Startups: Go Local or Go Global? (ArabNet Dubai, June 2014)
1. Startups:
Go LOCAL or Go GLOBAL?
@DaveMcClure
@500Startups #ArabNet
Dubai, UAE (June 2014)
2. This Talk Is AboutâŚ
⢠500 Startups
âInternet Seed Fund + Accelerator + >200 Intl Startups
⢠Assessing Global Markets
â(# users, by language/geo) * (avg $ GDP) * (% internet) = online spend by lang/geo
âgrowth of factors above
!
!
⢠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 and partners are in [X] (where X = USA, EU, China, Saudi, 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
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 Coâs / 40+ Countries!
⢠Wildfire (acq GOOG, $350M)!
⢠MakerBot (acq SSYS, $400M)!
⢠Viki (acq Rakuten, $200M)
⢠Simple (acq BBVA, $117M)
⢠Twilio
⢠SendGrid !
⢠Credit Karma
⢠Udemy
6. 6
Silicon Valley Investor Ecosystem
!
!Angels &
Incubators
($0-10M)
!
âMicro-VCâ Funds
($10-100M)
âBigâ VC Funds
($100-500M)
âMegaâ 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
7. 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: East Asia (3x), Europe (2x), LatAm (2x), India (2x), MENA (2X)
8. 8
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
9. 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
10. 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
11. 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 disturb platforms (search, social, mobile, video, etc)
⢠Online payment methods / credit card distr
⢠Physical goods delivery / logistics
⢠Social media usage / behavior
⢠3 markets in 1: rich, middle-class, internet poor
13. Why You SHOULD NOTâ¨
Go Global
youâre a tiny little startup,
you donât speak the language,
your local market is big [enough]
14. 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, Germanu, Brazil)
⢠Your local market customers are REALLY RICH (ex: Saudi, Qatar)
⢠You have customers / revenue.
⢠You have a great living situation, family, kids, etc
15. 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 :)
16. Why Go Global?â¨
(because California is *awesome*)
⢠Itâs BIG. (US, EU, China are huge markets⌠also Saudi)
⢠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.
17. Angel* List: It Rocks.â¨
(angel.co)
⢠Startups & Investors
⢠Activity & Metrics
⢠Platform & APIs
!
⢠*ps â not just for Angels,
not just for USA
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. 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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