Fueling Innovation. ! Entrepreneurship, Innovation & Venture Funding!! US Investment Landscape and Notes for UK Startups. ! London!

Transcription

1 Fueling Innovation! Entrepreneurship, Innovation & Venture Funding!! US Investment Landscape and Notes for UK Startups! London! 3 Feb 2015! David J. Blumberg, Managing Partner

2 Blumberg Capital Mission We help innovative entrepreneurs transform early stage information technology companies into large scale businesses.

3 Blumberg Capital Overview 7 to 11 Investment professionals with entrepreneurial experience Soon ~$500M assets under management Focus on capital efficient Information Technology companies Disciplined strategy of leading Seed and Series A investments Investing in tech hubs (SF, NY, Vancouver, Tel Aviv, Berlin, London ) Large and sustainable funnel of proprietary deal flow Value add: Chief Information Officer & Chief Marketing Officer Councils; Talent Lead Solid track record: current funds in top decile CONFIDENTIAL 3

4 Blumberg Capital Investment Strategy Our lead the early stage strategy fills a funding gap in the market Growth Capital Early Stage Lead Angels Key Tenets: Go early; go big Target 15-25% equity in seed or series A round Follow on with winners Differentiated Financial Strategy: BC owns ~15% of the average portfolio company BC serves on ~90% of company boards CONFIDENTIAL 4

5 Selected Blumberg Capital Portfolio Enterprise Software & SaaS Financial Services Acquired (PANW) Social Media & E-commerce CONFIDENTIAL 5

6 Best Time Ever For Entrepreneurs - Why Now? Dramatic decline in CapEx for startups Rise of efficient distribution channels: SaaS, Mobile Apps, Social Media Growth of emerging markets Access to education, formal / informal, models Growth / professionalization of angel investors Large companies seek partners for innovation CONFIDENTIAL

7 Accelerating Prosperity: 2000 Years GDP Growth

8 Entrepreneurship Requirements Passion / Commitment / Persistence Vision Credibility / Integrity Domain expertise Functional skill set Supportive peer group / mentors CONFIDENTIAL

9 The Six T s VCs Use To Evaluate Startups Theme Terms Team Timing Terrain Technology 9

10 Innovation: Why, What, How, Who, When? Why What How Who When Pain / Necessity Lack of alternatives Value proposition Market size / Risk factors Differentiated advantages / Competitive landscape Customer feedback / External validation Technological edge / Intellectual property What is in the secret sauce? Right team mix of skills, compatibility Market timing, channels CONFIDENTIAL

11 Due Diligence Trust But Verify! Take nothing for granted; expect the unexpected Market checks consulting with industry experts Customer checks yours and ours (via CIO / CMO / CISO Counsels) Founder checks formal and informal references Financial checks - analysis and review of assumptions Legal checks - use a good attorney/solicitor CONFIDENTIAL 11

12 Post-investment Support Network introductions Sales Business development Recruiting Financing Operational expertise Strategic/financial consulting Follow-on investing, based on merit CONFIDENTIAL 12

13 Accelerating Change Risks/Opportunities McKinsey estimates the economic impact of the Digital / Mobile revolution will be 5-10X Internet in the 1990s All business models are at risk Major corporations are desperate for innovation 40% of existing companies will fail in this transition 8 trends: Distributed co-creation; Consumers as innovators; Distributed talent; Higher value interactions; Expanding automation; Unbundling production from delivery; Analytics for management; Data businesses Portable, verified identity is an enabler CONFIDENTIAL 13

14 UK Open ID Opportunity; Carpe Diem! Developed economy with rule of law, low corruption Bridge between EU and US and ROW Strong digital / mobile infrastructure Entrepreneurial critical mass; VC funding Leading universities & research institutions World class, international financial center Polyglot, educated workforce Supportive government leadership for UK Identity Assurance Program CONFIDENTIAL 14

15 Case Study Trulioo Business Model: First Internet Identity Bureau Leading industry expertise using Social Media as engine for Real Time ID verification Unique technology approach and product head start Trial for UK Identity Assurance program put company at risk Technical success; provided visibility and insights Commercial failure: too early for adoption and insufficient standards; lack of cross industry / government scheme to support Stay tuned; be patient, go to market private sector leads? CONFIDENTIAL 15

16 Monitoring VC Activity Levels Venture capital investments hit a frenzy in 2000; today s level more sober Billions US Venture Capital: $ Invested by Quarter Seed Stage Early Stage Expansion Stage Later Stage $30 $25 $20 $15 $10 $5 $ Seed stage is 2% of total in past year Source: PWC Moneytree as of Q CONFIDENTIAL 16

17 Technology is Continuing Secular Growth In 2000, technology stocks represented 35% of the S&P index. Recent levels below 20% while post crash growth has been significant and steady Technology Company Market CapitalizaAon as % of S&P 500 Source: KPCB, Morgan Stanley, Bloomberg, CapIQ CONFIDENTIAL 17

18 Early Stage Investing is Stable and Attractive Late stage market valuations have increased substantially and are more volatile, while Seed and Series A stages have been impacted less Median Company ValuaAon by Funding Stage ($M) $180 Series Seed Series A Series B Series C Series D or Later $ $140 $120 $100 $80 $ $ $ $ * Source: Pitchbook CONFIDENTIAL 18

19 Blumberg Invests in Top VC Markets Note: Survey of 331 venture capital, private equity, and growth equity investors Source: WSJ, 8/13/2014, based on data from the National Venture Capital Association and Deloitte CONFIDENTIAL 19

20 Richer World Is Happier World

21 Angel Factoids In ,000 active angel investors $23 billion invested in 67,000 startups Average angel round = $343k Average investment size per angel = $85k 275,000 jobs created Majority of angel deals fail 90% of cash returns are produced by 10% of exits Source: UNH Center for Venture Research, 2012 full-year report; and Forbes.com 21

22 Year In Review: Significant Macro Changes Mobile permeates all sectors Crowdsourcing/social/cloud is disrupting many industries Emerging markets are riskier Big Data 2.0 is addressing the application layer Geo-political tensions Iran, Ukraine, China, Syria, Nigeria Turnover in large VC firms and more first time funds Increasing corporate venture activity Increasing regulation and taxation burden CONFIDENTIAL 22

23 Newsflash: Capitalism Works! Average summer student earnings at minimum $US wage 1949 Typewriter 35mm camera AM FM table radio 3-speed phonograph 2009 Laptop PC Color ink jet printer, scanner, copier 8Mpixel digital camera Portable GPS 32 color HDTV 8GB ipod Nano Microwave Refrigerator freezer combo DVD/DVR Home theatre system Cordless phone AM/FM radio Camcorder Playstation II 7 more things Source: G.Beck

24 Wrap-up Fueling Innovation Many portfolio companies hiring and we are looking to fund great new entrepreneurial teams Copy: 24