The Business of (Tech) Startups - Challenge Cup

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Slides for my talk at 1776's Challenge Cup dinner in DC.

Slides for my talk at 1776's Challenge Cup dinner in DC.

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  • 1. @paulsingh # THE BUSINESS OF (TECH) STARTUPS THE RISE OF THE ANGELS (AND THE ENTREPRENEURS) PAUL SINGH @paulsingh
  • 2. @paulsingh # 500 STARTUPS @paulsingh
  • 3. @paulsingh #
  • 4. @paulsingh # A (R)EVOLUTION IN THINKING
  • 5. @paulsingh # RISK AND UNCERTAINTY ARE NOT THE SAME
  • 6. @paulsingh # EARLY STAGE STARTUPS HAVE CHANGED
  • 7. @paulsingh # CLOUD, OPEN SOURCE AND ONLINE DISTRIBUTION DRIVING STARTUP COSTS LOWER THAN EVER BUT SCALING STILL COSTS MONEY
  • 8. @paulsingh # WEB GETS BIGGER. WORLD GETS SMALLER.
  • 9. @paulsingh # TRACTION IS THE NEW INTELLECTUAL PROPERTY PLATFORMS (SEARCH, SOCIAL & MOBILE) PRIMARILY DRIVING THE CHANGE. NO LONGER “GOOD ENOUGH” TO DEPEND ON TECH DIFFERENTIATION.
  • 10. @paulsingh # CAPITAL INCREASINGLY COMMODITIZED RISE OF THE ANGELS, YO!
  • 11. @paulsingh # NEW REALITY: MONEY FOLLOWS FOUNDERS RISE OF THE ENTREPRENEURS, YO!
  • 12. @paulsingh # SIGNALS ARE EVERYWHERE BIG DATA + OPEN SOURCE ANALYTICS = NEW TECHNIQUES FOR VC
  • 13. @paulsingh # SIGNALS ARE EVERYWHERE BIG DATA + OPEN SOURCE ANALYTICS = NEW TECHNIQUES FOR VC
  • 14. @paulsingh # TRANSPARENCY IS SIGNALS ARE EVERYWHERE BIG DATA + OPEN SOURCE ANALYTICS = NEW TECHNIQUES FOR VC
  • 15. @paulsingh # WALL STREET BEAT US TO IT
  • 16. @paulsingh #
  • 17. @paulsingh # “ UBS PROPRIETARY SATELLITE PARKING LOT FILL RATE POINTS TO AN INTERESTING CADENCE INTRA-QUARTER AND POTENTIAL UPSIDE TO OUR VIEW.
  • 18. @paulsingh #
  • 19. @paulsingh # “ TWICE A WEEK A SMALL HELICOPTER CIRCLES OVER CUSHING’S TANK FARMS ON AN INDUSTRY SPYING MISSION
  • 20. @paulsingh # WALL STREET ISN’T ALONE THESE TECHNIQUES ALREADY USED TO UNDERWRITE IN-VITRO FERTILIZATION LENDING, PAYDAY LOANS, SUBPRIME AUTO LENDING, HOME/PERSONAL/AUTO INSURANCE AND MORE.
  • 21. @paulsingh # IT TURNS OUT, WE CAN DO IT, TOO SURPRISE!
  • 22. @paulsingh # + “GUT” + TRUSTED MENTORS + MUCH, MUCH MORE DATA.
  • 23. @paulsingh # WE CAN DO IT, TOO.
  • 24. @paulsingh # WE CAN DO IT, TOO.
  • 25. @paulsingh # WE’RE DOING IT, TOO.
  • 26. @paulsingh #
  • 27. @paulsingh # “ VENTURE CAPITAL IS OPEN TO ATTACK BY DISRUPTIVE NEW BUSINESS MODELS AND TECHNOLOGY. -- NAVAL RAVIKANT (@naval)
  • 28. @paulsingh # dashboard.io
  • 29. @paulsingh # dashboard.io
  • 30. @paulsingh # EARLY STAGE VC IS CHANGING HAS CHANGED
  • 31. @paulsingh # STATE OF THE ART IN EARLY STAGE INVESTING IS NOT VERY SOPHISTICATED
  • 32. @paulsingh # UNBUNDLING OF ADVICE, CONTROL AND MONEY
  • 33. @paulsingh # USED TO BE ABOUT CAPITAL, DEALFLOW AND JUDGEMENT TODAY, IT’S ABOUT ACCESS.
  • 34. @paulsingh #
  • 35. @paulsingh # INCREASINGLY ABOUT DEAL SELECTION, NOT DEAL SOURCING. IT’S 2013, YO.
  • 36. @paulsingh # dashboard.io
  • 37. @paulsingh # (500) CHECKLIST Product solves a problem for a specific target customer Capital-efficient businesses - operational @ <$1M funding Primarily internet-based distribution - search, social, mobile, local Simple revenue models - transactions, subscriptions or affiliate Functional prototype before investment (or previous success) Small but measurable usage - some customers, early revenue Small but cross-functional team - engineer, design/UX, marketing
  • 38. @paulsingh # (NEW) FINANCINGS Standardized terms No fixed amounts, no closings, no leads Continuous, not discrete rounds Prices beginning to float No Board seats at the earliest stage Herd mentality and oversubscriptions
  • 39. @paulsingh # THE BUSINESS OF INVESTING IS ABOUT CHOOSING THE LEAST-WORST OPPORTUNITY NOT TRYING TO PREDICT THE NEXT GOOGLE, FACEBOOK OR LINKEDIN.
  • 40. @paulsingh # THE FIRST CHECK SHOULD BE SMALL AND FAST DOUBLE DOWN HEAVY IF THE COMPANY SURVIVES INTO THE NEXT ROUND
  • 41. @paulsingh # “ BY ITS NATURE, THE INTERNET UNDERMINES ANYONE WHOSE STATUS DEPENDS ON PRIVILEGED ACCESS TO INFORMATION. -- MICHAEL LEWIS
  • 42. @paulsingh # THE PRIVATE MARKET IS BECOMING MORE ACCESSIBLE.
  • 43. @paulsingh # THE PRIVATE MARKET IS BECOMING MORE TRANSPARENT.
  • 44. @paulsingh # Demo Day Videos ⟹ livestream.com/500startups Sample Pitch Decks ⟹ slideshare.net/500startups Venture Capital 101 ⟹ venturehacks.com/archives Investor Thoughts: Brad Feld ⟹ feld.com Fred Wilson ⟹ avc.com Chris Dixon ⟹ cdixon.org Mark Suster ⟹ bothsidesofthetable.com angel.co/valuations and angel.co/salaries
  • 45. @paulsingh # dashboard.io
  • 46. @paulsingh # YOUR KEY TAKEAWAYS Focus on Traction. Learn to Communicate and Inspire.
  • 47. @paulsingh ALSO... # Distribution > Product Tactics > Strategy Notability > Credibility Get on AngelList Raise 12-18+ months of funding Learn the basics of VC economics Don’t confuse due diligence with progress & probability... Shameless plug: dashboard.io
  • 48. @paulsingh # THE BUSINESS OF (TECH) STARTUPS THE RISE OF THE ANGELS (AND THE ENTREPRENEURS) LEARN MORE: bit.ly/dashboard-weekly @paulsingh