VENTURE51 IS A SEED- & EARLY-STAGE FUND BUILT FOR ENTREPRENEURS BY ENTREPRENEURS.

condensed pitch-book

WHY EARLY-STAGEVENTURE CAPITAL

“The third great wave of the Internet is mobile and social together, it’s going to be tectonic.”

-John Doerr

FAVORABLE MEGATRENDSDisruptive emergence of new media

and distributed co-creation moves into the mainstream

Internet and new media tools disrupting production and consumption patterns of content/

media and commerce behavior of consumers

Tectonic shifts in consumer-facing communication, commerce, content & consumption

Convergence problems creates a variety of cloud/client opportunities (both business & consumer landscapes)

Mobile platforms reshaping distribution and consumption paradigms

Macro knowledge and impact-analyses of global consumer trends and mass collaboration at scale

Global demand for consumer-focused technology products and service, and the the emergence of global languages and geographic arbitrage

Nascent tech startup ecosystems beginning to bloom across the globe

HTML5, the new web standard that allows to make interactive web pages, is going to revolutionize the media and advertising industries

User Experience is the new unfairadvantage and the growing importance of user experience and design

The age of the multi-sided business model

URLs for IRL: enabling the Internet of “things” as the offline world is quickly becoming stapled into the future by combining physical representations with

digital ones

Tech 2011+

VCReboot

2011+Economy

Build tech faster, better & cheaper

Traditional VCs continueto exit early stage as their funds are not equipped to play in these early rounds

Companies are earning record-high profits in recent quarters as a result of many of the cost-cutting efforts deployed after the credit crisis and the massive layoffs. These same companies are now looking to innovate thru acquiring early-stage technology startups.

FORMED IN VINTAGE MARKETAverage startup can be launched for under $500K (it’s the new $5M)

Unemployment rate is >10% (April 2010)

Traditional VCs are expected to decrease in the early-stage by 60% through 2012. VCs are leaving early-stage deals because they are sitting on too much capital and will need to focus on legacy positions due to the size of exits over the past decade. (National Venture Capital Association)

$500K IS THE NEW $5M

Date of first cashflow positive

VC

Burn

Date of cashbreakeven

Web 1.0

Web 1.0 Traditional J-Curve

Old Way

Small Dipsof Capital

Web 2.0

Web 1.0

Traditional

Web 2.0 Curve

Kinda Old Way

Source: Web 2.0 Strategy Guide

2011 STARTUP CURVE

Web 2.0

Web 1.0

Traditional

The new tech startup costs under $500K to get to market and build value. The new tech startup also gets to market 10X faster in todays real-time build.

Even Smaller Dips of Capital

Tech 2011 Similar to the web 2.0 curve but with even cheaper startup costs and more realistic growth acceleration.

BUYING POWERCompanies are earning record-high profits in recent quarters as a result of many of the cost-cutting efforts deployed after the credit crisis and the massive layoffs. These same companies are now looking to innovate thru acquiring early-stage technology startups.

Highly Acquisitive Tech Giants

Actively Acquisitive Tech Up & Comers

Actively Acquisitive Tech Giants

Actively Acquisitive Consumer & Media Giants

privately owned companies, consumer facing brands needing to innovate thru technology, digital media agencies and lower-cap tech companies needing to innovate all have cash on hand.

1000+ OTHER COMPANIES

SEED, DISCOVER, PILE ON & ACCELERATE(Seed, discover or help achieve P/M Fit thru our shared network & in-house expertise, pile on & buckle up)

Acceleration Resources

Follow-On Placement (back the truck up and pile on)

Lean/Agile Startup Model - Achieving Product/Market Fit thru Customer Development

Advisor & Mentor

Network

StartupEnablementResources

AppDev

Resources

MarketingResources

BizDev

ResourcesM&A

Resources

Seed-and Early-Stage Capital Placement

INFORMATION TECHNOLOGY

THEMATIC BLENDED-THESIS DRIVEN APPROACHa hybrid philosophy to startup investing in Information Technology (with emerging Intersections)

THEMES

OUR THESIS IS THE - HOW WE INVESTWhat we look for in foundersWhat we look for in companiesWhat we look for in productsWhat we look for in mind-set & cultureWhat we look for in extended teamWhat geographies we look at

OUR CORE IS I.T.

OUR THEMES ARE THE - WHERE WE INVESTThese are the segments we’ve developed themes around for the next 3-5 year period where we will invest. These themes can span categories as they’re often built on standards, protocols, and widely adopted technical viewpoints.

•Native Consumers & Digital Families•Mobile Life•Business “Consumerization”•Real-Time Data•New Commerce•Plumbing

THESIS

EMER

GING

INTE

RSEC

TION

S

INVESTMENT THEMES

Venture51 will leave open a small percentage for newly identified emerging opportunities.

CONSUMER INTERNET

BUSINESS INTERNET & DATA

MOBILE SOFTWARE & SERVICES

REAL-TIME & SOCIAL INTERNET

MOBILE/SOCIAL GAMING

OTHER & EMERGING

ECOMMERCE & DISRUPTIVE MODELS

INFRASTRUCTURE & BACKEND

•Streaming Video•Videosharing•Parenting/Safety •Travel & Planning•Photosharing•Lifestreaming•Adtech•Edtech

•Location-based Services•Gaming•Local Discovery•Mobile Payments &

Transactions•Geo Loc•Mobile APIs• ioS, Android, BB &

Windows•Learning•Proximity-Based

Marketplaces

•Curation•Big data &

Monetization•Crowd-sourcing•Time-Relevant Data•Twitter & Facebook

Ecosystem•Social Layer• Interest Layer•API Platforms

•Virtual Gaming•Multiplayer Online

Games•Social Casual Games•Mobile Gaming•Educational Gaming•Virtual Worlds•Game Mechanics

•Demand Aggregation•Game Mechanic

Commerce•Mobile - Hyper Local•Flash/Group Sales•Micro-transactions•Virtual Goods•Virtual Currencies•Flash Pricing•Group Pricing•DaaS•Freemium•API Call Services

•Real-time Analytics•Enterprise

Applications•SMB Consumerization•Data Mining•Mobile Enterprise•Storage•Events

•Cloud•Application

infrastructure•Applications software•Networking, storage &

databases (application layer)•Back-end systems•APIs•Development tools

NATIVE CONSUMERS & DIGITAL FAMILIES MOBILE LIFE BUSINESS

CONSUMERIZATIONREAL-TIME

DATANEW COMMERCENEW ECONOMICS PLUMBING

HIGHESTPRIORITY

HIGHPRIORITY

INVESTMENT THESISFounders & Management (with Technical & UX/UI/IxD Chops)We are hugely in favor of the technical founder. We will generally focus on companies started by strong technologists who know exactly what they want to build and how they are going to build it.

Scalable Information Technology While there are many exciting new entrepreneurial opportunities in fields like energy, transportation and clean, there continues to be a massive opportunity in Information Technology — which is where we will focus.

Agile AdvisoryWe love getting our hands dirty and shaking trees. We grow our startups through active participation, leveraging our operational expertise (product, marketing & distribution) and professional network

Business Pivots, Not Business PlansYour business plan is wrong. It’s a prediction of the future that is out of date as soon as you hit save, print or send. Things change. Competition. Timing. Costs. Pricing.

Deal Size & Flexible Investment StructuresAs seed and early stage investors, we often provide a company's first outside capital – and typically invest alongside angel investors, angel syndicates or seed syndicates.

Smaller Initial Bets, Bigger Follow-OnOur investment strategy is simple, invest before product/market fit, measure/test to see if the team is finding it, and if so, then exercise our pro-rata follow-on investment opportunity after they have achieved product/ market fit.

Capital Efficient Startups The most important factor, however, is the capital efficiency we are seeing in our and partner’s portfolio companies. Startups simply don't need as much money as the companies did 5 years ago, 10 years ago, or 15 years ago.

VelocityVelocity is key to faster success or faster failure. Arriving at either one of these outcomes faster is better. The reason to go fast is not so much that it's critical to get your product to market early, but that you haven't really started working on it till you've launched and put it in contact with users.

Grounded in Customer Development We look for product/market fit through the lens of Customer Development. We invest smaller amounts of capital prior to product/market fit and double down afterwards.

Product, Market(ing) & ScaleMarketing is a function of a market, and we deeply believe you can not succeed without both. However, We believe that the product is the heart of any technology company. The company gets built around the product.

Addressable Market We seek to fund companies that provide a unique solution to an existing urgent need in an addressable market. And we typically avoid companies that try to change consumer behavior or create a new consumer need.

Defensibility Good companies are built on a valuable data asset. As these systems the companies build accumulate data over time, they increase the value of the product and make it more difficult for newer services to deliver an equivalent experience. Defensibility lies in the data.

HARDCORE DESIGN-DRIVEN THESISUser Research Research is interwoven into all user experience roles – the inspiration and validation of ideas and designs greatly enhances the chance of success in meeting your design objectives.

Front-end Stack (toolset)the collection of front-end web-standards technologies—(X)HTML (of any flavor), CSS, and JavaScript—as “the web stack”

Visual DesignVisual design (aka Visual Communication, Information Design is primarily concerned with clearly communicating the aesthetic, personality and function of a system and to invoke feeling.

Backend Knowledgeto back-end technologies. Those things are important, certainly, but not from the front-end point of view. A browser doesn’t care if your page was generated by PHP, Django, Rails, Perl

Information Architecture (IA)IA entails designing an information system and the users’ pathways through it. The IA’s goal is to create a system that will provide useful information to suit the user’s context.

Conversion Metrics/ User FlowsGaining visibility into what’s working and what’s not in your products. Measure what’s happening and help tune your user experience and help eople understand and create user flows.

UI/UX . User experience highlights the experiential, affective, meaningful and valuable aspects of human-computer interaction and product ownership, but it also includes a person’s perceptions of the practical aspects such as utility, ease of use and efficiency of the system

Story Telling/CopywritingGood writers can effortlessly guide users through an interface with concise instructional copy.

IxD The Interaction Designer is a story-weaver – scripting the narrative between man and machine – the dialogue of system response to user action

Creative Vision/Business Model While there are many exciting new entrepreneurial opportunities in fields like energy, transportation and clean, there

35-50male

Design Founder

EMERGING INTERSECTIONS

WEBCONSUMER INTERNET

SMART DATA

CLOUD

CROWD FUELED

CAPITALEFFICIENT

ENTERPRISE

MOBILE

DISTRIBUTION

EDUCATION

INVESTMENT STAGE

Series A Investment

Series B Investment

Series C Investment

Concept / Prototype

Customer Discovery & Validation

Proof of Concept / Product-Market Fit

First Commercial Success / Marketing /

DistributionFully Operational /

ScaleGrowth Exit: M&A/

IPO

Early-Stage / Super Seed Investment

Amount of Money

Startup Stage

Founder Funded

Seed/Super Angel/Micro-VCInvestmentAngel / Friends &

Family / Advisory

Mezzanine

Series D Investment

Business Model Scale

GEO AGNOSTICSeattle

Silicon Valley

Southern Cal

Boulder

Austin

New York

Boston

Vancouver

Atlanta