funding and growth in silicon valley

30
MINISTRY OF FOREIGN AFFAIRS OF DENMARK EKSPORTRÅDET – THE TRADE COUNCIL ”From Idea to IPO” Funding & Growth in Silicon Valley MINISTRY OF FOREIGN AFFAIRS OF DENMARK EKSPORTRÅDET – THE TRADE COUNCIL Sunil Maulik, Ph.D. [email protected]

Upload: scaleit

Post on 06-May-2015

2.615 views

Category:

Business


1 download

DESCRIPTION

Sunil Maulik's presentation on funding and growth in Silicon Valley

TRANSCRIPT

Page 1: Funding and growth in Silicon Valley

MINISTRY  OF  FOREIGN  AFFAIRS  OF  DENMARK  EKSPORTRÅDET  –  THE  TRADE  COUNCIL  

”From  Idea  to  IPO”  Funding  &  Growth  in  Silicon  Valley  

MINISTRY  OF  FOREIGN  AFFAIRS  OF  DENMARK  EKSPORTRÅDET  –  THE  TRADE  COUNCIL  

Sunil  Maulik,  Ph.D.  [email protected]  

 

Page 2: Funding and growth in Silicon Valley

MINISTRY  OF  FOREIGN  AFFAIRS  OF  DENMARK  EKSPORTRÅDET  –  THE  TRADE  

COUNCIL  

Start  Your  Motor!  

Page 3: Funding and growth in Silicon Valley

Why  start  up  a  company?  

•  What  is  the  current  market  Dynamic?  

•  What  are  your  Long-­‐Term  goals?  

•  Investors  like  Big  Ideas  –  what  is  yours?  

 The  Silicon  Valley  mantra  “Go  big  or  go  

home!”  

 

Page 4: Funding and growth in Silicon Valley

MINISTRY  OF  FOREIGN  AFFAIRS  OF  DENMARK  EKSPORTRÅDET  –  THE  TRADE  

COUNCIL  

Taking  the  leap  

Page 5: Funding and growth in Silicon Valley

TransiRoning  from  career  to  startup  •  Build  a  prototype  and  get  customer  feedback    

•  Establish  a  team  willing  to  work  for  stock  

•  Get  as  much  done  without  paying  salaries:  – First  product  – First  customers  – Business  plan;  markeRng  plan  

Page 6: Funding and growth in Silicon Valley

MINISTRY  OF  FOREIGN  AFFAIRS  OF  DENMARK  EKSPORTRÅDET  –  THE  TRADE  

COUNCIL  

Get  the  funding  you  need  

Page 7: Funding and growth in Silicon Valley

Sources  of  Funding  

•  Boot-­‐Strapping  (Customer  Funded)  

•  Angel  Investors  •  Corporate  Capital  •  Venture  Capital  •  Other  – Going  public  (IPO)  – Secondary  markets  

Page 8: Funding and growth in Silicon Valley

Boot-­‐Strapping  (Customer  Funded)  

•  Get  customers  to  pre-­‐pay  for  the  product  

•  Create  a  process  for  acquiring  early  customers  

•  Offer  discounts  or  revenue-­‐share    •  Give  the  customer  a  significant  up-­‐side  See  KickStarter  (www.kickstarter.com)  

Page 9: Funding and growth in Silicon Valley

Angel  Investors  

•  Write  small  checks  ($25K-­‐$250K)  

•  Finds  or  advises  company:  – Business  development  – Engineers  

•  Can  introduce  company  to  VCs  

Page 10: Funding and growth in Silicon Valley

Some  Famous  Silicon  Valley  Angels  

•  Y-­‐Combinator    •  Founders  Fund    •  Angel  List    •  500StartUps  

Page 11: Funding and growth in Silicon Valley

Danish  Example  –  AppHarbor  

•  Founded  Sept  2010  by  Rune  Sørensen,  Troels  Thomsen  and  Michael  Friis.  

•  Y-­‐Combinator  Funded    •  Easy  to  use  development  pladorm  for  .NET  developers  

•  Example  of  ‘Pladorm  as  a  Service’  (PaaS)  

Page 12: Funding and growth in Silicon Valley

MINISTRY  OF  FOREIGN  AFFAIRS  OF  DENMARK  EKSPORTRÅDET  –  THE  TRADE  

COUNCIL  

CorporaRons  as  investors/partners  

Page 13: Funding and growth in Silicon Valley

Corporate  Funding  

•  Strategic  investors  –  not  looking  to  get  lots  of  money  back  (Return  on  Capital)  • Want  early  view  into  technology  • Want  early  view  into  compeRRon  •  Expect  discount  on  business  partnership  •  May  want  exclusivity  

Page 14: Funding and growth in Silicon Valley

Danish  Example  -­‐  MemoLane  •  Founder:  Eric  Lagier  •  A  pladorm  for  collecRng  and  connecRng  thoughts,  pictures,  messages  

•  Integrates  with  your  social  networks    Total:  $2.5M  Seed  Funding:  Niklas  Zennstrom/Janus  Friis  (Skype)  Series  A,  11/09    Digital  Garage  $500k    Series  B,  9/10    August  Capital,  Atomico  $2M  

Page 15: Funding and growth in Silicon Valley

MINISTRY  OF  FOREIGN  AFFAIRS  OF  DENMARK  EKSPORTRÅDET  –  THE  TRADE  

COUNCIL  

Reach  for  the  sky!  –  Venture  Capital  

Page 16: Funding and growth in Silicon Valley

Venture  Capitalists  •  Lots  of  money  •  Lots  of  experRse  and  help  •  Expensive  money!  •  Look  for  scalable  companies  ($500MM+  valuaRons)  •  Looking  for  disrupRve  technology  in  huge  markets  

Page 17: Funding and growth in Silicon Valley

Venture  Capital  •  VCs  can  bring  credibility  with  customers    

•  VCs  can  get  major  partnership  deals  

•  VCs  can  recruit  professional  management  

•  VCs  also  sit  on  boards  of  large  public  companies,  private  equity  funds,  etc.  

   

Page 18: Funding and growth in Silicon Valley

Disadvantages  of  Venture  Capital  •  Requires  huge  amounts  of  Rme/effort  to  get    

•  Puts  negaRve  pressure  on  founders  

•  Requires  accountability  (must  hit  milestones)  

•  Doesn’t  allow  for  early  flexibility  •  VCs  may  take  your  company  in  a  direcRon  that  is  not  of  interest  to  you  

 

Page 19: Funding and growth in Silicon Valley

Financing  Roadmap  -­‐Friends  &  Family    

 -­‐Individual  Angels      -­‐Early  Customers        -­‐Early-­‐stage  VCs  (Series  ‘A’)          -­‐Later-­‐stage  VCs  (Series  ‘B’  and  ‘C’)            -­‐Private  Equity  (If  needed-­‐Series  ‘D’)              -­‐IPO  or  Acquisi4on  

Page 20: Funding and growth in Silicon Valley

MINISTRY  OF  FOREIGN  AFFAIRS  OF  DENMARK  EKSPORTRÅDET  –  THE  TRADE  

COUNCIL  

Raising  VC  Money  –  The  Pot  at  the  end  of  the  Rainbow  

Page 21: Funding and growth in Silicon Valley

What  do  VCs  look  for?  

MINISTRY  OF  FOREIGN  AFFAIRS  OF  DENMARK  EKSPORTRÅDET  –  THE  TRADE  

COUNCIL  

•  Big,  bold  Idea  •  AuthenRcity,  Integrity,  MoRvaRon  (A.I.M.)  •  A+  DNA  (Ability  to  hire  a  winning  team)  •  Rapid  IteraRons  &  Pivot  (R.I.P.)    

Page 22: Funding and growth in Silicon Valley

How  to  raise  VC  money  •  Need  a  track-­‐record  (if  not  you,  then  your  team)  

•  IdenRfy  unfair  advantages  that  benefit  your  company  

•  Determine  if  your  idea  has  economic  power  

 Demonstrate  unambiguously  how  you  

create  value  for  the  customer  

Page 23: Funding and growth in Silicon Valley

How  to  raise  VC  money  (cont.)  

•  Show  a  huge  market  opportunity  

•  Demonstrate  venture-­‐scale  returns  

•  IdenRfy  clear  milestones  to  first  year  revenue  

•  Provide  signed  customer/partner  relaRonships  

Page 24: Funding and growth in Silicon Valley

What  numbers  do  VCs  look  at?  

•  VCs  want  at  least  10x  Return  on  Investment  (RoI)  

•  IRR  (Internal  Rate  of  Return)  is  also  important    

•  VCs  invest  money  for  their  LPs  (Limited  Partners)  with  an  expected  IRR  of  30%  

•  VCs  want  to  make  money  for  their  funds  so  they  can  raise  new  funds  

Page 25: Funding and growth in Silicon Valley

Example  -­‐  Zendesk  •  Started  in  Denmark  •  First  Funding  from  Boston  •  Now  Headquartered  in  San  Francisco  •  HelpDesk  and  Support  Infrastructure  for  sonware  companies    Total  Funding:  $25.5M    Seed,  6/08    Christoph  Janz  $500k  Series  A,  5/09    Charles  River  Ventures  $1M  Series  B,  8/09    Benchmark  Capital,  Charles  River  Ventures  $6M  Series  C,  12/10    Matrix  Partners,  Benchmark  Capital,  Charles  River  Ventures  $19M  

Page 26: Funding and growth in Silicon Valley

MINISTRY  OF  FOREIGN  AFFAIRS  OF  DENMARK  EKSPORTRÅDET  –  THE  TRADE  

COUNCIL  

You’re  Off!  –  Now  What?  

Page 27: Funding and growth in Silicon Valley

OK  –  you’re  funded!  

•  Rapidly  expand  partnerships:  – Customers  – Distributors  – Channels  – Suppliers  

•  Keep  shipping  products:  – Regular  release/update  schedule  – New  funcRonality  (get  customer  feedback!)  

Page 28: Funding and growth in Silicon Valley

How  to  go  from  one  to  one  thousand  (any  units!)  

•  IdenRfy  a  big  company  that  must  sell  your  product  in  order  to  increase  their  revenue  

•  IdenRfy  complementary  company(s)  that  you  can  merge/acquire  

•  IdenRfy  internaRonal  partners  that  have  access  to  large  markets    

•  Change  (pivot)  your  business-­‐model  to  dramaRcally  increase  revenue  

Page 29: Funding and growth in Silicon Valley

The  Start-­‐Up  Curve  

Page 30: Funding and growth in Silicon Valley

Summary  

•  To  be  big  –  think  big!  •  Investors  want  to  invest  in  big  ideas  •  Prove  that  you  have  a  disrupRve  technology  

•  Describe  how  you  will  efficiently  capture  a  sliver  of  a  huge  market  

•  Show  that  you  can  scale  to  capture  the  rest  of  the  market