The document discusses the state of the venture capital market and emerging trends. It notes that it has become dramatically cheaper to start a company due to factors like open source software and cloud computing. This has led to more founders being younger and more technical. While the number of venture capital firms has decreased in size, the opportunities for investment have grown larger. New models of venture capital firms have also emerged that focus on specific topics or stages of funding. The document suggests that online video and television content is a major emerging opportunity, as consumers spend more time watching online video than reading online.

1. The State of the Venture Capital Markets Mark Suster VCJ Venture Alpha Conference – October 2011 @msuster

2. What is the State of the VC Market? What Comes After Social Networking?

3. Accenture (software dev) BuildOnline (’ 99) Koral (’ 05) VP Product Mgmt, Salesforce.com Largest VC firm in Southern California Both Sides of The Table This Week in VC

4. The Set Up What is Driving Change?

5. It Is Dramatically Cheaper to Start a Company Open source Cloud Developers Start Companies 2000 $5m $500k 2005 $50k 2009 $5k 2011

6. Amazon & Ycombinator Have Fueled the Market 90% reduction in cost Faster time-to-market Great ability to experiment

7. So Founders Much Younger, More Technical

8. Huge Explosion in Tech Startup Creation Seed Deals / Incubation

9. While The Total Number of VCs Has Right-Sized

10. The Opportunities are Much Bigger 2001 2011 100 2,000 Always On Higher Speed Payment Ready Socially Linked Millions Online

11. Conditions Actually Bode Really Well for VCs Active VCs Seed Deals Revenue Potential +

12. So What Exactly Is Changing in our Industry? Some Goods, Some Bads

13. Mentorship-Led Investing Has Captured Enormous Talent Pool Access to Deals

14. Great New Focused & Disciplined VCs Created Super Early Territory Topic Area (i.e. big data) Early or Classic A Thrive

15. Some Traditional VCs Now Doing Many Seed Deals Seed C-E Round A, B Round

16. This is Driven by FOMO (Fear of Missing Out) High volume, small deals No oversight Purely an “option” Not smart strategy for VC or founders

17. In H1 2011 80% of LP Money Went to Just 7 Firms. The Billion Dollar Club. 7 Firms Total $6.3 $8.1 VC Money Raised ($ billion)

18. Which Begs the Question of Whether It’s Venture Capital or Growth Equity Seed C-E Round A, B Round

19. Fund Size + FOMO Driving Separation from Price & Underlying Value Time $ Historic Value Today’s Market

20. People are Paying Growth Prices for Market Risk Time Valuation Product Risk Growth / Scale Risk Monetization / Competition Risk Market Risk

21. Probably Less Traditional VCs Being Funded Lately. Seed C-E Round A, B Round $25-75m Typical Fund Size $200-300m $500m-$1bn

22. Traditionally VCs Have Focused on Few Companies & Deep Commitments 1-2 deals per partner / year Many deals / year

23. Two great firms have reinvented model by focusing on the “group collective” Ops Support Founder friendly High volume CEO Summits Founder Email Lists X-Company Equity Sharing Heavy focus on “second round capital” Winning Follow On $$

24. Some of Best Returns Seem to Be Driven By “Right-Sized” Traditional VCs Public Accessible Though-Leaders

25. Public Openness Helps With Every Major Stage of the VC Lifecycle Access to Deals Winning Follow On $$ Exits Top end of funnel much wider Founders want to work with you VCs work with others they know, like & respect Awareness with buyers for your portfolio

26. So What is the Next Big Investment Opportunity on the Internet? Television. Yes, really.

27. Americans watch 5.3 hours of TV / Day TV Reading < 1 Hour 5.3 Hours Media Patterns Online 3 Hours

28. You Tell Me What the Future of the Internet Is?

29. But VCs Hate Investing in Content – Hits Driven Business?

30. It’s Not Just Dogs on Skateboards Anymore

31. A Disruptive Breed of Digital Content Producer Has Emerged UGC Network TV YouTube TV Production Costs / Minute $100-400 $6,000-8,000

32. These 4 LA Companies Alone Doing > 3 Billion Video Views / Month YouTube TV Costs / Minute

33. YouTube is the New Comcast … And Notice the Change in Branding

34. With YouTube Content Distribution is Much More Predictable Viewer Subscribers Email Lists Facebook Connect YouTube Producer

35. Youth Demo Already 1/3 rd of Time Online Watching Video Streaming Video Other Surfing

36. And Revenue Becoming Substantive

37. How Mainstream? 86% of All Internet Watch Online Video

38. Aug 11 42 billion views 185 million viewers 228 videos / person 17 hours

39. 91% of Households Still Pay for TV (91%)

40. This Market Disruption Will Be Enormous – And It’s Arriving Now

41. </end> Thank you