STC dreams of SV

@SpainTC
Dreams of Silicon Valley
Christian Prada
Managing Director
@SpainTC @christianprada
spaintechcenter.com

@SpainTC
Silicon
Valley
Dream
Downside
of Silicon
Valley
Getting
Started
Raising
Capital
Market
Research
State of
Affairs

@SpainTCSilicon Valley in the Headlines
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February 8, 2016

@SpainTCLeader in Venture Investing
+50% Share of Total Funding
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SV
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Raising
Capital
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@SpainTCAccess to Huge US Market
316 Million Peple
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@SpainTC
“A bit part of what makes Silicon Valley special
is that the entrepreneurial ecosystem is not a
zero sum. There’s a camaraderie amongst
entrepreneurs because we’re all here to do one
thing – solve a meaningful problem. It’s a
privilege to be a part of this community, which
covers all parts of the world.”
-- Joshua Reeves, Founder, ZenPayroll
Collaborative Environment
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@SpainTCUnique Culture
Innovation as commonly understood in Silicon
Valley is the product of invention
(an idea, technology, intellectual property, etc.)
AND commercialization.
The invention or underlying technology is important but
without widespread adoption it is deemed irrelevant.
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@SpainTCFar from Home
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@SpainTCHigh Cost of Living
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@SpainTCHigh Salaries and Attrition
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@SpainTCDifficult to Stand out of the Crowd
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@SpainTCHigh Fail Rate
Startups rarely fail because of
technology;
they fail because of
lack of product/market fit.
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@SpainTC
The end of the consumer
internet/social/mobile gold rush
Massive industry consolidation:
the top 6 apps and 8 of the top 9 are owned by Facebook and Google
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@SpainTC
2015 Market
B2C
• VR had a hard time getting started.
• Wearables and IoT have yet to go massively mainstream.
• Bitcoin and the Blockchain have yet to yield a killer app.
• AI has great potential but also gives incumbents with large
data (FB and Google) scale advantages over newcomers.
• Incumbent disruption happening in verticals like
transportation, hospitality, education, healthcare and finance
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@SpainTC
2015 Market
B2B
• Consumer-like approach to enterprise solutions.
Examples: Slack
• But there aren’t many broad horizontal plays in enterprise
• Most of the action was in verticals
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@SpainTCMore money and less rounds
Capital invested in 2015 at 2 times of pre-recession levels
Source: PitchBook 2015 Annual US Venture industry report & Upfront Ventures
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@SpainTC
Capital flowed massively into a smaller
number of late stage deals
… but the number of angel/seed deals have grown fastest
Source: PitchBook 2015 Annual US Venture industry report & Upfront Ventures
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@SpainTC
Investment in late-stage deals has
largely been driven by non VCs
Source: CB Insights & Upfront Ventures
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@SpainTCPrivate market valuations rose in 2015
… but Q4 saw a massive correction
Source: Dow Jones VentureSource & Upfront Ventures
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@SpainTCNTM Revenue Multiples Over 5 Years
All these categories are converging to a multiple of around 2-3x
Source: Redpoint Ventures
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@SpainTCPublic Tech Markets
Tech stocks off 52-week high – as of February 5, 2016
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@SpainTCIPO exits down
down 32% in volume and down 38% in value
Source: Dow Jones VentureSource & Upfront Ventures
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@SpainTC
The result: Unicorns
2015 is an inflexion year
The underlying fundamentals of opportunity in tech
slowed down
… but the capital rushing to get invested in tech
did not.
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@SpainTC
Private market valuations
to go down in 2016
30% of VCs expect valuations to correct significantly
Source: 158 VCs surveyed; Upfront Ventures
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@SpainTCFund raising cycles will take longer
… and pace will slow down even further
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@SpainTC
Focus is now on controlling
burn over rapid growth
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@SpainTCWhat happens next?
• The Unicorn phase is over and will be followed by an
unwinding phase:
• capital flows will line up more tightly to opportunities.
• We're probably not going to have another implosion like
happened in the early 2000s. Today's companies have:
• Real customers and revenues (execution).
• Academic framework and a better approach to entrepreneurship.
Mostly…
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@SpainTCBut we could see
• Downrounds: Startups who accepted unfavorable terms could find investors
forcing them to liquidate or sell leaving founders and employees with nothing.
• Shutdowns: Startups that are burning too much cash could quickly disappear as
funds will be harder to raise.
• A wave of acqui-hires as cash-rich giants scoop up talent by raiding struggling
startups.
• Layoffs, lower salaries and fewer perks as startups and big tech companies alike
strain to show investors that they're being responsible during these lean times.
• Lower revenues of startups whose business depends on other startups.
• Startup focus on cash flow over growth.
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@SpainTC
Cheaper resources in general and specific spaces show promise
Opportunities in various spaces
• B2C
• On demand economy on specific verticals. Take a particular vertical with fat
margins and build a service on top. Ex: VIP service on top used car sales.
• VR: Games will be the strongest early use case, but not everyone is going to
want to put on a headset. VR will only reach its true potential when it can be
deployed in a more natural way.
• We may see a new form of wearables. The wrist is not the only place to wear
a computer on our bodies.
• Bitcoin and Blockchain may find a killer app.
• B2B
• Consumer like services on specific verticals
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@SpainTC
Investment Research:
Venture Deals by Brad Feld
Covers what you need to know to begin
fundraising:
• The Players
• How to Raise Money
• Term Sheets
• Cap Tables
• Convertible Debt
• How VC Funds Work
• Negotiation Tactics
• Legal Things Every Entrepreneur Should
Know
“I wish I’d had this book when I started my first company.”
– Dick Costolo, Former CEO of Twitter
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@SpainTCInvestment Research: AngelList
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@SpainTCInvestment Research: CrunchBase
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@SpainTCInvestment Research: Crunchinator
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@SpainTCMarket Research: MatterMark
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Raising
Capital
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@SpainTCMarket Research: AngelList
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@SpainTCMarket Research: Product Hunt
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@SpainTCFind Seed Accelerators at Seed-DB
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@SpainTCSearch on f6s.com
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@SpainTCDiscover Programs on YouNoodle
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@SpainTC
Spain Tech Center offers technology and innovation
companies from Spain the support and network they need
to expand their businesses to Silicon Valley
Spain Tech Center
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@SpainTCImmersion Program
www.stcimmersion.com
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@SpainTC
Strategy Feedback
Service Provider AccessClient and Partner Intros
Pitch Elevator Review
Services for Startups and Entrepreneurs
Alberto Gómez - Coinffeine
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@SpainTCSpain Tech Center Networking Events
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STC dreams of SV

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STC dreams of SV