http://idcee.org/p/alanpatricof-greycroft-partners/
Alan Patricof, a venture capital pioneer, founded Greycroft, LLC in 2006. Greycroft is a venture capital firm, with offices in New York and Los Angeles, focused on the digital media sector. The firm has three funds – Greycroft I, II and III – with combined committed capital of $375 million. Prior to founding Greycroft, Mr. Patricof was the founder and chairman of Apax Partners, Inc. (formerly Patricof & Co. Ventures, Inc.), the U.S. arm of Apax Partners, Worldwide, LP, now one of the world’s leading private equity firms operating in 12 countries with $41 billion under management or advice.
During the past 40-plus years, Mr. Patricof has participated in the financing and development of a large number of public and private companies. Companies with which he has been involved at the initial stages are Apple Computer, America Online, Cadence Systems, Office Depot, FORE Systems, Cellular Communications, Inc., IntraLinks, Audible, Inc. and The Huffington Post. He currently serves on the board of Boston Properties and on the Board of Overseers of The Columbia School of Business. Mr. Patricof is a frequent speaker on entrepreneurship, venture capital and social impact investing.
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3. Quick history of Greycroft
Fund I
(April 2006)
Fund II
(April 2010)
Fund I Annex
(Feb 2012)
•Greycroft I - $75MM
•Greycroft II - $131MM
•34 investments
•56 investments
•Greycroft I Annex $12MM
Fund I themes:
Fund II themes:
•4 investments to
date
•Adtech, primarily paid
media
•Adtech, primarily owned
media
•Social media (B2B, B2C)
•eCommerce (B2B, B2C)
•Analytics
•Gaming
•Online Publishing
•Online Video
•Small seed portfolio
2006
Twitter
2007
iPhone
2008
2009
Facebook hits
100M users
2010
iPad
Instagram
2011
Pinterest
2012
2013
Facebook hits
800M users
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4. And our newest fund
Fund III
(January 2013)
•Greycroft III - $175MM
•6 investments to date
Fund III themes:
•Marketing SaaS
•Cloud enablement
•Small seed portfolio
2013
iPhone
Facebook hits
100M users
iPad
Instagram
Pinterest
Facebook hits
800M users
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6. Investment thesis
• Offices in LA and NYC – both emerging tech leaders
• Small Funds – $400 Million under management
-Investments range from $100,000 - $5 Million
• Recent addition of a Seed Fund
• Focus on early stage digital media and Internet startups
• Investing in Teams
-Repeat entrepreneurs
-Repeat experts in the space
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7. More than 90% of reported VC exits have been M&A
Venture-Backed Liquidity Events – Total
number of exits
600
Venture-backed IPOs
Venture-backed M&A deals
400
200
19
8
19 5
8
19 6
87
19
8
19 8
8
19 9
9
19 0
9
19 1
9
19 2
9
19 3
9
19 4
9
19 5
9
19 6
9
19 7
9
19 8
9
20 9
0
20 0
0
20 1
0
20 2
0
20 3
0
20 4
0
20 5
0
20 6
0
20 7
0
20 8
0
20 9
1
20 0
1
20 1
12
0
Note: IPO totals include all companies with at least one U.S. VC investor that trade on U.S. exchanges;
regardless of domicile M&A totals only accounts for VC backed deals with disclosed values
Source: Thompson Reuters; 2012 NVCA Yearbook
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9. The Greycroft approach to investing is different
Lead every deal
No syndication
Board seats
20% ownership
$1B expectations
$5M minimum
Largest possible
fund
IPO expectations
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11. Mobile
• Shift to mobile is accelerating
-Last year, nearly 12% of time spent with media by an
adult was consumed via a mobile device
• Digital ad-spend is going to migrate rapidly onto mobile
-$8.8B in 2012 is forecast to become nearly $63B in 2017
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12. Mobile and tablet sales have grown rapidly
Global internet device sales (M)
CAGR
CAGR
(06-12) (12-15)
3,000M
Tablet
N/A
50%
Smartphone
26.2% 24.3%
51%
27%
PC
8%
6%
2,000
1,000
0
2006
2007
2008
2009
2010
2011
Source: Gartner, IDC, Strategy Analytics, company filings, BI Intelligence
2012
2013F
2014F
2015F
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13. Globally, more than one third of digital ad spend will
be on mobile by 2017
Mobile ad spending share
of total digital ad spend worldwide
40%
36.3
31.0
30
25.6
19.8
20
14.2
10
8.5
4.6
0
2011
2012
2013
2014
2015
2016
2017
482
503
517
543
567
593
616
Digital ad spend ($B)
86
104
118
133
146
160
173
Mobile ad spend ($B)
4.0
8.8
16.7
26.3
37.5
49.6
62.8
Total ad spend ($B)
Note: Excludes SMS, MMS and P2P messaging based advertising
Source: eMarketer
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14. The shift to mobile media is accelerating – growing at
53% p.a.
Share of media time spent per day
on mobile (US adults)
Note: Time spent multi-tasking is counted for each medium
Source: eMarketer; Needham & Co.
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16. Highlighted trends in payments
• Though early, mobile payments represent strong area of growth,
with ~40% CAGR expected in transaction value through 2017
-The majority of this growth is being driven by mobile commerce and
money transfers
• Consumers are increasingly seeking convenience and a simplified
and unified mode of both online and offline payments
-Google, Facebook, Apple, payment platforms, and retailers are all working
to provide solutions that help to bridge the “digital divide”
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17. Mobile payments expected to grow dramatically
Global mobile payments ($B)
$800B
721
’11-’17F CAGR = 38%
600
400
235
200
163
106
0
Mobile payment
users (MM)
2011
2012
2013P
2017F
161
201
246
450
Note: Includes bill payments, merchandise purchases, money transfers, and NFC transactions
Source: Gartner
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18. Global smartphone users’ mCommerce activities
mComm activities of smartphone users, 2012 (% resp)
60%
51
Italy
UK
40
43
Russia
US
South Korea
38
38
33
30
24
20
22
18
15
11
12
14
28
26
15
17
3 3 4
0
NFC/
Mobile Wallet
Note: Select ‘developed’ countries selected
Source: Nielsen; Gartner
Barcode/
QR Scanning
Mobile
Shopping
Mobile
Banking
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19. Companies innovating in online and mobile payments
Payment
platforms
P2P
payments
Mobile POS
Retailer
closed apps
Mobile
Wallets
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20. Key takeaways on mobile commerce
• Mobile banking and commerce increasingly common
among smartphone users
• NFC growth expected to be limited over next few years,
with challenges on both the consumer and merchant
adoption front
-There is no incentive for consumer to tap rather than swipe a
credit card and the interface can be less reliable
• Banking and payment networks are established. There is
room for innovation in ancillary services surrounding
the payments infrastructure
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22. Video
Strong Trends
•60% of US network traffic is devoted to online video streaming
•50% of all mobile traffic is video
•89 million people in the US are going to watch 1.2 billion online
videos today
•YouTube attracts 1 billion unique visitors who watch over 6 billion
hours of video each month - this is estimated to be 1/3 of all online
video traffic and grows to almost 60% when you exclude porn
-Maker Studios is responsible for 4B video views per month
Imbalance with advertising dollars
•Online advertising only accounts for less than $100B of the $800B
in total global ad spend (<12%)
-Of which, online video advertising is only 7-10% of all online ad spend
•24% of US brands are advertising against online video today (of
approximately 4,300 national brands)
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23. Digital video ad spend forecast to grow rapidly
US Digital Video Ad Spending
$10B
9.1
8.0
8
7.0
5.8
6
4.1
4
2.9
2
0
2.0
2011
2012
2013
2014
2015
2016
2017
Note: Includes advertising that appears on desktop and laptop computers as well as mobile phones and tablets
Source: eMarketer; IAB; PWC
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24. Consumer behavior shows increased time allocated
Online video – daily minutes spent
30
Average YouTube
video is 4:21 minutes
24
20
17
10
0
10
2010
Note: Ages 13-64
Source: eMarketer; IAB; GfK; One Productions
2011
2012
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25. Nearly three quarters of US internet users view video
Online video viewers (US)
300M
200
172
183
201
205
191
197
100
0
% of internet
users
2012
2013
2014
2015
2016
2017
72.2
75.0
76.6
77.3
77.8
78.1
Source: eMarketer; comScore; Nielsen
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27. Native Advertising
• The concept of Native advertising isn’t new,
-it’s just being ‘discovered’ in the online business and advertisers are
finding clever new uses
• 73% of online publishers offer native advertising
• Over half of all display ads are never in view (below the fold)
• Native advertising in the context of social media alone was $1.63B > expected to climb to $4.57B in 2017
• 41% of Facebook’s Ad Revenue came from native mobile ads in
2013 Q2
• Twitter ads (all native) are projected to generate nearly $1B next
year
• Native advertising can be controversial or risky because it
allows advertising to appear in the same format as editorial content
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28. Native advertising is becoming increasingly important
US Social media ad spend
$13B
11.0
Native
10
9.7
Display
8.4
7.2
8
6.1
5
4.6
3
0
Native as a %
of total spend
2012
2013
2014
2015
2016
2017
35.2%
38.9%
39.9%
40.5%
41.1%
41.7%
Note: Native defined as branded content integrated directly within social network experience
Source: eMarketer; BIA/Kelsey
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29. Sponsorship dollars are flowing into native advertising
US Digital sponsorship ad spending
$4B
3.1
3
2.9
2.6
2.3
2
1.9
1.5
1.1
1
0
2011
2012
2013
2014
2015
2016
2017
Note: Includes advertising that appears on desktop and laptop computers as well as mobile phones and tablets
Source: eMarketer
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31. Connected devices
• Connected devices and the Internet of Things is a rapidly emerging
sector with nearly 25B new devices coming online over the next
five years
-These include your phone, embedded and wearable health devices,
smart watches, new control interfaces, smart appliances, tracking tags
for your possessions, and even your car
• The volume of data these devices will create unrivaled volumes of
data and that data presents opportunities for entrepreneurs
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32. Connected devices expected to grow rapidly, but will
not become ubiquitous over the next 5-7 years
Connected devices, worldwide
60B
50.1
42.1
40
34.8
28.4
22.9
20
18.2
14.4
11.2
8.7
0
Penetration of
connected
devices (%)
Source: Cisco
2012
2013
2014
2015
2016
2017
2018
2019
2020
0.60
0.72
0.87
1.05
1.27
1.54
1.85
2.24
2.70
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33. Internet of things data traffic expected to grow 89%
p.a. over the next five years
Volume of data created by
connected devices (monthly)
600PB
563
1PB = 1,073,741,824 MB
400
300
200
159
85
24
0
Source: Cisco
2012
45
2013
2014
2015
2016
2017
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34. A few big ideas to consider
• Offline data gathering/analytics
-Tremendous amounts of data are being created through the connected
device revolution – harness it
• Quantified self
-We are moving to a world where every part of ones self can be studied
and quantified – find solutions to our biggest health problems
• Over the top TV
-Content is everywhere and at low cost – disrupt incumbents in the
delivery market
• Sharing economies
-Bike shares, home shares, car shares, even private jet shares – make
our society more efficient in our use of resources
• Prize driven innovation
-Competition for prizes is helping to solve some of our toughest
problems and driving innovation – these are more important than
creating the next social network
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