Avoiding the Valley of Death: Attracting Funding
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According to a venture capital guru at Harvard Business School, 90 percent of start ups will never receive a second round of funding. Of the 10 percent that do, many of them struggle to take their business to the next level. Part of the issue is the risks that have accumulated as the business has developed – risks that make potential investors nervous and less likely back your venture. Having attracted a significant amount of venture capital, Bitcasa has successfully negotiated early stage growth and continues evolving to ensure profitability and continued investment. In this session Bitcasa CEO, Brian Taptich will discuss lessons learned in the start up journey including how to attract funding, avoiding the ‘valley of death’, developing operations and infrastructure to support growth, and making tough decisions to ensure success.
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Avoiding the Valley of Death: Attracting Funding
- 1. Avoiding the Valley of Death: Attracting Funding
- 3. About Bitcasa Bitcasa Confidential & Proprietary
- 4. Bitcasa Confidential & Proprietary Everything Looks Great! 4 • Dow 17k! • Huge VC rounds! • Huge VC valuations! • IPOs everywhere!
- 5. Bitcasa Confidential & Proprietary The Reality is Bleak (and always has been) 5 • 95% of startups don’t see ROI. • 91% of startups don’t get to liquidity event. • 90% of startups don’t get 2nd round.
- 6. Bitcasa Confidential & Proprietary How to Avoid the Valley of Death? 6 • Manage capital efficiently. • Get to scale quickly. • Have a billion dollar story. • Build the right team.
- 7. Bitcasa Confidential & Proprietary Which Means What, Exactly…? 7 • Build lots with a little. • Understand what “scale” means to you. • See the path to a billion. • Hire slow, fire fast.
- 8. Bitcasa Confidential & Proprietary Know Your VC Audience (A Cynic’s Take.) 8 • 10-year asset managers. • The scourge of “pattern recognition”. • Killing you with kindness. • The myth of “smart” money.
Hinweis der Redaktion
- - Introduction - Discuss professional background
- - Discuss how you got involved with Bitcasa - Mention the consumer origins and talk about some of the transformation that has occurred – from consumer to developer, Telcos and OEMs. Insert Bitcasa CloudFS API plug for startups/developers. - Discuss the amount of funding that Bitcasa has secured to date
- Last week the Dow hit 17000 Huge company valuations - AirBnB valued at $10bn, Uber valued at $17bn Large amounts of funds being raised - Yo app (an app that just says ‘Yo’) just raised $1 million http://www.forbes.com/sites/jaymcgregor/2014/06/19/app-raises-1m-in-funding-for-simply-sending-the-message-yo-back-and-forth/ Numerous IPOs - IPOs like GoPro, Splunk, Alibaba, Box
- - 95% of startups fail to see an ROI - - If failure is defined as failing to see the projected return on investment—say, a specific revenue growth rate or date to break even on cash flow—then more than 95% of start-ups fail - Shikhar Ghosh, Senior Lecturer, Harvard Business School - Only 11% of startups made IPO or were acquired - - Of the 6,613 U.S.-based companies initially funded by venture capital between 2006 and 2011, 11% were acquired or made initial public offerings of stock, according to Dow Jones VentureSource. - 60% of startups survive to age 3 - according to separate studies by the U.S. Bureau of Labor Statistics and the Ewing Marion Kauffman Foundation - Only 35% survive to age 10 - according to separate studies by the U.S. Bureau of Labor Statistics and the Ewing Marion Kauffman Foundation - It’s always been bleak Private Equity is making all the money. Big difference between the haves and the have nots According to the Harvard Business School 90% of startups will not receive a second round of funding. With the odds against most startups, what are some of the things startups can do to avoid the ‘valley of death’?
- - Manage capital efficiently – some startups are too capital intensive – be efficient (and don’t over raise and hamstring yourself) - Zynga exp - Get to scale quickly - bitcasa, zynga bit torrent (monstrous user base) BT no business and raised a lot. - Tell a billion dollar story - convincingly articulate the vision for the company and market opportunity - Employ the right people – invest in a solid leadership team
- Lessons learned: - Be capital efficient – create product with a small team - Demonstrate traction on a budget Bitcasa examples: - Small amount of money get control over expenses - Extraordinary data under mgmt - Know what “scale” means to you – total number of users or handful of enterprise or number of developer Bitcasa examples: - Scaled to 40 petabyte of data, but still more TAM Squint your eyes and see the path to a billion dollars - Large 200bn market we are going after Leadership change and new DNA
- - They are asset managers - "Pattern recognition” - taking risk vs. mitigating risk especially bigger institutional funds - ROI under 10 years – put money to work as they are raising funds and put in more companies - 10 year horizon Punch line – often the incentives are at odds between founder and the investor