Download - Inaugural Asian Business Angel Forum Keynote
© 2009 Felicis Ventures LLC
Inaugural Asian Business Angels Forum Angel Investing as Foundation for Entrepreneurship
Aydin Senkut Founder & Managing Director Felicis Ventures
http://www.felicisvc.com Twitter.com/asenkut
© 2009 Felicis Ventures LLC
Aydin Senkut – Felicis Ventures Bringing operational excellence & scaling experience to funding start-ups
Acquired by Google
Acquired by Twitter
Mixer Labs
Acquired by Shanda Games
Acquired by AT&T
Acquired by Intuit
Acquired by IAC
Acquired by Google
Acquired by Microsoft
First Google Product Manager & International Sales
Angel Investor with 50+ investments, 11 exits
One of the top 25 Tech Angels according to Businessweek (March 8, 2010)
© 2009 Felicis Ventures LLC
Angel Investing – Why Does It Matter ? Biggest Success Stories of Today were once backed by Angel Investors
© 2009 Felicis Ventures LLC
• Usually the first outside investor
• Invest with the expectation of a financial return
• Invest usually locally and regionally
• Participate actively in the investment process
• Usually care about the entrepreneurs and the companies they invest in / interested in building personal relationships with companies & employees
• Offer advice and guidance to founders
What is an Angel Investor ? Anyone who provides private capital to a [non family] start-up
© 2009 Felicis Ventures LLC
Angel Investors in VC Ecosystem
Friends, Family or Grants
Rev
enue
/ E
BIT
DA
Individual Angels / Groups / Boutique VCs
Venture Capital Funds
Investment Banks & PE Funds
Acquisition Stage / IPO / Mergers
Idea Start up Intro Rollout Growth Expansion Maturity
Angel Investors $10k – $1MM
Grants of up to $1MM
Inv. Banks / PE $10MM - 100MM+
© 2009 Felicis Ventures LLC
Angel Investors in the US
* Source: Angel Capital Association Presentation by Ian Sobieski, Band of Angels, Oct 2007
U.S. Millionaires
Estimate Of Informal Investors
225,000
Estimate of Active Angels
(Center For Venture Research)
Investors In Angel Groups
© 2009 Felicis Ventures LLC
Rising Popularity of Angel Investing 3x Growth in North American Angel Organizations in 7 yrs
* Source: Center for Venture Research (pre 03 data) and Kauffman Foundation/ACEF (04-06 data)
NUMBER OF ANGEL ORGANIZATIONS
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Angel Investing – Investment Focus Internet / Software lead other segments
* Source: Center for Venture Research (pre 03 data) and Kauffman Foundation/ACEF (04-06 data)
© 2009 Felicis Ventures LLC
Angel Investments in Perspective In the Context of Venture Capital
Ear
ly S
tage
to L
ate
Sta
ge
2007 Angel Investments 2007 VC Investments
51,000 Deals
Average Deal Size: $500,000
3,416 Deals Average Deal Size:
$7,500,000
* Source: University of New Hampshire Center for Venture Research, Price Waterhouse Coopers
© 2009 Felicis Ventures LLC
Venture Capital is Highly Concentrated Silicon Valley (40%) and NY (7%) account for nearly half of venture investment
* Source: NVCA Research 2009; PriceWaterhouseCoopers
© 2009 Felicis Ventures LLC
What Makes Silicon Valley Special
No Success Without Failure
Adaptability
Elite Universities (with Global, Highly-Selected Student Bodies)
Successful Entrepreneurs Act as Mentors & Angel Investors
© 2009 Felicis Ventures LLC
• Consumer internet still offers best path to high multiple returns
• Key differentiator: capital efficiency
• Virtually all the big successes were first backed by angels
Total $Raised Last Valuation ExitType Multiple InYears Founded Last Valuation at IPO or Exit
Facebook $716.0 $10,000 - 14 5 2004 2009
Twitter $55.0 $285 - 5 3 2006 2009
Zappos $62.8 $920 M&A 15 10 1999 2009
Adify $27.0 $300 M&A 11 2 2006 2008
Google $25.1 $23,100 IPO 920 7 1998 2005
Bebo $15.0 $850 M&A 57 3 2005 2008
Zimbra $14.5 $350 M&A 24 3 2004 2007
Photobucket $13.5 $300 M&A 22 4 2003 2007
YouTube $11.5 $1,650 M&A 143 1 2005 2006
Last.fm $5.0 $280 M&A 56 5 2002 2007
Note:Allamountsinmillions
Silicon Valley Success Story “Internet is the Greatest Legal Wealth Creation in History”
© 2009 Felicis Ventures LLC
Where Should Angels Invest ?
Great Companies
Focus
Talent Passion
Innovation
Unique Culture and Fun
Finding Great Companies is the Basis of Angel Investing
© 2009 Felicis Ventures LLC
What Does It Take… …To Be A Successful [ Angel ] Investor ?
Capital Network
Proprietary Deal-flow
Domain Expertise
Judgment (Pattern Recognition)
© 2009 Felicis Ventures LLC
Seeding Future Winners - Incubators LEADING EXAMPLE IN THE US
• Review 600+ companies every 6 months
• Each batch around 20+ companies (~4% acceptance rate)*
• Investment: $5K USD + $5K USD per founder
• Stake: Usually 2-10%
INTERESTING FACTS • 25% of accepted companies are international
• Last batch, more than half the companies changed what they were working on
• Last Investor Day included 27 companies and 210 Investors
KEY RESULTS Companies Acquired • Reddit (acquired by Conde Nast) • Parakey (acquired by Facebook) • Omnisio (acquired by Youtube/Google) • Zenter (acquired by Google) • Anywhere.fm (acquired by iMeem)
Companies with sizeable VC rounds • Heyzap • Loopt • Scribd
• Justin.tv • Xobni • Posterous
© 2009 Felicis Ventures LLC
Strong brand & highly selective (admission ratio of 1-5%)
Limited time (~3 months) to encourage execution and fast iteration
Heavy Mentorship in all key product areas (especially engineering, product, and fund-raising)
Community and participation (Biggest success factor cited by founders)
Active involvement of investors increases funding rate to 75%*
* Techstars
How Can Incubators Succeed ? Filter, Stress, Mentor, Engage & Create an Eco-system
© 2009 Felicis Ventures LLC
Growth is Key to Successful Investing Key: Target the Fastest Growing Internet and Mobile Markets
Global Rank Country
2007Users Added(000s) 2007Y/Y Growth Penetration
1 China 73,000 53% 16%
2 US 9,800 5% 73%
3 Brazil 7,400 17% 26%
6 India 5,000 7% 7%
8 Russia 4,311 17% 21%
INTERNET USER NET ADDITIONS
Global Rank Country
2007 Net Subs Added(000s) 2007Y/Y Growth Penetration
1 China 86,228 19% 41%
2 India 67,570 41% 21%
4 Brazil 21,062 21% 64%
5 Russia 19,326 13% 120%
7 US 13,596 6% 85%
MOBILE SUBSCRIBER NET ADDITIONS
Source: Morgan Stanley Research, ITU
© 2009 Felicis Ventures LLC
Growth is Happening Faster Example: Disruptive Platforms - Time to Success much Shorter
Platform
Approximate Time Since Inception Users Y/Y Growth
Applications Available
Applications Downloaded
Skype 6 yrs 405MM 47% - -
Youtube 4 yrs 363MM 40% - -
Facebook 5 yrs 236MM 135% 52K+ 308MM+
iTunes Store 8 yrs 75MM - 10MM+ 6B+
Nintendo Wii 2 yrs 45MM 125% ~1K 189MM+
iPhone / iPod Touch 2 yrs 33M 265% 35K++ 1B+
Amazon Kindle 1 yrs - 239% 240K+ -
Source: Morgan Stanley Research; dates from inception based on Wikipedia; user numbers current as of mid 2009
© 2009 Felicis Ventures LLC
Next Big Things
Other • Data Driven Smart Web Apps
• Crowd Labor
Education
Search • Local / Real-time Search
• Subjective Search
Health • Personal Genomics
• Electronic Health Records
Mobile • Mobile Social Gaming
• Viral Mobile Apps
• Online Education / Next Generation Text Books
• Specialized Networks around College Admissions
© 2009 Felicis Ventures LLC
Drastic Changes in Exits Start-ups Need Less Capital, Exits Shrinking…
Source: 2009 report by NVCA and Thomson Reuters
• Ave exit size down about 4x in 2 years – M&A sweet spot is $100M
• First big jump in Q2 of 2009
0
50
100
150
200
250
300
350
400
Q1-2006 Q2-2006 Q3-2006 Q4-2006 Q1-2007 Q2-2007 Q3-2007 Q4-2007 Q1-2008 Q2-2008 Q3-2008 Q4-2008 Q1-2009 Q2-2009
Average IPO Offer Amount
Average M&A Deal Size
© 2009 Felicis Ventures LLC
Singapore in Context
Singapore Silicon Valley
Population • 4.22M
GDP • $700+ billion*
Universities • 13
Population • 4.84M
GDP • $163 billion*
Universities • 4
Silicon Valley in Comparison
Source: CIA World Factbook, Wikipedia; SV GDP estimated as roughly 5% of US economy
© 2009 Felicis Ventures LLC
Singapore Silicon Valley
Singapore in Context Silicon Valley in Comparison
Companies in Fortune Global 500 Companies in Fortune 500
© 2009 Felicis Ventures LLC
Rank Company Country Market Capitalization
1 Google US $102B 2 Amazon US $29B 3 Yahoo US $19B 4 eBay US $15B 5 Yahoo JP Japan $14B 6 Softbank Japan $13B 7 Activision US $13B 8 Tencent China $12B 9 Baidu China $6B
10 Rakuten Japan $6B 11 Electronic Arts US $6B 12 Alibaba China $5B 13 NHN Korea $5B 14 NetEase China $3B 15 Expedia US $2B
Food For Thought
TOP GLOBAL INTERNET COMPANIES
What will it take to have an entry from Singapore here ?
Source: Morgan Stanley Research, 2009 – Mary Meeker / State of the Internet presentation
© 2009 Felicis Ventures LLC Confidential – Copyright Felicis Ventures LLC
Aydin Senkut twitter.com/asenkut www.felicisvc.com