silicon valley: vcs, startups and venture spirit

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The beginner's guide to Silicon Valley, startup world and venture capital - presentation to Tallinn Technical University students on Dec 1, 2011

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  • 1.Silicon ValleyStartups, VCs and venture spirit Allan Martinson MTVP & Kurat.com

2. My startup (and not so startup) lifeBaltic 3. Beginners guide toKnown locations ofSilicon ValleyS.F. Restaurants, gigs, gays, liberals and the #estonianmafia hippiest startups SFO The gates S.J.Please wake me up Palo Altowhen Im finished The CapitalSand Hill Rd Money lives here No evil here. Seriously Stanford Uni.The brains Apples hereAfter $100m exit youwill live here The Zuck Country 4. Valley of DeathForget Silicon Valley. Lets start fromDeath Valley 5. A startup is a human institutiondesigned to deliver a new product orservice under conditions of extreme uncertaintyEric RiesFounder, the Lean Startup MethodologyTheleanstartup.com 6. The Art of the Start Six lessons for your stupid little startup 7. How does a startup start? 8. Lesson 1: Its all about people 9. It does not start from a business ideaIt starts fromSkeptic 2 founder rulepeople Leader Incubation takes yearsMulti-skilledTeam &talents Values 10. Lesson 2: The birth of an idea 11. This does not happen 12. Three origins of great startups Copycats: Copy existing businessmodel to new markets Evolutionary: Seek better solutionto existing problems Revolutionary: Seek unknownsolution to unknown problemsThe best ideas come on cross-roads of trends and disciplines 13. The What The 30-seconds pitch:tell your granny Who is your customer What does your company do for this customer Why are you better than competition Do you pass the Googletest? 14. Lesson 3: The art of pivot 15. Pivot, explainedI am not leaving you I am pivoting to another man 16. The life of any startup canbe divided into two parts before product/market fitand after product/market fit Marc Andreessen Founder, Netscape Partner, Andreessen Horowitz 17. Why pivot?Not a single great companyfollows its original business ideaFailure is not a problem Slow failure is a problem 18. The importance of milestones MVP (Minimum Viable Product): 48 hrs 3months Initial customer validation: 1 week 6 months One million something (users, $$$, etc): 1-2years You shall pivot if: Your solution seeks a problem, not vice versa Nobody wants to use your product even you You have ceased to believe into your company for >1 month 19. Lesson 4: The Need For Speed 20. Why speed? Startups, by verydefinition, areprobabilistic Success seemsintentional only inretrospective impossible to compute 21. In unpredictable environmentsspeed and focusare the best boosters of success rate And hunger is the best factorcontributing to it 22. The ultimate example of being focusedI was too busy, I didnt dothings like that I just didnt goand meet new people whowere involved in investments. Bill Gates Founder, Microsoft on refusing to meet Warren Buffet 23. Lesson 5: Importance of right signals 24. Silicon Valley is amental state 25. Being Estonian is a full-time job 26. Lesson 6: Where to find smart investors 27. Raising venture capital is theart of younger men seducingolder men - Anonymous 28. Typical lifecycle of a high-tech company+0- 18-24 mo 9-18 mo2-3 Y3-7 Y21050 200 500 employeesFFF A-round B-roundIPO or$10-500K$1-10m$5-50m exit 29. Typical life cycle in figuresYear1 23 4 5 6Phase StartupEarly growth GrowthExitRevenues ($m) 01 410 2030Growth % 300%150%100% 50%Investment phaseAngel A-round B-roundPre-money / exit valuation ($m) 0,5340 150Investment ($m) 0,4 2,5 25Post-money valuation ($m) 0,9 5,5 65 150Post-money ownership offounders 56% 30% 19%19%Value of founders stake ($m) 0,5 1,712,1 28,0IRR to angel investors124%Money-back, angel56 timesIRR to A-round investors102%Money-back, A-round17 timesIRR to B-round investors 52%Money-back, B-round2,3times 30. What shall you know about VCs Venture capital (LPs) and venture capitalists(GPs) are not the same VCs are in the business of saying NO and thenmaking money You can divorce your wife but you cannotdivorce a VC You shall like, but not love each other If in doubt, pick the smartest 31. Thank you! allan.martinson@mtvp.eeallan.martinson@kurat.com

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