- 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.
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Startup Ecosystems: Local vs. Global?
1. Startups:
Go LOCAL or Go GLOBAL?
@DaveMcClure
@500Startups #EmTech
Mexico City (June 2014)
2. This Talk Is AboutâŚ
⢠500 Startups
âInternet Seed Fund + Accelerator + >200 Intl Startups
⢠Startup Ecosystems & Global Markets
â(# users, by language/geo) * (avg $ GDP) * (% internet) = online spend by lang/geo
!
⢠Why You Shouldnât Go Global
âYouâre a Crappy Little Startup with no customers, revenue, or funding
âYou Donât Speak the Language (not very well, anyway)
âYour local market is >50-100M+ users, and nobody else is going after it
⢠Why You Should Go Global
âYou Live in a Small Country / Startup Ghetto
âThere arenât [m]any local investors / they give you crappy valuations.
âThere ARE local investors, but they are predatory, too revenue-focused, risk-averse
âYour customers / partners are in [X] (where X = USA, EU, China, Brazil, Mexico, etc)
3. 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
6. GeeksOnaPlane.com â¨
(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 âş
!
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)
â % 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
12. Why You SHOULD NOTâ¨
Go Global
youâre a tiny little startup,
you donât speak the language,
your local market is big [enough]
13. Why Stay Local?
(Because itâs HOME)
⢠You donât speak English (well enough).
⢠Your solution doesnât travel well / you wonât/canât localize it well.
⢠Thereâs 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 SHOULDâ¨
Go Global
you live in a small country,
local investors are too conservative,
donât write [enough] checks
give u crappy, low valuations.
!
or, you just love California :)
15. Why Go Global?â¨
(because California is *awesome*)
⢠Itâs 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 âş)
⢠You really love Kim Kardashian, Jay-Z, JT, Beyonce, etc.
16. Angel* List: It Rocks.â¨
(angel.co)
⢠Startups & Investors
⢠Activity & Metrics
⢠Platform & APIs
!
⢠*ps â not just for Angels,
not just for USA
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 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
⢠FUTURE: 5,000 VCs deploy $10M->20 startups = $50B/yr -> 100,000 startups
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