Startup Funding Options - From Kickstarter to Venture Capital - Dreamforce 2012 - 9/20
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The document discusses various methods of startup funding, including bootstrapping, angel investing, and venture capital, highlighting their pros and cons. It outlines the typical venture capital process and financial evaluations involved in securing investments, as well as criteria that startups should consider when seeking funding, and emphasizes the importance of growth potential. Additionally, it points out the role of expertise in leveraging funds effectively and mentions a focus on SaaS and technology-enabled services.
Startup Funding Options - From Kickstarter to Venture Capital - Dreamforce 2012 - 9/20
- 1. Startup Funding From Kickstarter to Venture Capital Brian Jacobs Emergence Capital Partners @brian_emcap
- 2. Safe harbor Safe harbor statement under the Private Securities Litigation Reform Act of 1995: This presentation may contain forward-looking statements that involve risks, uncertainties, and assumptions. If any such uncertainties materialize or if any of the assumptions proves incorrect, the results of salesforce.com, inc. could differ materially from the results expressed or implied by the forward- looking statements we make. All statements other than statements of historical fact could be deemed forward-looking, including any projections of product or service availability, subscriber growth, earnings, revenues, or other financial items and any statements regarding strategies or plans of management for future operations, statements of belief, any statements concerning new, planned, or upgraded services or technology developments and customer contracts or use of our services. The risks and uncertainties referred to above include – but are not limited to – risks associated with developing and delivering new functionality for our service, new products and services, our new business model, our past operating losses, possible fluctuations in our operating results and rate of growth, interruptions or delays in our Web hosting, breach of our security measures, the outcome of intellectual property and other litigation, risks associated with possible mergers and acquisitions, the immature market in which we operate, our relatively limited operating history, our ability to expand, retain, and motivate our employees and manage our growth, new releases of our service and successful customer deployment, our limited history reselling non- salesforce.com products, and utilization and selling to larger enterprise customers. Further information on potential factors that could affect the financial results of salesforce.com, inc. is included in our annual report on Form 10-Q for the most recent fiscal quarter ended July 31, 2012. This documents and others containing important disclosures are available on the SEC Filings section of the Investor Information section of our Web site. Any unreleased services or features referenced in this or other presentations, press releases or public statements are not currently available and may not be delivered on time or at all. Customers who purchase our services should make the purchase decisions based upon features that are currently available. Salesforce.com, inc. assumes no obligation and does not intend to update these forward-looking statements.
- 3. Our Mission To unleash the power of SaaS and Technology-Enabled Services (“TES”) to business users around the world 3
- 4. You’ve built an awesome app. Is it time to raise venture capital?
- 6. VC Math Typical Pipeline for 10 investments 1200 companies review materials 500 face-to-face meetings " "40% 50 due diligence (4-8 weeks) " x 10% 2000 reference calls About 2 years of time 10 Investments " x 20% ! < 1.0%
- 7. VC Math Typical Results – 10 Investments "Investment "Total Value 3 Total Loss "$3 million "$ 0" We are wrong 3 Return of Investment (1x) " 3 "$ 3 million " 60% of the time! 3 Sell for profit (4x) " 3 "$ 12 million 1 Home run (10x) " 1 "$ 10 million " Total "$10 million "$25 million
- 8. What are we looking for? Hypergrowth
- 9. VCs love Math Typical VC Questions: How will you generate revenue? Subscriptions, advertising, transactions, open source, freemium? What is your average price? How many customers do you need to reach $100 million in revenue? How many customers are there in the US? Worldwide? What is your distribution model? Field sales, telesales, channels, freemium/viral? How much does it cost to sell a new customer? (Time and manpower) What is your dollar-weighted churn? Logo churn? What are the unit economics? We want to calculate (1) how big is your market size and (2) how much money you will need to grow really fast.
- 10. How much do you need? Bootstrap SuperAngels Venture Capital Incubators Angel Funds Seed Funds Megafunds Angels Accelerators $50,000 $500,000 $5 million $50 million Note: Log scale
- 11. Bootstrapping + Pros - Cons Maintain 100% control Go slow approach Maintain 100% ownership Impossible with some business models Macho points at meetups No expense account Successful examples: Best for: getting started, consulting companies, development shops, smaller opportunities, maintaining control
- 12. New options for bootstrappers PaaS AppStores Incubators Crowdfunding Maximize your ownership by doing everything possible to prove your business model before selling a piece of your company
- 13. PaaS Case Study • Force.com ISV: Pharmaceutical CRM • Startup to 1st customer: 180 days • Angel Funding: $3 mm • VC Funding: $4 mm • $100+ mm revenue in 5 years
- 14. Angels + Pros - Cons Maintain control (>50%) Fundraising process (4-7 months) Cool rich guys Limited help May invite you to pool parties May not provide follow-on capital They take awesome vacations, but don’t invite you Successful examples: Best for: small capital req’ts, preparing for VC route
- 15. Venture Capital + Pros - Cons Fastest growth possible Long fundraising process (6-9 months) Lots of professional help Selling ownership to grow (30-80%) Successful examples Best for: top 1% of startups, the largest opportunities, need to grow very fast
- 16. Founder Math "Ownership at IPO "Current Net Worth* " Bill Gates " 45% " $61 billion Jeff Bezos "41% "$18 billion Sergey Brin "16% "$17 billion Mark Zuckerberg "18% "$15 billion Marc Benioff "28% "$1.9 billion Reid Hoffman "19% "$1.5 billion * Forbes 400 list, 2012
- 17. Should I get Venture Capital? Pop Quiz Customers are begging for my product. If I hired twice as many employees, my business would grow to pay for them all within 6 months. I can grow my company +100% for 5 years in a row. I like hiring salesmen. My wife encourages me to work 120 hour weeks. I drink more than 15 cups of coffee per day. I would sell 1/2 of my company if that’s what it takes to beat my competitor. I like math If you checked ✔ 4 or more boxes, please see me after the session.
- 18. Emergence Capital • We are 100% focused on SaaS and technology-enabled services targeting business users. • Track record of building global industry leaders • Leveraging a small, highly networked team • World class SaaS expertise
- 19. Brian Jacobs General Partner, Emergence Capital @brian_emcap
- 20. A Few Reminders. . . Why Work With a PDO Partner Success Experts Innovation Theater and Lounge 1:1 Success Clinics Innovation Theater and Lounge Need to relax? Have a massage! Check out the Partner Hub 540 Howard Street Survey (Session Record) Cloud Crawl (Thursday Night) Follow us on Twitter @partnerforce
- 21. Partner Hub – Speaker Debrief Why Work With a PDO Partner Success Clinics Welcome Desk Speaker Debrief Area
- 23. Venture Capital 1000000 600000 is not for 100000 everyone 500000 10000 400000 1000 300000 Note: Log Scale 100 200000 10 100000 1 0 Bootstrapped Angel Bootstrapped Angel VC VC IPO IPO