Marketrevolution stayhungrystayupdated-startupentrepreneurs-131205053654-phpapp01

28.11.13

STARTUP & THE NEW ENTREPRENEURS

MARKET REVOLUTION - Stay Hungry, Stay Updated - STARTUP & ENTREPRENEURS

Where does this story start?

2


Source: Natbat, sept 13.

This is the story of Natalie & Simon

From idea to exit

3


Source: Dissapore, aug 2012; La Stampa, jul 2013.

The history of Eataly

From microwave to Culatello

4


Source:

Testo slide

What do they have in common?

5

They are STARTUPS


Source: Google Trends, 2013.

Media, blog, social, TV, newspaper, magazine...

A skyrocketing interest

6

startups

but is it just a buzzword?


Source: Whitehouse, feb 2009.

7

The future of our economyrelies on theimagination of our

entrepreneurs

Barack Obama


Source: Wikipedia, 2013; Geekwire, sept 2011.

Long story short

Ok, but what's new around here?

8

1998-2000dot-com Bubble

2004-todayThe new wave

1973-1998The golden age

1950-1970The early days

Theres something new (and more)


Source: Wikipedia, nov 2013; Forbes, nov 2013; Doppiozero, oct 2013.

3 drivers

9

Economic

Economic Crisis Youth unemployment Failure of the traditional

business models Economic pressure from

emerging markets

Technological

Exponential growth in various technologies

Know-how sharing Development of a global

real-time communication network

Cultural

Mixture of counterculture utopias and neo-capitalism optimism

Loss of authority of the institutions

Craving for meaning and realization

Cult of failure Cooperative practices


Source:

Where everything was born

The reasons why Silicon Valley was (and is) the epicenter

10

Colleges

Research centers

Labs

Ultraliberalism

Hippie culture

Technology as a religion

Cult of failure

Do than discuss

Technology

Venture capital

Lean juridical system

ResourcesValuesPlace


What is the startup revolution?

11


TITOLOSOTTOTESTO

12

A global community of people who, relying on their creativity, skills and commitment, create new

organizations as a tool to disrupt conservative paradigm, solve global problems and create value for themselves

and the community itself.


The new paradigm

13

#vision

#disruption

#explorationfrom execution to

from management to

from retention to

#valuefrom profit to


What is a startup?

14


Eric Ries

15

Source: Lean Startup, 2010..

A human institution designed to deliver a new product or service under conditions ofextreme uncertainty.


RISKINNOVATIONPEOPLE

16

ITS ABOUT

MARKET REVOLUTION - Stay Hungry, Stay Updated - STARTUP & ENTREPRENEURS 17

ITS NOT ABOUT

DIGITALINDUSTRYSIZE


How does this work?

18


Source: Market Revolution, nov 2013.

An highly connected ecosystem

The startup framework

19


Source: Entrepreneur.com, 2013.

Colleges, research labs, business schools, foundations, public institutions

Where ideas and people come from

Institutions

20


Source:

Founders, coders, designers, makers, mentors, angels

Networking is the Word

Community

21


Websites, blogs, magazines, webzines

Not only the specialized ones

Media

22


Where you get to know and be known

Events

23

Fairs, events, competition, hackathons, demo days


Finance, legal, administration

skills and services to run a company

Services & support

24


Coworking, fablabs

Where companies are built and can share ideas, experiences, skills and network

Spaces & places

25


INVESTMENT & CORPORATELets focus on

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Paul Graham

27

Source:Paul Graham, nov 2005.

Venture funding works like gears.A typical startup goes through several rounds of funding.A each round you take just enough money to reach the speed where you can shift into the next gear.


two friends, an idea

Let's start a company

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This girl

This guy


Source: Paul Graham, nov 2005.

Lets follow the story of a (imaginary) startup called:

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STARTUPPERWARE


The first funding aimed at company set up, prototyping and living expenses

Pre-seed round

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Goal: - Fine tuning of the idea

- Build the prototype

Timing: 3 months

Pre-seed

Early stage

Seed

A-B-C round

Late stage

STARTUPPERWARE


Source: Funders and Founders, may 2013.

Friends & Family

Pre-seed round

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Pros: easy to find, no interferences.Cons: mix together business and personal life, no business network, not accredited as investors.

15k5% of the equity

20%Option pool


Grants & Competitions

Pre-seed round

32

Pros: smart money, visibility and PR, few constraints.Cons: no business network.


Source: Startupbro, 2013.

Crowdfunding

Pre-seed round

33

Pros: no constraints, awareness and PR.Cons: hard to get, no business network, high expectations.


Source: Investopedia, 2013; Paul Graham, nov 2005.

Burn rate - monthly cost of mantainance of the company. Tells you when you are running out of cash.

Option pool - Shares of stock reserved for employees of a private company. Are used to attract talents. The amount of stock an employee gets decreases polynomially with the age of the company.

Key concepts

Pre-seed round

34


Source: Techinasia, dec 2012.

The first boost to build the company

Seed round

35

Goal: concept validation- Minimum Valuable Product

- Business plan: value proposition, target, maket size, revenue model, competitors, competitive advantage

Timing: 3-6 months

Pre-seed

Early stage

Seed

A-B-C round

Late stage

STARTUPPERWARE


Source: Funders and Founders, may 2013.

Firms that oer small amounts of funding, working spaces, business and technical advisorship, sta services (PR, lawyers, accountants, etc), networking.

Incubators/accelerators

Seed round

36

Goal: profitable disinvestment of the shares

People

Main focus

Big batch

Model

15-100K

Funding

5-30%

Equity


Source: Forbes, apr 2012, Startup Weekend, 2013.

Incubators/accelerators

Seed round

37

Cons: Small funding, strong competition for brands, lower commitment.

Pros: low control over the startup, easy to reach, standardized investment process, personal relationship, access to VC network.


Source: Bernardi, nov 2013.

Organizations which internally generate ideas for new startups and hire people to develop them.

Startup foundries

Seed round

38


Source: Investopedia, 2013; Business Model Generation, 2013; Grasshopperherder, 2013; Lean Startup, 2010; Investment law group, 2013.

Equity - stocks or any other security representing an ownership interest. For a startup is one of its main assets.

Business model - how an organization creates, delivers and captures value (economic, social, cultural, or other forms).

Pivoting - structured course correction designed to test a new fundamental hypothesis about the product, strategy and engine of growth.

Track record - the percentage return of invested assets.

Key concepts

Seed round

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Source: Techinasia, dec 2012.

Its time to make things seriously

Early stage round

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Goal: customer validation- Generate traction

- Generate revenue

- Hiring sta

Timing: 12-18 months

Pre-seed

Early stage

Seed

A-B-C round

Late stage

STARTUPPERWARE



Rich people who invest in new companies.

Goal: invest in startups with high-speed growth

Angel investors

Early stage round

41

market captivity

Main focus

15-20%

Equity

up to 200k

Funding

Cons: potential issues for subsequent rounds, push to exit, less reputation to protect, involved in the management.

Pros: SME, networking, mentoring, less investment constraints.


Source: Paul Graham, nov 2005; Investopedia, 2013.

Accredited investors - people with over a million dollars in liquid assets or an income of over $200,000 a year.

Evaluation - in early stage investing, valuations are voodoo

Exit strategy - is the way of "cashing out" an investment.

Key concepts

Early stage round

42


Source: Techinasia, dec 2012; Wikipedia, 2013.

Grow. And keep growing.

Series A-B-C round

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Goal: from revenue to profit- Scaling business

- International expansion

- Hiring executive

Timing: 1-2 year

Pre-seed

Early stage

Seed

A-B-C round

Late stage

STARTUPPERWARE



Investment firms that manage, either private or general funds, in equity stakes of high-risk/high-return ventures.

Goal: cash-out with a strong multiplier (2-3x)

Venture capital

Series A-B-C round

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Exit

Focus

Mgmt fee

Model

> 1 million

Funding

10-40%

Equity



Venture capital

Series A-B-C round

45

Cons: control on the management, strict regulation on investment.

Pros: capital, experience, network.


Source: Paul Graham, nov 2005; Investopedia, 2013; Investopedia, 2013.

Term sheet - summary of what the deal terms will be when and if they do a deal.

Due diligence - the background check of the business, technological, financial and legal aspects of the company.

Diluition - reduction in the ownership percentage of a share of stock caused by the issuance of new stock.

Key concepts

Series A-B-C round

46


Source: Wikipedia, nov 2013, Crunchbase, nov 2013; Business Insider, nov 2013.

Get bought or go public

Later stage round

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Goal: cash-out- Solid growth

- Acquisition

- Financial stabilization

Timing: 3-4 years

Pre-seed

Early stage

Seed

A-B-C round

Late stage STARTUPPERWARE


Source: Startup Italia, nov 2013.

Acquisition

Later stage

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EOS is an italian biopharmaceutic startup, founded

in 2006 with private capital and investment

of Sofinnova Partners and

Principia.

In 2010 created their flagship

innovative product: Lucitanib.

The 2012 its licensed for using in US, Japan and China markets.

Few days ago was acquired by

Clovis, U.S. biopharmaceutical company, for $

400 million in cash + shares.

Its (perhaps) the biggest exit of the history of Italian startup.


Source: Wikipedia, nov 2013, Crunchbase, nov 2013; Business Insider, nov 2013.

IPO

Later stage

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After 7 years and $1.16B of

funding, on November 6,

2013, Twitter was listed on the New

York Stock Exchange (NYSE).

70 million shares were priced at US

$26.

Twitter raised $1.82B.

In the first day of trading, shares closed at US

$44.90 for $31b evaluation.

In one day Twitter created

1,600 new millionaries.


Source: Forbes, apr 2013; Crunchbase, nov 2013.

Testo slide

Large private company

Later stage

50

GoPro was founded in 2004

by Nick Woodman to capture and

share our lives most exciting

moments in high definition.

Over the years received funding

from several investors. The

latest was in 2012 from Foxconn of

$200 million.

Today, GoPro evaluation is $2.25 billion.

The estimated revenues in 2013 are more $900+

million.


Whos financing who

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Pre-seed Early stageSeed A-B-C round Late stage

Self-financing

Grant

Crowdfunding

Incubator

Accelerator

VCs

Angel Investors

Companies

Some examples


(Some) figures and data

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The global start-up ecosystem

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http://multisite-blog.digital.telefonica.com.s3.amazonaws.com/wp-content/uploads/2013/01/Startup-Eco_14012013.pdf

The startup output index represents the total activity of entrepreneurship in the region, controlling for

population size and the maturity of startups in the region

Silicon Valley

Tel Aviv

Los Angeles

New York

Boston

LondonToronto

Vancouver

Sydney

Sao Paulo

Moscow

Paris

Berlin

Singapore

Melbourne

Bangalore

Santiago

Waterloo

Source: Start-up Ecosystem Report 2012 , Telefonica

to ta l ac t iv i ty o f entrepreneurshipcontrolling for population size and the maturity of startups


How many startups?

54

23

Per 1.000 working age people

1112

16

Source:World Bank, 2012


Sourcce: Human Highway per Italia Startup, 2012

Whats going on in Italy

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300 k

29 mln

5,3 mln

3,5 mln

1.227

Internet Users

Would invest in start-ups

Would invest much money in start-ups

Know where to invest

Create an innovative startupStartuppers

Wanna-be Startuppers

Committed Wanna-be startuppers

Potential Startuppers


Source: Global Entrepreneurship Research Association (GERA)

Fear of Failure RatePercentage of 18-64 population with positive perceived

opportunities who indicate that fear of failure would prevent them from setting up a business

What can stop them?

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Source: Italia Startup, 2013

Italian Startup ecosystem

57

450

194

604

35

20

42

INNOVATIVE STARTUPS INCUBATORS & ACCELERATORS


VC investment in the US

58

725 274

million dollars

7.800 1.638

Seed

Early stage

companies

Source: PricewaterhouseCoopers and the National Venture Capital Association (NVCA),2012

in

in


Seed & early stage investment

59

477

56

274

355

UK France

ItalyGermany

EUROPEAN UNION

Million euros in 2012

Source:European Private Equity and Venture Capital Association; PricewaterhouseCoopers and the National Venture Capital Association (NVCA),2012

8.600

1.900

UNITED STATES

Million dollars in 2012

(28m 2013)


Source: The Venture Capital Secret: 3 Out of 4 Start-Ups Fail, 2012.

U.S.-based companies initially funded by venture capital between 2006 and 2011

How many survive?

60

66

6.613

5.555

727

operating independently

were acquired or made initial public oerings

currently in IPO registration


from a business point of viewmodels, strategy, consequences

61


Source:

62

Whats going on?


What Companies Want

63

THEMSELVESGet noticed in a highly competitive industry

INDUSTRYFind the next big idea

INTERNALLYSmart talented employees

Increase eciency and eectiveness


Source:

The next big idea

How can startups help?

64

Source: Harvard Business Review, dec 2008; Wikipedia, nov 2013.

Open innovation

Its not convenient to innovate on its own.

Find and access to new ideas and paths to market through partenership and collaborations.

The boundaries between a firm and its environment have become more permeable; innovations can easily transfer inward

and outward.


Steve Blank

65

Source: Steve Blank, jan 2010..

A temporary organization formed to search for a

repeatable and scalable business model.


Source: Privco,2012

The TOP 10 Acquirers of 2012

1

2

3

4

5

6

7

8

9

10

16

16

12

10

10

9

8

7

6

6

Number of acquisitions in 2012


Source: Nymag, 2013

Get noticed in a highly competitive industry

67

PR & ReputationA 17-year-old whiz kid who sold his company to Yahoo

for $30 million

like BEST STORY EVER for PR.



Smart talented employees

68

ACQ-HIRE

Source :Fortune,2013



Source Wikipedia, nov 2013:

Increase eciency and eectiveness

69

NEW MANAGERIAL METHODS

LEAN STARTUP: a set of methodologies and tools for developing businesses and products

Validated learning, minimum viable product, actionable metrics, pivoting.



The dark side of startup revolution

70


What are the risks?

71

Startup Ecosystem Corporate


Focus on hyped but with little value segments

For startups

Can I be sexy too?

72

Especially for social and consumer internet


Source: Infoworld, nov 2013; Instagram, jan 2013; Businessweek, nov 2013.

For the ecosystem

Are we in a new bubble?

73

$100m investmetnov 2012

$1b acquisitionapr 2012

$3b evaluationnov 2013


How can a speculative system foster breakthrough innovation that create new markets and at the same time destroy others?

for the ecosystem

Dont you mind if we disrupt?

74


Discover, communicate, acquire, integrate and collaborate with startups require a whole new set of skills and processes.

for corporate

Well, it is not my job!

75


Startup revolution is not a passing hype but it's a growing movement that is

changing the way people and businesseswork and create value.


Speakers

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Cinzia Malerba | Analyst

Business Analyst at Orange Network, on marketing and change management. Shes coordinator of Market Revolution, a blog about trends and business strategies. She previously worked in brand management and trade marketing in apparel and fashion, in Luxottica and Valentino. She holds a master in Management at Bocconi University and she has been exchange student at Louis Pasteur University in Strasbourg, France and Asian Institute of Management in Manila, The Philippines.

Stefano Daelli | Associate

Consultant at FUTUREBERRY on new business models, marketing and digital strategy topics. Hes project manager of Market Revolution, a blog about trends and business strategies, and co-founder of IMBIK, startup incubator based in Milan. He worked at the Accenture Customer Innovation Center in Milan. He graduated in Philosophy at Universit Statale degli Studi di Milano and has been resident student of Collegio di Milano. He is professor at IED Management.

[email protected]

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