Dave McClure - Go local or go global?
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Startupfest 2014

Startupfest 2014

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Dave McClure - Go local or go global? Presentation Transcript

  • 1. Startups: Go LOCAL or Go GLOBAL? @DaveMcClure @500Startups #StartupFest Montreal (July 2014)
  • 2. This Talk Is About… • 500 Startups –Internet Seed Fund + Accelerator + >200 Intl Startups • Startup Ecosystems & Global Markets –(# users, by language/geo) * (avg $ GDP) * (% internet) = online spend by lang/geo ! • 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 / partners are in [X] (where X = USA, EU, China, Brazil, Mexico, etc)
  • 3. 3 Dave McClure
 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
  • 4. 4 500 Startups 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 ! 800+ Portfolio Co’s / 40+ Countries! • Wildfire (acq GOOG, $350M)! • MakerBot (acq SSYS, $400M)! • Viki (acq Rakuten, $200M) • Twilio • SendGrid ! • Credit Karma • Udemy
  • 5. 5 500 Startups: Global Seed Fund
 Over 200+ startups outside US, in 40+ countries
  • 6. GeeksOnaPlane.com 
 (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: 15 trips to 30+ countries East Asia (3x), Europe (2x), LatAm (3x), India (2x), MENA (2X), SE Asia (3x)
  • 7. 7 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
  • 8. Global Languages • 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
  • 9. Global Markets • 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
  • 10. 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 distribution platforms (search, social, mobile, video) • Online payment methods / credit card distr • Physical goods delivery / logistics • Social media usage / behavior • 3 markets in 1: rich, middle-class, internet poor
  • 11. 11 Platforms 2.0
 Search, Social, Mobile, Video, Messaging Customer Reach: 100M-1B+ ! • Search: Google (also Baidu, Yandex, Yahoo-J) ! • Social: Facebook, Twitter (also TenCent, Line) ! • Mobile: Apple (iOS), Android ! • Media: Video (YouTube), Photos (Pinterest, Instagram), Music ! • Comm: Email, WeChat/WhatsApp/Line/Kakao, SMS, Voice !
  • 12. Why You SHOULD NOT
 Go Global you’re a tiny little startup, you don’t speak the language, your local market is big [enough]
  • 13. 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, Germany, Brazil) • Your local market customers are RICH (ex: Saudi Arabia, Japan) • You have customers / revenue. • You have a great living situation, family, kids, etc
  • 14. Why You SHOULD
 Go Global 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 :)
  • 15. Why Go Global?
 (because California is *awesome*) • It’s BIG. (US, EU, China are huge markets… also Mexico/LatAm, Brazil) • 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.
  • 16. Angel* List: It Rocks.
 (angel.co) • Startups & Investors • Activity & Metrics • Platform & APIs ! • *ps – not just for Angels, not just for USA
  • 17. Critical Ecosystem Factors • Optimism & Belief (“Silicon Valley”) • Mentorship + Education (Knowledge) • Universities + Companies (People) • Capital, Legal, Finance (Infrastructure) • Engineering + Design / UX (Product) • Platforms + Distribution (Customers) • Online Payments (Monetization) • IPO / M&A Market (Exits) 17
  • 18. 18 Silicon Valley Investor Ecosystem ! !Angels & Incubators ($0-10M) ! “Micro-VC” Funds ($10-100M) “Big” VC Funds ($100-500M) “Mega” VC Funds (>$500M) TrueFirst Round A16ZAtomico Y-Combinator TechStars SoftTech (Clavier) Felicis (Senkut) SV Angel (Conway) SequoiaGreylock Union Square Floodgate (Maples) Foundry Incubation Seed Series A Series B Series C+ Bootstrap, KickStarter, Crowdfunding
  • 19. Example Startup Ecosystem • 1,000 Bootstrap Startups ($0-10K) • 300 Accelerator Startups ($10-100K) • 100 Seed-Stage Startups ($100K-$1M) • 30 Series A/B Startups ($1-10M) • 10 Later-Stage Companies ($10-100M) • 1-3 Mature Company IPOs ($100M+) 19
  • 20. Entrepreneur Education • Business Plans • Functional Prototypes • Lean Startup • Software Engineering / Design & UX • Online Marketing / Unit Economics • Monetization & Payments • Customer Service + Support • Fundraising & Pitch 20
  • 21. Investor Education • 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 21
  • 22. Questions? Comments? • More Info? – http://500.co (our company) – http://500hats.com (my blog) – https://angel.co/500startups (our fund) – Dave McClure, @DaveMcClure
  • 23. 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 15