stimulating effective deal flo fleming dealflow dec v1.pdf• class size: 20 students; in-person...

December 2016 Download this file at <http://files.academicvc.com>

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Boostphase®

Stephen Fleming

[email protected] @stephenfleming

1

Stimulating Effective Deal Flowboostphase (büst´fāz), n., 1. The first phase of a spacecraft’s trajectory, from launch until it ceases to accelerate under its own power.

Usage: Small changes to the trajectory during boostphase will have major influences on the ultimate position and velocity of the spacecraft, determining success or failure of the mission.

December 2016 © 2016 by Boostphase LLC. All rights reserved. 2

AgendaIntroduction

Startups Myths and Realities

Sources of Deal Flow

— Universities

— Hackathons

— Bootcamps

— Accelerators

— Incubators

— Networking

— Referrals

Questions and Answers

December 2016 © 2016 by Boostphase LLC. All rights reserved.

11 years as Vice President, Georgia Institute of Technology.

20+ years venture capital experience. – General Partner, Alliance Technology Ventures

(affiliated with Georgia Research Alliance). – 18 investments as lead investor.

– 12 profitable exits including 4 IPOs, $650M acquisition. – Original investor, Seraph Group.

3

About Me


15 years operational experience: - AT&T Bell Labs

Early optical fiber development. - Nortel

Supervised startups developing first ADSL modem and one of the first cablemodems in early 1990s.

- LICOM (venture-backed telecom equipment startup).

BS, Physics, Georgia Tech (Highest Honors).

4

About Me (2)


AgendaIntroduction



— Universities

— Hackathons

— Bootcamps

— Accelerators

— Incubators

— Networking

— Referrals



Startups… the Myth

“Great startups are launched by solitary geniuses in a lonely garage.”


Startups Are a Team Sport



“You have to build your startup in Silicon Valley or San Francisco.”


Startups Happen Across the USA

Darker colors = More funds invested

Where Startups Raised Money in 2015

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Startups Happen Across the USA

Darker colors = More funds invested

Where Startups Raised Money in 2015

California

Number of rounds: 1,477 Total $M: 41,034

New York

Number of rounds: 494 Total $M: 8,895

Georgia

# rounds: 58 Total $M: 812

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AgendaIntroduction



— Universities

— Hackathons

— Bootcamps

— Accelerators

— Incubators

— Networking

— Referrals



University Spinouts and Startups

Spinouts Startups


• Based on university intellectual property.

• Requires IP license (exclusive or non-exclusive).

• Company formed around one or more professors.

• Frequently uses university fixed assets (labs, etc.).

15

University Spinouts and Startups

Spinouts Startups• No university intellectual

property (no licensing). • May involve

• professors, • graduate students, • undergraduate students, • or alumni.

• Usually stand-alone labs (if any).


Dealing with University Faculty


Teaching a professor how to be an entrepreneur is like teaching a cat how to swim:

• It can be done. • You will lose blood. • You’ll never be satisfied with the results. • You will annoy the cat.

Different motivations, different priorities, different views of “proper procedure.” Best bet: Recruit an entrepreneur to work with the professor.

• 1+1=3.17

Dealing with University Faculty


Complex, time-consuming process. Licensing began with Bayh-Dole Act of 1980. Now, must comply with:

• Bayh-Dole Act. • IRS 501(c)3 regulations. • Export control regulations. • Conflict of Interest

policies. • Individual state laws.

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Dealing with University Licensing


For entrepreneurs and investors:

• Terms are less critical than time to market.

• Tech transfer officers do this every week.

• Emphasize need for speed, be willing to be flexible on royalty fees, other terms.

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Dealing with University Licensing (2)


Start early! • Extended pre-license

development may raise the perceived value to the university.

• Series A/B venture investors will insist on licenses being executed before investing.

• So will acquiring companies!

20

Dealing with University Licensing (3)


AgendaIntroduction



— Universities

— Hackathons

— Bootcamps

— Accelerators

— Incubators

— Networking

— Referrals



Hackathons


Hackathons occur in every market, large and small, in uncountable varieties:

• Sector-specific (public service, fintech, etc.). • Targeting under-served groups (women, minorities,

kids). • Targeting a particular technology (mobile, voice, API,

etc.) Multiple financial models

• Just for fun • Corporate prizes

Includes software developers, graphic designers, user interface designers and project managers.

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Hackathons


Successful projects will not be investable startups… • Limits on time, team, resources. • Goal is to develop relationships among developers. • Any working code is a happy side effect.

…but many will showcase talented teams. • Many haven’t quit their day jobs. • Opportunity to help create a startup before being

pushed aside by bigger VC groups.

24

Hackathons for Investors


AgendaIntroduction



— Universities

— Hackathons

— Bootcamps

— Accelerators

— Incubators

— Networking

— Referrals



Definition of Terms

Bootcamp Educational programs that teach development skills (primarily software). No investment or coaching.

AcceleratorLimited-time programs that help a cohort (group) of companies with the new venture process. May provide small investment rounds. Ends with “Demo Day.”

IncubatorPrograms offering individualized coaching services to member companies. Frequently includes physical facilities. May provide substantial capital investment. Graduation based on progress, not calendar time.


Definition of Terms

Bootcamp Accelerator IncubatorDuration 2 days—12 weeks 3-6 months 1-5 years

Cohorts (Groups) Yes Yes No

Business Model For-profit / Tuition or Percentage of salary

Profit or not-for-profit / Investment Not-for-profit / Rent

Selection Competitive or Non-competitive Competitive Competitive or Non-

competitive

Venture Stage Early Early Early or late

Education Core business Seminars Classes and coaching: legal, finance, HR, etc.

Mentorship None External mentors and other cohort members

As needed / Strategic and tactical

Venture Location On-site On-site Typically on-siteSour

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Bootcamps: Examples

BootcampDuration 2 days—12 weeks

Cohorts (Groups) Yes

Business Model For-profit / Tuition

Selection Competitive or Non-competitive

Venture Stage Early

Education Core business

Mentorship None

Venture Location On-site


Many bootcamps specialize in particular technologies

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Bootcamps: Specialization

Web HTML/CSS Wordpress Mobile iOS / Swift Android

C# / dot-Net Python Java Ruby on Rails Data science

SoftwarePrototyping Manufacturing Internet of Things

Hardware

Industrial Design

User Experience (UX)


Bootcamp: Environment


Most programs are for-profit based • Full-time or part-time • Programs usually cost $500–$1000/week, up to 12

weeks • Some students pay their own tuition; others employer-

paid Small number of not-for-profit programs

• Highly discounted or free tuition • Goal is economic development… frequently targeted at

women, minorities, military veterans, or other under-served populations

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Bootcamps: Tuition


AppAcademy is based on a student success model • Highly selective: Accepts only 5% of applicants. • Class size: 20 students; in-person training (not online) • Weekly tests: Any failure means dismissal from the 12-

week program. • Job placement rate: 98%

• Average $89,000 in NYC… $105,000 in San Francisco • Graduate pays: 18% of first-year salary

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Bootcamps: Incentives


Hiring Day!


Typical developer career impact: • Typical student: 31 years old, college graduate, 7 years

work experience, but not in a technical field.

After graduation: • 66% of graduates find as developers • Average pay increase: 38% ($18,000)

• In a period of flat to minimal pay increases in USA • 84% satisfaction rate

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Bootcamp Impact on Developersht

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AgendaIntroduction



— Universities

— Hackathons

— Bootcamps

— Accelerators

— Incubators

— Networking

— Referrals



Accelerators: Examples

AcceleratorDuration 3-6 months

Cohorts (Groups) Yes

Business Model Profit or not-for-profit / Investment

Selection Competitive

Venture Stage Early

Education Seminars

Mentorship External mentors and other cohort members

Venture Location On-site


Began with Y-Combinator in 2005.

Structure quickly imitated by others nationwide.

Most major metropolitan areas have one or more.

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US Accelerators: Dramatic Growthht

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The objective is to turn the art of starting a company into a structured development program that can be repeated like an assembly line.

• Startup gets: • Mentorship • Funding • Office space • Exposure / Credibility

• Accelerator gets: • Equity ownership… Potential capital gains

38

Accelerators


Competitive Selection

It’s difficult to get into the top programs.


Competitive entry procedure • Applicants may be local, or nationwide, or international

• Temporary relocation • Startup Chile

• Decisions based on quality of team, product/market fit, and alignment with accelerator focus

• Cohorts (groups) are typically anywhere from 10 to 30 teams

• Exception: Y Combinator is now ~100 teams • Everyone starts on the same date

40

Typical Accelerator Process (1)


“We think of Y Combinator as Rome or Athens in antiquity. Come out to Mountain View for three months, you don’t have to move here permanently. Absorb whatever really works out here and take that back home.”

• Garry Tan, partner at Y Combinator

41

Relocation: Temporary or Permanent?


Accelerator Environment

Open, flexible, collaborative spaces.


Small investment to support founding team • Typically $25,000 for 6% of the company

• Varies by industry sector, location, etc. • Can be equity or convertible debt

Expectation • The founders work full-time on this idea for the

duration of the cohort (typically 12 weeks)

43



Seminars and Discussion Groups

Top visionaries and thought leaders.


Accelerator sponsors weekly/bi-weekly seminars and discussion groups

• Building personal relationships across cohort members • Targeted mentoring by accelerator staff and

experienced local executives • Collaborative environment

• Learning by doing • Work-play balance

45



Demo Day!

Unrelenting focus of accelerators.


Demo Day!

“There are 77 days until Demo Day. After that, anything you do will make you better — but it won’t make you better on Demo Day.”

—Paul Graham


“Demo Day” for investors and strategic partners • Cohort members show what they’ve accomplished,

what they plan to do next. High rates of venture funding or early “acqui-hire” M&A

• Companies have typically progressed faster than without the accelerator program

• Greater visibility (for members of top accelerators) • Buying into a network of cohort members

Alumni networking continues indefinitely

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Short term: • Increased venture capital funding at “Demo Day” • Increased rate of early acquisition (“acqui-hire”) • Increased rate of early failure (“Lemons sour quickly.”)

Long term: • Surprise: Noticeably lower rate of follow-on venture

capital funding compared to companies funded by top angel groups

• Possible explanation: Accelerators focus on the entrepreneur, while angel groups focus on success of the company.

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Accelerator Impact on Companiesht

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Silicon Valley is different: • Cannot be directly compared to other cities, regions, or

countries in terms of startups, angel, and venture investment.

Other locations: • Clusters matter. (Austin, Boulder, Atlanta, etc.) • Accelerator graduates attract more seed and early-stage

VC. • Non-accelerator companies also attract more seed and

early-stage venture investment. • Improves company retention (instead of moving to Calif., etc.)

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Accelerator Impact on Regionsht

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AgendaIntroduction



— Universities

— Hackathons

— Bootcamps

— Accelerators

— Incubators

— Networking

— Referrals



Incubators: Examples

IncubatorDuration 1-5 years

Cohorts (Groups) No

Business Model Not-for-profit / Rent

Selection Competitive or non-competitive

Venture Stage Early or late

Education Classes and coaching: legal, finance, HR, etc.

Mentorship As needed / Strategic and tactical

Venture Location Typically on-site

April 2016 © 2016 by Boostphase LLC. All rights reserved.

ATDC Service Offerings

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Educate

Signature

Accelerate

Graduate

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Star

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Graduate- Only Events

CEO Roundtable

CTO Roundtable

Signature-Only Events

Spea

ker

Seri

es

Customer Discovery Lab

Core Courses

SBIR Workshops

Sector Verticals

Advanced Courses

Teaching Mentors

Catalyst Office Hours

Advisor Mentor(s)

Assigned Catalyst

SME Mentors

Assigned Entrepreneur in Residence (EIR)

Com

mun

ity

Part

ners

Director Connect

Campus Connect

Investor Connect

Industry Connect

Sponsor Connect

Community Curriculum Coaching

Community Co-Working

Partnerships

Seed Space

Access to Design Studio

Dedicated Suite Space

Commons Connections

Circ

les

Founder Circles

Mis

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AgendaIntroduction



— Universities

— Hackathons

— Bootcamps

— Accelerators

— Incubators

— Networking

— Referrals



Networking


You can’t be an effective investor sitting behind your desk.56

Effective Networking


AgendaIntroduction



— Universities

— Hackathons

— Bootcamps

— Accelerators

— Incubators

— Networking

— Referrals



Referral


Identify your edge: Know what you know, and know what you don’t know.

Make yourself someone people want to come to for advice, for mentorship, or for a connection/introduction

Listen, learn, respond, and try to provide insight/wisdom.

Be genuine. 59

Building a Referral Network


What About Online Networks?


AgendaIntroduction



— Universities

— Hackathons

— Bootcamps

— Accelerators

— Incubators

— Networking

— Referrals


December 2016 Download this file at <http://files.academicvc.com>

Con

tent

s ©

201

6, B

oost

phas

e LL

C. A

ll ri

ghts

res

erve

d.

Boos

tpha

se ®

is a

reg

iste

red

trad

emar

k of

Boo

stph

ase

LLC

Boostphase®

Stephen Fleming

[email protected] @stephenfleming

62

Stimulating Effective Deal Flowboostphase (büst´fāz), n., 1. The first phase of a spacecraft’s trajectory, from launch until it ceases to accelerate under its own power.

Usage: Small changes to the trajectory during boostphase will have major influences on the ultimate position and velocity of the spacecraft, determining success or failure of the mission.

stimulating effective deal flo fleming dealflow dec v1.pdf• class size: 20 students; in-person...

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