Go LOCAL or Go GLOBAL?
Dubai, UAE (June 2014)
This Talk Is About…
• 500 Startups
–Internet Seed Fund + Accelerator + >200 Intl Startups
• Assessing Global Markets
–(# users, by language/geo) * (avg $ GDP) * (% internet) = online spend by lang/geo
–growth of factors above
• Why You Shouldn’t Go Global
–You’re a Crappy Little Startup with no customers, revenue, or funding
–You Don’t Speak the Language (not very well, anyway)
–Your local market is >50-100M+ users, and nobody else is going after it
• Why You Should Go Global
–You Live in a Small Country / Startup Ghetto
–There aren’t [m]any local investors / they give you crappy valuations.
–There ARE local investors, but they are predatory, too revenue-focused, risk-averse
–Your customers and partners are in [X] (where X = USA, EU, China, Saudi, etc)
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, 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
Global Seed Fund & Startup Accelerator
What is 500?!
• $100M silicon valley VC fund + startup accelerator!
• 30+ people / 10 investing partners!
• Locations: SV, NYC, MEX, BRZ, IND, CHN, SE Asia!
• 1500+ Founders / 200+ Mentors!
• Community + Content + Conferences!
750+ Portfolio Co’s / 40+ Countries!
• Wildfire (acq GOOG, $350M)!
• MakerBot (acq SSYS, $400M)!
• Viki (acq Rakuten, $200M)
• Simple (acq BBVA, $117M)
• SendGrid !
• Credit Karma
500 Startups: Global Seed Fund
Over 200+ startups outside US, in 40+ countries
Silicon Valley Investor Ecosystem
“Big” VC Funds
“Mega” VC Funds
SV Angel (Conway)
(my International road trip w/ geeky friends :)
• Travel The World with Startups, Geeks, VCs
• Meet MORE Startups, Geeks, VCs in other countries
• Learn about Intl markets, technology, people
• Socialize with friends all over the world ☺
2009-2014: East Asia (3x), Europe (2x), LatAm (2x), India (2x), MENA (2X)
Local vs Global?
• Emerging / Developing Markets!
• Global Languages: English, Chinese, Spanish, Arabic
• Critical Factors: Education, Mentorship, Capital
• Capital Availability: Incubation, Seed, Series A
• Positive Macro: SmartPhones, Tablets, Payments,
Logistics, Growing Middle Class, Distribution Platforms
• Wealthy Global Users, Shoppers, Travelers
• English: 1-3B+ ppl, most online, high GDP, modest growth
• Mandarin: 1B+ ppl, lots online, med GDP, flat growth
• Spanish: 500M+ ppl, some online, med GDP, strong growth
• Arabic: 500M+ ppl, some online, low/med GDP, strong growth
• Others: Hindi, Portuguese, French, German, Japanese,
Russian, Korean, Turkish, Farsi, Urdu, etc
• US/Can/UK/AU (400M+): big market, not much growth but lots of spend
• Europe (400-500M): not much growth, many lang, high GDP
• China / E. Asia (1B+): lots of ppl, growing usage / GDP, flat growth (pop.)
• LatAm (500M+): Brazil, Mexico, Argentina, Colombia, Chile; LOTS growth
• India/Pak/South Asia (1.5B+): lots of ppl, growing mobile, strong growth
• SE Asia (600M+): Indonesia, Vietnam, Thailand, Philippines; strong growth
• Middle East / Arabic (500M+): growing mobile, lots of future growth
• Africa (900M+): growing infrastructure, lots of future growth
How to Assess Global Markets
• 1) # of ppl / language speakers by geography
• 2) % internet usage (web, mobile, smartphone, etc)
• 3) $ Avg GDP / $ online spend / disposable income
• Online spend / lang, geo = (#ppl) * (%internet) * ($GDP)
– % Growth rates of ppl, lang, internet, GDP
• Currency, country, culture, etc
• Online disturb platforms (search, social, mobile, video, etc)
• Online payment methods / credit card distr
• Physical goods delivery / logistics
• Social media usage / behavior
• 3 markets in 1: rich, middle-class, internet poor
Why You SHOULD NOT
you’re a tiny little startup,
you don’t speak the language,
your local market is big [enough]
Why Stay Local?
(Because it’s HOME)
• You don’t speak English (well enough).
• Your solution doesn’t travel well / you won’t/can’t localize it well.
• There’s not as many startups competing for your local market.
• Your local market has 50-100M+ users (ex: Japan, Germanu, Brazil)
• Your local market customers are REALLY RICH (ex: Saudi, Qatar)
• You have customers / revenue.
• You have a great living situation, family, kids, etc
Why You SHOULD
you live in a small country,
local investors are too conservative,
don’t write [enough] checks
give u crappy, low valuations.
or, you just love California :)
Why Go Global?
(because California is *awesome*)
• It’s BIG. (US, EU, China are huge markets… also Saudi)
• All the [rich, online] customers are here.
• All the investors are here (Silicon Valley)
• All the platforms & partners are here (Silicon Valley).
• Because you watch too many action movies and rap videos.
• Because you love California / NYC. (we understand ☺)
• You really love Kim Kardashian, Jay-Z, JT, Beyonce, etc.
Angel* List: It Rocks.
• Startups & Investors
• Activity & Metrics
• Platform & APIs
• *ps – not just for Angels,
not just for USA
• Business Plans
• Functional Prototypes
• Lean Startup
• Software Engineering / Design & UX
• Online Marketing / Unit Economics
• Monetization & Payments
• Customer Service + Support
• Fundraising & Pitch
• Startups are NOT Real Estate
• Most Startups Fail / Power Law Returns
• Portfolio Approach (10-20+ investments)
• Legal Structure, Financial Structure
• Syndication + Co-Investment
• Access to Downstream Capital
• Exits & Liquidity
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
• entrepreneurs can create 1-5M new startup businesses every year
How much capital is needed globally to get seed stage startups rolling?
• Assume 1M-5M startups/yr x $50K-$1M funding/each
• Low: 1M x $50K = $50B/yr <-> High: 5M x $1M = $5T/yr
How many metros? How many investors / metro? How many startups / metro?
• 1 microVC can fund 10-20 startups/yr * $50K-$1M = $1M-$10M annual budget
• 500+ global metros @ 1M+ ppl can generate ~100-1,000 startups / year
• guesstimate = min ~100K+ startups/yr across top 100-200 global metros
• 5-50 VCs / metro * 200 metros = 1,000-10,000 VCs globally
• FUTURE: 5,000 VCs deploy $10M->20 startups = $50B/yr -> 100,000 startups