Logan Bartlett - Mattermark Webinar 4.30.2015

Small Business & Entrepreneurship

logan-bartlett
PowerPoint Presentation webinar 2 Agenda Who Am I? State of the Start-Up Ecosystem How Have VCs Found Deals Historically? How has Data Impacted Venture Sourcing? Trends for 2015 Advice for Founders Q&A © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 3 Who Am I? Investor at Battery Ventures focused on B2B software investing Battery typically looks to write checks between $8 and $25M Active with our firm’s investments in Coupa, Glassdoor and Yesware www.loganvc.com © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 4 State of the Start-Up Ecosystem © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 1. Cost of starting a company is decreasing 5 Source: Mark Suster – Upfront Ventures © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Two key dynamics in the early stage The cost of starting a company has dropped significantly – lean 2. Proliferation of micro vc and microbrews 6 Source: CB Insights © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 2. There has been a significant proliferation in early stage capital 3. Smart minds aren’t running to Wall Street 7 Source: Zero Hedge © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 I think this is too fold – Smart minds can’t be lured with just the same raw dollars and The millennial generation that I’m a part of is seeking “fulfillment” in their jobs… Not chasing near term dollars right now but instead want to be doing something they enjoy. IBM for 30 years and a white-picket fence are done 4. Market sizes are expanding 8 Source: Packetworks © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 5. Distribution is enhancing market velocity 9 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Mobile is the driving force here but the velocity of expansion is crazy 6. Companies are staying private longer 10 Source: Mark Suster – Upfront Ventures © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Microsoft and Cisco went public 20 years ago with market caps of $400 and $500M respectively Now we have $50B+ private companies 7. Public money is playing in private markets 11 Source: CB Insights © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 And so what are public investors doing? They are coming down to get growth companies. There is just less growth on the public market 12 So…….. what?? © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 13 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 CASH Valuations go up… 14 Source: Pitchbook © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 42% year over year increase in the Series B there Round sizes go up… 15 Source: Tom Tunguz - Redpoint © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Tom Tunguz did a did a great post on this but as the number of private company financings last year was 1 a working day That’s as many IPOs as we’ve had for venture backed companies in the last decade This is going to create a liquidity problem Large caps are being a bit more discipline Dividends and share buybacks are driving dollars vs. acquisitions Unicorns go up… 16 Source: CB Insights © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 … And winners take all 17 Source: Play Bigger Advisors, LLC. © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 18 Entrepreneurs should be all like…. © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Don’t worry about this. This does not impact you Everything we discussed is a macro concern 19 Because great companies are started in all markets For a full list of all Battery investments and exits, please visit www.battery.com Nasdaq © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 20 You just need to keep building value … © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Focus acutely on milestones in front of you 21 … and growing up and to the right © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 And jump from one hurdle to the next… Make the value of the next round higher than the post money of the last one and retain ownership for yourself Those are two simple goals but difficult to achieve I’m going to wrap up talking about this a bit more on valuations but a founders goal is pretty simply How Have VCs Found Deals Historically? 22 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 22 Method 1: Smile and dial 23 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 For any entrepreneur with more than 10 people (and probably even those with less than that) – they know this… some forms are worse (or better?) about this than others I don’t know if this is politically correct or what but I think of this as the east coast approach - TA really pioneered this on the growth equity side Method 2: Networking and referrals 24 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 This is more what I think of as the west coast approach You’re moving and shaking – shaking hands and kissing babies How has Data Impacted Venture Sourcing? 25 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 25 Both of those models still exist Firms have moved to hybrid approaches there But data has changed the game How did this start??? The Godfathers: LinkedIn and TechCrunch 26 LinkedIn provided new insights into both companies and employees Crunchbase crowdsourced funding information and provided extensive coverage on the start-up ecosystem © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 LinkedIn fundamentally shifted this as you now had more transparency into what people were doing LI has become a resume of sorts and with this you get more info about companies Crunchbase crowdsourced funding information which created a Wikipedia of sorts for start ups Commercialization for the have nots 27 Companies like Facebook, Netflix, LinkedIn, Twitter, AirBnB etc. built tools to handle their scale that were later commercialized Mattermark took practices that were done at the top venture firms and institutionalized it for the masses… . … and made it searchable by investor, stage, business model etc. © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Hang with me on this one So when companies in tech got too big to use commercial software for stuff around data centers and scale out.. They built their own stuff and then that tech was eventually commercialized for the masses those companies in the top right are examples of that Similarly forward thinking venture and growth firms did this as well But then Mattermark commercialized this and made it searchable in various ways Tools have proliferated 28 Company-Focused People-Focused For a full list of all Battery investments and exits, please visit www.battery.com © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 29 So…….. what?? © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Targeted outreach 30 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 More targeted outreach and networking While smile and dial and networking are still the ways you find deals – venture firms are smarter about it now Hopefully this leads to founders getting less dumb emails and more customized ones Trends for 2015 31 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 31 More dinosaurs gonna die 32 Bubble, My Ass: Some Unicorns Might Be Overvalued, But All Dinosaurs Gonna Die. By Dave McClure © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Everyone should read this article on innovation and the impact of it There are a lot of reasons that are behavioral based that it’s difficult to keep up here for large institutions But the velocity in which things are going (to that slide on amount of time to reach 100M) – it’s even more magnified More security breaches are coming 33 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 The Interview Advice for Founders 34 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 34 Stay lean and talk to all potential customer… 35 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Stay lean – you have to and you have to do so based on the cost of starting companies That’s the shoulder lean for … and diligence VCs before reaching out 36 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Your time is valuable – firms are big institutions but just like I want VCs to be more targeted in their approach to founders – the reverse is true Find the individual that makes the most sense Go through connections as you have the opportunity Put junior people that seem to work with the senior ones in the email as well A little tip is to look at a Partner and then look at the people also viewed – the junior people highest up there are probably their team Don’t optimize for valuation early … 37 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 I know this seems self fulfilling so let’s unpack this a bit SV did a good job of outlining this but worst case scenario is this: Raise at a super high valuation (let’s so 10x multiple off of $1M) - $10M post money Market falls out – not your fault at all and you keep doing everything you’re supposed to and are at $3M revenue – but market is 3.0x … you’re forced to raise at $9M which is a down round – this is the simplest example but there are more that I’m happy to talk through as well You should try and control what is in your control and provide safety parameters around what you can’t – don’t give up ownership but … because it’s a long journey 38 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 … but a fun one 39 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Q&A 40 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 40
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PowerPoint Presentation webinar 2 Agenda Who Am I? State of the Start-Up Ecosystem How Have VCs Found Deals Historically? How has Data Impacted Venture Sourcing? Trends for 2015 Advice for Founders Q&A © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 3 Who Am I? Investor at Battery Ventures focused on B2B software investing Battery typically looks to write checks between $8 and $25M Active with our firm’s investments in Coupa, Glassdoor and Yesware www.loganvc.com © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 4 State of the Start-Up Ecosystem © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 1. Cost of starting a company is decreasing 5 Source: Mark Suster – Upfront Ventures © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Two key dynamics in the early stage The cost of starting a company has dropped significantly – lean 2. Proliferation of micro vc and microbrews 6 Source: CB Insights © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 2. There has been a significant proliferation in early stage capital 3. Smart minds aren’t running to Wall Street 7 Source: Zero Hedge © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 I think this is too fold – Smart minds can’t be lured with just the same raw dollars and The millennial generation that I’m a part of is seeking “fulfillment” in their jobs… Not chasing near term dollars right now but instead want to be doing something they enjoy. IBM for 30 years and a white-picket fence are done 4. Market sizes are expanding 8 Source: Packetworks © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 5. Distribution is enhancing market velocity 9 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Mobile is the driving force here but the velocity of expansion is crazy 6. Companies are staying private longer 10 Source: Mark Suster – Upfront Ventures © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Microsoft and Cisco went public 20 years ago with market caps of $400 and $500M respectively Now we have $50B+ private companies 7. Public money is playing in private markets 11 Source: CB Insights © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 And so what are public investors doing? They are coming down to get growth companies. There is just less growth on the public market 12 So…….. what?? © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 13 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 CASH Valuations go up… 14 Source: Pitchbook © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 42% year over year increase in the Series B there Round sizes go up… 15 Source: Tom Tunguz - Redpoint © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Tom Tunguz did a did a great post on this but as the number of private company financings last year was 1 a working day That’s as many IPOs as we’ve had for venture backed companies in the last decade This is going to create a liquidity problem Large caps are being a bit more discipline Dividends and share buybacks are driving dollars vs. acquisitions Unicorns go up… 16 Source: CB Insights © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 … And winners take all 17 Source: Play Bigger Advisors, LLC. © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 18 Entrepreneurs should be all like…. © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Don’t worry about this. This does not impact you Everything we discussed is a macro concern 19 Because great companies are started in all markets For a full list of all Battery investments and exits, please visit www.battery.com Nasdaq © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 20 You just need to keep building value … © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Focus acutely on milestones in front of you 21 … and growing up and to the right © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 And jump from one hurdle to the next… Make the value of the next round higher than the post money of the last one and retain ownership for yourself Those are two simple goals but difficult to achieve I’m going to wrap up talking about this a bit more on valuations but a founders goal is pretty simply How Have VCs Found Deals Historically? 22 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 22 Method 1: Smile and dial 23 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 For any entrepreneur with more than 10 people (and probably even those with less than that) – they know this… some forms are worse (or better?) about this than others I don’t know if this is politically correct or what but I think of this as the east coast approach - TA really pioneered this on the growth equity side Method 2: Networking and referrals 24 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 This is more what I think of as the west coast approach You’re moving and shaking – shaking hands and kissing babies How has Data Impacted Venture Sourcing? 25 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 25 Both of those models still exist Firms have moved to hybrid approaches there But data has changed the game How did this start??? The Godfathers: LinkedIn and TechCrunch 26 LinkedIn provided new insights into both companies and employees Crunchbase crowdsourced funding information and provided extensive coverage on the start-up ecosystem © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 LinkedIn fundamentally shifted this as you now had more transparency into what people were doing LI has become a resume of sorts and with this you get more info about companies Crunchbase crowdsourced funding information which created a Wikipedia of sorts for start ups Commercialization for the have nots 27 Companies like Facebook, Netflix, LinkedIn, Twitter, AirBnB etc. built tools to handle their scale that were later commercialized Mattermark took practices that were done at the top venture firms and institutionalized it for the masses… . … and made it searchable by investor, stage, business model etc. © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Hang with me on this one So when companies in tech got too big to use commercial software for stuff around data centers and scale out.. They built their own stuff and then that tech was eventually commercialized for the masses those companies in the top right are examples of that Similarly forward thinking venture and growth firms did this as well But then Mattermark commercialized this and made it searchable in various ways Tools have proliferated 28 Company-Focused People-Focused For a full list of all Battery investments and exits, please visit www.battery.com © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 29 So…….. what?? © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Targeted outreach 30 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 More targeted outreach and networking While smile and dial and networking are still the ways you find deals – venture firms are smarter about it now Hopefully this leads to founders getting less dumb emails and more customized ones Trends for 2015 31 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 31 More dinosaurs gonna die 32 Bubble, My Ass: Some Unicorns Might Be Overvalued, But All Dinosaurs Gonna Die. By Dave McClure © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Everyone should read this article on innovation and the impact of it There are a lot of reasons that are behavioral based that it’s difficult to keep up here for large institutions But the velocity in which things are going (to that slide on amount of time to reach 100M) – it’s even more magnified More security breaches are coming 33 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 The Interview Advice for Founders 34 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 34 Stay lean and talk to all potential customer… 35 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Stay lean – you have to and you have to do so based on the cost of starting companies That’s the shoulder lean for … and diligence VCs before reaching out 36 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Your time is valuable – firms are big institutions but just like I want VCs to be more targeted in their approach to founders – the reverse is true Find the individual that makes the most sense Go through connections as you have the opportunity Put junior people that seem to work with the senior ones in the email as well A little tip is to look at a Partner and then look at the people also viewed – the junior people highest up there are probably their team Don’t optimize for valuation early … 37 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 I know this seems self fulfilling so let’s unpack this a bit SV did a good job of outlining this but worst case scenario is this: Raise at a super high valuation (let’s so 10x multiple off of $1M) - $10M post money Market falls out – not your fault at all and you keep doing everything you’re supposed to and are at $3M revenue – but market is 3.0x … you’re forced to raise at $9M which is a down round – this is the simplest example but there are more that I’m happy to talk through as well You should try and control what is in your control and provide safety parameters around what you can’t – don’t give up ownership but … because it’s a long journey 38 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 … but a fun one 39 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 Q&A 40 © 2015 ALL RIGHTS RESERVED ● MATTERMARK.COM ● (415) 366-6587 40
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