The Place to Grow

Risk Assessment of Embedded Connectivity PropositionsLondon, January 27, 2010Jouko Ahvenainen

The Place to Growwww.growvc.com2

Grow VC Chairman Working on 2.0 business models,

ecosystem, and funding models

Mobile and 2.0 business experience

Co-founder of the first social network analytics company, www.xtract.com

On the boards of various start-up companies, and a co-founder or seed investor in 6 companies

A pioneer to develop and sell the first social marketing intelligence solutions

Social Media Marketing book, available in Amazon

Other experience Senior positions: e.g. Cap

Gemini Ernst & Young, Powerwave Technologies Inc., Nokia, and Sonera

International: lived and worked in Finland, Malaysia, the UK, and the US

Jouko Ahvenainen

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Truly Global International Platform where investors, companies, and entrepreneurs can better meet each other and get tools to make transactions effectively

Includes several components:1. Match-making tools (between funder and entrepreneur)2. Peer-to-peer micro-funding and fund co-investments3. Software platform for the community4. Legal, monitoring and reporting framework5. Involvement of top experts in venture funding and industry verticals 6. Growth and funding enabling services

New service launch in February: the first real global peer-to-peer startup micro-funding You can start invest with dozens of dollars

Grow VC model

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Grow VC position

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• Match-making

• Service investments

• New fund model

• Support for investment process and

materials

Entrepreneurs who looks forfunding

InvestmentPartners, e.g. VC

Private Investors,e.g. angels

Start-upXXX

Start-upYYY

Start-upZZZ

Investment decisions:• Private investors

• Community of investors and entrepreneurs

Investment process:Managed by community

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EMBEDDED CONNECTIVITYTwo Models

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Background

The business environment of fast-growth companies has changed significantly over the past 15 years Internet and web 2.0 spreading funding model global #1 in their niche VC’s and business angels – typically local

Immediately global web and mobile companies look for global smart money, not limited to single country or state

New funding models are needed for early phase, but also to cover the needs of different kind of companies not only one type risk money

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VC Market

Traditional VCs are shifting focus on more mature companies Often at least 1M€ annual revenue

US VCs spent only $17.7 billion on 2,795 different deals last year, the lowest dollar amount and number of investments since 1997 (source: Thomson Reuters)

Limited Partners’ interest to invest in traditional European VC funds collapsed in the last year, e.g. only one investment in Q3 (source: Go4Venture)

In practise traditional VC’s don’t make investments in early phase companies Only if you have a product and / or revenue

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Embedded connectivity solutionsTwo categories

1. Hardware and more demanding application platforms Include typically significant R&D work and require high level

technical competence technology risk Longer development cycles and patentable solutions Traditional VC funded cases

2. Applications End-user applications based on basic mobile functionality or

on proprietary platforms Short development cycles, users’ feedback important market

risk Difficult cases of traditional VC’s

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1. HW and platform business:Technology business with new rules

The ecosystem is changing Operators role is fading & operators are often

the slowest and most expensive route to the market Direct consumer access become more important

Technology is changing Application development easier Internet type platforms

APIs offer data and services, e.g. location and messaging

Risky to develop proprietary solutions for a few operators open APIs, open source, and de facto standards

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2. Web and mobile businesses:new retail business

The new chasm is to get attention and users

It is like to sell goods through supermarkets, except No manufacturing costs No logistical issues The number of supermarkets and shelf

space is in principle limitless

To be successful Users must find your app directly, or You must get good supermarkets to put

your add to good shelf space, or Both of these options

Smarter analytics and personalization can change this picture, but it happens slowly

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Go-to-market

Listen to market Test your ideas and models

Light beta learn develop

Fast development cycles Use the latest development tools

Think your business model It can be free apps, but you should

have an idea to monetize But don’t try to monetize too much

too early

Many concepts are easy to copy build your brand and position

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Challenges of funding market

2010 VC market is still a question mark; some positive signs

Web and mobile enterprises ARE NOT only new technology enterprises and capital efficiency is high Open source, free tools, fast development The challenge is to get users, not to implement a service Funding requirements are changing

New funding models are coming especially for the early phase funding Business angels Crowd-funding and micro-funding, like Grow VC, are coming The market is coming more global

Capital efficiency and lean startup model are requirements for all startups

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Mobile services funding

1. Immediately global mobile apps companies look for global smart money, not limited to single country or state

2. Step-by-step funding If you cannot start mobile apps business with less than $200k, you

must re-think your approach Make it – launch it – improve it Successful companies don’t do it immediately right, but they use

money carefully and are able to change course as they learn

3. New funding models are needed for early phase, but also to cover the needs of different kind of companies not only one type risk money Someone can make simple apps for personal living without world-class

ambitious, and need some money to start Another one what to create fast growing business with hundreds of

apps

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A COUPLE OF WEEKS TO REGISTERIN GROW VC BETA FOR FREE

http://beta.growvc.com/register/form

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Jouko Ahvenainen

jouko@growvc.comTel (UK): +44 79 1248 1154Tel (US): +1 415 287 0854Skype: jahven

www.growvc.comTwitter: @growvc

You don’t have to be Steve Jobs to be an entrepreneurYou don’t have to be Bill Gates to be an investorEveryone must start somewhereGrow VC – The Place to Grow