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FJ Labs - NOAH16 London

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Keynote by Fabrice Grinda, Co-Founder of FJ Labs at the NOAH Conference London 2016, Old Billingsgate on the 10th of November 2016.

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FJ Labs - NOAH16 London

  1. 1. 1 F J L A B S London, November 2016 Confessions of an Accidental Angel FABRICE GRINDA fabrice@fjlabs.com www.fabricegrinda.com
  2. 2. GET YOUR TICKET TODAY! www.noah-conference.com 2-3 Tempodrom, Berlin Old Billingsgate, London NOV201722-23 JUN2017 SAVE THE DATE
  3. 3. 2 F J L A B S
  4. 4. 3 F J L A B S | Founding Partners SPEAKS JOSE MARIN  Entrepreneur with $200M+ in exits  Founder IG Expansion, DeRemate  Investor in 250+ startups  Entrepreneur with $300M+ in exits  Founder OLX, Zingy, Aucland  Investor in 250+ startups  Blog: www.fabricegrinda.com FABRICE GRINDA SPEAKS
  5. 5. 4 F J L A B S | Investment Track Record * This represents a passive angel investment by Fabrice in Viajanet, but not Jose’s founder’s equity 55x MOIC - Realized Gain Seed Round 2006 Acq. by Yahoo 2014 for $640M 40x MOIC – Unrealized Gain Seed Round 2010 Last round $700M post-money 13x MOIC - Realized Gain Seed Round 2013 Acq. by MSFT for $100M 39x MOIC – Partial Exit Seed Round 2010 Last round 3.3B post-money 39x MOIC – Unrealized Gain Series A Round 2011 Last round $1.3B post-money 22x MOIC – Partial Exit Seed Round 2014 Last round $150M post-money 11x MOIC – Realized Gain Seed Round 2011 Acq. By Ebay for $185M in 2016 31x MOIC* – Partial Exit Seed Round 2010 Last round $150M 16x MOIC - Realized Gain Seed Round 2011 IPO Frankfurt 2015 10x MOIC – Realized Gain Secondary Round 2011 IPO NYSE 2015
  6. 6. 5 F J L A B S UNREALIZED GAINS # of Companies: 215 Average Investment: $380K Average Holding Position: <2Y REALIZED GAINS # of Companies: 68 Average Investment: $105K Average Holding Position: 3.15Y IRR 72% Note: Numbers are rounded up to the nearest tenth $7.2M $40.9M 5.7x $81.6M $122M 1.5x | 254 Active Investments – 500+ Entrepreneurs
  7. 7. 6 F J L A B S Returns In The Top 1% of VCs Kauffman Foundation VC portfolio analysis of ninety-nine VC funds, 1989 – 2011 A 2012 study by Kauffman Foundation1 showed only 6 in 99 LP funds made 3.0x or more returns on invested capital and the average is 1.2x with an average holding period of 7 years 1 “We have met the enemy… and he is us”, Kauffman Foundation, May 2012 FJ Labs is in the top 1% highest performing fund 5.7x Realized Gains Average holding duration: 3.15 years
  8. 8. 7 F J L A B S 31x 19x 5x 252x 35x 52x Partial Exit Seed Round 2013 Last round $520M post-money Realized Gain Seed Round 2010 Last round $150M Realized Gain Seed Round 2006 Acquired by Naspers 2013 Unrealized Gain Series Seed 2014 Acq. by Wallapop in 2015; Wallapop’s last round $350M Unrealized Gain Series Seed 2011 Fair market valuation $240M Unrealized Gain Series Seed 2014 Last round $25M post-money Multiples on first money in only, not on all capital invested | Company Building Track Record
  9. 9. 8 F J L A B S COMPANY BUILDING $1.5B+ RAISED, $5B+ IN VALUE CREATED AND 4,000+ JOBS …?
  10. 10. 9 F J L A B S UNREALIZED GAINS # of Companies: 9 Average Investment: $1.24M Average Holding Position: 3Y REALIZED GAINS # of Companies: 13 Average Investment: $738K Average Holding Position: 2.5Y IRR 145% Note: Numbers are rounded up to the nearest tenth, current values are based on last round valuations $9.6M $106.4M 11.1x $11.2M $102.6M 9.16x | 23 Companies Built (Inc. OLX, Beepi, AdoreMe)
  11. 11. 10 F J L A B S I´VE MADE ALL THE MISTAKES IMAGINABLE…
  12. 12. 11 F J L A B S | Investment Strategy MARKETPLACE FOCUS • 120+ marketplace investments in 20+ countries • VCs and entrepreneurs know us as marketplace experts • We get invited to deals because of our marketplace expertise, both operating and investing • Even though we focus on marketplaces, we invest opportunistically in other models DON’T LEAD ROUNDS • We invest small amounts relative to the size of the round • We don’t join boards • We decide quickly • Because of our check size, we don’t compete with VCs. They share deal flow openly and invite us to co-invest alongside them GLOBAL • We mostly invest in the US because of its mature ecosystem, higher multiple on successful exits and greater deal flow • We also invest in large markets outside of the US where we typically don’t take idea risk • We invest in smaller markets if the companies have global ambitions • Top tier VCs also invite us to deals because of our international expertise STAGE AGNOSTIC • We invest from pre-seed to Pre-IPO • 70% of our deals are seed stage, 15% are venture rounds and 15% are late stage rounds • 34% of capital goes into seed, 16% into venture and 50% into late stage
  13. 13. 12 F J L A B S | Investment Heuristics  $1B+ potential value  Valid Business Model  Initial Unit Economics  Market leader potential  Scalable & capital efficient  Growing Market  No Disintermediation Risk  Execution Know-how  That we like 1. The Team 2. The Business 3. The Product 4. The Terms
  14. 14. 13 F J L A B S APPRENTICE PROGRAM • We hire 2-4 MBA summer interns who then work with us part- time during their second year • They become co-founders of the companies we build • We launch companies with people we know and trust FUNDING • We invest up to $2.5-$5M per company • Founders can focus on the business during the first 18 months without needing to fundraise • Investment terms are agreed before launch • Entrepreneurs have option to raise from other investors • Top tier funds are eager to invest in companies we build IDEATION • We have a systematic process for screening opportunities • We rapidly test the company’s unit economics and value proposition before committing to building the idea • We do not copy ideas we see on the investing side and will reject intros if we think we might be conflicted • We sometimes partner with portfolio companies to launch their equivalent in other markets. For instance, our company Instacarro partnered with Russian-based Carprice to launch in Brazil FOCUS • We build 1-2 companies per year • We become operationally involved in each company. We help with product, hiring, strategy, and marketing • We focus on a small number of companies in order to make sure they succeed COMPANY BUILDING STRATEGY| Company Building Strategy
  15. 15. 14 F J L A B S CREATION • Company is incorporated. 60% for Founding Team & 40% for FJ Labs LLC • FJ Labs LLC invests first $250k. Side fund is allowed to invest 5% at same terms as FJ Labs LLC D1 BUILD • The company hires its first employees and builds the product • FJ Labs LLC invests another $500k in the company D90 UNIT ECONOMICS • Start testing unit economics and product market fit • FJ Labs LLC invests another $500k in the company D210 GROW • The side fund can invest $2M at $8M pre D360 IDEATION • FJ Labs and apprentices brainstorm ideas • Build MVPs to test theoretical unit economics PRE COMPANY BUILDING PROCESS| Company Building Process
  16. 16. 15 F J L A B S Marketplace Trends
  17. 17. 16 F J L A B S UBER FOR X HIGH AOV LOW FREQUENCY LOW AOV HIGH FREQUENCY
  18. 18. 17 F J L A B S B2B MARKETPLACES: THE HOLY GRAIL HIGH MARGINS OF 20% HIGH AVERAGE ORDER VALUE HIGH RECURRENCE B2B MARKETPLACES HAVE ATTRACTIVE CHARACTERISTICS THAT MAKE THEM MORE RESILIENT EXAMPLES:
  19. 19. 18 F J L A B S Musings on the Future of Tech
  20. 20. 19 F J L A B S GLOBAL VR HEADSET SHIPMENTS (BY CATEGORY)* *BI Intelligence VIRTUAL REALITY IS STILL IMMATURE Oculous Rift ($599) Platform: high-end PCs Owner: Facebook HTC Vive ($799) Platform: high-end PCs Owner: HTC/Steam Gear VR ($99) Platform: Samsung phones Owner: Samsung Playstation VR ($349) Platform: Playstation 4 Owner: Sony
  21. 21. 20 F J L A B S AI IS ADVANCING BY LEAPS AND BOUNDS DEEP BLUE BEATS GARRY KASPAROV IN CHESS | 1997 DEEP MIND BEATS LEE SEDOL IN GO | 2016
  22. 22. 21 F J L A B S AI streamlines customer support via automated responses Initial steps of sales are automated Image recognition technology helps to tag and moderate online platforms AI integrated in the workflows of professionals will decrease the amount of work needed from humans The increased productivity decreases the cost of the service, which eventually benefits both supply/demand side and the unit economics for the business. (see example on next slide) AI WILL ASSIST HUMANS IN UNDERLYING SERVICE PROVIDED INTERNAL PROCESSES WILL BE AUTOMATED HOW AI WILL AFFECT MARKETPLACES
  23. 23. 22 F J L A B S 10 HOUR WORKDAY FOR THE UPCOUNSEL LAWYER WITHOUT AI HOW AI CAN CREATE A WIN/WIN/WIN SITUATION IN A SERVICE MARKETPLACE COST TO CLIENT: $2,000 LAWYER’S TAKE: $1,800 COST TO CLIENT 1: $1,500 LAWYER’S TAKE: $1,000 10 HOUR WORKDAY FOR THE UPCOUNSEL LAWYER SUPPORTED BY AI COST TO CLIENT 2: $1,500 COST TO CLIENT 3: $1,500 UPCOUNSEL’S TAKE: $1,500 LAWYER’S TAKE: $1,000 LAWYER’S TAKE: $1,000 UPCOUNSEL’S TAKE: $200 $3,000
  24. 24. 23 F J L A B S Sources: *Estimated by dronelife.com AERIAL DRONE SALES ARE STILL SMALL, BUT SHOW EXPLOSIVE GROWTH 2013-2015 AERIAL DRONE SALES BY PARROT, DJI AND 3D ROBOTICS*
  25. 25. 24 F J L A B S MOST AUTO OEMs THINK IT WILL TAKE 10+ YEARS BEFORE AUTONOMOUS VEHICLES ARE ADOPTED AT SCALE
  26. 26. 25 F J L A B S SELF-DRIVING CARS WILL RESHAPE TRANSPORTATION AS WE KNOW IT AV´S WILL DECREASE THE NUMBER OF TRAFFIC ACCIDENTS BY 90% PRODUCTIVITY GAINS ARE ESTIMATED TO BE $5.3 T WORLDWIDE 2nd ORDER EFFECTS ON URBAN DELIVERY AND LOGISTICS WILL BE HUGE
  27. 27. 26 F J L A B S WE ARE STILL AT THE VERY BEGINNING OF THE TECHNOLOGY REVOLUTION…
  28. 28. 27 F J L A B S AMAZING TIMES LIE AHEAD!
  29. 29. 28 F J L A B S FABRICE GRINDA CO-FOUNDER THANK YOU! Questions? fabrice@fjlabs.com www.fabricegrinda.com @fabricegrinda
  30. 30. Selected Completed NOAH Transactions Focus on Leading European Internet companies Covering over 400 companies across 25 online verticals, a broad range of over 500 investors as well as 100+ online-focused corporates Deep understanding of industry dynamics Ability to add value beyond banking advice Facilitates overall process and minimizes management distraction NOAH Advisors is globally well connected and has direct access to virtually all key players in the industry Knowledge of and strong relationships with potential buyers’ key decision makers Proactively finds and unlocks attractive investment opportunities for leading investors Annual NOAH Conference in its 8th year Over 40 years of combined relevant M&A experience Routine execution of M&A and financing transactions with sizes of several billion euros 24 successfully completed NOAH Advisors transactions underline successful transfer of M&A competencies to the Internet sector Entrepreneurial mind-set, focused on growing the business and establishing a reputation for excellence Ability to deliver top results in short time frames Highly success-based compensation structures align interests of clients and NOAH Advisors, and demonstrate conviction to deliver top results Creative deal solutions September 2015 December 2014 September 2014 October 2014 May 2014 Sale of a 70% stake in to Exclusive Financial Advisor to Drushim and its Shareholders Sale of 100% of for $800m to Exclusive Financial Advisor to Fotolia and the Selling Shareholders Sale of 100% of for €80m to Exclusive Financial Advisor to Trovit and its Shareholders Sale of controlling stake in to Exclusive Financial Advisor to Facile.it and its Shareholders sold 100% of for $228m to a joint venture between Exclusive Financial Advisor to Yad2 and its Shareholders Unique Industry Know-How Unmatched Network and Relationships Strong Investment Banking Competence Full Commitment - We Are Entrepreneurs! EUROPE’S LEADING INTERNET CORPORATE FINANCE BOUTIQUE September 2016October 2016 May 2016 Investment in by Financial Advisor to Oakley Capital Exclusive Financial Advisor to 10Bis and its Shareholders ® Marco Rodzynek Managing Director & Founder marco.rodzynek@noah-advisors.com Jan Brandes Managing Director jan.brandes@noah-advisors.com Justus Lumpe Managing Director justus.lumpe@noah-advisors.com The NOAH Advisors Core Banking Team Nikhil Parmar Director nikhil.parmar@noah-advisors.com 10Bis Drushim Acquisition of a Majority Stake in by from at a valuation of €300m Investment in Exclusive Financial Advisor to KäuferPortal and its Shareholders by 84% Ownership

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