Transcript of "Onetti - Marinucci - MTB Job Creator Tour 2013"
ALBERTO ONETTIChairman, Mind the Bridge FoundationMARCO MARINUCCIExecutive Director, Mind the Bridge FoundationIntroduction to EntrepreneurshipFrom Startup to Venture Financing@MIndTheBridge#jobcreator
AGENDAEntrepreneurship in Italy: Where are we?The Startup worldBusiness PlanningThe Venture Capital MarketThe Silicon ValleyMind the Bridge2
Entrepreneurship in Italy: Where are we?The Startup worldBusiness PlanningThe Venture Capital MarketThe Silicon ValleyMind the Bridge3AGENDA
4Zero Growth Italy has not grown since the beginning of the new Millennium –slower than its European neighbors and US Average growth rate(2001-2012): US (1.63%), EU (1.42%), IT (0.16%)The Problem we haveSource: IMF 2013More info here: “Italy. Europe’s Investment Opportunity”, White Paper by Vietor, Onetti & Napolitano, New York, 2011-6-5-4-3-2-1012342002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Real GDP growth (percent) Italy EU US
5Youth Unemployment Unemployment rate in Italy (12%) is lower than in Greece and Spain(27%), but much higher than in Germany (5.5%). Worst employment problem pertains to young people (38% forpeople between 15-24)The Problem we have (2)38pc 8.1pc12pc 5.5pc
Italy: Industry Contribution to GDPSource: CrESIT 2012Lack of large companies In Italy SMEs are 99.9% of the total (EU, SBA Fact Sheet 2012) 95%+ have less than 10 employees and 50%+ have only one (ISTAT, 2013)Mostly mature business Primarily Services (73.4% ofGDP) Manufacturing is only18.6% (it was 21% in 2000) Innovative industries playa minor role (2-6%)The Problem we have (3)
Where are we heading?“Before World War II, Argentina was rich. Evenin 1960, the country was twice as rich as Italy.Today, he says, you can compare the percapita income of Argentina to that ofRomania. Because it didn’t grow.The Risk we faceA country could get rich in 1900 just by producing corn and meat, but that is nottrue today. But it took them 100 years to realize they were becoming poor. Andthat is what worries me about Italy. We’re not going to starve next week. We arejust going to decline, slowly, slowly, and I’m not sure what will turn that around.”(New York Times 2010)
”In US firm startups account for only 3 percent of employment butalmost 20 percent of gross job creation”Source: “Who Creates Jobs? Small vs. Large vs. Young”.J. Haltiwanger, R.Jarmin, and J. Miranda (2011)8On average, 1-year-old firms createnearly 1 million jobs, while 10-year-oldfirms generate 300,000.Existing firms are net job destroyers,losing 1 million jobs net combinedper year. By contrast, in their firstyear, new firms add an average of 3million jobs.During recessionary years, jobcreation at startups remains stableStartups Create Most New Net Jobs inthe United StatesJob Creation and Loss by Firm Age(Average per year, by year-group, 1992-2006)The Solution (1)
9VC investments generally declined since 2008 all over the world Vs. 2011: -14% in Europe and -5.5% in US Vs. 2008: -50% in Europe and -10% in USVenture Capital: Leaders and Laggards3.18510.96826.874Source: European Private Equity and VentureCapital Association. PricewaterhouseCoopers/National Venture Capital Association. AIFI &PricewaterhouseCoopers 2008-2012.U.S.Silicon ValleyEuropeItalyAnnual VC Investments (Billion US$)0.175
10Venture Capital Industry is still in its infancy (but it’s growing) Approx. €100M invested every year in early-stage investments Vs. 2011: +65% increase (vs. -10% in private equity) 394 startups funded in the last five yearsWhere are we? Venture FinanceCompaniesSmall size of the stock market Italian market capitalization is on avg. 25% of Italian GDP 110% in US and 140% in UKSource: AIFI &PricewaterhouseCoopers 2008-2012.DealsAmount (M€)
11BTW, Venture Capital industry ischangingBerlinLondonSuper AngelsWe now have a liquid seed-stagefunding structure in Europe. Wedidn’t have this before and so nowthe first €1m roadblock forentrepreneurs has beenremoved.Hendrik BrandisPartner, EarlybirdUnited StatesEuropeJeff ClavierCrowdfundingAcceleratorsRonConwayReidHoffman
Where are we? Research12Quality Research Base 74k scientific publications (1996-2010) ranking 8th globally Italy is in the top 10 countries (4th) for number of publications (2001-2011)in comparison to R&D expenditureIssues in turning Research into Business Academic spin-offs are not ramping upSource: IX Rapporto Netval sulla Valorizzazione della Ricerca Pubblica Italiana, 2012Notes: data related to 2010 and 2011 are not final- On avg. 75 new spin-offs/yr.- 894 new spin-offs since 2000Geolocation:- North-West: 25.3%- North-East : 24.9%- Center: 26.9%- South & Isles: 22.9%Top Universities:- Polytechnic of Turin- University of Padua- University of BolognaSource: SCImago Journal & Counrty Rank, 2010Source: Italian International Growth agenda, Booz&Co analysis
13We need more Quantity (deal “trickle”) Legal barriers to entry and exit (Italy is not a “corporate haven”) Labor market rigidities Obstacles in bridging research into business Managerial/Entrepreneurial skillsWe need more Quality High mortality (“crisi del primo miglio”) and “Dwarfism” Mindset Seed fundingWe need to get prepared for International Exits (since Day One) High Tech “Leviathans” are not here Small size of the stock market and lack of large corporations doesn’thelp Language barriersItaly: Startup Check-List
AGENDA14Entrepreneurship in Italy: Where are we?The Startup worldBusiness PlanningThe Venture Capital MarketThe Silicon ValleyMind the Bridge
Between 26 and 35High level of education(11% Ph.D or MBA, 42%Master degree)Prior entrepreneurial experience (23%have founded a startup)and/or working experience (8-9 yrs)89% are MaleStartup Generation…Who are you?11% of startups are incorporated abroad(Silicon Valley, Berlin, Israel, London)Corporate drain?
The Entrepreneur profile:Italy vs. US18Entrepreneurs 30 to 49 started businesses at ahigher rate than other age groups didThe Kauffman Foundation and LegalZoomStartup Environment Index 2012 Mind The Bridge Survey 2012Age distributionIn Italy 84% are in the 26-45 range. 33 is theaverage age12 A third of startup owners were women Female entrepreneurs are only 11%Gender19% had master’s degrees while 8%professionals or doctorateEducation3 42% have a master degree while 11%a Ph.D. orMBAPrior Experience4 57% have 6+yrs of priorindustry/work experienceand 44% had startedcompanies in the pastFunding & Incubation periodAlmost 80% has 8/9 yrs avg.prior working experienceand 23% has founded atleast one company before5 80% of early-stage businessowners in US used personalfunds to finance theircompanies.Bootstrapping rules (58%),while 38% got also fundingby external investors.More info here: “Startups - Italy vs US - Onetti IID 2013”, A. Onetti, Italian Innovation Day, Mountain View, 2013
What makes a successfulentrepreneur?19Education matters a lot 2.0 Startups are founded byhighly educated peopleExperience matters as well Being a serial entrepreneur isa job The right startup is never thefirst one you foundWorking/Studying abroad doesopen your mind It means more network,opportunities, ideas,experienceA successful startup is a teamplay One-man bands do not gotoo far
AGENDA20Entrepreneurship in Italy: Where are we?The Startup worldBusiness PlanningThe Venture Capital MarketThe Silicon ValleyMind the Bridge
Business Idea21THE BIG IDEA!!!… THAT MATTERS ALOT, BUT IT’S ALLABOUT EXECUTION …
Manager vs. Entrepreneur•Where is the opportunity?•How do I capitalize on it?•What resources do I need?•How can I gain controlover them?•What structure is best?Theentrepreneurasks . . .•What resources do I control?•What structure determines ourorganization’s relationship toits market?•How can I minimize theimpact of others on my abilityto perform?•What opportunity isappropriate?The typicaladministratorasks . . .22
The Business Plan?“Business plans and 5 years financialprojections are a waste of time”23Dave McClure“They came to me with no businessplan” Intel 1968“No one besides venturecapitalists and the lateSoviet Union requires five-year plans to forecastcomplete unknowns”Steve Blank
The Lean Approach“The Lean Startup method teaches youhow to drive a startup, how to steer,when to turn, and when to persevereandgrow a business with maximumacceleration.”Eric RiesVision Steer AccelerateTEST the product, collectFEEDBACK, understandCUSTOMERS NEEDSFAIL fast (Pivoting?) - GROWfast.MODIFY your MVP, IMPROVEit and create HIGH QUALITYgoodsNow you areready to SCALE“Get out of the Building!”
Build-Measure-Learn feedback loop2513 2“Using the Lean Startup approach, companies can create order not chaos byproviding tools to test a vision continuously.”What is the problem we aim atsolving?MVPMetrics, TractionNo plan survives firstcontact with customersPivoting or scale?Validated learning
26“There are some cases where things work despite thelack of a plan. But there is an awful lot of failure theretoo. Winning without a plan is hitting the jackpot,and most people do not hit the jackpot. Since youwant to have as much mastery over things as possible,you need to plan.”Peter ThielEntrepreneur and venture capitalist, co-founder of PayPal andfirst outside investor in FacebookThough... Aspirations are not a Plan
27THE BUSINESS MODEL How do you make money(Revenue Model)? How do you structure activities(Cost Structure) Financials What are you looking for (capital youare raising- use of proceeds)THE TEAM The team Your relevant experience inthe domain youre addressingTHE MARKET The market you are addressing Market size Potential growth CompetitionTHE OPPORTUNITY The problem we solve (descriptionof your product highlighting thebenefits to the users/customers) The competitive advantage (whyyour product is better) Compelling reason to buyBUSINESS PLANThe Business Plan
Financials: Statement of OperationsP&L 2012established2013anticipatory2014forecast2015forecast2016forecastRevenueAvr rev. per cust.(COGS)Gross Margin(OperatingExpenses)(R&D)(Mktg & Sales)(Engineering)(G&A)Operating MarginHeadcountSource: Mind the Bridge
32Avoid TMI!More info here: “Financials: Forecasting&Reporting”, A. Onetti, MTB Gym
AGENDA33Entrepreneurship in Italy: Where are we?The Startup worldBusiness PlanningThe Venture Capital MarketThe Silicon ValleyMind the Bridge
The Funding process is MilestoneBasedSource: Onetti-Zucchella, Business Modeling for Life Science and Biotech Companies. Creating Valueand Competitive Advantage with The Milestone Bridge, Routledge, forthcoming
But Keep the Eyes on the BallACQUIRED BY:ACQUIRED BY:FOR $1.1 BILLIONFOR $1 BILLIONACQUIRED BY:FOR $1.03 BILLION“Investments are just a tool…The Exit is the real prize”
Definition• High net worth individual ($1million to invest) who providesfinancing, advice, andnetworking to early stagecompanies.Key investment Criteria• Geography (close to home)• High growth industry• Growth Potential of the venture• Personal attributes of theentrepreneur and team• Track record of entrepreneur andteamThe Angel Investor37
The Venture Capitalist38DEFINITION•VC Firms are financial intermediaries thatprovide the following to privately heldenterprises:•Equity (often coupled with debt) financing•Risk sharing•Managerial expense•Contacts•Reputation•In exchange, VC firms obtain equityTYPES OF VCs•Private Fund VC•Legal Structures: Partnership, Limited LiabilityCorporation, Corporation•Stakeholders in a Partnership: General Partners(GP), Special Limited Partners (SLP), LimitedPartners, Advisory Board•Corporate VC•Consider impact on earning of parent•How does it further the parent’s objective?
VC: General Investment Process39Limited PartnersVC Firm (General Partners)Startup CompaniesIPO/M&AFund Fund FundExitDistributions Fundraising CommitmentsInvestment DisbursementsProceeds
The Valuation is a two side process Size of market opportunityhow big is the market segment, what marketshare can you gain? revenue / price model Comparablesmultiple of Revenue (trailing/forward) orEBITDA Financial ProjectionsRevenue, EBITDA, DCF UltimatelyBid vs. Ask negotiation40
How much you need(Cap Incr)e.g. € 1,0MHow much equity youwant to give up ( Y%)e.g. 25%Post Money Valuation (V)= Cap Incr / Y = 1/0,25= € 4,0MPre Money Valuation= V - Cap Incr= € 4,0M - 1,0M= € 3,0MThe Valuation Process:Pre- e Post-Money Valuation41
Less than 1% of allleads get funded5 – 10Financed1,000 Leads150 MeetingsActivelyPursued70$$$VC Financing Process:Getting through the Funnel42
Dealing with VCs44 VCs see tons of pitch every day be shortand immediate, use body language andshow passion They don’t know your product usescreenshots, videos, prototypes They are positively impressed by big numbersand they look for big market opportunity be ambitious since the beginning but haverealistic objectives. They are not always expert as you are aboutthe topic use simple words, get straight tothe point Smile it’s ok to have fun when you pitch
Valuation is only one piece ofthe puzzle45Agreement• Amount, valuationand timing ofinvestment• Form of investment• Terms of investment• Rights• LiquidationPreferences• Drag Along• Pay to Play• Vesting/buy-backprovisionsControlMechanisms• Boardrepresentation• ConvertiblePreferred securities• Syndication ofinvestment• Staging of capitalinfusion
The (REAL) History of the Valley501930 1940 1950 1960 1970 1980 1990 2000WAVESOFINNOVATIONINTERNETINTEGRATEDCIRCUITSDEFENSEToday:25 of Fortune 100Adobe SystemsAMDAgilent TechnologiesApple Inc.Applied MaterialsBusiness ObjectsCisco SystemseBayElectronic ArtsGoogleHewlett-PackardIntelIntuitLSI LogicMaxtorNational SemiconductorNetwork ApplianceNvidiaOracle CorporationSanDiskSeagate TechnologySolectronSymantecSun MicrosystemsYahoo!…◊ NASA◊Lockheed◊ HP (47)◊ Intel(68)◊ Kleiner Perkins(72)◊ Apple (80)◊ 3Com, Adobe,Cisco◊ Yahoo, ebay,Google (90s)?PERSONALCOMPUTERS◊ Apple (2000s)MOBILE◊ Facebook,Twitter, Zynga,Linkedin (2000s)SOCIAL
The Main Pillars51FINANCIAL MARKETM&A, IPO dreamENTREPRENEURSThe garagecultureUNIVERSITIEShighlyconnected withbiz world◊Is that replicable / portable?◊Is it sustainable long-term?◊What is the impact of the changinginternational outlook?KEY QUESTIONS
Soft Factors52◊The importance of Dynamism,speed: continuous evolving world◊ Approach to Risk◊ Value of Failure (not just adownside but a must-have)◊ Importance of the Hub: a world ofopportunities◊Think BigKEY TO SUCCESS
Raising money today (@#$!)in Silicon Valley53are you not localhow many exits again?don’t show me the buyer (don’tIPO me…)haven’t jumped yetDON’T TALK TO ME IF YOU…
Job Creator TourSTARTUP SCHOOL(Apr, Jul, Aug, Nov)VentureCamp(8/9 Nov)60Building the Bridge: The 2013 TimelineEducation
MTB JOB CREATOR TOUR61 EducationThe MtB Startup Business School gives youthe “nuts and bolts” regardingentrepreneurship, business planning,venture capital market and Silicon Valleyeco-system Honest FeedbackThanks to the Gym session the startupsselected have the opportunity topresent their business idea in front of apanel of investors and entrepreneurs Fine tuning the business ideaEverybody can largely benefit from thediscussion of all the business ideas aswell as the education program in themorningThe best project wins aseat @MTB StartupSchool!
62SESSIONSLast SessionApril 8th – April 26thUPCOMINGJuly 1st – July 19thJuly 29th – Aug 16thNov 11th – Nov 29thBe a Silicon Valley Startups for 3 weeks!Students, Graduate studentsEngineers, ScientistWannabe EntrepreneursWHERE?One Market Plaza, Steuart Tower,San FranciscoHOW TO APPLY?Check it out here!www.school.mindthebridge.orgWho can participate?APPLY NOW!LEARN: MtB Startup SchoolWatch thevideo here!
Accelerator Program(winter & summer batch)63GROWTH:MTB GymMind the Seed FundWINTER BATCHJanuary – MarchOPENING SOON!SUMMER BATCHSTARTS ONAugust 26th, 2013Demo Days
2012 FACTS$6.45M FUNDING - $32.4M VALUATION$1.6M Funding – Team 3->10 full time – 1.5Mdaily viewers (+66% in last 4 months)$1.9M Funding – Team +50% - US entity - #19hottest startups in the world (Web Summit)$1.2M Funding – Team 2->11 full time –US entity - 2013 prototype launch in orbit$500K Funding (500Startups) – Team 0->5 –US Entity - Top 5 iOS edu app, Best Design$600K Funding (2 rounds) – Team: 3->8 fulltime – 2X registered users (600K)6 months pivoting (>Thailand)$650K Funding – Team 2->4 – New launchcoming
2013 BATCHESCAUTION …. RISING STARS!Winter 2013 Batch Summer 2013 Batch10 weeks accelerator program @Gym in San Francisco and up to $65k in seed funding
Building Success StoriesApril 2012Enters 500Startups (+$65K)Sep 2011Second round of $1.1Mfunding (IAG,ZernikeMeta Ventures)April 2011 - EXITMerges with Avrio RMSGroup (US)Feb 2012Wins Seedcamp Berlin, raises$1.350M (Seedcamp,industrial partner)winnersFeb 2012$1M+ round with Filas Lazioand Angels InvestorsSince Gym inception (Aug 2010):30 startups incubated,20 funded ($9.5M+), 2 exits 66SUCCEED:Sep 2012$1,5M+ round with Vertis andPrincipiaFeb 2013Winner of Mobile PremierAwards 2013 in Barcelona.Jan 2013€500K round of funding
Venture Camp 2013Milan, 8-9 Nov 2013ObjectivesFostering a sustainable Italianecosystem for entrepreneurshipProviding entrepreneurs with directexposure to venture capitalinvestors both from Italy and SiliconValleyBoosting ideas with high potentialMind the Bridge VentureCamp is a 2-day event held inMilan to promote a healthierItalian entrepreneurialecosystem.Meet StartupsLearnNetworkFind Links
THANK YOU FOR YOURATTENTIONQuestions & AnswersSOCIAL MEDIA:Facebook:Mind the Bridge - Connecting TalentTwitter: MindTheBridgeGoogle+: Mind the Bridge Foundationhttp://www.youtube.com/user/mindthebridgeTVhttp://siliconvalley.corriere.it/http://www.linkedin.com/groups?gid=2142980WEBSITEWWW.MINDTHEBRIDGE.ORGMINDTHEBRIDGE.ORG/ACCELERATORSCHOOL.MINDTHEBRIDGE.ORGGYM.MINDTHEBRIDGE.ORGinformation@mindthebridge.orgCONTACTS
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