Go Global Now 2014 - Entrepreneurship 360° - Mind the Bridge

Naples – May 12, 2014
Entrepreneurship 360
MARCO MARINUCCI
Founder & CEO, Mind the Bridge Foundation
ALBERTO ONETTI
Chairman, Mind the Bridge Foundation
@MindTheBridge
#jobcreator

What we believe
Investors
Entrepreneurship
Startups
Corporates

Startups

Base Ingredients for a Startup
4

The Entrepreneur profile:
Italy vs. US
The Kauffman Foundation and LegalZoom
Startup Environment Index 2012 Mind The Bridge Survey 2012
1
Age distribution
Entrepreneurs 30 to 49 started businesses at a
higher rate than other age groups did
In Italy 84% are in the 26-45 range. 33 is the
average age
Gender
2 A third of startup owners were women Female entrepreneurs are only 11%
Education
19% had master’s degrees while 8%
3
42% have a master degree while 11%a Ph.D. or
professionals or doctorate
MBA
Prior Experience
57% have 6+yrs of prior
4
industry/work experience
and 44% had started
companies in the past
Funding & Incubation period
5
80% of early-stage business
owners in US used personal
funds to finance their
companies.
Almost 80% has 8/9 yrs avg.
prior working experience
and 23% has founded at
least one company before
Bootstrapping rules (58%),
while 38% got also funding
by external investors.
More info here: “Startups - Italy vs US - Onetti IID 2013”, A. Onetti, Italian Innovation Day, Mountain View, 2013
5

Business Idea
THE BIG IDEA!!!
… THAT MATTERS A
LOT, BUT IT’S ALL
ABOUT EXECUTION …
6

The Business Plan?
“They came to me with no business
plan”
Intel 1968
“Business plans and 5 years financial
projections are a waste of time”
Dave McClure
“No one besides venture
capitalists and the late
Soviet Union requires fiveyear
plans to forecast
complete unknowns”
7
Steve Blank

The Lean Startup Methodology
“The Lean Startup method teaches you
how to drive a startup, how to steer,
when to turn, and when to persevere
and grow a business with maximum
acceleration.”
Eric Ries
Vision Steer Accelerate
TEST the product, collect
FEEDBACK, understand
CUSTOMERS NEEDS
FAIL fast (Pivoting?)
or GROW fast.
MODIFY your MVP, IMPROVE it
“Get out of the Building!”
SCALE

Build-Measure-Learn
What is the problem we aim at
solving?
Pivoting or scale?
1
3 2
MVP: Minimum Viable Product
Metrics, Traction
Validated learning
No plan survives first
contact with customers
9

Investors

The Funding Sources
Bootstrapping
Equity Financing
Early sources
Founders’ capital,
Savings, Family,
Friends
Seed Investors,
Crowdfunding,
Angels,
Early stage VC
(Series A)
Later sources
Venture Debt, Loans,
Working Capital
Lines, Strategic
Partners, Retained
earnings
Later Stage VC
(Series B+),
Corporate VC,
Private placement,
Public markets
11

Angels: General Investment
Process
‣ Informal
‣ Close to Home
‣ Ancillary
‣ Individual vs Group Investment
Source:
NVCA Yearbook
Center for Venture Research, University of New
Hampshire
John Backus, 2012
12

VC: General Investment Process
Limited Partners
Distributions
Fundraising Commitments
VC Firm (General Partners)
Fund Fund Fund
Proceeds
Investment Disbursements
Startup Companies
Exit
IPO/M&A
13

Valuation is a two side process
‣ Size of market opportunity
how big is the market segment, what market share can you
gain?
‣ Comparables
‣ Terms
‣ Time
Multiple of Revenue (trailing/forward) or EBITDA
Liquidation Preferences/Management Carve-out/Cash vs
Paper/Earn-out/Lock-up
Better «quick and dirty» than never
‣ Ultimately
Bid vs. Ask negotiation
14

VC Average Investment Portfolio
DEFAULTS
BREAKEVEN
“FIRE SALES”
ZOMBIES
IPO/M&A
GOOD IPO/M&A
WILD ONES (IPO)
60%
12%
10%
8%
6%
4%
0%
TOTAL
100%
Source: ATV

Venture Capital Returns follow the
Power Law
Tumblr-Yahoo Deal
16
16

Who are The Kings?
Just look at the VC firms that are behind the top 100 tech exits
17

The Selection Aptitude?
18

Corporates

Disruptive innovation
Is yours far behind?

Innovators in large organizations...
Kodak invented digital
photography, but could not
shift its focus quickly enough
from film.

“My organization gives new ideas a
fair hearing and implements them
quickly, when they make sense.”

Sorry, no ideas are born fully formed

Risk averse leadership

And what about your employees?

David & Goliath Must Dance:
Startups are the fast track to
disruptive innovation

Silicon
Valley:
trends

What’s shaking?
1. The lean startup movement
‣ Lean Startups do not require a lot of cash
‣ The startup no longer needs $5M before
launching
LEAN is everywhere
28

What’s shaking?
2. The rise of
accelerators and
incubators
‣ Plenty of
“Archimedes labs”
all over the world
‣ Typically under
$20,000 money
offered
29

What’s shaking?
3. Accelerators’
Bubble?
‣ Seed capital and
growth capital is
available
‣ Only 27% are
funded after 1 year
Source:
Duncan Davidson (Bullpen Capital) cited in No.1 -
The Startup Valley of Death - December 2013
30

What’s shaking?
4. The retreat of VCs to
later stage (Series A
Crunch)
‣ Why not wait to see who
did well and selectively
invest only in the winners?
‣ Most VCs abandoned early
stage investing
‣ +90% of startups and 73% of
incubated startups end up
in the Valley of Death
31

Angel vs Venture Capital Investments
There is a lot of angel
money ($20B), indeed:
‣ 3X the money that goes
in to Early-Stage Venture
($7.4B)
‣ 1.5X the money that
goes in to late stage
venture
Source:
NVCA Yearbook
Center for Venture Research, University of New Hampshire
John Backus, 2012
32

What’s shaking?
5.Angel Bubble?
‣ Only 2.5% of angelfunded
companies will
ever raise venture capital.
What happens to the rest?
‣ Acqui-hiring= nice exits
“We are in an angel bubble that will keep inflating
when Crowdfunding meets Main Street in 2013.
The bubble will burst. Not tomorrow. But soon”
(John Backus, NAV)
Source:
NVCA Yearbook
Center for Venture Research,
University of New Hampshire
John Backus, 2012
33

What’s shaking?
6. The Series B Trap
‣ Pile of cash for
companies that
get the elusive “traction”
‣ Raising tens or even
hundreds of millions of
dollars without massive
dilution
Source: No.1 - The Startup Valley
of Death - December 2013
34

What’s shaking?
6. (Equity) Crowdfunding
‣ Disintermediation
‣ Transparency
‣ Lowering the bar: We are all
investors
‣ Syndicates= VC like $$
35

What’s shaking?
7. Acqui-Hires fuel the Market
Top 10 Acquirers In Silicon Valley
1 Cisco 160
2 Google 143
3 Microsoft 132
4 IBM 117
5 Yahoo! 107
6 Rent My Vacation Home USA 96
7 Hewlett-Packard 86
8 Oracle Corporation 84
9 AOL 62
10 EMC 58
Font: Crunchbase April 2014
36

Growth Strategy: Twitter
ACQUISITIONS (2008-2014)
Mesagraph, 3/2014 1
SecondSync, 3/2014 2
MoPub, 9/2013 3 $350M
Trendrr, 8/2013 4
Marakana, 8/2013 5
Spindle, 6/2013 6
Lucky Sort, 5/2013 7
Ubalo, 5/2013 8
Bluefin Labs, 2/2013 9 $80M
Crashlytics, 1/2013 10 $100M
Cabana, 10/2012 11
Vine, 10/2012 12 $30M
Clutch.io, 8/2012 13
Hotspots.io, 4/2012 14
Posterous, 3/2012 15 $10M
Dasient, 1/2012 16
Summify, 1/2012 17
Whisper Systems, 11/2011 18
Julpan, 9/2011 19
Bagcheck, 8/2011 20
BackType, 7/2011 21
AdGrok, 5/2011 22 $10M
TweetDeck, 5/2011 23 $40M
Fluther, 12/2010 24
Smallthought Systems, 6/2010 25
Dabble DB, 6/2010 26
Cloudhopper, 4/2010 27
Atebits, 4/2010 28
Mixer Labs, 12/2009 29
$5.2M
Values of n, 11/2008 30
Summize, 7/2008 31 $15M
Source: Crunchbase April 2014
Funding
FUNDING TOTAL
$1.16B
Acquisitions
# Acquisitions 31
M&A TOTAL: $630M
FUNDING(pre-IPO)/ACQUISITION SPENT ratio: 1.84
MAJOR ACQUISITION: MOPUB ($350M)
Exit
Public
Date
Raised
Post IPO Valuation
NASDAQ:TWTR
nov-13
$1.82B
$18.1B
37

Twitter Acquisition Strategy
In total, the startups acquired raised $73M in
funding across 42 transactions prior to being
acquired by Twitter.
Of the acquired startups that raised funding, only 6
ever reached the Series B stage.
9 startups were acquired by Twitter after receiving
just seed or angel funding.
On average, Twitter startups with funding raised 2.4
rounds prior to acquisition.
The average time between first funding and
acquisition was 2.1 years.
18/31 acquisitions have come since 2012
highlighting the company’s accelerated pace of
acquisition.
38

Twitter Acquisitions: Locations
58% of Twitter’s
acquired firms were
based in California.
10% of acquisitions
each were for New
York or Massachusettsbased
companies.
39

Growth Strategy: Facebook
ACQUISITIONS (2007-2014)
Oculus VR, 3/2014 1 $2B
WhatsApp, 2/2014 2 $19B
Branch, 1/2014 3 $15M
Little Eye Labs, 1/2014 4
SportStream, 12/2013 5
Onavo, 10/2013 6 $150M
Jibbigo, 8/2013 7
Monoidics, 7/2013 8
Parse, 4/2013 9 $90M
Spaceport.io, 4/2013 10
Osmeta, 4/2013 11
Storylane, 3/2013 12
Atlas Advertiser Suite, 2/2013 13
threadsy, 8/2012 14
Spool, 7/2012 15
Bolt | Peters, 6/2012 16 $50M
Face.com, 6/2012 17 $60M
Karma, 5/2012 18
Lightbox, 5/2012 19
Glancee, 5/2012 20
Tagtile, 4/2012 21
Instagram, 4/2012 22
$1.01B
GazeHawk, 3/2012 23
Friend.ly, 3/2012 24
Sendoid, 3/2012 25
Gowalla, 12/2011 26
WhoGlue, 11/2011 27
Strobe, 11/2011 28
Digital Staircase, 11/2011 29
Snaptu, 9/2011 30 $60M
Push Pop Press, 8/2011 31
Sofa, 6/2011 32
Beluga, 3/2011 33
Rel8tion, 1/2011 34
Pursuit, 2011 35
Zenbe, 11/2010 36
drop.io, 10/2010 37
Nextstop, 9/2010 38
$2.5M
Chai Labs, 8/2010 39 $10M
Hot Potato, 7/2010 40 $10M
ShareGrove, 5/2010 41
Divvyshot, 4/2010 42
Octazen Solutions, 2/2010 43
FriendFeed, 8/2009 44
Parakey, 7/2007 45
$47.5M
Source: Crunchbase, April 2014
Funding
FUNDING TOTAL
FUNDING IPO
Acquisitions
# Acquisitions 45
Total
$22.5B
MAJOR ACQUISITION:
WHATSAPP ($19B)
• $4B Cash
• $12B FB shares
• $3B Stock options
Exit
$2.33B
$113.8B
Public
NASDAQ:FB
Date
may-12
Raised
$18.4B
Post IPO Valuation $104B
40

Facebook Acquisition Strategy
”My company acquires other, smaller startups to hire great people.
The fact that so many of the people who are leading products
within Facebook are coming from a
startup just creates an incredibly
entrepreneurial environment at scale.”
Mark Zuckerberg, CEO Facebook
VIDEO: WHY FB BUYS STARTUPS
http://www.youtube.com/watch?v=OlBDyItD0Ak
“We think about either acquiring
talent or actually looking at
technologies that we can bring
in and build products on.”
“We don’t usually acquire products.”
Christian Hernandez, Facebook’s head of
international business development
41

Facebook -> Glancee
Acquihired: Talent & Technology acquisition
Deal Glancee was last acquisition
before IPO (after Instagram), mainly
undisclosed terms
INSTAGRAM vs GLANCEE
‣ Before getting acquired, Glancee had only been
downloaded 30k times and 20k users using it in the
background on their iPhone
‣ Instagram had 35 million . users and was growing fast
42

Facebook -> WhatsApp
Regarding the size it is equal to 25 Instagram ones
Deal WhatsApp will operate
independently retaining its brand, $3B
stock options for founders and
empoyees if they work at least 4years
@ Facebook
WHATSAPP vs INSTAGRAM
‣ Instagram had 13 employees before the deal.
‣ WhatsApp and its 55 employees were gaining
one million new users every day.
43

Conclusions
1. Let’s build Entrepreneural Ecosystems thinking at
long term economical impact
2. Startups cannot prosper in a vacuum: smart
money + exit strategies needed + link to large
corporates
3. Education is key at startup/investor/corporate
levels
.
44

THANK YOU FOR YOUR
ATTENTION
SOCIAL MEDIA:
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