“The third great wave of the Internet ismobile and social together, it’s going tobe tectonic.” -John Doerr
FAVORABLE MEGATRENDS Disruptive emergence of new media and distributed co-creation moves into the mainstream Mobile platforms reshaping distribution and consumption paradigms Internet and new media tools disrupting production and consumption patterns of content/ Macro knowledge and impact-analyses of global media and commerce behavior of consumers consumer trends and mass collaboration at scale Tectonic shifts in consumer-facing communication, Global demand for consumer-focused technology products commerce, content & consumption and service, and the the emergence of global languages and geographic arbitrage URLs for IRL: enabling the Internet of “things” as the ofﬂine world is quickly becoming stapled into the future by combining physical representations with User Experience is the new unfair digital ones advantage and the growing importance of user experience and design Convergence problems creates a variety of cloud/client opportunities (both business & consumer landscapes) Nascent tech startup ecosystems beginning to bloom across the globe HTML5, the new web standard that allows to make interactive web pages, is going to revolutionize the media and advertising industries The age of the multi-sided business model
FORMED IN VINTAGE MARKET Average startup can be launched for under $500K (it’s the new $5M) Tech 2011+ Unemployment rate is >10% (April 2010) Build tech faster, better & cheaper Traditional VCs are expected to decrease in the early-stage by 60% through 2012. VCs are leaving early-stage deals because they are sitting on too much capital and will need to focus on legacy positions due to the size of exits over the past decade. (National Venture Capital Association) 2011+ VC Economy Companies are earning record-high Reboot proﬁts in recent quarters as a result of many of the cost-cutting efforts Traditional VCs continue deployed after the credit crisis and to exit early stage as their the massive layoffs. These same funds are not equipped to companies are now looking to play in these early rounds innovate thru acquiring early-stage technology startups.
$500K IS THE NEW $5M Web 1.0 Traditional J-Curve Web 2.0 Curve Web 2.0 W ay W ay ld Web 1.0 Old Kinda O Web 1.0 Traditional Date of ﬁrst cash ﬂow positive Small Dips of Capital Date of cash breakeven VC Source: Web 2.0 Strategy Guide Burn
2011 STARTUP CURVE The new tech startup costs under $500K to get to market and build value. The new tech startup also gets to market 10X faster in todays real-time build. Web 2.0 Web 1.0 Tech 2011 Similar to the web 2.0 curve but with even cheaper startup costs and more realistic growth acceleration. Traditional Even Smaller Dips of Capital
BUYING POWERCompanies are earning record-high profits in recent quarters as a result of many of the cost-cutting efforts deployed after the credit crisis and themassive layoffs. These same companies are now looking to innovate thru acquiring early-stage technology startups. Highly Acquisitive Tech Giants Actively Acquisitive Consumer & Media Giants Actively Acquisitive Tech Giants Actively Acquisitive Tech Up & Comers 1000+ privately owned companies, consumer facing brands needing to innovate thru technology, digital media OTHER COMPANIES agencies and lower-cap tech companies needing to innovate all have cash on hand.
SEED, DISCOVER, PILE ON & ACCELERATE(Seed, discover or help achieve P/M Fit thru our shared network & in-house expertise, pile on & buckle up) Acceleration Resources Follow-On Placement (back the truck up and pile on) Lean/Agile Startup Model - Achieving Product/Market Fit thru Customer Development Advisor & Startup App Biz Mentor Marketing M&A Enablement Dev Dev Network Resources Resources Resources Resources Resources Seed-and Early-Stage Capital Placement
THEMATIC BLENDED-THESIS DRIVEN APPROACHa hybrid philosophy to startup investing in Information Technology (with emerging Intersections) THEMES OUR THEMES ARE THE - WHERE WE INVEST These are the segments we’ve developed themes around for the next 3-5 year period where we will invest. These themes can span categories as they’re often built on standards, protocols, and widely adopted technical viewpoints. EMERGING INTERSECTIONS •Native Consumers & Digital Families •Mobile Life •Business “Consumerization” •Real-Time Data •New Commerce •Plumbing INFORMATION TECHNOLOGY OUR CORE IS I.T. THESIS OUR THESIS IS THE - HOW WE INVEST What we look for in founders What we look for in companies What we look for in products What we look for in mind-set & culture What we look for in extended team What geographies we look at
INVESTMENT THEMES HIGHEST HIGH PRIORITY PRIORITY NATIVE CONSUMERS & BUSINESS REAL-TIME NEW COMMERCE MOBILE LIFE PLUMBING DIGITAL FAMILIES CONSUMERIZATION DATA NEW ECONOMICS CONSUMER MOBILE SOFTWARE MOBILE/SOCIAL BUSINESS REAL-TIME & ECOMMERCE & INFRASTRUCTURE & INTERNET & SERVICES GAMING INTERNET & DATA SOCIAL INTERNET DISRUPTIVE MODELS BACKEND• Streaming Video • Location-based • Virtual Gaming • Real-time Analytics • Curation • Demand Aggregation • Cloud Services • Multiplayer Online • Big data & • Game Mechanic • Application• Videosharing • Enterprise• Parenting/Safety • Gaming Games Applications Monetization Commerce infrastructure• Travel & Planning • Local Discovery • Social Casual Games • SMB Consumerization • Crowd-sourcing • Mobile - Hyper Local • Applications software• Photosharing • Mobile Payments & • Mobile Gaming • Data Mining • Time-Relevant Data • Flash/Group Sales • Networking, storage & Transactions • Educational Gaming • Twitter & Facebook • Micro-transactions databases (application• Lifestreaming • Mobile Enterprise • Geo Loc Ecosystem layer)• Adtech • Virtual Worlds • Storage • Virtual Goods • Mobile APIs • Game Mechanics • Events • Social Layer • Virtual Currencies • Back-end systems• Edtech • APIs • ioS, Android, BB & • Interest Layer • Flash Pricing Windows • API Platforms • Group Pricing • Development tools • Learning • DaaS • Proximity-Based • Freemium Marketplaces • API Call Services OTHER & Venture51 will leave open a small percentage for newly identified emerging opportunities. EMERGING
INVESTMENT THESIS Scalable Information Technology Founders & Management (with Agile Advisory While there are many exciting new Technical & UX/UI/IxD Chops) We love getting our hands dirty and entrepreneurial opportunities in ﬁelds like We are hugely in favor of the technical shaking trees. We grow our startups energy, transportation and clean, there founder. We will generally focus on through active participation, leveraging our continues to be a massive opportunity in companies started by strong technologists operational expertise (product, marketing Information Technology — which is where who know exactly what they want to build & distribution) and professional network we will focus. and how they are going to build it. Business Pivots, Not Business Deal Size & Flexible Investment Smaller Initial Bets, Bigger Plans Structures Follow-On Your business plan is wrong. It’s a As seed and early stage investors, we Our investment strategy is simple, invest prediction of the future that is out of date often provide a companys ﬁrst outside before product/market ﬁt, measure/test to as soon as you hit save, print or send. capital – and typically invest alongside see if the team is ﬁnding it, and if so, then Things change. Competition. Timing. angel investors, angel syndicates or seed exercise our pro-rata follow-on investment Costs. Pricing. syndicates. opportunity after they have achieved product/ market ﬁt. Capital Efﬁcient Startups Velocity Grounded in Customer The most important factor, however, is the Velocity is key to faster success or faster Development capital efﬁciency we are seeing in our and failure. Arriving at either one of these We look for product/market ﬁt through the partner’s portfolio companies. Startups outcomes faster is better. The reason to go lens of Customer Development. We invest simply dont need as much money as the fast is not so much that its critical to get smaller amounts of capital prior to product/ companies did 5 years ago, 10 years ago, your product to market early, but that you market ﬁt and double down afterwards. or 15 years ago. havent really started working on it till youve launched and put it in contact with users. Product, Market(ing) & Scale Addressable Market Defensibility Marketing is a function of a market, and We seek to fund companies that provide a Good companies are built on a valuable we deeply believe you can not succeed unique solution to an existing urgent need data asset. As these systems the without both. However, We believe that the in an addressable market. And we typically companies build accumulate data over product is the heart of any technology avoid companies that try to change time, they increase the value of the company. The company gets built around consumer behavior or create a new product and make it more difﬁcult for the product. consumer need. newer services to deliver an equivalent experience. Defensibility lies in the data.
EMERGING INTERSECTIONS CAPITAL EFFICIENT DISTRIBUTION CROWD FUELED ENTERPRISE CLOUD SMART DATA CONSUMER INTERNET WEB MOBILE EDUCATION
INVESTMENT STAGE Mezzanine Amount of Money Series D Investment Series C Investment Series B Investment Series A Investment Early-Stage / Super Seed Investment Seed/Super Angel/ Micro-VC Angel / Friends & Investment Family / Advisory Founder Funded Startup Stage Concept / Customer Discovery First Commercial Proof of Concept / Business Model Fully Operational / Growth Exit: M&A/ Prototype & Validation Success / Marketing / Product-Market Fit Scale Scale IPO Distribution
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