Web 3.0 is taking principles from community-focused Web 2.0 and applying them in business-to-business contexts. Data shows strong returns for investments in Midwestern business verticals like healthcare, financial services, and engineering. However, there are challenges like a lack of follow-on funding and concentration of funds in certain areas. Growing deal flow and ensuring investment success requires activities like mentoring startups, networking, and cultivating relationships with potential acquisition partners.

1. Historic Inflection Point
Web 2.0 was about creating community,
content, and focused on B2C (Facebook,
Pinterest, Tumblr, LinkedIN
Web 3.0 is taking some of those principles
and putting them to work in B2B silos

2. Where Should You
Invest To Increase
Return?
“Fish Where the Fish
Are”
Data on Midwestern
B2B Verticals

3. Data from Corum Group; Q1 2013, actual exits
Healthcare-3.95x on sales 21.8x on EBITA
Fin Service-3.49x on sales 14.05x on EBITA
A/E/C-2.80x on sales 14.43x on EBITA
HR-2.12x on sales 53.54x on EBITA
CRM-3.83x on sales 18.53x on EBITA
Supply Chain-5.36x on sales 40.56x on EBITA

4. Money Money Money!
1 Trillion waiting to be
deployed by Private Equity
Over 300 Billion on
Corporate balance sheets
Strategic Acquisition for
employees or IP

5. New Exits
Family offices buying for cash flow
New entrants to the market from outside
the US (Bosch, Shuanghui)

6. Exit Market is BIG
Demand is there
Problem is there are
few opportunities

7. Factors For Exits
9/10 companies fail
Investors don’t invest enough
Investors investing in round 1, and done
Spray and pray
No information arbitrage
Investing in companies where investor has no experience
Risk takers instead of risk managers
Learning curve effects of angel investing-curve is steep and hard
Pick Jockeys not horses
Passive investors serve on boards-active investors make things happen

8. Some Problems in the
Midwest
Few funds want to lead
Series A investment
Few funds dominate one
vertical
Developed West Loop
Ventures around that
thesis

9. Deal Flow
Always a problem
Need to see lots of deals so there isn’t adverse
selection
Need diversity to look at solutions from variety
of angles
Even if you don’t invest, you learn something

10. Remedy For Deal Flow
Join or affiliate with an angel group
Mentor at an accelerator like TechStars
Network with other angels-talk
Attend Meetups where Entrepreneurs
are
Work At University Entrepreneur Ctrs
(for free) like Polsky Center at Univ
Chicago
Invest in a Series A fund

11. Ensuring Success
Talk to potential exit partners prior to investing
Get management references
Make sure you can fail fast
Cultivate next rounds of investment
Network, Network, Network!

12. Ways to Grow Without
Investing a Dime
Mentor companies
Take a meeting, become a customer
Open your Rolodex (for free) make
introductions
Talk about Midwest startups with your peers
Download their apps, use, and give feedback

13. Q and A
• Co-Founder of Hyde Park Angels (www.hydeparkangels.com) and
West Loop Ventures (www.westloopventures.com)
•
Blog at pointsandfigures.com Tweet @pointsnfigures
•
Active investments in: KapowEvents.com, YCharts.com, Brilliant.org,
Alltuition.com, Desktimeapp.com, UICO.com, Supply-vision.com,
Tallgrassbeef.com, Dabble.co
•
Trustee at the National World War Two Museum
(http://www.nationalww2museum.org) in New Orleans, Louisiana