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David Blumberg, Founding Partner Blumberg Capital: Entrepreneurship, Innovation & Venture Funding

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David Blumberg, Founding Partner Blumberg Capital talk on Entrepreneurship, Innovation & Venture Funding. 1) David brings twenty-five years of experience in funding committed entrepreneurs and helping them execute their transformative ideas into commercially successful companies. With team members located in the world’s top three funding centers – Silicon Valley, New York and Tel Aviv – Blumberg Capital has the perspective for helping their portfolio firms reach global success.Blumberg Capital prefers taking the lead in a funding round, assuring founders the attention they need to take their business model to the next level. For further info check out http://www.pitchperfectsv.com

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David Blumberg, Founding Partner Blumberg Capital: Entrepreneurship, Innovation & Venture Funding

  1. 1. Entrepreneurship, Innovation & Venture Funding For PitchPerfect May 13, 2015 David J. Blumberg Managing Partner Fueling Innovation
  2. 2. Blumberg Capital Mission We help innovative entrepreneurs transform early stage information technology companies into large scale businesses.
  3. 3. Blumberg Capital Overview  8 Investment professionals with entrepreneurial experience  ~$500M assets under management across 4 funds  Focus on capital efficient Information Technology companies  Disciplined strategy of leading Seed and Series A investments  Investing in tech hubs (US, Israel, Germany, Canada…)  Large and sustainable funnel of proprietary deal flow  Chief Information Officer Council & Chief Marketing Officer Council  Talent Lead for recruiting assistance  Solid track record: current funds in top decile CONFIDENTIAL 3
  4. 4. Blumberg Capital Investment Strategy Growth Capital Angels Early Stage Lead Key Tenets:  Go early; go big  Target 15-25% equity in seed or series A round  Follow on with winners CONFIDENTIAL 4 Our “lead the early stage” strategy fills a funding gap in the market Differentiated Financial Strategy:  BC owns ~15% of the average portfolio company  BC serves on ~90% of company boards
  5. 5. Selected Blumberg Capital Portfolio CONFIDENTIAL 5 Financial Services Social Media & E-commerce Enterprise Software & SaaS Acquired (PANW)
  6. 6. Best Time Ever For Entrepreneurs - Why Now?  Dramatic decline in CapEx for startups  Rise of efficient distribution channels: SaaS, Mobile Apps, Social Media  Growth of emerging markets  Access to education, formal / informal, models  Growth / professionalization of angel investors  Large companies seek partners for innovation CONFIDENTIAL
  7. 7. Accelerating Prosperity: 2000 Years GDP Growth
  8. 8. $0 $5 $10 $15 $20 $25 $30 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Billions US Venture Capital: $ Invested by Quarter Seed Stage Early Stage Expansion Stage Later Stage Source: PWC Moneytree as of Q2 2014 Monitoring VC Activity Levels CONFIDENTIAL 8 Venture capital investments hit a frenzy in 2000; today’s level more sober. Seed stage is  2% of total in  past year
  9. 9. Technology is Continuing Secular Growth Source: KPCB, Morgan Stanley, Bloomberg, CapIQ Technology Company Market Capitalization as % of S&P 500 CONFIDENTIAL 9 In 2000, technology stocks represented 35% of the S&P index. Recent levels below 20% while post crash growth has been significant and steady.
  10. 10. 3.2 5.96.9 11.3 16.3 28.1 34.9 62.3 40.4 155.0 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Series Seed Series A Series B Series C Series D or Later Median Company Valuation by Funding Stage ($M) Source: Pitchbook Early Stage Investing is Stable and Attractive CONFIDENTIAL 10 Late stage market valuations have increased substantially and are more volatile, while Seed and Series A stages have been impacted less.
  11. 11. Blumberg Invests in Top VC Markets Note: Survey of 331 venture capital, private equity, and growth equity investors Source: WSJ, 8/13/2014, based on data from the National Venture Capital Association and Deloitte 11CONFIDENTIAL
  12. 12. Entrepreneurship Requirements  Passion / Commitment / Persistence  Vision  Credibility / Integrity  Domain expertise  Functional skill set  Supportive peer group / mentors CONFIDENTIAL
  13. 13. The Six T’s VCs Use To Evaluate Startups TeamTerms TerrainTiming Technology 13 Theme
  14. 14. Innovation: Why, What, How, Who, When ?  Why  Pain / Necessity  Lack of alternatives  Value proposition  What  Market size / Risk factors  Differentiated advantages / Competitive landscape  Customer feedback / External validation  How  Technological edge / Intellectual property  What is in the secret sauce?  Who  Right team – mix of skills, compatibility  When  Market timing, channels CONFIDENTIAL
  15. 15. Due Diligence – Trust But Verify!  Take nothing for granted; expect the unexpected  Market checks – consulting with industry experts  Customer checks – yours and ours (via CIO / CMO / CISO Counsels)  Founder checks – formal and informal references  Financial checks - analysis and review of assumptions  Legal checks - use a good attorney/solicitor 15CONFIDENTIAL
  16. 16. Post-investment Support  Network introductions  Sales  Business development  Recruiting  Financing  Operational expertise  Strategic/financial consulting  Follow-on investing, based on merit 16CONFIDENTIAL
  17. 17. Accelerating Change – Risks/Opportunities  McKinsey estimates the economic impact of the Digital / Mobile revolution will be 5-10X Internet in the 1990s  All business models are at risk  Major corporations are desperate for innovation  40% of existing companies will fail in this transition  8 trends: Distributed co-creation; Consumers as innovators; Distributed talent management; Higher value interactions; Expanding automation; Unbundling production from delivery; Analytics for management; Data businesses 17CONFIDENTIAL
  18. 18. Entrepreneurs Opportunity Knocks; Carpe Diem!  Developed economies high consumer income, rule of law, low corruption  Natural trade bridge between EU and US and ROW  Strong digital / mobile infrastructure  Leading universities & research institutions  World class centers for international finance, logistics, manufacturing, fashion, automotive, machinery, etc.  Polyglot, educated workforce  Too much government intervention; work rules, taxation and regulation; slow growth; demographics 18CONFIDENTIAL
  19. 19. Year In Review: Significant Macro Changes CONFIDENTIAL 19  Mobile permeates all sectors  Crowdsourcing/social/cloud is disrupting many industries  Big Data 2.0 (algorithms and machine learning) addressing the application layer  Turnover in large VC firms and more first time funds  Increasing corporate venture activity  Increasing regulation and taxation burden  Emerging markets are still growing, but also riskier  Geo-political tensions – Iran, Islamic State, Russia, China, Nigeria
  20. 20. Richer World Is Happier World
  21. 21. Newsflash: Capitalism Works! 1949  Typewriter  35mm camera  AM FM table radio  3-speed phonograph 2009  Laptop PC  Color ink jet printer, scanner, copier  8Mpixel digital camera  Portable GPS  32” color HDTV  8GB iPod Nano  Microwave  Refrigerator freezer combo  DVD/DVR  Home theatre system  Cordless phone  AM/FM radio  Camcorder  Playstation II  7 more things… Source: G.Beck Average summer student earnings at minimum $US wage
  22. 22. Wrap-up www.blumbergcapital.com Fueling Innovation We fund great entrepreneurial teams, and many portfolio companies are hiring www.blumbergcapital.com/portfolio 22

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