Bitspiration 2015 Presentation for Entrepreneurs

1. Raising Funds
from Silicon Valley
What Silicon Valley investors look
for in Polish companies…

2. Advantages for Polish Startups &
Entrepreneurs?
WHY ME?
HOW TO PICK AN INVESTOR?
FOLLOW UP DISCUSSION:
Quick Introduction
What I am doing in Poland
Ten Factors Silicon Valley VC
Investors Look For
SILICON VALLEY FUNDING
Introduction
- From Wroclaw University of Technology, Jun and Oct 2014
- From Warsaw School of Economics, May 2015
Structuring Polish-US investor companies

3. Why Me? 14+ Years of Top-Notch Experience

4. Why Me? Why is Poland the right place right now?Why Poland?

5. Why Me? Polish companies are already being fundedWhy Poland?
Brainly, DocPlanner, UXPin, Estimote, Oort, others
MATTERMARK
MULTIPLE $M FINANCINGS
527 PL startups listed
ANGEL LIST
1,835 PL startups at pre-funding thru growth funding
2,624 PL founder-CEOs (out of 1,560,000 PL professionals on LI)
LINKEDIN

6. Why Me? Sequoia Capital Famous Question – Why Now?Why Poland?
Poland #15
Country for
Internet
Penetration
(25+M people)

7. Why Me? Sequoia Capital Famous Question – Why Now?Why Poland?
Poland #8
Country for
Smart Phone
Penetration
(22+M people)
Poland #5 for
mobile % of
internet traffic at
52%

8. Average investor spends 3m:44s on a pitch deckPitch Deck
Lessons From A
Study of 200
Perfect Pitch Decks
@kimmaicutler
Ave Length = 19 pages
Frequency:
Team = 100%
Product = 96%
Problem = 88%
Financials = 58% (seed)

9. Recommended Deck OrderingPitch Deck
Lessons From
A Study of 200
Perfect Pitch
Decks
@kimmaicutler
Fairly standard, start with:
Company Purpose
Problem
Solution
End with team @ReidHoffman

10. How long does it take; Seed Fund or Angels?Pitch Deck
Lessons From
A Study of 200
Perfect Pitch
Decks
@kimmaicutler
Ave time to fundraise is 12 weeks, but much variation and usually it takes “way longer” than expected
Fundraising with seed funds more efficient than angels:

11. Darwinian Survival of FundraisingPitch Deck
Lessons From
A Study of 200
Perfect Pitch
Decks
@kimmaicutler
9 seed rounds exist for
every Series A Round
(i.e. “Series A Crunch”)
But Series A is more
efficient (<time, fewer
investors & meetings)

12. In a great market — a market
with lots of real potential
customers — the market pulls
product out of the startup
The Market – Existing, Quantifiable, And Proven
Ability To Execute In It
Conversely, in a terrible
market, you can have the
best product in the world and
an absolutely killer team, and
it doesn't matter — you're
going to fail.
10 Factors 1

13. Retention is the single
most important thing for
growth.
Rapid Growth – 30% forward revenue/user growth per
period (per year for M&A or IPO) or per month/quarter
(early stage)
Every single user on their 31st
day after registration, what
percentage of them are monthly
active? Thirty-second day, thirty-
third day, thirty-fourth day. And
that allows you, with only 10,000
customers, to get a real idea of
what this curve is going to look
like for your product.
210 Factors

14. Scale – $1Bn+ market cap potential (a “unicorn”),
with line of sight to $1Bn+ in revenues
The Wall Street Journal and Dow Jones VentureSource
are tracking venture-backed private companies valued
at $1 billion or more. See how the club has expanded
since the project began in January 2014.
The Billion Dollar Startup Club
10 Factors 3

15. One of the most common types
of advice we give at Y
Combinator is to do things that
don't scale
Predictability – Recurring and visible revenue streams /
user growth (lifetime return customers)
The most common unscalable
thing founders have to do at the
start is to recruit users
manually… founders ignore this
path because the absolute
numbers seem so small at first.
The mistake they make is to underestimate the
power of compound growth. We encourage
every startup to measure their progress by
weekly growth rate. If you have 100 users, you
need to get 10 more next week to grow 10% a
week.” (that’s 14,000 users in Y1 and 2 million
users in Y2)
10 Factors 4

16. Pricing before product
– plan distribution first;
is your pricing
scalable?
Product and Customer Diversity – Multiple
proven products, features, customers, industry
distribution channels, find customers
Uncontrolled
distribution leads to all
manner of head-ache
and profit-bleeding.”.
It’s possible to niche market
and mass sell… Whether
Apple or Estee Lauder,
sustainable high-profit
brands usually begin with
controlled distribution.
Remember that more
customers isn’t the goal;
more sustained profit is.
510 Factors

17. Startup probabilities of success where cofounders don't have a long
history are bad; when things go wrong, there is no history to bind…
A bad early hire can kill a company; in the early days the goal is to not
hire and stay small as long as possible…
Be proud of how much can be done with fewer employees; more equals
high burn rate, complexity & slower decisions…
Founders underestimate how hard it is to recruit; the best employees
have options; mission belief is the differentiator.
Proven Management Team – Track record managing
growth increases investor confidence in execution
10 Factors 6

18. Globalization means copying
things that work… There is no
innovation; you go from
building 1 to n typewriters (…)
Weak Competitive Landscape – Emerging leader taking
share from legacy vendors unable to respond (new and
disruptive)
Technologization / technology, by
contrast, involves doing new
things… True technology
companies—Palantir, SpaceX—
involve going from 0 to 1. This
means going from typewriters to
word processors.
10 Factors 7

19. When you are starting a startup
you need revenue. You need
validation. You need users. You
need commitment. Free trials get
you none of those things… You
think you've made progress but
at the end of the free trial you’re
going to have to sell them all
over again.
Strong Economic Model – Quantifiable and proven
inputs for unit cost of customer acquisition,
revenues, margins and contributions over time
Two things you should be doing when
you're starting your company: talking to
your users (selling) or building your
product. As a founder, you have some
unique advantages that make it
possible for you to be really, really good
at sales: passion for the product and
your knowledge of the industry and the
problem that you're solving.
10 Factors 8

20. If you’re going to spend the best
years of your life working on
something, you better make it
something you care about. The
mission is not the exact problem
you’re going to solve, but it’s the
North Star. It’s telling you the
direction in which you should go.
The Elevator Pitch – One Summary that
Describes it All
10 Factors
Frequency, Density, and Pain are three
variables to analyze almost any problem.
Frequency: Does the problem you’re
solving occur often?
Density: Do a lot of people face this
problem?
Pain: Is the problem just an annoyance, or
something you absolutely must resolve?
9

21. Passion versus Pain = Consumer versus Enterprise10 Factors 10
Mary Meeker

22. How to Pick Investors?

23. How to Pick Investors?
One of the really cool things that's happening
right now is this massive proliferation of ways
to start a company and ways to get your
company funded
MORE OPTIONS THAN EVER TO GET A NEW COMPANY FUNDED:
— Aaron Harris, a partner at Y Combinator

24. HOW DOES A POLISH COMPANY RAISE M ONEY IN THE USA?
VC Funding not only route…
Set up a US affiliate which accepts US
funding (for legal reasons).
When there is a liquidation (sale, IPO),
the flow of funds need to be established
to pass to the international owners
(either directly via shares in US entity or
flow of funds).
Because of some commoditization of basic
entity set-up services in US, this can be
done for small amounts of money
The US company is the economic
and voting entity. The Polish affiliate
is the R&D and operations entity.
$1,000 to set up entity $25,000 to
$50,000 to close financing deal.
Angel Funding, Syndicate Funding,
Crowdfunding viable
How to Pick Investors?

25. Team Leadership skills, operating knowhow
and industry knowledge are all tremendously
important. However, most entrepreneurs seem
to make their decisions more on perceived
brand, past successes and ability to intro.
How to Pick Investors?

26. Look at their portfolio list … Subtract out the extremely successful
companies. a) they have no time for you & b) everybody who has a super
successful out-of-the-gate company loves their VC because there was no
conflict
Call the companies that are doing well but not yet household names. Ask
about the criteria above
More importantly, call the companies that struggled. You’ll learn most
about VCs when you find out how they handled themselves in tough
situations. Make sure to call 3-4 members of the management team to
avoid one person’s bias
Past successes aren’t always relevant to future ones (web vs. mobile,
Traditional software vs. SaaS, SEO marketing vs. social marketing)
REFERENCE CHECK IS BEST WAY TO CHOOSE A VC:How to Pick Investors?

27. Never been easier to start a technology company…
In the USA or anywhere else…
Why?... Decreasing costs, market factors…
On the other hand… Silicon Valley is very
expensive…
Global Trends

28. What about the Silicon Valley funding bubble?Global Trends
Maybe in the
future…
Today we are
in a boom!

29. It’s become 2x more expensive to scale a startup in
Silicon Valley in 2015 versus 2009
The combined inflation of real estate and
wage costs in Silicon Valley have a
dramatic impact of the operating expenses
of startups. This chart compares the op-ex
(excluding marketing spend) of a
hypothetical 20 person Series A startup and
a hypothetical 80 person Series B startup
over the past five years in Silicon Valley. In
both cases, the op-ex figures double from
$2.5M to $5.0M and from $7.9M to $15.6M
respectively.
Global Trends

30. More
powerful
phones =
More
potential for
powerful
apps
Global Trends Smartphone costs declining… 5% annually from
2008-2013…

31. Global Trends Bandwidth costs declining… 27% annually from
1999-2013…
Declining cost /
Performance of
bandwidth
enables faster
collection &
transfer of data
to facilitate richer
connections /
interactions

32. Global Trends Compute costs declining 33% annually (1990-2013)
Decreasing cost /
performance curve
enables
computational power
at core of digital
infrastructure….

33. Each new
computing
cycle typically
generates 10x
the installed
base of
previous
cycle…
Global Trends Mobile internet has potential to be 10x bigger
than desktop internet…

34. Global Trends Mobile traffic as % of Internet Traffic = Mega Trend
25% in 2015,
rising fast!
Remember
Poland is #5
globally at
52%

35. Global Trends Smart phones have lots of upside remaining
Only 30% of Global
5.2B unit Phone
Market are Smart
Phones, More
Shipments Each
Year

36. Global Trends Mobile is constantly changing
Global smartphone
Operating System is
97% Different Than
10 Years Ago

37. Global Trends Tablets Growing +50% Per Year
Faster than PC
Ever Did

38. Global Trends Mobile + Tablets Shipment = 5x of TV + PC
Just 10 Years
Since Inception
Creates
Opportunity…

39. How big will Streaming Mobile Video be in 5 years?Global Trends

40. How big will Streaming Mobile Video be in 5 years?Global Trends
2.8 hours per day
spent on mobile
screens…
29% on vertical
video = Wow!

41. Global Trends
Cloud Technology/Apps Challenging Physical
Products Pain Points

42. Global Trends Sensors Growing >30% Per Year, Where in 5 Years?
Beacon Valley
Poland has strong
Position in sensors

43. Global Trends User Generated Content = 2/3 of All Content
Sharing Content
Not Slowing Down
Where Does It
All Go?
How to organize?

44. Global Trends User Generated Content = 2/3 of All Content
1.8 B Photos
Uploaded Daily
Are your Photos
And Messages
Organized?

45. Global Trends Which Way Are Mobile Apps Moving?
Sharing with Friends
And Finding New
Friends…
Not Researching
Information…

46. Global Trends What about the Blockchain / Crypto Currency?
Too Many Smart
People Believe
It’s Here to Stay
Who will find the
1st Mainstream
App / Use Case?

47. Global Trends Online Education is Global, Brainly.PL $9M Funding

48. Global Trends Changing Global Workforce Brings Tides of Change

49. Global Trends Changing Workforce Brings Tides of Change
Entrepreneurs and Freelancers have more independence
than ever, that’s attractive but requires discipline and tools!
Freelancers and Entrepreneurs say…

50. Global Trends Evolution of Communications
Smaller Groups
Small Messages
More Frequent
Communication
What’s Next? An
Encyclopedia of
Tweetable Premises?

51. Global Trends What is Growth Hacking = Leveraging a Platform to
identify a segment of users
Product-Market Fit
2,000 legitimate entrepreneurs added per month on Twitter
500 legitimate entrepreneurs added per month on Linkedin
Finding users =
Not a Problem
Sales and
Marketing /
Distribution
@500Startups

52. Global Trends www.SiliconValleyCounsel.com
1. Network Effects / Lean Ops
/Founder Fit / Pricing / Sales
and Distribution Execution
1. Expensive law firms /
consultants = incomplete
1. 200 page books / 1,000 Blog
posts… who has time, pieces
of a puzzle!
1. Product Hunt = 1M upvotes
Mattermark = 1M startups
Linkedin = 3Mentrepreneurs

53. Global Trends Technology Has Changed Communications
Facebook, Twitter,
Linkedin, Instagram,
Pinterest, and
Tinder…
Change how people
Interact /
Communicate
UI Simplicity makes
their virality

54. Global Trends For Apps, User Interface Needs to Be Super Simple
Hypothesis/Assumptions:
The Ultimate App =
Press 1 Button
To Get Instant
Gratification
Entrepreneurs love
Short form bullet
Points

55. Let’s Connect Find the info you need for your startup
questions right now!
Linkedin: Peter Szymanski
Twitter: @szymap and @SiliconVCounsel
www.SiliconValleyCounsel.com

56. Raising Funds
from Silicon Valley
What Silicon Valley investors look
for in Polish companies…