30. 30
“Valley of Death”
Research Grants Development
Grants
(eg SBIR)
Friends, Family, &
Founders
($5-$50k)
Angel
Investors
($50-$500k)
Funding
Early Stage
Venture Capital
($500k-$2M+)
Venture Capital
($2M-$50M)
Private Equity,
Project Financing
($2M-$50M)
IPO, Merger,
or Acquisition
($2M-$50M)
Stage of
Venture
Development
Idea
Basic Research
Applied
Research
Proof of
Concept
Target
Market
Business
Plan
Engineering
Prototypes
Supplier
Contracts
Product
Introduction
Revenue
Growth
Production
Prototypes
Distribution
Contracts
Working
Prototypes
Founding
Team
Net
Cash
Flow
➡ > 95% of startups fail
➡ VCs fund 1% of submitted biz plans
31. 31
It’s all about execution of a predefined
plan
The Leading Cause of Startup Death
Product
Dev.
2
Alpha/Bet
a Test
3
Launch
Product
4
Where
Customer?
Pitch
Investor
1
Customer
Dev.
5
Inside the building
32. 32
No Business Plan Survives
First Contact With Customers
Startups/New Ventures Are Not Smaller
Versions of Existing Companies
Startups/New Ventures
need their own tools
73. Startup Investor Ecosystem
Angels &
Incubators
($0-10M)
“Micro-VC” Funds
($10-100M)
“Big” VC Funds
($100-500M)
“Mega” VC Funds
(>$500M)
TrueFirst Round
A16ZAtomico
Y-Combinator
TechStars
SoftTech (Clavier)
Felicis (Senkut)
SV Angel (Conway)
SequoiaGreylock
Union Square
Floodgate (Maples)
Foundry
Incubation
Seed
Series A
Series B
Series C+
Bootstrap, KickStarter,
Crowdfunding
74. Staying in Business = Raising More Funds
Year1
Year3-4
Each Fund Life = 10 Years
3-4 Yrs = Seed
NewCos
6-7 Yrs = Harvest
& Do Followons
Must raise new funds to keep
investing in NewCos; once new
fund is raised, NewCo funding
will come from it
Fund III
($150M)
Fund II ($125M)
Fund I ($100M)
After 6-7 years in business, VC
will have 3+ concurrent, active
funds at any one time; only
one, however, will be funding
NewCos
Year6-7