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Onetti - Marinucci - MTB Job Creator Tour 2014
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Onetti - Marinucci - MTB Job Creator Tour 2013

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Mind the Bridge Job Creator Tour 2013

Onetti - Marinucci - MTB Job Creator Tour 2013

  1. 1. ALBERTO ONETTIChairman, Mind the Bridge FoundationMARCO MARINUCCIExecutive Director, Mind the Bridge FoundationIntroduction to EntrepreneurshipFrom Startup to Venture Financing@MIndTheBridge#jobcreator
  2. 2. AGENDAEntrepreneurship in Italy: Where are we?The Startup worldBusiness PlanningThe Venture Capital MarketThe Silicon ValleyMind the Bridge2
  3. 3. Entrepreneurship in Italy: Where are we?The Startup worldBusiness PlanningThe Venture Capital MarketThe Silicon ValleyMind the Bridge3AGENDA
  4. 4. 4Zero Growth Italy has not grown since the beginning of the new Millennium –slower than its European neighbors and US Average growth rate(2001-2012): US (1.63%), EU (1.42%), IT (0.16%)The Problem we haveSource: IMF 2013More info here: “Italy. Europe’s Investment Opportunity”, White Paper by Vietor, Onetti & Napolitano, New York, 2011-6-5-4-3-2-1012342002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Real GDP growth (percent) Italy EU US
  5. 5. 5Youth Unemployment Unemployment rate in Italy (12%) is lower than in Greece and Spain(27%), but much higher than in Germany (5.5%). Worst employment problem pertains to young people (38% forpeople between 15-24)The Problem we have (2)38pc 8.1pc12pc 5.5pc
  6. 6. Italy: Industry Contribution to GDPSource: CrESIT 2012Lack of large companies In Italy SMEs are 99.9% of the total (EU, SBA Fact Sheet 2012) 95%+ have less than 10 employees and 50%+ have only one (ISTAT, 2013)Mostly mature business Primarily Services (73.4% ofGDP) Manufacturing is only18.6% (it was 21% in 2000) Innovative industries playa minor role (2-6%)The Problem we have (3)
  7. 7. Where are we heading?“Before World War II, Argentina was rich. Evenin 1960, the country was twice as rich as Italy.Today, he says, you can compare the percapita income of Argentina to that ofRomania. Because it didn’t grow.The Risk we faceA country could get rich in 1900 just by producing corn and meat, but that is nottrue today. But it took them 100 years to realize they were becoming poor. Andthat is what worries me about Italy. We’re not going to starve next week. We arejust going to decline, slowly, slowly, and I’m not sure what will turn that around.”(New York Times 2010)
  8. 8. ”In US firm startups account for only 3 percent of employment butalmost 20 percent of gross job creation”Source: “Who Creates Jobs? Small vs. Large vs. Young”.J. Haltiwanger, R.Jarmin, and J. Miranda (2011)8On average, 1-year-old firms createnearly 1 million jobs, while 10-year-oldfirms generate 300,000.Existing firms are net job destroyers,losing 1 million jobs net combinedper year. By contrast, in their firstyear, new firms add an average of 3million jobs.During recessionary years, jobcreation at startups remains stableStartups Create Most New Net Jobs inthe United StatesJob Creation and Loss by Firm Age(Average per year, by year-group, 1992-2006)The Solution (1)
  9. 9. 9VC investments generally declined since 2008 all over the world Vs. 2011: -14% in Europe and -5.5% in US Vs. 2008: -50% in Europe and -10% in USVenture Capital: Leaders and Laggards3.18510.96826.874Source: European Private Equity and VentureCapital Association. PricewaterhouseCoopers/National Venture Capital Association. AIFI &PricewaterhouseCoopers 2008-2012.U.S.Silicon ValleyEuropeItalyAnnual VC Investments (Billion US$)0.175
  10. 10. 10Venture Capital Industry is still in its infancy (but it’s growing) Approx. €100M invested every year in early-stage investments Vs. 2011: +65% increase (vs. -10% in private equity) 394 startups funded in the last five yearsWhere are we? Venture FinanceCompaniesSmall size of the stock market Italian market capitalization is on avg. 25% of Italian GDP 110% in US and 140% in UKSource: AIFI &PricewaterhouseCoopers 2008-2012.DealsAmount (M€)
  11. 11. 11BTW, Venture Capital industry ischangingBerlinLondonSuper AngelsWe now have a liquid seed-stagefunding structure in Europe. Wedidn’t have this before and so nowthe first €1m roadblock forentrepreneurs has beenremoved.Hendrik BrandisPartner, EarlybirdUnited StatesEuropeJeff ClavierCrowdfundingAcceleratorsRonConwayReidHoffman
  12. 12. Where are we? Research12Quality Research Base 74k scientific publications (1996-2010) ranking 8th globally Italy is in the top 10 countries (4th) for number of publications (2001-2011)in comparison to R&D expenditureIssues in turning Research into Business Academic spin-offs are not ramping upSource: IX Rapporto Netval sulla Valorizzazione della Ricerca Pubblica Italiana, 2012Notes: data related to 2010 and 2011 are not final- On avg. 75 new spin-offs/yr.- 894 new spin-offs since 2000Geolocation:- North-West: 25.3%- North-East : 24.9%- Center: 26.9%- South & Isles: 22.9%Top Universities:- Polytechnic of Turin- University of Padua- University of BolognaSource: SCImago Journal & Counrty Rank, 2010Source: Italian International Growth agenda, Booz&Co analysis
  13. 13. 13We need more Quantity (deal “trickle”) Legal barriers to entry and exit (Italy is not a “corporate haven”) Labor market rigidities Obstacles in bridging research into business Managerial/Entrepreneurial skillsWe need more Quality High mortality (“crisi del primo miglio”) and “Dwarfism” Mindset Seed fundingWe need to get prepared for International Exits (since Day One) High Tech “Leviathans” are not here Small size of the stock market and lack of large corporations doesn’thelp Language barriersItaly: Startup Check-List
  14. 14. AGENDA14Entrepreneurship in Italy: Where are we?The Startup worldBusiness PlanningThe Venture Capital MarketThe Silicon ValleyMind the Bridge
  15. 15. Base Ingredients for a Startup15
  16. 16. What is an Entrepreneur16
  17. 17. Between 26 and 35High level of education(11% Ph.D or MBA, 42%Master degree)Prior entrepreneurial experience (23%have founded a startup)and/or working experience (8-9 yrs)89% are MaleStartup Generation…Who are you?11% of startups are incorporated abroad(Silicon Valley, Berlin, Israel, London)Corporate drain?
  18. 18. The Entrepreneur profile:Italy vs. US18Entrepreneurs 30 to 49 started businesses at ahigher rate than other age groups didThe Kauffman Foundation and LegalZoomStartup Environment Index 2012 Mind The Bridge Survey 2012Age distributionIn Italy 84% are in the 26-45 range. 33 is theaverage age12 A third of startup owners were women Female entrepreneurs are only 11%Gender19% had master’s degrees while 8%professionals or doctorateEducation3 42% have a master degree while 11%a Ph.D. orMBAPrior Experience4 57% have 6+yrs of priorindustry/work experienceand 44% had startedcompanies in the pastFunding & Incubation periodAlmost 80% has 8/9 yrs avg.prior working experienceand 23% has founded atleast one company before5 80% of early-stage businessowners in US used personalfunds to finance theircompanies.Bootstrapping rules (58%),while 38% got also fundingby external investors.More info here: “Startups - Italy vs US - Onetti IID 2013”, A. Onetti, Italian Innovation Day, Mountain View, 2013
  19. 19. What makes a successfulentrepreneur?19Education matters a lot 2.0 Startups are founded byhighly educated peopleExperience matters as well Being a serial entrepreneur isa job The right startup is never thefirst one you foundWorking/Studying abroad doesopen your mind It means more network,opportunities, ideas,experienceA successful startup is a teamplay One-man bands do not gotoo far
  20. 20. AGENDA20Entrepreneurship in Italy: Where are we?The Startup worldBusiness PlanningThe Venture Capital MarketThe Silicon ValleyMind the Bridge
  22. 22. Manager vs. Entrepreneur•Where is the opportunity?•How do I capitalize on it?•What resources do I need?•How can I gain controlover them?•What structure is best?Theentrepreneurasks . . .•What resources do I control?•What structure determines ourorganization’s relationship toits market?•How can I minimize theimpact of others on my abilityto perform?•What opportunity isappropriate?The typicaladministratorasks . . .22
  23. 23. The Business Plan?“Business plans and 5 years financialprojections are a waste of time”23Dave McClure“They came to me with no businessplan” Intel 1968“No one besides venturecapitalists and the lateSoviet Union requires five-year plans to forecastcomplete unknowns”Steve Blank
  24. 24. The Lean Approach“The Lean Startup method teaches youhow to drive a startup, how to steer,when to turn, and when to persevereandgrow a business with maximumacceleration.”Eric RiesVision Steer AccelerateTEST the product, collectFEEDBACK, understandCUSTOMERS NEEDSFAIL fast (Pivoting?) - GROWfast.MODIFY your MVP, IMPROVEit and create HIGH QUALITYgoodsNow you areready to SCALE“Get out of the Building!”
  25. 25. Build-Measure-Learn feedback loop2513 2“Using the Lean Startup approach, companies can create order not chaos byproviding tools to test a vision continuously.”What is the problem we aim atsolving?MVPMetrics, TractionNo plan survives firstcontact with customersPivoting or scale?Validated learning
  26. 26. 26“There are some cases where things work despite thelack of a plan. But there is an awful lot of failure theretoo. Winning without a plan is hitting the jackpot,and most people do not hit the jackpot. Since youwant to have as much mastery over things as possible,you need to plan.”Peter ThielEntrepreneur and venture capitalist, co-founder of PayPal andfirst outside investor in FacebookThough... Aspirations are not a Plan
  27. 27. 27THE BUSINESS MODEL How do you make money(Revenue Model)? How do you structure activities(Cost Structure) Financials What are you looking for (capital youare raising- use of proceeds)THE TEAM The team Your relevant experience inthe domain youre addressingTHE MARKET The market you are addressing Market size Potential growth CompetitionTHE OPPORTUNITY The problem we solve (descriptionof your product highlighting thebenefits to the users/customers) The competitive advantage (whyyour product is better) Compelling reason to buyBUSINESS PLANThe Business Plan
  28. 28. Why a Business Plan28
  29. 29. Talking $$$29
  30. 30. Financials: Key Data30Bookings BillingsCash onHandBurn(net/gross)Revenue Cash-In
  31. 31. Financials: Statement of OperationsP&L 2012established2013anticipatory2014forecast2015forecast2016forecastRevenueAvr rev. per cust.(COGS)Gross Margin(OperatingExpenses)(R&D)(Mktg & Sales)(Engineering)(G&A)Operating MarginHeadcountSource: Mind the Bridge
  32. 32. 32Avoid TMI!More info here: “Financials: Forecasting&Reporting”, A. Onetti, MTB Gym
  33. 33. AGENDA33Entrepreneurship in Italy: Where are we?The Startup worldBusiness PlanningThe Venture Capital MarketThe Silicon ValleyMind the Bridge
  34. 34. Founders’ capital/Savings/Family/FriendsSeed Investors,Crowdfunding,Angels,Early stage VC(Series A)Venture Debt/Loans,Working CapitalLines, StrategicPartners, RetainedearningsLater Stage VC(Series B+),Corporate VC,Private placement,Public marketsThe Funding Sources34Bootstrapping Equity FinancingEarly sourcesLater sources
  35. 35. The Funding process is MilestoneBasedSource: Onetti-Zucchella, Business Modeling for Life Science and Biotech Companies. Creating Valueand Competitive Advantage with The Milestone Bridge, Routledge, forthcoming
  36. 36. But Keep the Eyes on the BallACQUIRED BY:ACQUIRED BY:FOR $1.1 BILLIONFOR $1 BILLIONACQUIRED BY:FOR $1.03 BILLION“Investments are just a tool…The Exit is the real prize”
  37. 37. Definition• High net worth individual ($1million to invest) who providesfinancing, advice, andnetworking to early stagecompanies.Key investment Criteria• Geography (close to home)• High growth industry• Growth Potential of the venture• Personal attributes of theentrepreneur and team• Track record of entrepreneur andteamThe Angel Investor37
  38. 38. The Venture Capitalist38DEFINITION•VC Firms are financial intermediaries thatprovide the following to privately heldenterprises:•Equity (often coupled with debt) financing•Risk sharing•Managerial expense•Contacts•Reputation•In exchange, VC firms obtain equityTYPES OF VCs•Private Fund VC•Legal Structures: Partnership, Limited LiabilityCorporation, Corporation•Stakeholders in a Partnership: General Partners(GP), Special Limited Partners (SLP), LimitedPartners, Advisory Board•Corporate VC•Consider impact on earning of parent•How does it further the parent’s objective?
  39. 39. VC: General Investment Process39Limited PartnersVC Firm (General Partners)Startup CompaniesIPO/M&AFund Fund FundExitDistributions Fundraising CommitmentsInvestment DisbursementsProceeds
  40. 40. The Valuation is a two side process Size of market opportunityhow big is the market segment, what marketshare can you gain? revenue / price model Comparablesmultiple of Revenue (trailing/forward) orEBITDA Financial ProjectionsRevenue, EBITDA, DCF UltimatelyBid vs. Ask negotiation40
  41. 41. How much you need(Cap Incr)e.g. € 1,0MHow much equity youwant to give up ( Y%)e.g. 25%Post Money Valuation (V)= Cap Incr / Y = 1/0,25= € 4,0MPre Money Valuation= V - Cap Incr= € 4,0M - 1,0M= € 3,0MThe Valuation Process:Pre- e Post-Money Valuation41
  42. 42. Less than 1% of allleads get funded5 – 10Financed1,000 Leads150 MeetingsActivelyPursued70$$$VC Financing Process:Getting through the Funnel42
  43. 43. VC Average Investment Portfolio43DEFAULTSBREAKEVEN“FIRE SALES”ZOMBIESIPO/M&AGOOD IPO/M&AWILD ONES (IPO)TOTAL60%12%10%8%6%4%0%100%Source: ATVTumblr-Yahoo Deal
  44. 44. Dealing with VCs44 VCs see tons of pitch every day  be shortand immediate, use body language andshow passion They don’t know your product  usescreenshots, videos, prototypes They are positively impressed by big numbersand they look for big market opportunity be ambitious since the beginning but haverealistic objectives. They are not always expert as you are aboutthe topic  use simple words, get straight tothe point Smile  it’s ok to have fun when you pitch
  45. 45. Valuation is only one piece ofthe puzzle45Agreement• Amount, valuationand timing ofinvestment• Form of investment• Terms of investment• Rights• LiquidationPreferences• Drag Along• Pay to Play• Vesting/buy-backprovisionsControlMechanisms• Boardrepresentation• ConvertiblePreferred securities• Syndication ofinvestment• Staging of capitalinfusion
  46. 46. Why Venture Capital?46
  47. 47. AGENDA47Entrepreneurship in Italy: Where are we?The Startup worldBusiness PlanningThe Venture Capital MarketThe Silicon ValleyMind the Bridge
  48. 48. The History of the Valley48
  49. 49. 49The (REAL) History of the Valley
  50. 50. The (REAL) History of the Valley501930 1940 1950 1960 1970 1980 1990 2000WAVESOFINNOVATIONINTERNETINTEGRATEDCIRCUITSDEFENSEToday:25 of Fortune 100Adobe SystemsAMDAgilent TechnologiesApple Inc.Applied MaterialsBusiness ObjectsCisco SystemseBayElectronic ArtsGoogleHewlett-PackardIntelIntuitLSI LogicMaxtorNational SemiconductorNetwork ApplianceNvidiaOracle CorporationSanDiskSeagate TechnologySolectronSymantecSun MicrosystemsYahoo!…◊ NASA◊Lockheed◊ HP (47)◊ Intel(68)◊ Kleiner Perkins(72)◊ Apple (80)◊ 3Com, Adobe,Cisco◊ Yahoo, ebay,Google (90s)?PERSONALCOMPUTERS◊ Apple (2000s)MOBILE◊ Facebook,Twitter, Zynga,Linkedin (2000s)SOCIAL
  51. 51. The Main Pillars51FINANCIAL MARKETM&A, IPO dreamENTREPRENEURSThe garagecultureUNIVERSITIEShighlyconnected withbiz world◊Is that replicable / portable?◊Is it sustainable long-term?◊What is the impact of the changinginternational outlook?KEY QUESTIONS
  52. 52. Soft Factors52◊The importance of Dynamism,speed: continuous evolving world◊ Approach to Risk◊ Value of Failure (not just adownside but a must-have)◊ Importance of the Hub: a world ofopportunities◊Think BigKEY TO SUCCESS
  53. 53. Raising money today (@#$!)in Silicon Valley53are you not localhow many exits again?don’t show me the buyer (don’tIPO me…)haven’t jumped yetDON’T TALK TO ME IF YOU…
  54. 54. 54Source: MoneyTree Report 2013, Data: Thomson Reuters19,851,399,238,120,8 18,6 22,4 22,9 26,630,8 30,519,7 23,328,4 26,95,416,731,911,86,9 6,4 7,8 8,0 9,6 11,3 11,2 8,1 9,2 11,6 111998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Investments (1998-2012)US Silicon Valley3.7285.5908.0324.5823.183 3.004 3.178 3.2623.827 4.124 4.1113.0653.526 3.673 3.7701.0481.6982.1761.115 814 878 955 997 1.222 1.283 1.281 968 1.057 1.158 1.1761998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Deals (1998-2012)US Silicon ValleyVC Investments: Trends
  55. 55. Why Now55talent aboundsfrom scarcity comes clarityinnovation comes from hungerstartup cost ~0IT’S THE BEST OPPORTUNITY
  56. 56. 561. the team is all (almost)2. healthy disregard for theimpossible3. big problems are better thansmall ones4. users first5. don’t pay attention to theVC bandwagon
  57. 57. Are the New Kings Coming FromEurope?57
  58. 58. AGENDA58Entrepreneurship in Italy: Where are we?The Startup worldBusiness PlanningThe Venture Capital MarketThe Silicon ValleyMind the Bridge
  59. 59. 59Our mission yourSUCCESSLearnStartup SchoolGrowthAcceleratorSucceedSuccess Stories
  60. 60. Job Creator TourSTARTUP SCHOOL(Apr, Jul, Aug, Nov)VentureCamp(8/9 Nov)60Building the Bridge: The 2013 TimelineEducation
  61. 61. MTB JOB CREATOR TOUR61 EducationThe MtB Startup Business School gives youthe “nuts and bolts” regardingentrepreneurship, business planning,venture capital market and Silicon Valleyeco-system Honest FeedbackThanks to the Gym session the startupsselected have the opportunity topresent their business idea in front of apanel of investors and entrepreneurs Fine tuning the business ideaEverybody can largely benefit from thediscussion of all the business ideas aswell as the education program in themorningThe best project wins aseat @MTB StartupSchool!
  62. 62. 62SESSIONSLast SessionApril 8th – April 26thUPCOMINGJuly 1st – July 19thJuly 29th – Aug 16thNov 11th – Nov 29thBe a Silicon Valley Startups for 3 weeks!Students, Graduate studentsEngineers, ScientistWannabe EntrepreneursWHERE?One Market Plaza, Steuart Tower,San FranciscoHOW TO APPLY?Check it out here! can participate?APPLY NOW!LEARN: MtB Startup SchoolWatch thevideo here!
  63. 63. Accelerator Program(winter & summer batch)63GROWTH:MTB GymMind the Seed FundWINTER BATCHJanuary – MarchOPENING SOON!SUMMER BATCHSTARTS ONAugust 26th, 2013Demo Days
  64. 64. 2012 FACTS$6.45M FUNDING - $32.4M VALUATION$1.6M Funding – Team 3->10 full time – 1.5Mdaily viewers (+66% in last 4 months)$1.9M Funding – Team +50% - US entity - #19hottest startups in the world (Web Summit)$1.2M Funding – Team 2->11 full time –US entity - 2013 prototype launch in orbit$500K Funding (500Startups) – Team 0->5 –US Entity - Top 5 iOS edu app, Best Design$600K Funding (2 rounds) – Team: 3->8 fulltime – 2X registered users (600K)6 months pivoting (>Thailand)$650K Funding – Team 2->4 – New launchcoming
  65. 65. 2013 BATCHESCAUTION …. RISING STARS!Winter 2013 Batch Summer 2013 Batch10 weeks accelerator program @Gym in San Francisco and up to $65k in seed funding
  66. 66. Building Success StoriesApril 2012Enters 500Startups (+$65K)Sep 2011Second round of $1.1Mfunding (IAG,ZernikeMeta Ventures)April 2011 - EXITMerges with Avrio RMSGroup (US)Feb 2012Wins Seedcamp Berlin, raises$1.350M (Seedcamp,industrial partner)winnersFeb 2012$1M+ round with Filas Lazioand Angels InvestorsSince Gym inception (Aug 2010):30 startups incubated,20 funded ($9.5M+), 2 exits 66SUCCEED:Sep 2012$1,5M+ round with Vertis andPrincipiaFeb 2013Winner of Mobile PremierAwards 2013 in Barcelona.Jan 2013€500K round of funding
  67. 67. Venture Camp 2013Milan, 8-9 Nov 2013ObjectivesFostering a sustainable Italianecosystem for entrepreneurshipProviding entrepreneurs with directexposure to venture capitalinvestors both from Italy and SiliconValleyBoosting ideas with high potentialMind the Bridge VentureCamp is a 2-day event held inMilan to promote a healthierItalian entrepreneurialecosystem.Meet StartupsLearnNetworkFind Links
  68. 68. Join the Wave…Don’t Miss it!
  69. 69. THANK YOU FOR YOURATTENTIONQuestions & AnswersSOCIAL MEDIA:Facebook:Mind the Bridge - Connecting TalentTwitter: MindTheBridgeGoogle+: Mind the Bridge Foundation
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Mind the Bridge Job Creator Tour 2013


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