Spawning Scalable Startups

Joyful Frog Digital Incubator Spawning scalable startups, sustainably echelon2010 June 2 Wong Meng Weng

We’re going to start a Y-Combinator-like operation soon. – Chris Evdemon, Innovation Works, Beijing

Seed Accelerator Stats
2005: Y Combinator begins
$5,000 per startup + $5,000 per founder
172 startups later, total acquisition value = $84M
average value per startup: $488,000
funded by founding angels Paul Graham, etc.
In Mar 2009 Sequoia invested $2M into YC.
2007: TechStars begins
average $15,000 investment per startup
39 startups later, total acquisition value = $17.25M
average value per startup: $442,000
funded by founding angels David Cohen, Brad Feld
Source: Copying Y Combinator, Jed Christiansen
3X in 3Y

Paul Graham = awesome
Graham ended up investing in Alexis's company through what became the seed funding firm Y Combinator, but the amazing part wasn't the money. It was that Y Combinator helped him move past a bad business idea that he and his partner spent a year on, and discover a better one, which became Reddit , the social news site that was sold to Conde Nast within 2 years of launching.
Then there's Kevin Hale … during the interview, despite initial resistance, they were convinced to create a form builder instead . The business became Wufoo, the startup that reached profitability within 9 months.
AirBnb : When they joined Y Combinator, they had a site that gave travelers an affordable alternative to hotels by matching them with locals who had space in their homes. They had a national presence, but they were constantly struggling for cash. Y Combinator gave them some funding to keep going, but they told me it was Graham's suggestion that they focus on just one city till they got their product right, which changed everything. Within a few months, they had a better product and they were finally profitable.
http://mixergy.com/y-combinator-paul-graham/

The Seed Accelerator Model
Disrupts the traditional VC model. “Series AA” funding round is usually in the $20,000 range instead of the $2,000,000 range. Typical startup is valued below $200,000.
3 month development sprint , in a batch of 10–20 companies at a time, 2 to 3 founders each.
Intensive tutoring by mentors and alumni helps first-time founders climb the entrepreneurship learning curve fast.
200–300 investors convene for a Demo Day at the end of the batch.

Y Combinator and TechStars

JFDI.Asia

Adapting the Model, Part 1
Full-time mentors supervise portfolio startups daily, face-to-face . Our full-time mentors act as co-founders, helping startups focus on launch, early revenue, and marketing.
JFDI involves follow-on investors early and throughout the program , not just on Demo Day, thus increasing the likelihood of successful follow-on financing.
JFDI covers many startup expenses directly, rather than giving the money to startups. We gain economies of scale by pooling technical and business resources, buying in bulk.
JFDI adapts the TechStars model to Singapore in four key ways:
We operate a structured ideation process. Too often we see solutions looking for a problem. Our rigorous process eliminates unmarketable ideas and optimizes for business feasibility.

Founder Institute A Real Estate Incubator plus “mentoring”

JFDI startup founder founder … You should think of them as a co-founder … – Chris Evdemon, June 1

Positioning

Our #1 Value-Add
We force founders to
talk to their
motherf*cking
customers

Ideation Workshops
run by our partner Propellerfish.com
Specialists in New Product Development Market Research and Workshop Facilitation

The Process
Start with a few themes
Do market research ahead of time
Gather user requirements and pain points
Organize an Ideation Workshop
Bring in domain experts
Bring in investors
Facilitate brainstorming
Produce dozens of ideas
Evolve and improve.
Rank them for feasibility
Fit to teams

Vision for JFDI Short term value prop: More pre-qualified dealflow for seed and Series A investors: solid businesses designed to be investment ready. Long term vision: a self-sustaining startup ecosystem in Singapore that turns founders into funders and inventors into investors. Improve the startup experience for founders and investors. Our motto: spawning scalable startups, sustainably

Credibility, Know-how
Talent engagement
Resource support
Customer engagement
Investor engagement
Core public funding
+ Smart private money
Strategic Partners

Management Team
Soon Loo: Board Directors of IPIT, listed business trust with US$500m+ market cap. Adjunct professor, SMU. Former Regional Vice President AXA Group Japan & Asia Pacific. Co-founder and senior VP Nextdoor Networks, a Silicon Valley IT company in Silicon Valley where he helped the company raise USD37.5mil VC capital. Formerly, McKinsey & Company consultant, Harvard MBA.
Hugh Mason : Serial investor / mentor / entrepreneur in the IDM sector. Co-founder Pembridge Partners LLP, London-based business accelerator specialising in marketing, media and technology SMEs that has raised/invested directly GBP25mil. Co-founder Narrateo Ltd, international TV production business. Former BBC TV producer. Physics graduate, University of Bath.
Meng Wong : Serial entrepreneur and software engineer. Founded pobox.com in 1995. Led SPF/Sender ID antispam standards project to success during 2003 and 2004. Founded Karmasphere in 2005. MBA dropout, National University of Singapore. Founder, hackerspace.sg.

Team credentials
33 man-years of frontline entrepreneurship experience
17 man-years of active angel investment experience
Over 2,000 SMEs supported
Raised ~ $100MM of investment directly and indirectly
Networks in US, UK, China, India, and SG + SEA
Interdisciplinary, multicultural team – technology, education, communication, leadership

Operations - bootcamp

FAQs
Where will the talent come from?
Who will fund the startups subsequently?
What about exits? Who will acquire the startups?
How can I invest? :-D

Spawning Scalable Startups

by e27 Singapore on Jun 06, 2010

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