Software Eats The World. Unicorns Kill Corporations (Dinosaurs).
Smart Dinosaurs Invest in Innovation & Buy Startups Before They Become Unicorns. These & Other Stories by 500 Startups
11. [ This Talk ]
• Startups Move FAST.
• Startups Can KILL.
• How 500 Works With Startups.
• How 500 Works With Corporates.
• Questions?
12. History Lesson: Startups Can KILL.
In 2001, Borders thought e-
books were not important.
They outsourced it to Amazon.
In only 10 years, Borders
became bankrupt, laying off
10,700 people,
While Amazon is worth $150
Billion.
13. In 2001, Borders thought e-
books were not important.
They outsourced it to Amazon.
In only 10 years, Borders
became bankrupt, laying off
10,700 people,
While Amazon is worth $150
Billion.
In 2000, Blockbuster was
offered to buy Netflix for
$50 Million
In only 10 years,
Blockbuster becomes
bankrupt.
While Netflix worth $20
Billion.
History Lesson: Startups Can KILL.
14. In 2001, Borders thought e-
books were not important.
They outsourced it to Amazon.
In only 10 years, Borders
became bankrupt, laying off
10,700 people,
While Amazon is worth $150
Billion.
In 2000, Blockbuster was
offered to buy Netflix for
$50 Million
In only 10 years,
Blockbuster becomes
bankrupt.
While Netflix worth $20
Billion.
Kodak is famous for
inventing the first film-less
digital camera in the world.
It is also famous for
becoming bankrupt
because they didn’t invest
in it.
History Lesson: Startups Can KILL.
19. [ This Talk ]
• Startups Move FAST.
• Startups Can KILL.
• How 500 Works With Startups.
• How 500 Works With Corporates.
• Questions?
20. 500 Startups: 100+ Investors, Entrepreneurs, Geeks
from Silicon Valley + 17 other Countries
The title “Partner” is used in accordance with customary business practice in the venture capital industry and does not indicate a legal
Dave McClure Christine Tsai
FOUNDINGFOUNDING PARTNER
Khailee Ng
MANAGING
Bedy Yang
MANAGING
SOUTH EAST ASIA LATAM/BRAZIL
Hasan Haider
Santiago Zavala
Rui Ma
Marvin Liao
Elizabeth Yin
Edith Yeung
Sean Percival
Adam Benayoun
Juan L. Salaberry
Pankaj Jain
Mojan MovassateMax Fram-Schwartz Ryan Lawler
Andrea Barrica
Zafer Younis
Krating Poonpol Natavudh P. (Moo)Cjin Cheng Binh Tran
Emily Chiu
Diana Moldavsky
Robert Neivert
Eddie Thai
Erhan ErdoganPhilipp Moehring
James Riney Mat Johnson Matt Lerner Tammy Camp
Tim Chae
Early employee Paypal,
early ‘Super Angel’,
venture capitalist at
Founder’s Fund, led
fbFund.
Early employee YouTube,
led developer community
building for Google after
YouTube’s acquisition
Built and exited 2
startups in 3 years.
GroupsMore sold to
Groupon + SAYS.com
merged to be listed on
the Malaysian stock
exchange
Founded Brazil
Innovators and built
startup ecosystems in
Latin America, and most
active seed investor
threre. Kauffman Fellow
21. 500 Startups: 100+ Investors, Entrepreneurs, Geeks
from Silicon Valley + 17 other Countries
23. 500 Partners: VCs + Tech Platforms
Our companies have raised capital from hundreds of VCs around the world:
Our companies have been acquired by over 20 major corporate acquirers:
24. 24
Sectors Selected Companies
E-COMMERCE
CLOUD & SAAS
VIDEO
MOBILE & TABLET
EDUCATION
PAYMENTS & FINANCIAL SERVICES
DATA SCIENCE (AI/MACHINE LEARNING)
IoT & HARDWARE
REAL ESTATE TECH & LOGISTICS
500 Sectors:
Investment Categories
25. Legal review
Partner
approval
Angel Pre-Seed Seed Post-Seed Series A/B Growth
Accelerator
How 500 Invests
Seed
“Distro"
Follow-On
Selection Criteria – Data-Driven Process Based on Pre-defined Metrics
• Product or service solves a problem for a specific target customer
• Capital-efficient business; operational at less than $1M in external financing
• Scalable internet-based distribution (search, social, mobile) or proven ability to scale sales
• Functional prototype required before investing (or previous product success)
• Measurable traction: engaged users, some revenue, and attractive unit economics
• Cross-functional team with design, engineering and marketing expertise
26. 500 Strategy: Lots of Little Bets*
1) make lots (>100) of
investments in
early-stage startups
3) wait 3-10 years for returns:
-10-20% small exits @1-5X (<25M+)
-5-10% larger exits @5-20X ($25-250M+)
-1-2% unicorns @20-50X+ (>$250M-1B+)
*See Peter Sims book: “Little Bets”
2) over next 2 years,
double-down on top 20%
28. The Lean Investor
Make lots of little bets:
• Start with many small “experiments”
• Filter out failures + small wins
• Double-down on stuff that looks like it’s working
• Incubation: $0-100K (“Build & Validate Product”)
• Seed: $100K-$1M (“Test & Grow Marketing Channels””)
• Venture: $1M-$10M (“Maximize Growth & Revenue”)
29. Investment Stage #1:
Product Validation + Customer Usage
• Structure
– 1-3 founders
– $25-$100K investment
– Incubator environment: multiple peers, mentors/advisors
• Test Functional Prototype / “Minimum Viable Product” (MVP):
– Prototype->Alpha, ~3-6 months
– Develop Minimal Critical Feature Set => Get to “It Works! Someone Uses It.”
– Improve Design & Usability, Setup Conversion Metrics
– Test Small-Scale Customer Adoption (10-1000 users)
• Demonstrate Concept, Reduce Product Risk, Test Functional Use
• Develop Metrics & Filter for Possible Future Investment
30. Investment Stage #2:
Market Validation + Revenue Testing
• Structure
– 2-10 person team
– $100K-$1M investment
– Syndicate of Angel Investors / Small VC Funds
• Improve Product, Expand Customers, Test Revenue:
– Alpha->Beta, ~6-12 months
– Scale Customer Adoption => “Many People Use It, & They Pay.”
– Test Marketing Campaigns, Customer Acquisition Channels + Cost
– Test Revenue / Unit Economics, Find Profitable Customer Segments
• Prove Solution/Benefit, Assess Market Size
• Test Channel Cost, Unit Economics, Revenue Opportunity
• Determine Org Structure, Key Hires
31. Investment Stage #3:
Revenue Validation + Growth
• Structure
– 5-25 person team
– $1M-$10M investment
– Seed & Venture Investors
• Make Money (or Go Big), Get to Sustainability:
– Beta->Production, 12-24 months
– Revenue / Growth => “We Can Make (a lot of) Money!”
– Mktg Plan => Predictable Channels / Campaigns + Budget
– Scalability & Infrastructure, Customer Service & Operations
– Connect with Distribution Partners, Expand Growth
• Prove/Expand Market, Operationalize Business
• Future Milestones: Profitable/Sustainable, Exit Options
32. [ This Talk ]
• Startups Move FAST.
• Startups Can KILL.
• How 500 Works With Startups.
• How 500 Works With Corporates.
• Questions?
34. How Can Corporates Work With Startups?
• Research: Learn about Innovation Topics + Disruptive Tech
• Meet: Get to Know Top Companies + Future Unicorns
• Invest: Own A Piece of The Future (Accelerator, Fund, Direct)
• Partner: Test Drive New Products With Your Customers
• Acquire: Acquire People + Technology + Business
35. 500 Startups + Stanford University Investor Education Program
#Venture Capital Unlocked: Learn the secrets of Silicon Valley Investing
#Corporate Accelerator: Build your own accelerator with 500 Startups
#Corporate VC: How to develop an industry-specific investment thesis
#500VCs
36. How to build investment
thesis
Meet REAL startup founders
and conduct selection
Connection with Silicon Valley
investors and mentors
Legal docs: cap table and
standard terms
How to generate deal flow Trends and relevant area of
investments
500 Startups + Stanford University Investor Education Program
#500VCs
37. Feb 8th-19th 2016
@ Stanford+500
signup NOW:
http://500.vc
500 Startups + Stanford University Investor Education Program
#500VCs