silicon valley 101

SILICON VALLEY 101STARTECH AUGUST 27, 2016 @CRAFT AND SOCIAL EL PASO, TX

WHO ARE WE?BETO

• Ebetuel (Beto)Pallares – AdVenture Capitalist• Manages a seed/early-stage fund now: $5.5M• Manages/advises on a $40M+ fund of funds and direct investment fund• Network of over 100+ venture funds, with 12 in which he has direct oversight• Manage nearly 2 dozen direct investments across multiple sectors and stages• Advises on creation of venture funds and development of ecosystems• Kauffman Fellow (www.kauffmanfellows.org)• Presidio Fellow (www.presidiofellows.org)• Experience in start-up and late-stage company due diligence, both domestic and international• BA Brandeis University, MBA UTEP, PhD in International Business Strategy with expertise in

accelerators/incubators and international technology companies

WHO ARE WE?ROBERT

• Digital Media/Technology & Sports/Entertainment expert with over 10 years experience

• Conduct start-up and fund due diligence on behalf of Joseph Advisory

• Cofounding CoWork Oasis & STARTech in Downtown El Paso – Fall 2016

• Served as an advisor for NMSU’s Arrowhead Center for Entrepreneurship

• Worked as an analyst for a new early-stage startup fund in Santa Monica (Silicon Beach)

• Worked at ESPN in Sales & Marketing handling multi-million dollar advertising accounts in the West Coast (i.e. Apple, Toyota, Nissan, Disney, movie studios, Vizio, EA Sports, Stubhub, adidas, Nike, etc.)

• MBA USC Marshall – Entrepreneurship & Venture Capital + Grad Certificate Technology Commercialization; BA U of Michigan – Sports Management & Communications; HS @ La Jeff

STARTECH@ COWORK OASIS

• STARTech provides education and knowledge to the El Paso Borderland region about technology based venture startups and what it takes to raise venture capital and succeed. We want to create a Silicon Sun ecosystem that does not exist in this region, and it begins with educating people about the industry, and fostering startups to get their START in El Paso in order to succeed in other regions like Silicon Valley. Headed by two venture capitalists with more than 10 years combined experience investing in startups and startup investment funds, we bring an outside perspective to El Paso, while also being based in El Paso.

COWORK OASISOPENING OCT/NOV 2016 @ 219 E SAN ANTONIO AVE

• CoWork Oasis is a community based shared office workplace enabling and promoting a tech based entrepreneurial ecosystem in the El Paso Borderland region. It is a communal space to network with fellow entrepreneurs, freelancers, service providers, web developers, etc. and meet your next client, cofounder, and/or mentor. The community will be empowered to create more tech enabled startups in the region via workshops, educational courses, development tools and an affiliated investor network that will all be built and housed in the coworking space. Memberships run month-to-month with no long-term obligation and provide flexibility based on needs.

SILICON VALLEY 101Some History, Data

THE EVOLUTION OF SILICON VALLEY

Source: Employment Development Department, Labor Market Information DivisionAnalytics: Collaborative Economics

INNOVATION INDUSTRIES AND OVERALLECONOMY SILICON VALLEY (2003-2013)

Source: Moody’s AnalyticsAnalysis: Collaborative Economics

ENTREPRENEURSHIP - START-UP VS SMALL BUSINESS

• Start-ups are different from small businesses• Success and failure are almost flipped

• A small business has a 75% chance of success

• A start-up has 75% chance of failure (even with VC funding)

• Different financing needs• Small businesses have a very clear ROI and scale factors

• Start-ups evolve and apply capital in seemingly incoherent ways

• Different inputs (talent, mentors, personalities)• The small business meets a market need, almost immediately

• The start-up meets a transactional or transformative need, and to do so, they need a different support infrastructure

START-UPS LOOK LESS AND LESS LIKE TRADITIONAL BUSINESSES, YET THEY SUPPLANT TRADITIONAL BUSINESSES

Source: The Startup Ecosystem Report

NEW POWER GAINS ITS FORCE FROM PEOPLE’S GROWING CAPACITY – AND DESIRE – TO GO FAR BEYOND PASSIVE CONSUMPTION OF IDEAS AND GOODS.

Source: Jeremy Heimans and Henry Timms www.hbr.org

WHAT START-UPS MEAN TO SOCIETY

Source: Jeremy Heimans and Henry Timms www.hbr.org

FUNDING LIFECYCLE

tSeedCapital

Angel Capital

GovernmentGrants

VentureCapital

1 – 5 years$250K - $5M

ExpansionCapital

$

PROGRESSION OF EARLY-STAGE INVESTMENT IN SILICON VALLEY-BASED START-UPS (LAUNCH YEARS 2006, 2009, 2012)

Source: CB InsightsAnalysis: Collaborative Economics

Source: The Startup Ecosystem Report

CRITICAL ELEMENTS OF A SUCCESSFUL ECOSYSTEM

InvestmentIdeas

Management

üEntrepreneursüResearchüScientistsüIncubators

üPrivate InvestorsüInstitutional InvestorsüGovernment SourcesüVenture Capital

üStartup NetworksüSourced from university alumniüOther Companies

CAPITAL IGNITES IDEAS AND MANAGEMENT

InvestmentIdeas

People are the key. The ideas are plentiful but are most easily relocated to where the money or management is based.

More seed capital is needed locally to leverage larger syndicated seed rounds. With sufficient capital resident to the idea, key people can be recruited.

START-UPS CREATE VALUE IN A NON-LINEAR FASHION

Seri

es A

Hit Milestones

HitMilestones

HitMilestones

Seri

es B

EX

IT

Ang

el R

ound

Due Diligence

Find

Dea

l

$100K $1M $5M $50MExample

SILICON VALLEY CASE STUDYUBER

EVOLUTION OF THE BRAND

MONEY RAISED

• $8.71B in 12 “rounds” the last 5 years

• Aug 2009 - $200k Seed – only Co-Founders – Travis Kalanick & Garret Camp (known as UberCab)

• Oct 2010 - $1.25M Angel – 29 different investors – including First Round Capital

• Feb 2011 - $11M Series A (valued at $60M) – 6 investors

• Dec 2011 - $37M Series B – 11 investors

• Launched Ride-Sharing early 2013

• Aug 2013 - $258M Series C (valued at $3.5B) – 3 investors

• June 2014 - $1.4B Series D (valued at $18.2B) – 8 investors

• Dec 2014 - $1.2B Series E (valued at $40B) – 6 investors

STUMBLEUPON

UBER CO-FOUNDERS

• Garrett Camp• 2002 – Founded StumbleUpon in Calgary, Canada

• 2006 – StumbleUpon moves to San Francisco after receiving Angel investment – including First Round Capital

• 2007 – StumbleUpon gets acquired by eBay for $75M

• 2008 - Comes up with UberCab with Garrett Camp in Paris conference• 2009 – Camp takes over StumbleUpon again after spinning it back off eBay

• 2012 – Steps down from StumbleUpon• 2013 – Founded Expa Startup Studio and raises $50M• 2015 – Takes over StumbleUpon once again after it gets into debt

UBER CO-FOUNDERS

• Travis Kalanick (CEO)

• 1998 – Dropped out of UCLA, joined Scour – Scour got invested

• 2000 – Scour gets sued for $250B – goes bankrupt

• 2001 – Founds RedSwoosh

• 2006 – Raises $1.73M Series A for RedSwoosh – from Mark Cuban

• 2007 – Sells RedSwoosh to Akamai Technologies for $19M and becomes a millionaire

• 2008 - Comes up with UberCab with Garrett Camp in Paris conference

• 2009 – Becomes Uber CEO

SIDECAR

SIDECAR

• Also in San Francisco

• Raised $45.5M in 5 rounds 2011-2014 including Google Ventures, Richard Branson

• FIRST to do ride-sharing in 2012 (Using your own vehicle)

• FIRST to be able to drop-off/pick-up at the SFO airport (Took Uber/Lyft until 2015)

• Riders selected their drivers (and car) to ride in

• NO Surge Pricing

LYFT

LYFT

• Strongest competitor to Uber in US

• Raised $2B in 9 ”Rounds” 2008 – 2015 (Spin-off from Zimride)

• Zimride was a ride-share service for road trips

• Passengers offer the driver a tip in addition to star rating system

• GM invested in them in Dec 2015 to help with R&D in autonomous driving

• China’s largest ridesharing company invested in Lyft and now Uber (in turn, Apple invested into them)

WHAT’S NEXT IN 2016 AND BEYOND?

STARRY IS MAKING MORE POWERFUL WI-FI FOR YOUR HOUSE

JUICERO WANTS TO MAKE THE FRESHEST JUICE YOU’VE EVER TASTED

CHEDDAR IS BETTING IT CAN BE THE NEW CNBC FOR MILLENNIALS

GRAIL WANTS TO DEVELOP A TEST FOR CANCER AT THE EARLIEST POSSIBLE STAGE

JUNO WANTS TO BE A DRIVER-FRIENDLY ALTERNATIVE TO UBER

OTTO'S SELF-DRIVING TRUCKS COULD REVOLUTIONIZE THE INDUSTRY

SIMPLE HABIT WANTS TO HELP STRESSED-OUT MILLENNIALS

COMPARABLY CAN SHOW YOU HOW MUCH YOU'RE BEING PAID COMPARED WITH YOUR PEERS

ZIPLINE'S DRONES PARACHUTE BLOOD AND MEDICINE TO REMOTE RWANDAN CITIES

NANIT IS A SUPERPOWERED BABY MONITOR

TRUEBILL WANTS TO STOP YOU FROM GETTING RIPPED OFF ON SUBSCRIPTIONS

WINNIE WANTS TO BE THE YELP FOR PARENTS

RITUAL IS MAKING A BETTER VITAMIN

RECHARGE LETS YOU RENT HOTEL ROOMS BY THE MINUTE FOR WHENEVER YOU NEED A REST

LOLA IS A NEW KIND OF A TRAVEL AGENT

PEARL WILL HELP TURN YOUR 'DUMB CAR' INTO A CUTTING-EDGE MODEL

KNUEDGE WANTS TO ONE-UP GOOGLE AND INTEL

In June, former NASA administrator Dan Goldin reemerged to reveal what he had been working on for the past decade: KnuEdge, a startup based in San Diego with a mission to one-up Google, AMD, and Intel with the ”fundamental invention” of the next generation

computer processor.