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Capital EmprendadorBorn April 21, 2010 in Mexico   2
GROUP AMERICASAlta Group Americas•Headquartered inLehi, Utah                                               Alta Ventures M...
Disruption #1                4
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Most Startups Fail?Why is this acceptable?   Source: Small Business Trends Published 2008. Data from Bureau of Census     ...
$400,000,000 - Direct Investment 7 Funds$850,000,000+ - Co-investors               X$1,250,000,000+ - Total Invested      ...
 “Most successful entrepreneurs I’ve met have no  idea about the reasons for their success. My  success was a mystery to ...
 People?    Product? Market?    Money?                         10
 Doing good things…  Building alpha & beta versions of their products  Writing marketing materials  Hiring sale teams ...
Scale It    Nail It                               The Big                                Scary                            ...
 Most new products and businesses don’t fail in the market scaling  exercise, but in pre-chasm stages in the…            ...
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Science   IndustryINVENTION         INSIGHT                            15
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Product                 (define it)Sales & Marketing              Technology(Position & Sell it)            (build it)18  ...
19 Entrepreneurs are doing good things, but                                                                               ...
Premature Scaling Building products before you nail the pain Writing marketing materials before you nail the solution H...
 Based on the Waterfall Product Development Model                                               Test        Sell Identify...
 Build Now, Sell Later How NOT to build a business 1.0 Reinforced in most universities & VCs by the business plan class ...
 Product Development Model Based on execution not research  “Midnight                         “Feature Lock-             ...
Entrepreneur                                                 Begin with the                                  Identify has ...
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Disruption #1: New Start-up Model                                    26
2011   2012   2013Universities    6      12     50+Participating                                     27
60                             120050                             1000     300% growth in40   schools                   80...
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 More efficient launch process… Efficiencies have driven down the cost of a startup.  $3-5 Million in late 90s = $50-30...
Disruption #2                31
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"...most often the very skillsthat propel an organization to     succeed in sustainingcircumstances systematically   bungl...
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Accelerators  2005:    1  2012:149               35
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149 ACCLERATORSOnly13% have an exitThe top .5% of accelerators have 85% of the exit value48% have not received any fun...
Have we been here before?                            39
Incubators 1.0 (Dot Com) 1980:12          Networked Incubators: Hothouses of the New Economy                              ...
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# of VC Seed Deals                         # of VC Early Stage Deals900                               3,000800            ...
Disruption #2: Entrepreneur Capital       Number of VC Seed Deals                             Number of Angel Seed Deals60...
Companies                       Amount  Funded16,000+ raising                  $1.1 Billion+ raised    capital35,000 Proje...
Product Performance                      Venture                      Capital                                Entrepreneur ...
Seed Investing Jumped 65% in 2012.                       Historically, 40% of                       seeded companies raise...
Number of Post-Seed Angel                              Investments              45,000              40,000              35...
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Acceleratorsimproving the   Model                49
Accelerator                 No. of Companies   Exits*Y Combinator                                  468          $956MTechS...
Less than $20K investment2-10% equityTalent identification – Hacker NewsNo office space but office hoursGuaranteed fo...
“For some reason more things than usual broke whenwe jumped from 66 to 84.” – Paul GrahamY Combinator Winter 2012 class s...
Disruption #3                53
Disruption #3: Derek Andersons hair                                   54
Alta Ventures MexicoAltaventures.com@PaulAhlstrom                       55
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"if there is any invention on earth that we dont want down here, that is it."                                            58
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63                       2.              Systematic Innovation                                                 3. IP      ...
1.   Get into the Field2.   Change or Fail Fast3.   Brutal Intellectual Honesty4.   Keep it Simple5.   Start Small        ...
 Paul Ahlstrom  Married, six kids, a golden retriever  Live in Utah & Mexico  Co-Author “Nail It Then Scale It”  Inno...
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Paul Ahlstrom 3 Startup Industry Disruptions

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Paul Ahlstrom, Managing Director and co-founder of Alta Ventures Mexico a venture capital fund focused in Mexico @PaulAhlstrom

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Paul Ahlstrom 3 Startup Industry Disruptions

  1. 1. 1
  2. 2. Capital EmprendadorBorn April 21, 2010 in Mexico 2
  3. 3. GROUP AMERICASAlta Group Americas•Headquartered inLehi, Utah Alta Ventures Mexico Fund I • Headquartered in Monterrey • Regional Office Mexico City Alta Growth Capital •Headquartered in Mexico City MEXICO •Regional Office in Monterrey Kickstart Seed Program •Support for Alta Ventures Mexico • Headquartered in Monterrey • Guadalajara 3
  4. 4. Disruption #1 4
  5. 5. 5
  6. 6. 6
  7. 7. Most Startups Fail?Why is this acceptable? Source: Small Business Trends Published 2008. Data from Bureau of Census 7
  8. 8. $400,000,000 - Direct Investment 7 Funds$850,000,000+ - Co-investors X$1,250,000,000+ - Total Invested X X X X X X X XA ER pr ise O X 8
  9. 9.  “Most successful entrepreneurs I’ve met have no idea about the reasons for their success. My success was a mystery to me then, and only a little less so now.” - Bob Metcalfe, 3Com -Inventor of Ethernet 9
  10. 10.  People?  Product? Market?  Money? 10
  11. 11.  Doing good things…  Building alpha & beta versions of their products  Writing marketing materials  Hiring sale teams  Business development deals  Talking with analysts  Talking with customers  Building prototypes  Etc… 11
  12. 12. Scale It Nail It The Big Scary ChasmInnovators Early Adopters Early Majority Late Majority Laggards Confidential Copyrighted Training Materials: Do Not Distribute November 4, 2011 12 12
  13. 13.  Most new products and businesses don’t fail in the market scaling exercise, but in pre-chasm stages in the… The Early Phase Black Hole 13 13
  14. 14. 14
  15. 15. Science IndustryINVENTION INSIGHT 15
  16. 16. 16
  17. 17. 17
  18. 18. Product (define it)Sales & Marketing Technology(Position & Sell it) (build it)18 18
  19. 19. 19 Entrepreneurs are doing good things, but * not doing them in the right order. More than 80% of the time entrepreneurs are ignoring customer demand the right product mix until after they have started to scale their business. * Harvard Business Review: Beating the Odds When you Launch a New Venture by Clark G. Gilbert and Matthew J. Eyring 19
  20. 20. Premature Scaling Building products before you nail the pain Writing marketing materials before you nail the solution Hires sales teams before you know how to sell Spending money before you understand the business model 20
  21. 21.  Based on the Waterfall Product Development Model Test Sell Identify Create Build product, product product product alpha build toopportuni specs product beta customer ty product s 21
  22. 22.  Build Now, Sell Later How NOT to build a business 1.0 Reinforced in most universities & VCs by the business plan class Discuss with Perfect the / raise Find a productEntrepreneu money from location, and add Sell ther has a idea friends, develop the features for product family and product broad fools appeal 22
  23. 23.  Product Development Model Based on execution not research “Midnight “Feature Lock- “Sales Pipeline Genius” Stage in” Stage Problem” Stage Discuss with / Perfect the Find aEntrepreneur raise money location, product and Sell the Russian from friends, add features has a idea develop the product Roulette family and for broad product fools appeal “Escalation of “American Idol” Commitment” Stage Stage 23
  24. 24. Entrepreneur Begin with the Identify has a idea Identify Customer! Minimum Nail the (based on Monetizeable (customer Feature Set (of Product… core Customer Pain centric the customer)competency) approach)Deliver breakthrough customer centricinnovation. 24
  25. 25. 25
  26. 26. Disruption #1: New Start-up Model 26
  27. 27. 2011 2012 2013Universities 6 12 50+Participating 27
  28. 28. 60 120050 1000 300% growth in40 schools 80030 1000%+ growth in 600 Universities Participating teams Teams Participating20 40010 2000 0 2011 2012 2013 28
  29. 29. 29
  30. 30.  More efficient launch process… Efficiencies have driven down the cost of a startup.  $3-5 Million in late 90s = $50-300k today Greater access to Seed Capital EC2 - Amazon Web Services Open source 20X number of consumers on the internet since 1997 Distribution through large social platforms 30
  31. 31. Disruption #2 31
  32. 32. 32
  33. 33. "...most often the very skillsthat propel an organization to succeed in sustainingcircumstances systematically bungle the best ideas for disruptive growth. An organizations capabilities become its disabilities when disruption is afoot."Clayton Christensen,The Innovators Solution 33
  34. 34. 34
  35. 35. Accelerators 2005: 1 2012:149 35
  36. 36. 36
  37. 37. 37
  38. 38. 149 ACCLERATORSOnly13% have an exitThe top .5% of accelerators have 85% of the exit value48% have not received any funding for their companies 38
  39. 39. Have we been here before? 39
  40. 40. Incubators 1.0 (Dot Com) 1980:12 Networked Incubators: Hothouses of the New Economy Published: October 2, 2000 Authors: Morten T. Hansen, Henry W. Chesbrough, Nitin Nohria, and Donald N. Sull 2000: A successful company like Yahoo! is inundated with business proposals from hopeful start-ups. When there is a wealth of opportunities, there is a poverty of access because so many entrepreneurs are chasing so few potential1000 partners, all of whom are extremely busy. January 25, 1998
 8 New Start-Up Incubators for Business Proposed 40
  41. 41. 41
  42. 42. # of VC Seed Deals # of VC Early Stage Deals900 3,000800 2,500700600 2,000500400 1,500300 1,000200100 500 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 # of VC Growth Deals 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 42
  43. 43. Disruption #2: Entrepreneur Capital Number of VC Seed Deals Number of Angel Seed Deals600 31,000550 29,000500 27,000 29% Increase450 48% Decrease 25,000400 23,000350 21,000300 19,000250 17,000200 15,000 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 43
  44. 44. Companies Amount Funded16,000+ raising $1.1 Billion+ raised capital35,000 Projects $485 Million Funded $89 Million350 Companies Managed TBD TBD $80 Million 300+ Managed 44
  45. 45. Product Performance Venture Capital Entrepreneur Capital Time 45 45
  46. 46. Seed Investing Jumped 65% in 2012. Historically, 40% of seeded companies raise a Series A. Industry insiders feel that number will drop to 20%. 46
  47. 47. Number of Post-Seed Angel Investments 45,000 40,000 35,000 79% Growth 30,000 25,000 20,000 15,000Early-stage 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012investors Seed Deals as a % of Angelmoving up Investmentsstream 75% 70% 65% 60% 30% Decrease 55% 50% 45% 40% 35% 30% 2005 2006 2007 2008 2009 2010 2011 2012 47
  48. 48. 48
  49. 49. Acceleratorsimproving the Model 49
  50. 50. Accelerator No. of Companies Exits*Y Combinator 468 $956MTechStars Boulder 66 $33MTechStars Boston 44 $9MSeed Camp 72 $17MTechStars NYC 36 $23M500Startups 126 $5MBetaSpring 56 $14MAngelPad 60 $6MLaunchbox Digital 18 $14MExcelerate Labs 30 $19.5M* http://www.seed-db.com/accelerators 50
  51. 51. Less than $20K investment2-10% equityTalent identification – Hacker NewsNo office space but office hoursGuaranteed follow onNetworking but not mentoringAlumni Value = $7.78 billion*Avg. worth of Ycomb company $45.2M * Forbes April 2012 51
  52. 52. “For some reason more things than usual broke whenwe jumped from 66 to 84.” – Paul GrahamY Combinator Winter 2012 class shrank from 84 to 50.Lowered follow on investment from $150,000 to $80,000 52
  53. 53. Disruption #3 53
  54. 54. Disruption #3: Derek Andersons hair 54
  55. 55. Alta Ventures MexicoAltaventures.com@PaulAhlstrom 55
  56. 56. 56
  57. 57. 57
  58. 58. "if there is any invention on earth that we dont want down here, that is it." 58
  59. 59. 59
  60. 60. 60
  61. 61. 61
  62. 62. 62
  63. 63. 63 2. Systematic Innovation 3. IP process Documentati on, Creation Environments & Access 1. Entrepreneur Observation - of Market Pain Inventor 4. Community Building/Net working 5. Capital 63
  64. 64. 1. Get into the Field2. Change or Fail Fast3. Brutal Intellectual Honesty4. Keep it Simple5. Start Small 64
  65. 65.  Paul Ahlstrom  Married, six kids, a golden retriever  Live in Utah & Mexico  Co-Author “Nail It Then Scale It”  Innovator, Entrepreneur, Investor  Founder Alta Ventures Mexico & Alta Growth Capital – Mexico  Founder KickStart Seed Fund & vSpring Capital – Utah  100+ investments over the last 12 years.  Ancestry.com, Rhomobile.com, Senforce, Aeroprise, Altiris, Juxta Labs, Convert.com, Mural.ly  BYU - BYU Grad, BYU Rollins Entrepreneur Center  University of Utah & Ohio State- Board and executive committee of the Technology Commercialization Office  Endeavor Mentor & ENLACE E+E Mentor - Mexico 65

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