Mind the Bridge Job Creator Tour 2013

1. ALBERTO ONETTI
Chairman, Mind the Bridge Foundation
MARCO MARINUCCI
Executive Director, Mind the Bridge Foundation
Introduction to Entrepreneurship
From Startup to Venture Financing
@MIndTheBridge
#jobcreator

2. AGENDA
Entrepreneurship in Italy: Where are we?
The Startup world
Business Planning
The Venture Capital Market
The Silicon Valley
Mind the Bridge
2

3. Entrepreneurship in Italy: Where are we?
The Startup world
Business Planning
The Venture Capital Market
The Silicon Valley
Mind the Bridge
3
AGENDA

4. 4
Zero Growth
 Italy has not grown since the beginning of the new Millennium –
slower than its European neighbors and US
 Average growth rate(2001-2012): US (1.63%), EU (1.42%), IT (0.16%)
The Problem we have
Source: IMF 2013
More info here: “Italy. Europe’s Investment Opportunity”, White Paper by Vietor, Onetti & Napolitano, New York, 2011
-6
-5
-4
-3
-2
-1
0
1
2
3
4
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real GDP growth (percent) Italy EU US

5. 5
Youth Unemployment
 Unemployment rate in Italy (12%) is lower than in Greece and Spain
(27%), but much higher than in Germany (5.5%).
 Worst employment problem pertains to young people (38% for
people between 15-24)
The Problem we have (2)
38pc 8.1pc12pc 5.5pc

6. Italy: Industry Contribution to GDP
Source: CrESIT 2012
Lack of large companies
 In Italy SMEs are 99.9% of the total (EU, SBA Fact Sheet 2012)
 95%+ have less than 10 employees and 50%+ have only one (ISTAT, 2013)
Mostly mature business
 Primarily Services (73.4% of
GDP)
 Manufacturing is only
18.6% (it was 21% in 2000)
 Innovative industries play
a minor role (2-6%)
The Problem we have (3)

7. Where are we heading?
“Before World War II, Argentina was rich. Even
in 1960, the country was twice as rich as Italy.
Today, he says, you can compare the per
capita income of Argentina to that of
Romania. Because it didn’t grow.
The Risk we face
A country could get rich in 1900 just by producing corn and meat, but that is not
true today. But it took them 100 years to realize they were becoming poor. And
that is what worries me about Italy. We’re not going to starve next week. We are
just going to decline, slowly, slowly, and I’m not sure what will turn that around.”
(New York Times 2010)

8. ”In US firm startups account for only 3 percent of employment but
almost 20 percent of gross job creation”
Source: “Who Creates Jobs? Small vs. Large vs. Young”.
J. Haltiwanger, R.Jarmin, and J. Miranda (2011)
8
On average, 1-year-old firms create
nearly 1 million jobs, while 10-year-old
firms generate 300,000.
Existing firms are net job destroyers,
losing 1 million jobs net combined
per year. By contrast, in their first
year, new firms add an average of 3
million jobs.
During recessionary years, job
creation at startups remains stable
Startups Create Most New Net Jobs in
the United States
Job Creation and Loss by Firm Age
(Average per year, by year-group, 1992-2006)
The Solution (1)

9. 9
VC investments generally declined since 2008 all over the world
 Vs. 2011: -14% in Europe and -5.5% in US
 Vs. 2008: -50% in Europe and -10% in US
Venture Capital: Leaders and Laggards
3.185
10.968
26.874
Source: European Private Equity and Venture
Capital Association. PricewaterhouseCoopers
/National Venture Capital Association. AIFI &
PricewaterhouseCoopers 2008-2012.
U.S.
Silicon Valley
Europe
Italy
Annual VC Investments (Billion US$)
0.175

10. 10
Venture Capital Industry is still in its infancy (but it’s growing)
 Approx. €100M invested every year in early-stage investments
 Vs. 2011: +65% increase (vs. -10% in private equity)
 394 startups funded in the last five years
Where are we? Venture Finance
Companies
Small size of the stock market
 Italian market capitalization is on avg. 25% of Italian GDP
 110% in US and 140% in UK
Source: AIFI &
PricewaterhouseCoopers 2008-
2012.
Deals
Amount (M€)

11. 11
BTW, Venture Capital industry is
changing
Berlin
London
Super Angels
We now have a liquid seed-stage
funding structure in Europe. We
didn’t have this before and so now
the first €1m roadblock for
entrepreneurs has been
removed.
Hendrik Brandis
Partner, Earlybird
United StatesEurope
Jeff Clavier
Crowdfunding
Accelerators
Ron
Conway
Reid
Hoffman

12. Where are we? Research
12
Quality Research Base
 74k scientific publications (1996-2010) ranking 8th globally
 Italy is in the top 10 countries (4th) for number of publications (2001-2011)
in comparison to R&D expenditure
Issues in turning Research into Business
 Academic spin-offs are not ramping up
Source: IX Rapporto Netval sulla Valorizzazione della Ricerca Pubblica Italiana, 2012
Notes: data related to 2010 and 2011 are not final
- On avg. 75 new spin-offs/yr.
- 894 new spin-offs since 2000
Geolocation:
- North-West: 25.3%
- North-East : 24.9%
- Center: 26.9%
- South & Isles: 22.9%
Top Universities:
- Polytechnic of Turin
- University of Padua
- University of Bologna
Source: SCImago Journal & Counrty Rank, 2010
Source: Italian International Growth agenda, Booz&Co analysis

13. 13
We need more Quantity (deal “trickle”)
 Legal barriers to entry and exit (Italy is not a “corporate haven”)
 Labor market rigidities
 Obstacles in bridging research into business
 Managerial/Entrepreneurial skills
We need more Quality
 High mortality (“crisi del primo miglio”) and “Dwarfism”
 Mindset
 Seed funding
We need to get prepared for International Exits (since Day One)
 High Tech “Leviathans” are not here
 Small size of the stock market and lack of large corporations doesn’t
help
 Language barriers
Italy: Startup Check-List

14. AGENDA
14
Entrepreneurship in Italy: Where are we?
The Startup world
Business Planning
The Venture Capital Market
The Silicon Valley
Mind the Bridge

15. Base Ingredients for a Startup
15

16. What is an Entrepreneur
16

17. Between 26 and 35
High level of education
(11% Ph.D or MBA, 42%
Master degree)
Prior entrepreneurial experience (23%
have founded a startup)
and/or working experience (8-9 yrs)
89% are Male
Startup Generation…Who are you?
11% of startups are incorporated abroad
(Silicon Valley, Berlin, Israel, London)
Corporate drain?

18. The Entrepreneur profile:
Italy vs. US
18
Entrepreneurs 30 to 49 started businesses at a
higher rate than other age groups did
The Kauffman Foundation and LegalZoom
Startup Environment Index 2012 Mind The Bridge Survey 2012
Age distribution
In Italy 84% are in the 26-45 range. 33 is the
average age
1
2 A third of startup owners were women Female entrepreneurs are only 11%
Gender
19% had master’s degrees while 8%
professionals or doctorate
Education
3 42% have a master degree while 11%a Ph.D. or
MBA
Prior Experience
4 57% have 6+yrs of prior
industry/work experience
and 44% had started
companies in the past
Funding & Incubation period
Almost 80% has 8/9 yrs avg.
prior working experience
and 23% has founded at
least one company before
5 80% of early-stage business
owners in US used personal
funds to finance their
companies.
Bootstrapping rules (58%),
while 38% got also funding
by external investors.
More info here: “Startups - Italy vs US - Onetti IID 2013”, A. Onetti, Italian Innovation Day, Mountain View, 2013

19. What makes a successful
entrepreneur?
19
Education matters a lot
 2.0 Startups are founded by
highly educated people
Experience matters as well
 Being a serial entrepreneur is
a job
 The right startup is never the
first one you found
Working/Studying abroad does
open your mind
 It means more network,
opportunities, ideas,
experience
A successful startup is a team
play
 One-man bands do not go
too far

20. AGENDA
20
Entrepreneurship in Italy: Where are we?
The Startup world
Business Planning
The Venture Capital Market
The Silicon Valley
Mind the Bridge

21. Business Idea
21
THE BIG IDEA!!!
… THAT MATTERS A
LOT, BUT IT’S ALL
ABOUT EXECUTION …

22. Manager vs. Entrepreneur
•Where is the opportunity?
•How do I capitalize on it?
•What resources do I need?
•How can I gain control
over them?
•What structure is best?
The
entrepreneur
asks . . .
•What resources do I control?
•What structure determines our
organization’s relationship to
its market?
•How can I minimize the
impact of others on my ability
to perform?
•What opportunity is
appropriate?
The typical
administrator
asks . . .
22

23. The Business Plan?
“Business plans and 5 years financial
projections are a waste of time”
23
Dave McClure
“They came to me with no business
plan” Intel 1968
“No one besides venture
capitalists and the late
Soviet Union requires five-
year plans to forecast
complete unknowns”
Steve Blank

24. The Lean Approach
“The Lean Startup method teaches you
how to drive a startup, how to steer,
when to turn, and when to persevereand
grow a business with maximum
acceleration.”
Eric Ries
Vision Steer Accelerate
TEST the product, collect
FEEDBACK, understand
CUSTOMERS NEEDS
FAIL fast (Pivoting?) - GROW
fast.
MODIFY your MVP, IMPROVE
it and create HIGH QUALITY
goods
Now you are
ready to SCALE
“Get out of the Building!”

25. Build-Measure-Learn feedback loop
25
1
3 2
“Using the Lean Startup approach, companies can create order not chaos by
providing tools to test a vision continuously.”
What is the problem we aim at
solving?
MVP
Metrics, Traction
No plan survives first
contact with customers
Pivoting or scale?
Validated learning

26. 26
“There are some cases where things work despite the
lack of a plan. But there is an awful lot of failure there
too. Winning without a plan is hitting the jackpot,
and most people do not hit the jackpot. Since you
want to have as much mastery over things as possible,
you need to plan.”
Peter Thiel
Entrepreneur and venture capitalist, co-founder of PayPal and
first outside investor in Facebook
Though... Aspirations are not a Plan

27. 27
THE BUSINESS MODEL
 How do you make money
(Revenue Model)?
 How do you structure activities
(Cost Structure)
 Financials
 What are you looking for (capital you
are raising- use of proceeds)
THE TEAM
 The team
 Your relevant experience in
the domain you're addressing
THE MARKET
 The market you are addressing
 Market size
 Potential growth
 Competition
THE OPPORTUNITY
 The problem we solve (description
of your product highlighting the
benefits to the users/customers)
 The competitive advantage (why
your product is better)
 Compelling reason to buy
BUSINESS PLAN
The Business Plan

28. Why a Business Plan
28

29. Talking $$$
29

30. Financials: Key Data
30
Bookings Billings
Cash on
Hand
Burn
(net/gross)
Revenue Cash-In

31. Financials: Statement of Operations
P&L 2012
established
2013
anticipatory
2014
forecast
2015
forecast
2016
forecast
Revenue
Avr rev. per cust.
(COGS)
Gross Margin
(Operating
Expenses)
(R&D)
(Mktg & Sales)
(Engineering)
(G&A)
Operating Margin
Headcount
Source: Mind the Bridge

32. 32
Avoid TMI!
More info here: “Financials: Forecasting&Reporting”, A. Onetti, MTB Gym

33. AGENDA
33
Entrepreneurship in Italy: Where are we?
The Startup world
Business Planning
The Venture Capital Market
The Silicon Valley
Mind the Bridge

34. Founders’ capital/
Savings/
Family/Friends
Seed Investors,
Crowdfunding,
Angels,
Early stage VC
(Series A)
Venture Debt/Loans,
Working Capital
Lines, Strategic
Partners, Retained
earnings
Later Stage VC
(Series B+),
Corporate VC,
Private placement,
Public markets
The Funding Sources
34
Bootstrapping Equity Financing
Early sources
Later sources

35. The Funding process is Milestone
Based
Source: Onetti-Zucchella, Business Modeling for Life Science and Biotech Companies. Creating Value
and Competitive Advantage with The Milestone Bridge, Routledge, forthcoming

36. But Keep the Eyes on the Ball
ACQUIRED BY:
ACQUIRED BY:
FOR $1.1 BILLION
FOR $1 BILLION
ACQUIRED BY:
FOR $1.03 BILLION
“Investments are just a tool
…
The Exit is the real prize”

37. Definition
• High net worth individual ($1
million to invest) who provides
financing, advice, and
networking to early stage
companies.
Key investment Criteria
• Geography (close to home)
• High growth industry
• Growth Potential of the venture
• Personal attributes of the
entrepreneur and team
• Track record of entrepreneur and
team
The Angel Investor
37

38. The Venture Capitalist
38
DEFINITION
•VC Firms are financial intermediaries that
provide the following to privately held
enterprises:
•Equity (often coupled with debt) financing
•Risk sharing
•Managerial expense
•Contacts
•Reputation
•In exchange, VC firms obtain equity
TYPES OF VCs
•Private Fund VC
•Legal Structures: Partnership, Limited Liability
Corporation, Corporation
•Stakeholders in a Partnership: General Partners
(GP), Special Limited Partners (SLP), Limited
Partners, Advisory Board
•Corporate VC
•Consider impact on earning of parent
•How does it further the parent’s objective?

39. VC: General Investment Process
39
Limited Partners
VC Firm (General Partners)
Startup Companies
IPO/M&A
Fund Fund Fund
Exit
Distributions Fundraising Commitments
Investment DisbursementsProceeds

40. The Valuation is a two side process
 Size of market opportunity
how big is the market segment, what market
share can you gain? revenue / price model
 Comparables
multiple of Revenue (trailing/forward) or
EBITDA
 Financial Projections
Revenue, EBITDA, DCF
 Ultimately
Bid vs. Ask negotiation
40

41. How much you need
(Cap Incr)
e.g. € 1,0M
How much equity you
want to give up ( Y%)
e.g. 25%
Post Money Valuation (V)
= Cap Incr / Y = 1/0,25
= € 4,0M
Pre Money Valuation
= V - Cap Incr
= € 4,0M - 1,0M= € 3,0M
The Valuation Process:
Pre- e Post-Money Valuation
41

42. Less than 1% of all
leads get funded
5 – 10
Financed
1,000 Leads
150 Meetings
Actively
Pursued
70
$
$
$
VC Financing Process:
Getting through the Funnel
42

43. VC Average Investment Portfolio
43
DEFAULTS
BREAKEVEN
“FIRE SALES”
ZOMBIES
IPO/M&A
GOOD IPO/M&A
WILD ONES (IPO)
TOTAL
60%
12%
10%
8%
6%
4%
0%
100%
Source: ATV
Tumblr-Yahoo Deal

44. Dealing with VCs
44
 VCs see tons of pitch every day  be short
and immediate, use body language and
show passion
 They don’t know your product  use
screenshots, videos, prototypes
 They are positively impressed by big numbers
and they look for big market opportunity 
be ambitious since the beginning but have
realistic objectives.
 They are not always expert as you are about
the topic  use simple words, get straight to
the point
 Smile  it’s ok to have fun when you pitch

45. Valuation is only one piece of
the puzzle
45
Agreement
• Amount, valuation
and timing of
investment
• Form of investment
• Terms of investment
• Rights
• Liquidation
Preferences
• Drag Along
• Pay to Play
• Vesting/buy-back
provisions
Control
Mechanisms
• Board
representation
• Convertible
Preferred securities
• Syndication of
investment
• Staging of capital
infusion

46. Why Venture Capital?
46

47. AGENDA
47
Entrepreneurship in Italy: Where are we?
The Startup world
Business Planning
The Venture Capital Market
The Silicon Valley
Mind the Bridge

48. The History of the Valley
48

49. 49
The (REAL) History of the Valley

50. The (REAL) History of the Valley
501930 1940 1950 1960 1970 1980 1990 2000
WAVESOFINNOVATION
INTERNET
INTEGRATED
CIRCUITS
DEFENSE
Today:
25 of Fortune 100
Adobe Systems
AMD
Agilent Technologies
Apple Inc.
Applied Materials
Business Objects
Cisco Systems
eBay
Electronic Arts
Google
Hewlett-Packard
Intel
Intuit
LSI Logic
Maxtor
National Semiconductor
Network Appliance
Nvidia
Oracle Corporation
SanDisk
Seagate Technology
Solectron
Symantec
Sun Microsystems
Yahoo!
…
◊ NASA
◊
Lockheed
◊ HP (47)
◊ Intel
(68)
◊ Kleiner Perkins
(72)
◊ Apple (80)
◊ 3Com, Adobe,
Cisco
◊ Yahoo, ebay,
Google (90s)
?
PERSONAL
COMPUTERS
◊ Apple (2000s)
MOBILE
◊ Facebook,
Twitter, Zynga,
Linkedin (2000s)
SOCIAL

51. The Main Pillars
51
FINANCIAL MARKET
M&A, IPO dream
ENTREPRENEURS
The garage
culture
UNIVERSITIES
highly
connected with
biz world
◊Is that replicable / portable?
◊Is it sustainable long-term?
◊What is the impact of the changing
international outlook?
KEY QUESTIONS

52. Soft Factors
52
◊The importance of Dynamism,
speed: continuous evolving world
◊ Approach to Risk
◊ Value of Failure (not just a
downside but a must-have)
◊ Importance of the Hub: a world of
opportunities
◊Think Big
KEY TO SUCCESS

53. Raising money today (@#$!)
in Silicon Valley
53
are you not local
how many exits again?
don’t show me the buyer (don’t
IPO me…)
haven’t jumped yet
DON’T TALK TO ME IF YOU…

54. 54
Source: MoneyTree Report 2013, Data: Thomson Reuters
19,8
51,3
99,2
38,1
20,8 18,6 22,4 22,9 26,6
30,8 30,5
19,7 23,3
28,4 26,9
5,4
16,7
31,9
11,8
6,9 6,4 7,8 8,0 9,6 11,3 11,2 8,1 9,2 11,6 11
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Investments (1998-2012)
US Silicon Valley
3.728
5.590
8.032
4.582
3.183 3.004 3.178 3.262
3.827 4.124 4.111
3.065
3.526 3.673 3.770
1.048
1.698
2.176
1.115 814 878 955 997 1.222 1.283 1.281 968 1.057 1.158 1.176
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Deals (1998-2012)
US Silicon Valley
VC Investments: Trends

55. Why Now
55
talent abounds
from scarcity comes clarity
innovation comes from hunger
startup cost ~0
IT’S THE BEST OPPORTUNITY

56. 56
1. the team is all (almost)
2. healthy disregard for the
impossible
3. big problems are better than
small ones
4. users first
5. don’t pay attention to the
VC bandwagon

57. Are the New Kings Coming From
Europe?
57

58. AGENDA
58
Entrepreneurship in Italy: Where are we?
The Startup world
Business Planning
The Venture Capital Market
The Silicon Valley
Mind the Bridge

59. 59
Our mission your
SUCCESS
Learn
Startup School
Growth
Accelerator
Succeed
Success Stories

60. Job Creator Tour
STARTUP SCHOOL
(Apr, Jul, Aug, Nov)
Venture
Camp
(8/9 Nov)
60
Building the Bridge: The 2013 Timeline
Education

61. MTB JOB CREATOR TOUR
61
 Education
The MtB Startup Business School gives you
the “nuts and bolts” regarding
entrepreneurship, business planning,
venture capital market and Silicon Valley
eco-system
 Honest Feedback
Thanks to the Gym session the startups
selected have the opportunity to
present their business idea in front of a
panel of investors and entrepreneurs
 Fine tuning the business idea
Everybody can largely benefit from the
discussion of all the business ideas as
well as the education program in the
morning
The best project wins a
seat @MTB Startup
School!

62. 62
SESSIONS
Last Session
April 8th – April 26th
UPCOMING
July 1st – July 19th
July 29th – Aug 16th
Nov 11th – Nov 29th
Be a Silicon Valley Startups for 3 weeks!
Students, Graduate students
Engineers, Scientist
Wannabe Entrepreneurs
WHERE?
One Market Plaza, Steuart Tower,
San Francisco
HOW TO APPLY?
Check it out here!
www.school.mindthebridge.org
Who can participate?
APPLY NOW!
LEARN: MtB Startup School
Watch the
video here!

63. Accelerator Program
(winter & summer batch)
63
GROWTH:
MTB Gym
Mind the Seed Fund
WINTER BATCH
January – March
OPENING SOON!
SUMMER BATCH
STARTS ON
August 26th, 2013
Demo Days

64. 2012 FACTS
$6.45M FUNDING - $32.4M VALUATION
$1.6M Funding – Team 3->10 full time – 1.5M
daily viewers (+66% in last 4 months)
$1.9M Funding – Team +50% - US entity - #19
hottest startups in the world (Web Summit)
$1.2M Funding – Team 2->11 full time –
US entity - 2013 prototype launch in orbit
$500K Funding (500Startups) – Team 0->5 –
US Entity - Top 5 iOS edu app, Best Design
$600K Funding (2 rounds) – Team: 3->8 full
time – 2X registered users (600K)
6 months pivoting (>Thailand)
$650K Funding – Team 2->4 – New launch
coming

65. 2013 BATCHES
CAUTION …. RISING STARS!
Winter 2013 Batch Summer 2013 Batch
10 weeks accelerator program @Gym in San Francisco and up to $65k in seed funding

66. Building Success Stories
April 2012
Enters 500Startups (+$65K)
Sep 2011
Second round of $1.1M
funding (IAG,
ZernikeMeta Ventures)
April 2011 - EXIT
Merges with Avrio RMS
Group (US)
Feb 2012
Wins Seedcamp Berlin, raises
$1.350M (Seedcamp,
industrial partner)
winners
Feb 2012
$1M+ round with Filas Lazio
and Angels Investors
Since Gym inception (Aug 2010):
30 startups incubated,
20 funded ($9.5M+), 2 exits 66
SUCCEED:
Sep 2012
$1,5M+ round with Vertis and
Principia
Feb 2013
Winner of Mobile Premier
Awards 2013 in Barcelona.
Jan 2013
€500K round of funding

67. Venture Camp 2013
Milan, 8-9 Nov 2013
Objectives
Fostering a sustainable Italian
ecosystem for entrepreneurship
Providing entrepreneurs with direct
exposure to venture capital
investors both from Italy and Silicon
Valley
Boosting ideas with high potential
Mind the Bridge Venture
Camp is a 2-day event held in
Milan to promote a healthier
Italian entrepreneurial
ecosystem.
Meet Startups
Learn
Network
Find Links

68. Join the Wave…
Don’t Miss it!

69. THANK YOU FOR YOUR
ATTENTION
Questions & Answers
SOCIAL MEDIA:
Facebook:
Mind the Bridge - Connecting Talent
Twitter: MindTheBridge
Google+: Mind the Bridge Foundation
http://www.youtube.com/user/mindthebridgeTV
http://siliconvalley.corriere.it/
http://www.linkedin.com/groups?gid=2142980
WEBSITE
WWW.MINDTHEBRIDGE.ORG
MINDTHEBRIDGE.ORG/ACCELERATOR
SCHOOL.MINDTHEBRIDGE.ORG
GYM.MINDTHEBRIDGE.ORG
information@mindthebridge.org
CONTACTS