US Startup Investment Market (Startonomics Tokyo, June 2009)Dave McClure
Presentation on US Startup & Seed / Angel Investment Market for Startonomics Tokyo (June, 2009). Speakers Dave McClure, Joyce Kim, Dave Troy, Ryan Pipkin.
US Startup Investment Market (Startonomics Tokyo, June 2009)Dave McClure
Presentation on US Startup & Seed / Angel Investment Market for Startonomics Tokyo (June, 2009). Speakers Dave McClure, Joyce Kim, Dave Troy, Ryan Pipkin.
Startup Metrics for Pirates (March 2009)Dave McClure
Slightly updated presentation from my talk at http://EntrepreneurTrek.org at Stanford University (March 2009). note: basically same as FOWA talk, minor update added slide 17.
The Lean VC: a Silicon Valley 2.0 StoryDave McClure
Slides from my talk about changes happening in the venture capital & angel investing industry, from the GROW Conference, Vancouver, Canada (August 2010).
An overview of the progress of the Blackstone Accelerates Growth program on it's third anniversary. A partnership between the Maine Technology Institute, MCED and the University of Maine, building intentional communities of innovation.
Startup Metrics for Pirates (March 2009)Dave McClure
Slightly updated presentation from my talk at http://EntrepreneurTrek.org at Stanford University (March 2009). note: basically same as FOWA talk, minor update added slide 17.
The Lean VC: a Silicon Valley 2.0 StoryDave McClure
Slides from my talk about changes happening in the venture capital & angel investing industry, from the GROW Conference, Vancouver, Canada (August 2010).
An overview of the progress of the Blackstone Accelerates Growth program on it's third anniversary. A partnership between the Maine Technology Institute, MCED and the University of Maine, building intentional communities of innovation.
Structured Ideation and Design Thinkinggaylecurtis
At the heart of a design thinking process is ideation, the capability for generating and relating ideas.
Brainstorming is a frequently practiced form of ideation, and this presentation describes the four rules of classic brainstorming. It also gives guidance for how to structure brainstorm sessions to drive direct and indirect benefits.
Better Ideas Faster: How to Brainstorm More EffectivelyDavid Sherwin
Use these practical methods to help you brainstorm better, smarter, and more effectively, no matter the timeline. Using these methods, you can approach a design problem with the right questions so you can focus your creative energy on finding solutions.
Here's the presentation given during Maine's Inaugural State of the Ecosystem. All materials were developed by Maine Accelerates Growth in collaboration with the Maine Technology Institute, excluding the keynote presentation by Tom Chapman of Chapman & Co. of Omaha, NE
Fostering a Startup and Innovation EcosystemTechstars
We are on a mission to make the world a more innovative and prosperous place, one community at a time.
We believe that entrepreneurs are critical to driving a strong global economy and a better world. We do our part by supporting the grassroots leaders who are at the core of every strong entrepreneurial community
This is a 5-step model for creating a metrics framework for your business & customers, and how to apply it to your product & marketing efforts. The "pirate" part comes from the 5 steps: Acquisition, Activation, Retention, Referral, & Revenue (AARRR!)
Startupfest 2013 - How to beat the Series A crunch. Why Internet marketing Ma...Startupfest
Why everything sucks, why breakthrough innovation is over-rated, and why analytically-driven internet marketing is the most critical skill set in beating the Series A Crunch.
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.
Startup Metrics for Pirates (KAUST, Nov 2013)Dave McClure
slides from my talk @ KAUST in Saudi Arabia (Nov 2013). Note: these slides are old, ugly, out-of-date, and probably will get you jailed or killed... so please don't pay attention to them.
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
Dinosaurs vs Unicorns aka "Bubble My Ass, All Dinosaurs Gonna Die" (London, J...Dave McClure
my talk on corporate innovation (or the lack thereof), the death of many dinosaurs, the survival of a smart few Raptors, and how to avoid getting trampled by Unicorns.
5. 500 Strategy: Lots of Little Bets*
1) make lots of little
bets on pre-traction,
early-stage startups
3) wait 3-10 years for returns:
-10-20% small exits @1-5X ($5-25M+)
-5-10% larger exits @5-20X ($25-250M+)
-1-2% unicorns @20-50X+ ($250M-1B+)
*See Peter Sims book: “Little Bets”
2) over the next 2 years,
double-down on top 20%
6. Why Invest in Startups?
Bad Reasons:
• You want to run your own business
but don’t have the time
• think you can make lots of money
• like telling other folks what to do
• You think it will be easy
• You like bragging about your
investments to other people
Good Reasons:
• It’s fun & you like tech stuff :)
• You like the domain area & have
relevant skills
• You can afford to lose everything
you invest
• You’ve got time to help mentor and
monitor your investments
• You’ve built your own businesses
before, had both success & failure
!
• LOTS CHEAPER TO BUILD
• LOTS MORE PEOPLE ONLINE
• MUCH EASIER TO MONETIZE
• MUCH EASIER TO SCALE CUSTOMERS
7. Investment Thesis
+ Your Brand
• Invest in things & people you know & like
• What’s your superpower? Got money, advice, skills?
• Choose an industry vertical, customer segment, or
skillset / domain where you can add value
!
• Write about your thesis / ideas / companies
• Get on Angel List, see what’s happening in that area
• Co-invest with other smart/famous people
• Make a few small investments to get the hang of things
• Say no quickly. Write checks quickly. Don’t be an ass.
8. The Lean Investor
Make lots of little bets:
• Start with many small “experiments”
• Filter out failures + small wins
• Double-down on stuff that looks like it’s working
!
• Incubation: $0-100K (“Build & Validate Product”)
• Seed: $100K-$1M (“Test & Grow Marketing Channels””)
• Venture: $1M-$10M (“Maximize Growth & Revenue”)
9. Startup Risk Reduction
Concept
Early
Customer
Usage
Scalable
Customer
Acquisition
[about to be]
Profitable
Unit
Economics
Functional
Prototype
Scalable
Profitable
Business
PRODUCT
MARKET
REVENUE
When 500
Likes to
Invest
Exit?
10. 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
11. 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 / Unit Economics, Find Profitable Customer Segments
!
• Prove Solution/Benefit, Assess Market Size
• Test Channel Cost, Unit Economics, Revenue Opportunity
• Determine Org Structure, Key Hires
12. 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
13. Startup Due Diligence
pro tip: focus on product + customers over team + market
• Business Plans
• Revenue Projections
!
• Can The Team Build the Product? Can They Ship, Market, & Sell?
• Are They Liars, Crooks, or Fools? Are They Lazy or Slow? Are They Crazy?
!
• Does Product Work? Does It Solve a Problem? Better Than Competition?
• Are There Users / Customers? How Many? Do They Pay? How Much?
• Are the Unit Economics Profitable? What is timing of Revenue / Expense?
• Does The Customer Acquisition Strategy Scale? Show Me The Proof.
!
• Will The Business Survive & Grow? Will the Founders Quit? Sell Early?
• If It Works, Will Anybody Buy The Business? Who / Why / How?
14. Docs & Legal: KISS
• In your first 5-10 deals, co-invest w/ other smart,
experienced investors & let them handle docs
• *pro tip: work w/ lawyers who have 50+ Silicon Valley deals
• Don’t get bogged down in legal BS; get the deal done
!
• confirm your understanding of the deal (valuation/cap,
amount, terms) in email or text and ask for reply
• convertible notes / security — use a cap
• Ask for information rights
• Ask for pro-rata rights (or min follow-on)
• use our free KISS docs: 500.co/kiss
15. Investor Ecosystem
!!
Angels &
Incubators
($0-10M)
!
“Micro-VC” Funds
($10-100M)
“Big” VC Funds
($100-500M)
“Mega” VC Funds
(>$500M)
Incubation
0-$100K
Seed
$100K-$1M
Series A/B
$2-10M
Series B/C
$10-50M
Bootstrap, KickStarter,
AngelList, Crowdfunding
stage where
500 writes
first checks
stage where 500
doubles-down
(maybe)
16. Building a Portfolio Budget &
Allocation Strategy
• How long will it take companies to exit? (3-7 yrs)
• How much money do you have to lose? (<5-10% net worth)
• (How much time do you have to spend/waste? sure about that?)
!
• Simple allocation for $1M investment budget over 5 years
• 50% 1st checks + 50% 2nd checks
• 20 x 1st checks @ $25K each, 1 / qtr ($500K)
• 5 x 2nd checks @ $100K each, 1 / year ($500K)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
1 2 3 4 5
17. Tracking Your Investments
• Set expectations for monthly investor updates & hold accountable
• Get & review monthly/quarterly financials
• WATCH THE BURN: ask what the monthly [net] burn rate is &
compare to previous
• WATCH THE CASH: ask how much cash is left & calc # months @
current burn rate
!
• Raise new round before <6-9 mo’s cash; Worry if <3 mo’s of cash.
• Share info with co-investors about how your companies are doing
(they may have diff info)
• Focus your energy on things that are working.
• Remember: try to be helpful, do no harm, don’t be an ass.
18. When / How to Double-Down?
• When to “follow-on” (write 2nd check):
• user/customers are scaling
• revenue/profit is increasing
• unit economics improving
• other experienced investors putting in more money
• founders never talk about selling / don’t ask for your money
!
• When NOT to double-down:
• founders begging you for money
• still no product / no revenue / un-profitable
• team isn’t shipping product fast / frequent
• valuation too high / raised too much money
• can’t increase ownership by at least 50-100%
• even if making progress; exit still not likely
• you have other / better alternatives
19. The Flat, The Elbow, The Wall
• Invest @ “The Flat”
when prices are low
Good Shit
• Double-down if/when
Happening Startup W
you detect “The Elbow”
(if valuation isn’t crazy)
!
• Don’t invest @ “The
Wall” unless capital is
“The Elbow”
infinite — if valuation
starts running away, you
usually can’t buy any
meaningful ownership
relative to existing. Time
Startup L
Startup K
“The Flat”
“The Wall”
3
2
1
3