Risk Assessment of Embedded Connectivity Propositions

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- VC Market
- Embedded connectivity solutions
- HW and platform business
- Web and mobile businesses
- Go-to-market
- Challenges of funding market
- Mobile services funding

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Risk Assessment of Embedded Connectivity Propositions

  1. 1. Risk Assessment of Embedded Connectivity Propositions<br />London, January 27, 2010Jouko Ahvenainen<br />
  2. 2. www.growvc.com<br />2<br />Jouko Ahvenainen<br /><ul><li>Grow VC Chairman
  3. 3. Working on 2.0 business models, ecosystem, and funding models
  4. 4. Mobile and 2.0 business experience
  5. 5. Co-founder of the first social network analytics company, www.xtract.com
  6. 6. On the boards of various start-up companies, and a co-founder or seed investor in 6 companies
  7. 7. A pioneer to develop and sell the first social marketing intelligence solutions</li></ul>Social Media Marketing book, available in Amazon<br /><ul><li>Other experience
  8. 8. Senior positions: e.g. Cap Gemini Ernst & Young, Powerwave Technologies Inc., Nokia, and Sonera
  9. 9. International: lived and worked in Finland, Malaysia, the UK, and the US</li></li></ul><li>Truly Global International Platform where investors, companies, and entrepreneurs can better meet each other and get tools to make transactions effectively<br />Includes several components:<br />Match-making tools (between funder and entrepreneur)<br />Peer-to-peer micro-funding and fund co-investments<br />Software platform for the community<br />Legal, monitoring and reporting framework<br />Involvement of top experts in venture funding and industry verticals <br />Growth and funding enabling services <br />New service launch in February: the first real global peer-to-peer startup micro-funding<br />You can start invest with dozens of dollars<br />Grow VC model<br />www.growvc.com<br />3<br />
  10. 10. Grow VC position<br />www.growvc.com<br />4<br />Investment decisions:<br /><ul><li>Private investors
  11. 11. Community of investors and entrepreneurs
  12. 12. Match-making
  13. 13. Service investments
  14. 14. New fund model
  15. 15. Support for investment process and materials</li></ul>Private Investors,e.g. angels<br />Start-upXXX<br />InvestmentPartners, e.g. VC<br />Start-upYYY<br />Entrepreneurs who looks forfunding<br />Start-upZZZ<br />Investment process:Managed by community<br />
  16. 16. www.growvc.com<br />5<br />
  17. 17. Embedded connectivity<br />Two Models<br />www.growvc.com<br />6<br />
  18. 18. www.growvc.com<br />7<br />Background<br />The business environment of fast-growth companies has changed significantly over the past 15 years<br />Internet and web 2.0 <br />spreading funding model<br />global #1 in their niche<br />VC’s and business angels – typically local<br />Immediately global web and mobile companies look for global smart money, not limited to single country or state<br />New funding models are needed for early phase, but also to cover the needs of different kind of companies  not only one type risk money<br />
  19. 19. VC Market<br />Traditional VCs are shifting focus on more mature companies<br />Often at least 1M€ annual revenue<br />US VCs spent only $17.7 billion on 2,795 different deals last year, the lowest dollar amount and number of investments since 1997 (source: Thomson Reuters)<br />Limited Partners’ interest to invest in traditional European VC funds collapsed in the last year, e.g. only one investment in Q3 (source: Go4Venture)<br />In practise traditional VC’s don’t make investments in early phase companies<br />Only if you have a product and / or revenue<br />www.growvc.com<br />8<br />
  20. 20. Embedded connectivity solutionsTwo categories<br />Hardware and more demanding application platforms<br />Include typically significant R&D work and require high level technical competence  technology risk<br />Longer development cycles and patentable solutions<br />Traditional VC funded cases<br />Applications<br />End-user applications based on basic mobile functionality or on proprietary platforms<br />Short development cycles, users’ feedback important  market risk<br />Difficult cases of traditional VC’s<br />www.growvc.com<br />9<br />
  21. 21. 1. HW and platform business:Technology business with new rules<br />The ecosystem is changing<br />Operators role is fading & operators are often the slowest and most expensive route to the market<br />Direct consumer access become more important<br />Technology is changing<br />Application development easier<br />Internet type platforms<br />APIs offer data and services, e.g. location and messaging<br />Risky to develop proprietary solutions for a few operators  open APIs, open source, and de facto standards<br />www.growvc.com<br />10<br />
  22. 22. 2. Web and mobile businesses:new retail business<br />The new chasm is to get attention and users<br />It is like to sell goods through supermarkets, except<br />No manufacturing costs<br />No logistical issues<br />The number of supermarkets and shelf space is in principle limitless<br />To be successful<br />Users must find your app directly, or<br />You must get good supermarkets to put your add to good shelf space, or<br />Both of these options<br />Smarter analytics and personalization can change this picture, but it happens slowly<br />www.growvc.com<br />11<br />
  23. 23. Go-to-market<br />Listen to market<br />Test your ideas and models<br />Light beta  learn  develop<br />Fast development cycles<br />Use the latest development tools<br />Think your business model<br />It can be free apps, but you should have an idea to monetize<br />But don’t try to monetize too much too early<br />Many concepts are easy to copy  build your brand and position<br />www.growvc.com<br />12<br />
  24. 24. Challenges of fundingmarket<br />2010 VC market is still a question mark; some positive signs<br />Web and mobile enterprises ARE NOT only new technology enterprises and capital efficiency is high<br />Open source, free tools, fast development<br />The challenge is to get users, not to implement a service<br />Funding requirements are changing<br />New funding models are coming especially for the early phase funding<br />Business angels<br />Crowd-funding and micro-funding, like Grow VC, are coming<br />The market is coming more global<br />Capital efficiency and lean startup model are requirements for all startups<br />www.growvc.com<br />13<br />
  25. 25. www.growvc.com<br />14<br />Mobile services funding<br />Immediately global mobile apps companies look for global smart money, not limited to single country or state<br />Step-by-step funding<br />If you cannot start mobile apps business with less than $200k, you must re-think your approach<br />Make it – launch it – improve it<br />Successful companies don’t do it immediately right, but they use money carefully and are able to change course as they learn<br />New funding models are needed for early phase, but also to cover the needs of different kind of companies  not only one type risk money<br />Someone can make simple apps for personal living without world-class ambitious, and need some money to start<br />Another one what to create fast growing business with hundreds of apps<br />
  26. 26. A couple of weeks to registerin Grow VC beta for free<br />http://beta.growvc.com/register/form<br />www.growvc.com<br />15<br />
  27. 27. You don’t have to be Steve Jobs to be an entrepreneur<br />You don’t have to be Bill Gates to be an investor<br />Everyone must start somewhere<br />Grow VC – The Place to Grow<br />Jouko Ahvenainenjouko@growvc.comTel (UK): +44 79 1248 1154Tel (US): +1 415 287 0854Skype: jahven<br />www.growvc.com<br />Twitter: @growvc<br />

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