Sunil Maulik's presentation on funding and growth in Silicon Valley

1. MINISTRY
OF
FOREIGN
AFFAIRS
OF
DENMARK
EKSPORTRÅDET
–
THE
TRADE
COUNCIL
”From
Idea
to
IPO”
Funding
&
Growth
in
Silicon
Valley
Sunil
Maulik,
Ph.D.
sma@innova4oncenterdenmark.com
MINISTRY
OF
FOREIGN
AFFAIRS
OF
DENMARK
EKSPORTRÅDET
–
THE
TRADE
COUNCIL

2. Start
Your
Motor!
MINISTRY
OF
FOREIGN
AFFAIRS
OF
DENMARK
EKSPORTRÅDET
–
THE
TRADE
COUNCIL

3. Why
start
up
a
company?
• What
is
the
current
market
Dynamic?
• What
are
your
Long-­‐
Term
goals?
• Investors
like
Big
Ideas
–
what
is
yours?
The
Silicon
Valley
mantra
“Go
big
or
go
home!”

4. Taking
the
leap
MINISTRY
OF
FOREIGN
AFFAIRS
OF
DENMARK
EKSPORTRÅDET
–
THE
TRADE
COUNCIL

5. TransiRoning
from
career
to
startup
• Build
a
prototype
and
get
customer
feedback
• Establish
a
team
willing
to
work
for
stock
• Get
as
much
done
without
paying
salaries:
– First
product
– First
customers
– Business
plan;
markeRng
plan

6. Get
the
funding
you
need
MINISTRY
OF
FOREIGN
AFFAIRS
OF
DENMARK
EKSPORTRÅDET
–
THE
TRADE
COUNCIL

7. Sources
of
Funding
• Boot-­‐Strapping
(Customer
Funded)
• Angel
Investors
• Corporate
Capital
• Venture
Capital
• Other
– Going
public
(IPO)
– Secondary
markets

8. Boot-­‐Strapping
(Customer
Funded)
• Get
customers
to
pre-­‐pay
for
the
product
• Create
a
process
for
acquiring
early
customers
• Offer
discounts
or
revenue-­‐share
• Give
the
customer
a
significant
up-­‐side
See
KickStarter
(www.kickstarter.com)

9. Angel
Investors
• Write
small
checks
($25K-­‐
$250K)
• Finds
or
advises
company:
– Business
development
– Engineers
• Can
introduce
company
to
VCs

10. Some
Famous
Silicon
Valley
Angels
• Y-­‐Combinator
• Founders
Fund
• Angel
List
• 500StartUps

11. Danish
Example
–
AppHarbor
• Founded
Sept
2010
by
Rune
Sørensen,
Troels
Thomsen
and
Michael
Friis.
• Y-­‐Combinator
Funded
• Easy
to
use
development
pladorm
for
.NET
developers
• Example
of
‘Pladorm
as
a
Service’
(PaaS)

12. CorporaRons
as
investors/partners
MINISTRY
OF
FOREIGN
AFFAIRS
OF
DENMARK
EKSPORTRÅDET
–
THE
TRADE
COUNCIL

13. Corporate
Funding
• Strategic
investors
–
not
looking
to
get
lots
of
money
back
(Return
on
Capital)
• Want
early
view
into
technology
• Want
early
view
into
compeRRon
• Expect
discount
on
business
partnership
• May
want
exclusivity

14. Danish
Example
-­‐
MemoLane
• Founder:
Eric
Lagier
• A
pladorm
for
collecRng
and
connecRng
thoughts,
pictures,
messages
• Integrates
with
your
social
networks
Total:
$2.5M
Seed
Funding:
Niklas
Zennstrom/Janus
Friis
(Skype)
Series
A,
11/09
Digital
Garage
$500k
Series
B,
9/10
August
Capital,
Atomico
$2M

15. Reach
for
the
sky!
–
Venture
Capital
MINISTRY
OF
FOREIGN
AFFAIRS
OF
DENMARK
EKSPORTRÅDET
–
THE
TRADE
COUNCIL

16. Venture
Capitalists
• Lots
of
money
• Lots
of
experRse
and
help
• Expensive
money!
• Look
for
scalable
companies
($500MM+
valuaRons)
• Looking
for
disrupRve
technology
in
huge
markets

17. Venture
Capital
• VCs
can
bring
credibility
with
customers
• VCs
can
get
major
partnership
deals
• VCs
can
recruit
professional
management
• VCs
also
sit
on
boards
of
large
public
companies,
private
equity
funds,
etc.

18. Disadvantages
of
Venture
Capital
• Requires
huge
amounts
of
Rme/
effort
to
get
• Puts
negaRve
pressure
on
founders
• Requires
accountability
(must
hit
milestones)
• Doesn’t
allow
for
early
flexibility
• VCs
may
take
your
company
in
a
direcRon
that
is
not
of
interest
to
you

19. Financing
Roadmap
-­‐Friends
&
Family
-­‐Individual
Angels
-­‐Early
Customers
-­‐Early-­‐stage
VCs
(Series
‘A’)
-­‐Later-­‐stage
VCs
(Series
‘B’
and
‘C’)
-­‐Private
Equity
(If
needed-­‐Series
‘D’)
-­‐IPO
or
Acquisi4on

20. Raising
VC
Money
–
The
Pot
at
the
end
of
the
Rainbow
MINISTRY
OF
FOREIGN
AFFAIRS
OF
DENMARK
EKSPORTRÅDET
–
THE
TRADE
COUNCIL

21. What
do
VCs
look
for?
• Big,
bold
Idea
• AuthenRcity,
Integrity,
MoRvaRon
(A.I.M.)
• A+
DNA
(Ability
to
hire
a
winning
team)
• Rapid
IteraRons
&
Pivot
(R.I.P.)
MINISTRY
OF
FOREIGN
AFFAIRS
OF
DENMARK
EKSPORTRÅDET
–
THE
TRADE
COUNCIL

22. How
to
raise
VC
money
• Need
a
track-­‐record
(if
not
you,
then
your
team)
• IdenRfy
unfair
advantages
that
benefit
your
company
• Determine
if
your
idea
has
economic
power
Demonstrate
unambiguously
how
you
create
value
for
the
customer

23. How
to
raise
VC
money
(cont.)
• Show
a
huge
market
opportunity
• Demonstrate
venture-­‐scale
returns
• IdenRfy
clear
milestones
to
first
year
revenue
• Provide
signed
customer/
partner
relaRonships

24. What
numbers
do
VCs
look
at?
• VCs
want
at
least
10x
Return
on
Investment
(RoI)
• IRR
(Internal
Rate
of
Return)
is
also
important
• VCs
invest
money
for
their
LPs
(Limited
Partners)
with
an
expected
IRR
of
30%
• VCs
want
to
make
money
for
their
funds
so
they
can
raise
new
funds

25. Example
-­‐
Zendesk
• Started
in
Denmark
• First
Funding
from
Boston
• Now
Headquartered
in
San
Francisco
• HelpDesk
and
Support
Infrastructure
for
sonware
companies
Total
Funding:
$25.5M
Seed,
6/08
Christoph
Janz
$500k
Series
A,
5/09
Charles
River
Ventures
$1M
Series
B,
8/09
Benchmark
Capital,
Charles
River
Ventures
$6M
Series
C,
12/10
Matrix
Partners,
Benchmark
Capital,
Charles
River
Ventures
$19M

26. You’re
Off!
–
Now
What?
MINISTRY
OF
FOREIGN
AFFAIRS
OF
DENMARK
EKSPORTRÅDET
–
THE
TRADE
COUNCIL

27. OK
–
you’re
funded!
• Rapidly
expand
partnerships:
– Customers
– Distributors
– Channels
– Suppliers
• Keep
shipping
products:
– Regular
release/update
schedule
– New
funcRonality
(get
customer
feedback!)

28. How
to
go
from
one
to
one
thousand
(any
units!)
• IdenRfy
a
big
company
that
must
sell
your
product
in
order
to
increase
their
revenue
• IdenRfy
complementary
company(s)
that
you
can
merge/acquire
• IdenRfy
internaRonal
partners
that
have
access
to
large
markets
• Change
(pivot)
your
business-­‐model
to
dramaRcally
increase
revenue

29. The
Start-­‐Up
Curve

30. Summary
• To
be
big
–
think
big!
• Investors
want
to
invest
in
big
ideas
• Prove
that
you
have
a
disrupRve
technology
• Describe
how
you
will
efficiently
capture
a
sliver
of
a
huge
market
• Show
that
you
can
scale
to
capture
the
rest
of
the
market