silicon valley, startups and entreprenurs

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Silicon Valley Startups, VCs and venture spirit Allan Martinson MTVP & Kurat.com

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Page 1: Silicon Valley, Startups and Entreprenurs

Silicon ValleyStartups, VCs and venture spirit

Allan MartinsonMTVP & Kurat.com

Page 2: Silicon Valley, Startups and Entreprenurs

My startup (and not so startup) life

Baltic

Page 3: Silicon Valley, Startups and Entreprenurs

Beginners guide to Silicon Valley

Palo Alto„The Capital“

Stanford Uni.„The brains“

Sand Hill RdMoney lives here

SFOThe gates

S.F.Restaurants, gigs,

gays, liberals and the hippiest startups

No evil here. Seriously

The Zuck Country

S.J.Please wake me up when I’m finished

After $100m exit you will live here

Apples here

#estonianmafia

Known locations of

Page 4: Silicon Valley, Startups and Entreprenurs

Valley of Death

Forget Silicon Valley.Lets start from

Death Valley

Page 5: Silicon Valley, Startups and Entreprenurs

A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty

Eric Ries

Founder, the Lean Startup MethodologyTheleanstartup.com

Page 6: Silicon Valley, Startups and Entreprenurs

The Art of the StartSix lessons for your stupid little startup

Page 7: Silicon Valley, Startups and Entreprenurs

How does a startup start?

Page 8: Silicon Valley, Startups and Entreprenurs

Lesson 1: It’s all about people

Page 9: Silicon Valley, Startups and Entreprenurs

It does not start from a business idea

Incubation takes years

2 founder ruleLeader

Skeptic

Multi-skilled talentsTeam &

Values

It starts from people

Page 10: Silicon Valley, Startups and Entreprenurs

Lesson 2: The birth of an idea

Page 11: Silicon Valley, Startups and Entreprenurs

This does not happen

Page 12: Silicon Valley, Startups and Entreprenurs

Three origins of great startups

• Copycats: Copy existing business model to new markets

• Evolutionary: Seek better solution to existing problems

• Revolutionary: Seek unknown solution to unknown problemsThe best ideas come on cross-roads

of trends and disciplines

Page 13: Silicon Valley, Startups and Entreprenurs

• The 30-seconds pitch: tell your granny– Who is your customer– What does your company

do for this customer– Why are you better than

competition• Do you pass the “Google

test”?

The What

Page 14: Silicon Valley, Startups and Entreprenurs

Lesson 3: The art of pivot

Page 15: Silicon Valley, Startups and Entreprenurs

Pivot, explained

„I am not leaving you… I am pivoting to another man“

Page 16: Silicon Valley, Startups and Entreprenurs

The life of any startup can be divided into two parts – before product/market fit and after product/market fit

Marc Andreessen

Founder, NetscapePartner, Andreessen Horowitz

Page 17: Silicon Valley, Startups and Entreprenurs

Why pivot?

Not a single great company follows its original business

idea

Failure is not a problem

Slow failure is a problem

Page 18: Silicon Valley, Startups and Entreprenurs

The importance of milestones

• MVP (Minimum Viable Product): 48 hrs – 3 months• Initial customer validation: 1 week – 6 months• One million something (users, $$$, etc): 1-2 years

• You shall pivot if:– Your solution seeks a problem, not vice versa– Nobody wants to use your product – even you– You have ceased to believe into your company for >1

month

Page 19: Silicon Valley, Startups and Entreprenurs

Lesson 4: The Need For Speed

Page 20: Silicon Valley, Startups and Entreprenurs

Why speed?

• Startups, by very definition, are probabilistic

• Success seems intentional only in retrospective – impossible to compute

Page 21: Silicon Valley, Startups and Entreprenurs

In unpredictable environmentsspeed and focus

are the best boosters of success rate

And hunger is the best factor contributing to it

Page 22: Silicon Valley, Startups and Entreprenurs

The ultimate example of being focused

“I was too busy, I didn’t do things like that… I just didn’t go and meet new people who were involved in investments.”

Bill GatesFounder, Microsoft on refusing to meet Warren Buffet

Page 23: Silicon Valley, Startups and Entreprenurs

Lesson 5: Importance of right signals

Page 24: Silicon Valley, Startups and Entreprenurs

Silicon Valley is a

mental state

Page 25: Silicon Valley, Startups and Entreprenurs

Being Estonian is a full-time job

Page 26: Silicon Valley, Startups and Entreprenurs

Lesson 6: Where to find smart investors

Page 27: Silicon Valley, Startups and Entreprenurs

Raising venture capital is the art of younger men seducing older men

- Anonymous

Page 28: Silicon Valley, Startups and Entreprenurs

Idea

Prot

otyp

e

“Bet

a” Commercial la

unch

Market s

hare

Breakeven!9-

18 m

o

18-2

4 m

o

2-3

Y

3-7

Y

Users &

traction

Revenues

Profits

0

+

-

Paid CEO

Sales structures

Bureaucracy

2 10 50 200 500 employees

FFF$10-500K

A-round$1-10m

B-round$5-50m

IPO orexit

Typical lifecycle of a high-tech company

Page 29: Silicon Valley, Startups and Entreprenurs

Typical life cycle in figures

Year 1 2 3 4 5 6

Phase Startup Early growth Growth Exit

Revenues ($m) 0 1 4 10 20 30

Growth % 300% 150% 100% 50%

Investment phase Angel A-round   B-round    

Pre-money / exit valuation ($m) 0,5 3   40   150Investment ($m) 0,4 2,5   25    

Post-money valuation ($m) 0,9 5,5   65   150

Post-money ownership of founders 56% 30%   19%   19%

Value of founders’ stake ($m) 0,5 1,7   12,1   28,0

             

IRR to angel investors 124%   Money-back, angel 56 times

IRR to A-round investors 102%   Money-back, A-round 17 times

IRR to B-round investors 52%   Money-back, B-round 2,3 times

Page 30: Silicon Valley, Startups and Entreprenurs

What shall you know about VCs

• Venture capital (LPs) and venture capitalists (GPs) are not the same

• VCs are in the business of saying NO and then making money

• You can divorce your wife but you cannot divorce a VC

• You shall like, but not love each other• If in doubt, pick the smartest