This document provides an overview of a talk given by Dave McClure on changes in venture capital and building startup ecosystems. The key points covered include:
1. An introduction to 500 Startups, a global seed fund and startup accelerator that has invested in over 700 companies across 40+ countries.
2. Changes that have occurred in technology and venture capital due to factors like reduced costs, increased online platforms, and the rise of accelerators and angel investing.
3. How 500 Startups employs a "Lean VC" approach of making many small bets through incremental investment stages focused on product validation, market validation, and revenue validation.
Changes in Venture Capital & Building 500 Startups (Sao Paulo, Sept 2013)Dave McClure
slides from my talk at Brazil Innovators startup conference in Sao Paulo (Sept 2013) on changes in the venture capital industry, and how we built 500 Startups.
When it comes to pitching your business, you need to communicate your idea clearly, confidently, and in a short amount of time. Can you do it in 10 minutes or less?
Get expert pitch advice from an entrepreneur who raised close to $1 million. Caroline Cummings will share her pitch secrets, techniques, and tools that helped her launch two tech companies, as well as help other entrepreneurs raise millions of dollars.
The best part? Putting these tips into practice will help you be more likely to get the funding you need.
Changes in Venture Capital & Building 500 Startups (Sao Paulo, Sept 2013)Dave McClure
slides from my talk at Brazil Innovators startup conference in Sao Paulo (Sept 2013) on changes in the venture capital industry, and how we built 500 Startups.
When it comes to pitching your business, you need to communicate your idea clearly, confidently, and in a short amount of time. Can you do it in 10 minutes or less?
Get expert pitch advice from an entrepreneur who raised close to $1 million. Caroline Cummings will share her pitch secrets, techniques, and tools that helped her launch two tech companies, as well as help other entrepreneurs raise millions of dollars.
The best part? Putting these tips into practice will help you be more likely to get the funding you need.
The Definitive Guide to the Fort Collins Startup SceneChris Snook
Published by Launch Haus for our guests and fellow entrepreneurs, this is the definitive resource for all those working in the startup ecosystem of Fort Collins and Northern Colorado. Inspired by the Hitchhiker's Guide to Boulder Tech Community and Sam Teller's Guide to LA Startups, Brianne and I have decided to illuminate and connect the world to the amazing resources and players in the NoCo Ecosystem. Future iterations will ensue as we continue our primary research and interface activity.
Version 1.2 Updates (last iteration Feb 2015)
-Added several new resources in the NoCo region from co-working, to capital, to creator spaces and meetup movements. Enjoy and plug in
-Launched the Feedback Survey live link
This Porto Tech Startup Guide gives you an overview of what is happening in the Porto startup ecosystem. If your startup, organization or initiative isn't in our list, please let us know. Send us an email to hello@startuptour.org.
Talk during the 7th National ICT Summit in Legaspi, Albay that discusses the state of the PH start-up ecosystem and the Philippine start-up roadmap (Credits to ICTO and TechinAsia)
A third world nation just 50 years ago, Korea is now the world's 15th biggest economy, a major force in the global tech scene and home to Samsung, the world's top smartphone manufacturer. It is also rapidly emerging as a regional tech hub and startup hotbed as well as an avid consumer of new technology.
But it wasn't always like this.
This Slideshare provides a glimpse into Korea's tech past to explain how the nation has rapidly emerged as a global heavyweight. Then we dive into the startup ecosystem which has been built on top of a world class tech infrastructure and provide clues to what you can expect from Korea in the years to come.
Nigeria... Yes, it's big, ugly, dangerous, poor, too big, too hot, too rainy. And it's Africa's biggest country and economy, so the potential for startups and entrepreneurs is huge.
During our trip to Lagos to attend the Mobile West Africa 2014 conference, we listened to the speakers, met the key players of the local tech ecosystem, and were amazed, just like all the other emerging markets we explore, by the creativity, the will, and the startups we saw.
Take the trip with us to dive into Nigeria's startup scene. As usual, we love to look back in time to see what are the milestones explaining why the country is where it is today. Oddly enough, Nigeria has long been a very isolated country, with few exports else than natural resources.
Since Nollywood and the most creative movie industry of the continent, it's changing.
Despite the kilometric list of challenges the country is facing, a lot of spots and startups are to be discussed. Wecyclers, BudgIT are among the secret gems we discovered in Lagos, and for sure, there's more than that.
Venture Capital Unlocked (Stanford) / Venture Capital 2.0Dave McClure
slides for my "Venture Capital 2.0" opening talk at Stanford School Continuing Studies, VC101 class "Venture Capital Unlocked" #VCunlocked #500startups
How to VC: Creating a VC fund portfolio modelDave McClure
This article aims to help VCs figure out how to size a venture capital fund, how many companies to include in your portfolio, and when and how to do follow-on investments. Most VCs aim to make a 3X (net) return on initial fund capital, at a ~20% net IRR. Note however, likely less than 10% of most VC funds achieve that goal.
Basic concepts of marketing and branding for venture capital. Emphasis on competitive differentiation (aka "How are you different/better than other VCs in your category?"). Specific focus on defining areas of "value add" that aren't BS.
How to define and position your VC brand to attract funding and dealflow.
* note: more recent updated version below:
https://www.slideshare.net/dmc500hats/branding-strategies-for-better-dealflow-and-fundraising-aka-the-helpful-vc
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The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
As a business owner in Delaware, staying on top of your tax obligations is paramount, especially with the annual deadline for Delaware Franchise Tax looming on March 1. One such obligation is the annual Delaware Franchise Tax, which serves as a crucial requirement for maintaining your company’s legal standing within the state. While the prospect of handling tax matters may seem daunting, rest assured that the process can be straightforward with the right guidance. In this comprehensive guide, we’ll walk you through the steps of filing your Delaware Franchise Tax and provide insights to help you navigate the process effectively.
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India Orthopedic Devices Market: Unlocking Growth Secrets, Trends and Develop...Kumar Satyam
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Unveiling the Secrets How Does Generative AI Work.pdfSam H
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Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
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1. Changes in Venture Capital +
Building Startup Ecosystems
@DaveMcClure - 500 Startups
Seoul, Korea - March 2014
2. This Talk
• What is 500 Startups?
• Changes in Tech + VC
• “Lean VC”: Quantitative Venture Capital
• Building Startup Ecosystems
• Global Entrepreneurship
• Q&A
!2
3. Dave McClure
Founding Partner & Chief Troublemaker, 500 Startups
00’s & 10’s:
• VC: Founders Fund, Facebook fbFund, 500 Startups
• Angel: Mashery, Mint.com, SlideShare, Twilio, Wildfire, SendGrid
• Marketing: PayPal, Simply Hired, Mint.com, oDesk, O’Reilly
!
80’s & 90’s:
• Entrepreneur: Aslan Computing (acq’d by Servinet/Panurgy)
• Developer: Windows / SQL DB consultant (Intel, MSFT)
• Engineer: Johns Hopkins‘88, BS Eng / Applied Math
4. 500 Startups
Global Seed Fund & Startup Accelerator
• What is 500 Startups?
– $100M silicon valley venture capital fund
– internet seed fund + startup accelerator program
– 30 team members (13 investing partners)
– SV, SF, NYC, MEX, BRZ, IND, CHN, SE Asia
– 1000+ Founders / 200+ Mentors
– Community + Content + Conferences
!
• 700+ Portfolio Co’s / 40+ Countries
– Wildfire (acq GOOG, $350M)
– MakerBot (acq SSYS, $400M)
– Viki (acq Rakuten, $200M)
– Simple (acq BBVA, $117M)
– Twilio
– SendGrid
– Credit Karma
– Udemy
– Zozi
– ElaCarte
– Virool
12. Startup Failure: Good or Bad?
• Series A bar higher:
• $1M revenue, 1M active users, 10M downloads, 100% YoY growth
• Lots of Incubation / Seed startups will “FAIL”
!
• BUT: Fail Budget = $50-$500K, not $5M+
• Many “failed” startups = ramen-profitable, small acquisition
• … *or* MBA alternative (<$100K)
• Series A/B VCs have LOTS to choose from (not bad)
!
• Overall, founders / market getting smarter
• More focus on customers, problems, revenue
• Many die, some survive (1-5x), some thrive (20x+).
13. Industry Changes, Challenges
• SW Startup Efficiency, Reduced CapX Costs
• Growing Market, Growing Platforms
• VC Industry Upheavals (2000, 2008)
• Micro VC: Seed Funds (ex: First Round Capital)
• Incubators & Accelerators (ex: Y Combinator)
• Big VC (ex: A16Z) & Platforms (ex: Angel List)
18. The Lean VC:
Lots of Little Bets, Incremental Investment
Method: Invest in lots of startups using incremental
investment, iterative development. Start with
many small experiments, filter out failures, and
expand investment in successes… (Rinse & Repeat).
!
• Incubator: $0-100K (“Build & Validate Product”)
• Seed: $100K-$1M (“Test & Grow Marketing Channels””)
• Venture: $1M-$10M (“Maximize Growth & Revenue”)
19. Investment Stage #1:
Product Validation + Customer Usage
• Structure
– 1-3 founders
– $25-$100K investment
– Incubator environment: multiple peers, mentors/advisors
!
• Test Functional Prototype / “Minimum Viable Product” (MVP):
– Prototype->Alpha, ~3-6 months
– Develop Minimal Critical Feature Set => Get to “It Works! Someone Uses It.”
– Improve Design & Usability, Setup Conversion Metrics
– Test Small-Scale Customer Adoption (10-1000 users)
!
• Demonstrate Concept, Reduce Product Risk, Test Functional Use
• Develop Metrics & Filter for Possible Future Investment
20. Investment Stage #2:
Market Validation + Revenue Testing
• Structure
– 2-10 person team
– $100K-$1M investment
– Syndicate of Angel Investors / Small VC Funds
!
• Improve Product, Expand Customers, Test Revenue:
–
–
–
–
Alpha->Beta, ~6-12 months
Scale Customer Adoption => “Many People Use It, & They Pay.”
Test Marketing Campaigns, Customer Acquisition Channels + Cost
Test Revenue Generation, Find Profitable Customer Segments
!
• Prove Solution/Benefit, Assess Market Size
• Test Channel Cost, Revenue Opportunity
• Determine Org Structure, Key Hires
21. Investment Stage #3:
Revenue Validation + Growth
• Structure
– 5-25 person team
– $1M-$10M investment
– Seed & Venture Investors
!
• Make Money (or Go Big), Get to Sustainability:
–
–
–
–
–
Beta->Production, 12-24 months
Revenue / Growth => “We Can Make (a lot of) Money!”
Mktg Plan => Predictable Channels / Campaigns + Budget
Scalability & Infrastructure, Customer Service & Operations
Connect with Distribution Partners, Expand Growth
!
• Prove/Expand Market, Operationalize Business
• Future Milestones: Profitable/Sustainable, Exit Options
22. Lots of Little Bets
aka “MoneyBall for Startups”
•
•
VC Evolution: Physician, Scale Thyself (Aug 2012)
MoneyBall for Startups, 500 Startups Investment Thesis (Jul 2010)
23. This Talk
• What is 500 Startups?
• Changes in Tech + VC
• “Lean VC”: Quantitative Venture Capital
• Building Startup Ecosystems
!23
28. Follow-On Strategy
• Should we follow-on? Why or Why Not?
• Signaling Risk vs Portfolio Returns
• Downstream Investor Syndicate is critical
• Using Angel List to drive visibility
• Global Strategies (more capital, connections)
29. Feedback Loop & Metrics
• Bad decisions = obvious quickly
• Good decisions = not obvious for years
• Short-term metrics: revenue, users, next
round
!
• Sharing best practices for decisions
• Lots of Little Bets helps speed up learning
• Billion Dollar “Unicorns” vs 10-20X ROI
30. Scaling VC
• Lots of Little Bets? Or a Few Big Bets?
• Power Laws, Singles vs Home Runs
• Focus on Network Effects
• Communication Platforms
• Portfolio Size vs Investment Stage
• Recruiting Thousands of VCs
31. How Big is Seed Stage Startup Market?
5,000 microVCs can fund 100,000 startups/yr @ $500K/startup = $50B/yr
Q: How many people are entrepreneurs? How many startups get started every year?
• ~1% of Humanity is “Entrepreneurial” (def’n: “can create a $10M rev/yr business”)
• 1% x 7B ppl = 70M entrepreneurs, who create 1-5 businesses lifetime (75 yrs)
• entrepreneurs could create ~1-5M new startup businesses every year
!
Q: How much capital is needed globally to fund seed stage startups?
• Assume 1M-5M startups/yr x $50K-$1M funding/each
• Low: 1M x $50K = $50B/yr <-> High: 5M x $1M = $5T/yr
!
Q: How many metros? How many investors? How many investors / startups / metro?
• 1 “micro-VC” can fund 10-20 startups/yr * $50K-$1M = ~$1-10M annual budget
• 500+ global metros with population >1M+ people can generate ~100-1,000 startups / yr
• guesstimate = min 100K+ startups/yr total across top 100-200 global metros
• 5-50 VCs / metro * 200 metros = 1,000-10,000 VCs globally
• FUTURE: 5,000 VCs can deploy $10M/yr each, or $50B/yr in ~100,000 startups
!31
32. This Talk
• What is 500 Startups?
• Changes in Tech + Venture Capital
• Growing 500 + “The Lean VC”
• GLOBAL Entrepreneurship
!32
34. Local vs Global?
• “Silicon Valley is Unique” — NOT TRUE.
• *we had a 50-70 year head start… ROW will catch up.
• Emerging / Developing Markets: 3-5B+
• English, Chinese, Spanish, Arabic
!
• Challenges: Payments, Mobile/Web, Logistics
• Challenges: Capital, Mentorship, Exits
!
• Investor Ecosystems, Mentorship & Community
• Does the Future look different? (yes, we hope)
35. Global Trends
• Growth of Global Languages (see Gengo.com)
– 1B+ speakers: Mandarin, English
– 300-500M+ spkrs: Spanish, Arabic, Hindi, Malay
• Smart Device Proliferation
– mobile, tablet, TV, console, etc
• More Young, More Old Users Online
• More Bandwidth, More Video, More Social, More Mobile
• Wealthy International Travelers
• Acceleration of Global Payment, E-Commerce
• Dramatically Reduced Cost: Product Dev, Customer Acqstn
• Global Distribution Platforms (Search, Social, Mobile, Video, Comm)
36. Questions? Comments? Heckles?
• Thanks for Listening
• Feedback Appreciated
• We are Hiring + Internships
!
• More Info?
– http://500.co (our company)
– http://500hats.com (my blog)
– https://angel.co/500startups (our fund)
– Dave McClure, @DaveMcClure