Download - Israel Eco system and timing by Yariv Levski
Yariv LevskiCurrent status@ Israeli startup scene
My name is YARIV LEVSKI,
I live in Tel Aviv
1 Wife2 Kids1 Exit
Hobbies: Triathlon
Let’s Start
Today I will be talking about
Horses,Startups and Israeli Eco System
Question:Who wins a running competition,The man or the horse?
The man vs. the horse competition:
• Started after a Pub dispute
• 35 Km, takes place in Welsh
• 1ST Race at 1980
The man vs. the horse competition:
For 23 years, the horse won
On 2004 the man won! (also 2007)(both times – it was very HOT weather)
How can a man win against a horse?
What is the advantage for man In a HOT weather?
We sweat better than a horse(Better abilities to climate our body)
Some Research Insights
Startup Genome: Why do startups fail?
Confirm whether they are solving a meaningful problem
Seek validation that people are interested in their product
Refine business model and improve efficiency of customer acquisition
Drive growth aggressively
DISCOVERY VALIDATION EFFICIENCY SCALE SUSTAIN RENEWAL
Startup needs to be able to scale properly
Scaling properly:Customer, product, team, business model and funding
What were the results?
The research presents2 kind of startups:Inconsistent - scales prematurelyConsistent - scales properly
Companies that scaleprematurely are
$Classifies as Inconsistent
$And companies that scale properlyare classified as consistent
1,100,000
3,400,000
Average funding raised
Team size
Inconsistent startups have 50% larger teamsbefore scaling and 50% smaller teams after scaling
50%larger teams
50%smaller teams
BEFORE scaling AFTER
Funding
Inconsistent startups raise 3 times more money in the efficiency stage and 8 times less money in scale stage
EFFICIENCY SCALE
3 timesmore money
18 times more money
Customer Acquisition
45% of startups that scale prematurely spend more than 15,000$ per month on customer acquisition before optimizing their conversion funnels & acquisition costs. 80% of consistent startups spend less than 15,000$
15,000$per month
45%Spend more
80%Spend less
User Growth
Inconsistent startups grow 10-12 times faster in discovery stage, 1.5-2 times faster in validation stag.7-8 times slower in efficiency stage and 16-26 times slower in scale stage.
SCALE
16-26times faster
EFFICIENCYVALODATIONDISCOVERY
7-8times faster
1.5-2times faster
10-12times faster
Users (not paying) - how many reached more than 100,000?23% of consistent startups exceed 100,000 users.
99% of consumer focused startups that scale prematurely stay below 100,000 users.
100,000Users
99%Don’t break the mark
23%exceed
Users (paying) - which phase they acquire Paying customers?Enterprise startups that scale prematurely have 75% more paid users in Discovery and Validation stages compared to consistent startups.
consistent startups have 50% more paid users in the Scale stage that inconsistent startups.
SCALEVALODATIONDISCOVERY
50%more users
75%more users
75%more users
Efficiency in programming of lean productinconsistent startups write 3.4 times more lines of code in the Discovery stage and 2.25 times more lines of code in the Efficiency stage.
EFFICIENCYDISCOVERY
3.4timesmore code
2.25times more code
What is the focus on Discovery phase?77% of startups that scale prematurely focus 50% or more of their resources in Discovery stage on product development. 45% of consistent startups focus their energy on customer development.
DISCOVERY
Spend
50%Of their resources on product development
77%
45%
Focus on customer development
Startups that succeed in scaling properly Simply invest more resources at theRight Moment (and not before)
Exactly like the manthat wins the horse:They know how to sweat and cool their body before losing energy and dehydrate
Israeli Startups: Facts & Numbers
First,
Let’s start with some numbers
Source: IVC Research Center
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13
479
565
518
573
485 477 488 494474
493
660
Capital Raised by Israeli High-Tech Companies ($M)
34% 36%24%
27% 26% 28% 27% 29% 30%
25%
66%
64%
76%
73%
74% 72% 73% 71%70%
75%
77%
23%
Israeli VC Fund ShareOther Investors
Germany France UK Israel
343399
656
967
Great eco system that attracts foreign capitalVC investments Y2D H1 2013 ( in Millions$)
Source: DFJ Esprit & Go4Venture Advisers mid-year analysis of European Venture Market
Money in, money out - the ratio
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1.1
1.9
2.8
10.1
3.32.7 3
2.3
5.2
9.7
11.5 1.3 1.6 1.8 2.1
1.1 1.3
2.1 1.9
Capital Received (M&As and IPSs) Capital Raised by Israeli High-Tech companies
what is the biggest trend in Tel Aviv?
So,
Building Big Companies!
(Meaning Hugh valuations)
Biggest deal this year
Google buys WAZE:
1 Billion $
650 M$1 B$ 250 M$221 M$
405M$480 M$ 475 M$650 M$
150 M$ 120 M$235 M$ 800 M$
The next big companies exits
Israeli companies with revenue over 50M$ / valuation over 500M$
What’s the
secret sauce?
No local Market(8M people)
Commercial relations with our neighbors: 0
We build international companies
From Day1*
*Save From China Israel is #2 country in NASDAQ
What’s the
secret sauce?
What’s the
secret sauce?
R&D centers all every important US company Government money supports R&D Biggest Patents per capita Biggest VC money per capita Failure - isn’t failing Presence of almost every important US VC Army as incubator of management and
technology
With new records of valuations in exits, the investors become more and more
patience to build big companies
As in Startup Genome,
The eco systems supports the startups
that reach scaling
BTW,This is why Startups Genome ranked Tel Aviv as2nd place best Ecosystem in the world
Tel Aviv Entrepreneurs are NOT smarter than anywhere else
They just have more capital to scale if they succeed.
This makes a Hugh difference and allows to grow big companies
My advice (in a nutshell)
Make sure that you raise capital only after Reaching the scaling phase.
Don’t raise significant amount when
you’re not ready to scale.
That is the best way to
grow the company well,
And eventually earn enough money to
buy a horse..
Thank You.Current status@ Israeli startup scene