demystifying (ad)venture capital
TRANSCRIPT
Demystifying (Ad)Venture Capital
Antoine Nivard, Associate@antoinenivard
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In the world you and I come from…
Markowitz’ Modern Portfolio Theory
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…assumes Normal Distribution of returns
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The world of startup investing is not normal.
The Power Law in Venture Investing
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The Power Law is hidden in time
The Perceived vs Actual Power Law
Sources: Mike Maples Jr.
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The Power Law states that the single best investment returns more than the rest of the
investments combined
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What is a VC fundable startup?
Fund size: $100MAverage term: 10 years
Expected annual return: >20%$300M
Avg. stake / company 15%Aggregate exit proceeds $2B!!
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VCs look for extraordinary outcomes
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In the world you and I come from…Michael Porters’ Generic Competitive Strategies
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Moore’s Law is the biggest opportunity & threatCPU Transistor Counts 1971-2008
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Moore’s Law states that the performance of computing doubles every 18 months
at any given price
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…competition is for losers
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Mectcalfe’s Law states that the value of a network is a function of the square of its number of nodes
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Networks can have hybrid structures
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Mobile is the new scale
Sources: Ben Evans, a16z
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Start small and scale upwards
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Exceptional startups (Power Law) leverage the open opportunities of computing (Moore’s Law) to grow
exponentially (Metcalfe’s Law)
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YouTube
They are crazy!“ ”Mark Cuban, Entrepreneur & Investor, 2006
…about Google’s acquisition of YouTube for $1.6B
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What Skype is doing is like a toy. They don’t realize they can’t scale it, they
don’t have a brand like the AT&T brand nor our local footprint.
“”
Hossein Eslambolchi, CTO, 2004
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• 1.5+ million homes• 34,000+ cities• 190+ countries• 25,000,000 guests
Early 2008 Summer 2015
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Be contrarian
Sources: Adapted from Mike Maples Jr.
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What iNovia look for…
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The way we look at opportunities
Vp
ValuableProblem
FmF
Founder-Market Fit
PmF
Product-Market Fit
Ua
Unfair Advantage
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Our investment themes
Future of WorkIndustry SaaS Software-enabled Hardware
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Careers in VC
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There is no linear path
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Powerfully balanced personalities & attitude
IQ
EQHQ*
Successful VCs
Sources: 1Adapted from Alfred Lin
Personnality1 Attitude
“Lean it all” vs “Know it all”
+
Commitment
*Hustle Quotient
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A few resources
• Classic Books• The Lean Startup – Eric Ries• The Hard Thing about Hard Things – Ben Horowitz• From Zero to One – Peter Thiel
• Classic Blogs • Paul Graham• Bill Gurley• Fred Wilson• Tomasz Tunguz• Brad Feld• …so many more out there
• Other great content• YC – http://startupclass.samaltman.com/• Follow VCs on Twitter
