- 500 Startups is an internet seed fund and accelerator that has invested in over 200 startups in more than 40 countries. - When deciding whether to focus locally or go global, startups should consider factors like language skills, how well their solution can be localized, the size of the local market, and availability of local investors and funding. - Reasons for startups to stay local include not speaking English well, having a large local market of 50-100 million users, and local customers being wealthy. Reasons to go global include living in a small country with conservative local investors who offer low valuations.

1. Startups:
Go LOCAL or Go GLOBAL?
@DaveMcClure
@500Startups #EmTech
Mexico City (June 2014)

2. This Talk Is About…
• 500 Startups
–Internet Seed Fund + Accelerator + >200 Intl Startups
• Startup Ecosystems & Global Markets
–(# users, by language/geo) * (avg $ GDP) * (% internet) = online spend by lang/geo
!
• Why You Shouldn’t Go Global
–You’re a Crappy Little Startup with no customers, revenue, or funding
–You Don’t Speak the Language (not very well, anyway)
–Your local market is >50-100M+ users, and nobody else is going after it
• Why You Should Go Global
–You Live in a Small Country / Startup Ghetto
–There aren’t [m]any local investors / they give you crappy valuations.
–There ARE local investors, but they are predatory, too revenue-focused, risk-averse
–Your customers / partners are in [X] (where X = USA, EU, China, Brazil, Mexico, etc)

3. 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, 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. 4
500 Startups
Global Seed Fund & Startup Accelerator
What is 500?!
• $100M silicon valley VC fund + startup accelerator!
• 30+ people / 10 investing partners!
• Locations: SV, NYC, MEX, BRZ, IND, CHN, SE Asia!
• 1500+ Founders / 200+ Mentors!
• Community + Content + Conferences
!
750+ Portfolio Co’s / 40+ Countries!
• Wildfire (acq GOOG, $350M)!
• MakerBot (acq SSYS, $400M)!
• Viki (acq Rakuten, $200M)
• Twilio
• SendGrid !
• Credit Karma
• Udemy
• Conekta
• Yaxi
• Clip
• Mexico Destinos

5. 5
500 Startups: Global Seed Fund
Over 200+ startups outside US, in 40+ countries

6. GeeksOnaPlane.com
(my International road trip w/ geeky friends :)
• Travel The World with Startups, Geeks, VCs
• Meet MORE Startups, Geeks, VCs in other countries
• Learn about Intl markets, technology, people
• Socialize with friends all over the world ☺
!
2009-2014: 15 trips to 30+ countries
East Asia (3x), Europe (2x), LatAm (3x), India (2x), MENA (2X), SE Asia (3x)

7. 7
Local vs Global?
• Emerging / Developing Markets!
• Global Languages: English, Chinese, Spanish, Arabic
• Critical Factors: Education, Mentorship, Capital
• Capital Availability: Incubation, Seed, Series A
• Positive Macro: SmartPhones, Tablets, Payments,
Logistics, Growing Middle Class, Distribution Platforms
• Wealthy Global Users, Shoppers, Travelers

8. Global Languages
• English: 1-3B+ ppl, most online, high GDP, modest growth
• Mandarin: 1B+ ppl, lots online, med GDP, flat growth
• Spanish: 500M+ ppl, some online, med GDP, strong growth
• Arabic: 500M+ ppl, some online, low/med GDP, strong growth
!
• Others: Hindi, Portuguese, French, German, Japanese,
Russian, Korean, Turkish, Farsi, Urdu, etc

9. Global Markets
• US/Can/UK/AU (400M+): big market, not much growth but lots of spend
• Europe (400-500M): not much growth, many lang, high GDP
• China / E. Asia (1B+): lots of ppl, growing usage / GDP, flat growth (pop.)
• LatAm (500M+): Brazil, Mexico, Argentina, Colombia, Chile; LOTS growth
• India/Pak/South Asia (1.5B+): lots of ppl, growing mobile, strong growth
• SE Asia (600M+): Indonesia, Vietnam, Thailand, Philippines; strong growth
• Middle East / Arabic (500M+): growing mobile, lots of future growth
• Africa (900M+): growing infrastructure, lots of future growth

10. How to Assess Global Markets
• 1) # of ppl / language speakers by geography
• 2) % internet usage (web, mobile, smartphone, etc)
• 3) $ Avg GDP / $ online spend / disposable income
• Online spend / lang, geo = (#ppl) * (%internet) * ($GDP)
– % Growth rates of ppl, lang, internet, GDP
!
• Currency, country, culture, etc
• Online distribution platforms (search, social, mobile, video)
• Online payment methods / credit card distr
• Physical goods delivery / logistics
• Social media usage / behavior
• 3 markets in 1: rich, middle-class, internet poor

11. 11
Platforms 2.0
Search, Social, Mobile,
Video, Messaging
Customer Reach: 100M-1B+
!
• Search: Google (also Baidu, Yandex, Yahoo-J)
!
• Social: Facebook, Twitter (also TenCent, Line)
!
• Mobile: Apple (iOS), Android
!
• Media: Video (YouTube), Photos (Pinterest, Instagram), Music
!
• Comm: Email, WeChat/WhatsApp/Line/Kakao, SMS, Voice
!

12. Why You SHOULD NOT
Go Global
you’re a tiny little startup,
you don’t speak the language,
your local market is big [enough]

13. Why Stay Local?
(Because it’s HOME)
• You don’t speak English (well enough).
• Your solution doesn’t travel well / you won’t/can’t localize it well.
• There’s not as many startups competing for your local market.
• Your local market has 50-100M+ users (ex: Japan, Germany, Brazil)
• Your local market customers are RICH (ex: Saudi Arabia, Japan)
• You have customers / revenue.
• You have a great living situation, family, kids, etc

14. Why You SHOULD
Go Global
you live in a small country,
local investors are too conservative,
don’t write [enough] checks
give u crappy, low valuations.
!
or, you just love California :)

15. Why Go Global?
(because California is *awesome*)
• It’s BIG. (US, EU, China are huge markets… also Mexico/LatAm, Brazil)
• All the [rich, online] customers are here.
• All the investors are here (Silicon Valley)
• All the platforms & partners are here (Silicon Valley).
!
• Because you watch too many action movies and rap videos.
• Because you love California / NYC. (we understand ☺)
• You really love Kim Kardashian, Jay-Z, JT, Beyonce, etc.

16. Angel* List: It Rocks.
(angel.co)
• Startups & Investors
• Activity & Metrics
• Platform & APIs
!
• *ps – not just for Angels,
not just for USA

17. Critical Ecosystem Factors
• Optimism & Belief (“Silicon Valley”)
• Mentorship + Education (Knowledge)
• Universities + Companies (People)
• Capital, Legal, Finance (Infrastructure)
• Engineering + Design / UX (Product)
• Platforms + Distribution (Customers)
• Online Payments (Monetization)
• IPO / M&A Market (Exits)
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18. 18
Silicon Valley Investor Ecosystem
!
!Angels &
Incubators
($0-10M)
!
“Micro-VC” Funds
($10-100M)
“Big” VC Funds
($100-500M)
“Mega” VC Funds
(>$500M)
TrueFirst Round
A16ZAtomico
Y-Combinator
TechStars
SoftTech (Clavier)
Felicis (Senkut)
SV Angel (Conway)
SequoiaGreylock
Union Square
Floodgate (Maples)
Foundry
Incubation
Seed
Series A
Series B
Series C+
Bootstrap, KickStarter,
Crowdfunding

19. Example Startup Ecosystem
• 1,000 Bootstrap Startups ($0-10K)
• 300 Accelerator Startups ($10-100K)
• 100 Seed-Stage Startups ($100K-$1M)
• 30 Series A/B Startups ($1-10M)
• 10 Later-Stage Companies ($10-100M)
• 1-3 Mature Company IPOs ($100M+)
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20. Entrepreneur Education
• Business Plans
• Functional Prototypes
• Lean Startup
• Software Engineering / Design & UX
• Online Marketing / Unit Economics
• Monetization & Payments
• Customer Service + Support
• Fundraising & Pitch
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21. Investor Education
• Startups are NOT Real Estate
• Most Startups Fail / Power Law Returns
• Portfolio Approach (10-20+ investments)
• Legal Structure, Financial Structure
• Syndication + Co-Investment
• Access to Downstream Capital
• Exits & Liquidity
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22. Questions? Comments?
• More Info?
– http://500.co (our company)
– http://500hats.com (my blog)
– https://angel.co/500startups (our fund)
– Dave McClure, @DaveMcClure

23. How Big is MicroVC / Seed Stage Market?
5,000 microVCs invest 100,000 startups/yr @ $500K/startup = $50B/yr
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, each of which starts 1-5 businesses lifetime
• entrepreneurs can create 1-5M new startup businesses every year
!
How much capital is needed globally to get seed stage startups rolling?
• Assume 1M-5M startups/yr x $50K-$1M funding/each
• Low: 1M x $50K = $50B/yr <-> High: 5M x $1M = $5T/yr
!
How many metros? How many investors / metro? How many startups / metro?
• 1 microVC can fund 10-20 startups/yr * $50K-$1M = $1M-$10M annual budget
• 500+ global metros @ 1M+ ppl can generate ~100-1,000 startups / year
• guesstimate = min ~100K+ startups/yr across top 100-200 global metros
• 5-50 VCs / metro * 200 metros = 1,000-10,000 VCs globally
• FUTURE: 5,000 VCs deploy $10M->20 startups = $50B/yr -> 100,000 startups
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