Raising Funds from Silicon Valley презентация

FOLLOW UP DISCUSSION:

Quick Introduction
What I am doing in Poland

Ten Factors Silicon Valley VC Investors Look For

SILICON VALLEY FUNDING

Introduction

- From Wroclaw University of Technology, Jun and Oct 2014
- From Warsaw School of Economics, May 2015

Structuring Polish-US investor companies

MATTERMARK

MULTIPLE $M FINANCINGS

527 PL startups listed

ANGEL LIST

1,835 PL startups at pre-funding thru growth funding

2,624 PL founder-CEOs (out of 1,560,000 PL professionals on LI)

LINKEDIN

Ave Length = 19 pages

Frequency:

Team = 100%
Product = 96%
Problem = 88%
Financials = 58% (seed)

Ave time to fundraise is 12 weeks, but much variation and usually it takes “way longer” than expected

Fundraising with seed funds more efficient than angels:

9 seed rounds exist for every Series A Round (i.e. “Series A Crunch”)

But Series A is more efficient (

The Market – Existing, Quantifiable, And Proven Ability To Execute In It

Conversely, in a terrible market, you can have the best product in the world and an absolutely killer team, and it doesn't matter — you're going to fail.

10 Factors

1

Every single user on their 31st day after registration, what percentage of them are monthly active? Thirty-second day, thirty-third day, thirty-fourth day. And that allows you, with only 10,000 customers, to get a real idea of what this curve is going to look like for your product.

2

10 Factors

The Wall Street Journal and Dow Jones VentureSource are tracking venture-backed private companies valued at $1 billion or more. See how the club has expanded since the project began in January 2014.

The Billion Dollar Startup Club

10 Factors

3

Predictability – Recurring and visible revenue streams / user growth (lifetime return customers)

The most common unscalable thing founders have to do at the start is to recruit users manually… founders ignore this path because the absolute numbers seem so small at first.

The mistake they make is to underestimate the power of compound growth. We encourage every startup to measure their progress by weekly growth rate. If you have 100 users, you need to get 10 more next week to grow 10% a week.” (that’s 14,000 users in Y1 and 2 million users in Y2)

10 Factors

4

Uncontrolled distribution leads to all manner of head-ache and profit-bleeding.”.

It’s possible to niche market and mass sell… Whether Apple or Estee Lauder, sustainable high-profit brands usually begin with controlled distribution. Remember that more customers isn’t the goal; more sustained profit is.

5

10 Factors

Proven Management Team – Track record managing growth increases investor confidence in execution

10 Factors

6

Weak Competitive Landscape – Emerging leader taking share from legacy vendors unable to respond (new and disruptive)

Technologization / technology, by contrast, involves doing new things… True technology companies—Palantir, SpaceX—involve going from 0 to 1. This means going from typewriters to word processors.

10 Factors

7

Strong Economic Model – Quantifiable and proven inputs for unit cost of customer acquisition, revenues, margins and contributions over time

Two things you should be doing when you're starting your company: talking to your users (selling) or building your product. As a founder, you have some unique advantages that make it possible for you to be really, really good at sales: passion for the product and your knowledge of the industry and the problem that you're solving.

10 Factors

8

The Elevator Pitch – One Summary that Describes it All

10 Factors

Frequency, Density, and Pain are three variables to analyze almost any problem.

Frequency: Does the problem you’re solving occur often?

Density: Do a lot of people face this problem?

Pain: Is the problem just an annoyance, or something you absolutely must resolve?

9

MORE OPTIONS THAN EVER TO GET A NEW COMPANY FUNDED:

— Aaron Harris, a partner at Y Combinator

Set up a US affiliate which accepts US funding (for legal reasons).

When there is a liquidation (sale, IPO), the flow of funds need to be established to pass to the international owners (either directly via shares in US entity or flow of funds).

Because of some commoditization of basic entity set-up services in US, this can be done for small amounts of money

The US company is the economic and voting entity. The Polish affiliate is the R&D and operations entity.

$1,000 to set up entity $25,000 to $50,000 to close financing deal.

Angel Funding, Syndicate Funding, Crowdfunding viable

How to Pick Investors?

How to Pick Investors?

REFERENCE CHECK IS BEST WAY TO CHOOSE A VC:

How to Pick Investors?

Global Trends

The combined inflation of real estate and wage costs in Silicon Valley have a dramatic impact of the operating expenses of startups. This chart compares the op-ex (excluding marketing spend) of a hypothetical 20 person Series A startup and a hypothetical 80 person Series B startup over the past five years in Silicon Valley. In both cases, the op-ex figures double from $2.5M to $5.0M and from $7.9M to $15.6M respectively.

Global Trends

Global Trends

Mobile internet has potential to be 10x bigger than desktop internet…

Freelancers and Entrepreneurs say…

Product-Market Fit

2,000 legitimate entrepreneurs added per month on Twitter

500 legitimate entrepreneurs added per month on Linkedin

Finding users =
Not a Problem

Sales and Marketing /
Distribution @500Startups

Linkedin: Peter Szymanski

Twitter: @szymap and @SiliconVCounsel

www.SiliconValleyCounsel.com