ! 80’s & 90’s: • Entrepreneur: Aslan Computing (acq’d by Servinet/Panurgy) • Developer: Windows / SQL DB consultant (Intel, MSFT) • Engineer: Johns Hopkins‘88, BS Eng / Applied Math
  • 4. This Talk • What is 500 Startups? !4
  • 5. 500 Startups
 Global Seed Fund & Startup Accelerator • What is 500 Startups? – ~$100M under mgmt, ~$8M annual budget – seed fund + accelerator (SF, MV, MXC) – 30 team members (12 investing partners) – SV, SF, NYC, MEX, BRZ, IND, CHN, SE Asia – 1000+ Founders / 200+ Mentors – Conferences, Community, Geeks on a Plane! ! • 675+ Portfolio Co’s / 40+ Countries – Wildfire (acq GOOG, $350M) – MakerBot (acq SSYS, $400M) – Viki (acq Rakuten, $200M) – Twilio – SendGrid – Credit Karma – Udemy – Zozi – ElaCarte – Virool
  • 6. !6
  • 7. 500 Startups: Global Seed Fund
 Over 200+ startups outside US, in 40+ countries
  • 8. This Talk • What is 500 Startups? • Changes in Tech + Venture Capital !8
  • 9. Daft Punk Lean Startup:
 Simpler, Faster, Cheaper, Smarter ! 1. 2. # Users, Bandwidth = Bigger. 3. ! ! Startup Costs = Lower. Transaction $$$ = Better. ! ➢ Building Product => Cheaper, Faster, Better ➢ Getting Customers => Easier, More Measurable ! Iterative Product & Marketing Decisions based on Measured User Behavior
  • 10. Changes in Tech + VC • LESS Capital required to build product, get to market – Dramatically reduced $$$ on servers, software, bandwidth – Funding Platforms: KickStarter, Angel List, Funders Club, etc – Cheap access to online platforms for 100M+ consumers, smallbiz, etc ! • MORE Customers via ONLINE platforms (100M-1B+ users) – Search (Google) – Social (Facebook, Twitter, LinkedIn) – Mobile (Apple, Android) – Local (Yelp, Groupon, Living Social -> FB, GOOG, TWTR) – Media (YouTube, Pinterest, Instagram, Tumblr) – Comm (Email, WeChat/WhatsApp/Line/IM/Chat, Voice, SMS, etc) ! • LOTS of little bets: Accelerators, Angels, Angel List, Small Exits – Y Combinator, TechStars, 500 Startups – Capital + Co-working + Mentoring -> Design, Data, Distribution – “Fast, Cheap Fail”, network effects, quantitative + iterative investments
  • 11. Platforms 2.0
 Search, Social, Mobile, Video, Messaging
  • 12. Before & After 2 Dot-Com Crashes
 Daft Punk Lean Startup: Simpler, Faster, Cheaper, Smarter Before 2000 • Sun Servers • Oracle DB • Exodus Hosting • 12-24mo dev cycle • 6-18mo sales cycle • <100M people online • $1-2M seed round • $3-5M Series A • Sand Hill Road crawl • Big, Fat, Dinosaur Startup After 2008 • AWS, Google, PayPal, FB, TW • Cloud + Open Source SW • Lean Startup / Startup Wknd • 3-90d dev cycle • SaaS / online sales • >3B people online • <$100K incub + <$1M seed • $1-3M Series A • Angel List global visibility • Lean, Little, Cockroach Startup
  • 13. Got Crunched Yet? Source: Bullpen Capital
  • 14. Crunch Good? Crunch Bad? • Series A bar higher: • $1M revenue, 1M active users, 10M downloads, 100% YoY growth • Lots of Incubation / Seed startups will “FAIL” ! • BUT: Fail Budget = $50-$500K, not $5M+ • Many “failed” startups = ramen-profitable, small acquisition • … *or* MBA alternative (<$100K) • Series A/B VCs have LOTS to choose from (not bad) ! • Overall, founders / market getting smarter • More focus on customers, problems, revenue • Many die, some survive (1-5x), some thrive (20x+).
  • 15. Angel* List: It Rocks. • • • • • Startups & Investors Syndicates & Backers Activity & Metrics Jobs & Talent Platform & APIs !
  • 16. Industry Changes, Challenges • SW Startup Efficiency, Reduced CapX Costs • Growing Market, Growing Platforms • VC Industry Upheavals (2000, 2008) • Super Angel -> Micro VC: Seed Funds (ex: FRC) • Incubators & Accelerators (ex: Y Combinator) • Big VC (ex: A16Z) & Platforms (ex: Angel List) • http://PreMoney.co
  • 17. This Talk • What is 500 Startups? • Changes in Tech + Venture Capital • “The Lean VC” !17
  • 18. Lots of Little Bets aka “MoneyBall for Startups” • • VC Evolution: Physician, Scale Thyself (Aug 2012) MoneyBall for Startups, 500 Startups Investment Thesis (Jul 2010)
  • 19. 500 Strategy: “Lots of Little Bets”* !19 *See Peter Sims book: “Little Bets”
  • 20. Minimum Viable Team:
 Hacker, Hipster, Hustler • Hacker: engineers & developers • Hipster: design & user experience (UX) • Hustler: marketing & business, “growth hacker” ! 1. Build functional prototypes 2. Improve UX so people convert 3. Scale customer acquisition & distribution
  • 21. The Lean VC:
 Lots of Little Bets, Incremental Investment Method: Invest in lots of startups using incremental investment, iterative development. Start with many small experiments, filter out failures, and expand investment in successes… (Rinse & Repeat). ! • Incubator: $0-100K (“Build & Validate Product”) • Seed: $100K-$1M (“Test & Grow Marketing Channels””) • Venture: $1M-$10M (“Maximize Growth & Revenue”)
  • 22. Investment Stage #1: 
 Product Validation + Customer Usage • Structure – 1-3 founders – $25-$100K investment – Incubator environment: multiple peers, mentors/advisors ! • Test Functional Prototype / “Minimum Viable Product” (MVP): – Prototype->Alpha, ~3-6 months – Develop Minimal Critical Feature Set => Get to “It Works! Someone Uses It.” – Improve Design & Usability, Setup Conversion Metrics – Test Small-Scale Customer Adoption (10-1000 users) ! • Demonstrate Concept, Reduce Product Risk, Test Functional Use • Develop Metrics & Filter for Possible Future Investment
  • 23. Investment Stage #2: 
 Market Validation + Revenue Testing • Structure – 2-10 person team – $100K-$1M investment – Syndicate of Angel Investors / Small VC Funds ! • Improve Product, Expand Customers, Test Revenue: – – – – Alpha->Beta, ~6-12 months Scale Customer Adoption => “Many People Use It, & They Pay.” Test Marketing Campaigns, Customer Acquisition Channels + Cost Test Revenue Generation, Find Profitable Customer Segments ! • Prove Solution/Benefit, Assess Market Size • Test Channel Cost, Revenue Opportunity • Determine Org Structure, Key Hires
  • 24. Investment Stage #3: 
 Revenue Validation + Growth • Structure – 5-25 person team – $1M-$10M investment – Seed & Venture Investors ! • Make Money (or Go Big), Get to Sustainability: – – – – – Beta->Production, 12-24 months Revenue / Growth => “We Can Make (a lot of) Money!” Mktg Plan => Predictable Channels / Campaigns + Budget Scalability & Infrastructure, Customer Service & Operations Connect with Distribution Partners, Expand Growth ! • Prove/Expand Market, Operationalize Business • Future Milestones: Profitable/Sustainable, Exit Options
  • 25. This Talk • What is 500 Startups? • Changes in Tech + Venture Capital • “The Lean VC” • Growing 500: #500STRONG !25
  • 26. Strategy, Brand, Marketing Lots of Little Bets, Online Platforms Design, Data, Distribution Blogging, Facebook, Twitter #500STRONG: for Geeks, by Geeks Seed Fund vs Accelerator ! • FUN: don’t be boring (t-shirts + flip-flops) • Community: from Silicon Valley to the World • Conferences & Events + GeeksOnaPlane.com • • • • •
  • 27. Deal Flow, Strategy & Selection • Lots of Little Bets • Take Lots of Small Risk, Early & Often • Differentiation & Branding • Revenue Emphasis, Small but Real Problems • Focus on Online Platforms • Hacker, Hipster, Hustler • Global vs Local
  • 28. Portfolio Development • How do we help? How can we help? • Importance of (trying to be) Helpful • Board seats or not? Useful to VC, not founders • Product, Market, Revenue • Mentorship & Connections • Platforms & Distribution • Downstream Investors & Syndicates
  • 29. Follow-On Strategy • Should we follow-on? Why or Why Not? • Signaling Risk vs Portfolio Returns • Investor opinion shouldn’t matter more than business fundamentals (if so, that’s a problem) • Downstream Investor Syndicate is critical • Using Angel List to drive visibility • Global Strategies (more capital, connections)
  • 30. Feedback Loop & Metrics • Bad decisions = obvious quickly • Good decisions = not obvious for years • Short-term metrics: revenue, users, next round ! • Sharing best practices for decisions • Lots of Little Bets helps speed up learning • “Winners” vs Numeric Returns • Economics of 1st check vs follow-on • Easy to get big multiples on small checks, BUT • Larger checks with smaller multiples still good
  • 31. Scaling VC • Lots of Little Bets? Or a Few Big Bets? • Power Laws, Singles vs Home Runs • Focus on Network Effects • Communication Platforms • Portfolio Size vs Investment Stage • Recruiting Thousands of VCs
  • 32. Example Startup Ecosystem • 1,000 Bootstrap Startups ($0) • 300 Accelerator Startups ($10-50K) • 100 Seed-Funded Startups ($250K-$1M) • 30 Series A Startups ($2-5M) • 10 Series B Startups ($5-20M) • 5 Series C Startups ($20-50M) • 1-3 IPOs ($50-250M) !32
  • 33. This Talk • What is 500 Startups? • Changes in Tech + Venture Capital • Growing 500 + “The Lean VC” • GLOBAL Entrepreneurship !33
  • 34. Going Local, Going Global
 web gets bigger -> world gets smaller
  • 35. Local vs Global? • “Silicon Valley is Unique” — NOT TRUE. • *we had a 50-70 year head start… ROW will catch up. • Emerging / Developing Markets: 3-5B+ • English, Chinese, Spanish, Arabic ! • Challenges: Payments, Mobile/Web, Logistics • Challenges: Capital, Mentorship, Exits ! • Investor Ecosystems, Mentorship & Community • Does the Future look different? (yes, we hope)
  • 36. Global Trends • Growth of Global Languages (see MyGengo.com) – 1B+ speakers: Mandarin, English – 300-500M+ spkrs: Spanish, Arabic • Smart Device Proliferation – mobile, tablet, TV, console, etc • More Young, More Old ($$$) Users Online • More Bandwidth, More Video, More Social, More Mobile • Wealthy Chinese + Indian, Web + IRL Globetrotters ($$$B) • Acceleration of Global Payment, E-Commerce • Dramatically Reduced Cost: Product Dev, Customer Acqstn • Global Distribution Platforms – US/EU: Apple, Facebook, AMZN, GOOG (Search, YouTube, Gmail, Android), Twitter – Asia: Baidu, Tencent, Alibaba, Sina, NHN, Yahoo-J, Softbank, Rakuten, Yandex, Mail.RU
  • 37. Questions? Comments? Heckles? • Thanks for Listening • Feedback Appreciated • We are Hiring + Internships ! • More Info? – http://500.co (our company) – http://500hats.com (my blog) – https://angel.co/500startups (our fund) – Dave McClure, @DaveMcClure
  • 38. How Big is MicroVC / Seed Stage Market? 5,000 microVCs invest 100,000 startups/yr @ $500K/startup = $50B/yr How many people are entrepreneurs? How many startups get started every year? • ~1% of Humanity is “Entrepreneurial” (def’n: “can create a $10M rev/yr business”) • 1% x 7B ppl = 70M entrepreneurs, each of which starts 1-5 businesses lifetime • 1-5 startups / 75 yrs avg life = (~1 startup/25 yrs) * 70M = ~3M startups per year ! How much capital is needed globally to get seed stage startups rolling? • Assume 1M-3M startups/yr x $50K-$500K funding/each • Low: 1M x $50K = $50B/yr (*this is the LOW end estimate) • High: 5M x $500K = $2.5T/yr (that’s “T” as in “Trillion”…) ! How many metros? How many investors / metro? How many startups / metro? • 1 microVC can do 10-20 startups/yr * $50K-$500K = $500K-$10M/yr budget • 100-500 global metros @ >1-2M ppl can generate ~500-2,000 startups / metro / yr • guesstimate = ~100K-200K startups/yr in top 200 global metros • 10-50 micro VCs / metro * 200 metros = 2,000-10,000 microVCs globally • EST: 5,000 microVCs can deploy $5M/yr each, or $50B/yr in ~100,000 startups !38

×