Collective Mining | Corporate Presentation - April 2024
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Building Startup Ecosystems (Singapore, July 2014)
1. Changes in Venture Capital +â¨
Building Startup Ecosystems
@DaveMcClure
Founding Partner
@500Startups http://500.co
#PreMoney Singapore - July 2014
2. This TalkâŚ
⢠What is 500 Startups?
⢠Changes in Tech + VC
⢠âLean VCâ = Quantitative Venture Capital
⢠Building Startup Ecosystems
⢠Global Entrepreneurship
⢠Q & A
3. Dave McClureâ¨
Founding Partner & Chief Troublemaker, 500 Startups
00âs & 10âs:
⢠VC: Founders Fund, Facebook fbFund, 500 Startups
⢠Angel: Mashery, Mint.com, SlideShare, Twilio, Wildfire, SendGrid
⢠Marketing: PayPal, Simply Hired, Mint.com, OâReilly
!
!
80âs & 90âs:
⢠Entrepreneur: Aslan Computing (acqâd by Servinet/Panurgy)
⢠Developer: Windows / SQL DB consultant (Intel, MSFT)
⢠Engineer: Johns Hopkinsâ88, BS Eng / Applied Math
4. 500 Startupsâ¨
Global Seed Fund & Startup Accelerator
⢠What is 500?
â $100M silicon valley VC fund + startup accelerator
â 30+ people / 10 investing partners
â Locations: SV, NYC, MEX, BRZ, IND, CHN, SE Asia
â 1500+ Founders / 200+ Mentors
â Community + Content + Conferences
!
⢠800+ Portfolio Coâs / 40+ Countries
â Wildfire (acq GOOG, $350M)
â MakerBot (acq SSYS, $400M)
â Viki (acq Rakuten, $200M)
â Simple (acq BBVA, $117M)
â Twilio
â SendGrid
â Credit Karma
â Udemy
â Barkbox
â HomeJoy
5. 500 Startups: Global Seed Fundâ¨
Over 200+ startups outside US, in 40+ countries
6. This TalkâŚ
⢠What is 500 Startups?
⢠Changes in Tech + VC
⢠âLean VCâ = Quantitative Venture Capital
⢠Building Startup Ecosystems
⢠Global Entrepreneurship
⢠Q & A
7. Industry Changes
⢠Financial Market Crises (2000, 2008)
⢠Startup Efficiency, Lean Startup Movement, Reduced Capital Costs
⢠Growing Market, Global Distribution Platforms, Growth Hacking
⢠Improved Monetization, Developing Payments Infrastructure
⢠Developing Startup Ecosystems, Global M&A
!
⢠Micro VC: Seed Funds (ex: First Round Capital)
⢠Incubators & Accelerators (ex: Y Combinator, 500)
⢠Funding Platforms (ex: Angel List, Kickstarter)
⢠Growing Global Market of Angel Investors
!
more info: http://PreMoney.co (June 27th, San Francisco)
8. Changes in Tech Startups
⢠LESS Capital required to build product, get to market
â Dramatically reduced cost for servers, software, bandwidth
â Funding Platforms: KickStarter, Angel List, Funders Club, etc
â Access to online platforms for 100M-1B+ consumers, smallbiz, etc
!
⢠MORE Customers via ONLINE platforms (100M+ users)
â Search (Google)
â Social (Facebook, Twitter)
â Mobile (Apple, Android)
â Media (YouTube, Pinterest, Instagram, Tumblr)
â Comm (Email, WeChat/WhatsApp/Line/Kakao, Voice, SMS, etc)
!
⢠LOTS of little bets: Accelerators, Angels, Angel List, Small Exits
â Y Combinator, TechStars, 500 Startups
â Capital + Co-working + Mentoring -> Design, Data, Distribution
â âFast, Cheap Failâ, network effects, quantitative + iterative investments
9. Before & After 2 Dot-Com Crashesâ¨
Daft Punk Startup: Simpler, Faster, Cheaper, Smarter
Before 2000
⢠Sun Servers
⢠Oracle DB
⢠Exodus Hosting
⢠12-24mo dev cycle
⢠6-18mo sales cycle
⢠<100M people online
⢠$1-2M seed round
⢠$3-5M Series A
⢠Sand Hill Road crawl
⢠Big, Fat, Dinosaur Startup
After 2008
⢠AWS, Google, PayPal, FB, TW
⢠Cloud + Open Source SW
⢠Lean Startup / Startup Wknd
⢠3-90d dev cycle
⢠SaaS / online sales
⢠>3B people online
⢠<$100K incub + <$1M seed
⢠$1-3M Series A
⢠Angel List global visibility
⢠Lean, Little, Cockroach Startup
12. This TalkâŚ
⢠What is 500 Startups?
⢠Changes in Tech + VC
⢠âLean VCâ = Quantitative Venture Capital
⢠Building Startup Ecosystems
⢠Global Entrepreneurship
⢠Q & A
13. Silicon Valley 2.0: â¨
Lots of Little Bets
aka âMoneyBall for Startupsâ
⢠VC Evolution: Physician, Scale Thyself (Aug 2012)
⢠MoneyBall for Startups, 500 Startups Investment Thesis (Jul 2010)
15. The Lean VC:â¨
Lots of Little Bets, Incremental Investment
Method: Make little bets in lots of startups using
incremental investment, iterative development.
Start with many small experiments, filter out failures,
and expand investment in successes.
!
⢠Incubator: $0-100K (âBuild & Validate Productâ)
⢠Seed: $100K-$1M (âTest & Grow Marketing Channelsââ)
⢠Venture: $1M-$10M (âMaximize Growth & Revenueâ)
16. Investment Stage #1: â¨
Product Validation + Customer Usage
⢠Structure
â 1-3 founders
â $25-$100K investment
â Incubator environment: multiple peers, mentors/advisors
!
⢠Test Functional Prototype / âMinimum Viable Productâ (MVP):
â Prototype->Alpha, ~3-6 months
â Develop Minimal Critical Feature Set => Get to âIt Works! Someone Uses It.â
â Improve Design & Usability, Setup Conversion Metrics
â Test Small-Scale Customer Adoption (10-1000 users)
!
⢠Demonstrate Concept, Reduce Product Risk, Test Functional Use
⢠Develop Metrics & Filter for Possible Future Investment
17. Investment Stage #2: â¨
Market Validation + Revenue Testing
⢠Structure
â 2-10 person team
â $100K-$1M investment
â Syndicate of Angel Investors / Small VC Funds
!
⢠Improve Product, Expand Customers, Test Revenue:
â Alpha->Beta, ~6-12 months
â Scale Customer Adoption => âMany People Use It, & They Pay.â
â Test Marketing Campaigns, Customer Acquisition Channels + Cost
â Test Revenue Generation, Find Profitable Customer Segments
!
⢠Prove Solution/Benefit, Assess Market Size
⢠Test Channel Cost, Revenue Opportunity
⢠Determine Org Structure, Key Hires
18. Investment Stage #3: â¨
Revenue Validation + Growth
⢠Structure
â 5-25 person team
â $1M-$10M investment
â Seed & Venture Investors
!
⢠Make Money (or Go Big), Get to Sustainability:
â Beta->Production, 12-24 months
â Revenue / Growth => âWe Can Make (a lot of) Money!â
â Mktg Plan => Predictable Channels / Campaigns + Budget
â Scalability & Infrastructure, Customer Service & Operations
â Connect with Distribution Partners, Expand Growth
!
⢠Prove/Expand Market, Operationalize Business
⢠Future Milestones: Profitable/Sustainable, Exit Options
19. This TalkâŚ
⢠What is 500 Startups?
⢠Changes in Tech + VC
⢠âLean VCâ = Quantitative Venture Capital
⢠Building Startup Ecosystems
⢠Global Entrepreneurship
⢠Q & A
23. 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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24. 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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25. This TalkâŚ
⢠What is 500 Startups?
⢠Changes in Tech + VC
⢠âLean VCâ = Quantitative Venture Capital
⢠Building Startup Ecosystems
⢠Global Entrepreneurship
⢠Q & A
26. 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
27. 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 âEntrepreneurialâ (defân: âcan create a $10M rev/yr businessâ)
⢠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
⢠Potential: 5,000 VCs deploy $10M->20 startups = $50B/yr -> 100,000 startups
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