Sofia Startups

1. How to Run, Grow, and Move your Startup to the
Silicon Valley
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Vassil Mladjov
Research Director
Startups, Incubators & Venture Capital
@VASSKO

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3. Why the Silicon Valley?
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24. We have VC money!
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25. 24
Gartner
US VC investments for the last 4 quarters
$47,800,000,000
4,729 deals

26. Total US VC investments
25
1,600
1,400
1,200
1,000
800
600
400
200
Gartner
$6.5
$7.8
$6.6
$6.7
$10.6
$9.8
$10.2
$9.1
$9.1
$10.3
$8.7
$8.4
$8.8
$9.3
$9.1
$9.8
$12.5
$16.4
954 1,003
938 993
1,277
1,202 1,229 1,175
1,484 1,469
1,355 1,301
1,437 1,383
1,294
1,162 1,155 1,117
0
$18
$16
$14
$12
$10
$8
$6
$4
$2
$0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2010 2011 2012 2013 2014
Capital Invested ($B) # of Deals Closed Source: PitchBook

27. 26
Gartner
Median Quarterly Valuat ions by Series
$6.8 $5.9 $7.5 $6.7
$3.2
$4.1
$11.8
$18.6
$23.1
$18.8
$21.5
$33.6
$40
$35
$30
$25
$20
$15
$10
$5
$0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Series Seed Series A Series B
* As of 6/30/14
Source: PitchBook
$38.4
$44.9
$40.8
$77.9
$67.9
$85.5
$66.8
$190.6
$250
$200
$150
$100
$50
$0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Series C Series D or Later * As of 6/30/14
Source: PitchBook

28. Investments breakdown per sector Q1-2014
27
$2,500,000,000
$2,000,000,000
$1,500,000,000
$1,000,000,000
$500,000,000
$-
Gartner

29. Investments breakdown per location Q1 - 2014
28
$6,000,000,000.00
$5,000,000,000.00
$4,000,000,000.00
$3,000,000,000.00
$2,000,000,000.00
$1,000,000,000.00
$-
Gartner

30. 29
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31. 30
Kickstarter Stats
$1,182,342,895 Total dollars pledged to projects
64,258 Successfully funded projects
6,453,397 Total backers
1,926,208 Repeat backers
16,010,198 Total pledges
Gartner

32. Angel List Stats: 4,421 startups
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33. #GartnerSYM
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34. #GartnerSYM
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35. 34
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36. What’s Driving This?
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37. Analogue Web E-Business D-Marketing D-Business Autonomous
Focus
Build
relationships that
drive business
or lower cost
Extend
relationships into
new markets/ geographies
Transform sales channel into a
global medium to
drive efficiencies
Exploit "Nexus"
to drive greater efficiency
Extend potential customers
from
people to things
Smart, semi-autonomous things
become the
primary "customer"
Outcomes Optimize
relationships
Extend
relationships
Optimize
channels
Optimize
interactions
Build new
business models
Maximize retention
of and relationships
with things
Entities
People
Disruptions Emerging technologies
People
Internet
and digital
technologies
People
Automation
of business
operations
People
Deeper customer
relationships, analytics
People
Creation of new value and
new nonhuman customers
People
Smart machines
and things
as customers
Technologies CRM
CRM
Web
EDI
Mobile
BI
Big data
Social
Sensors
3D printing
Smart machines
Robotics
Smarter machines
Automation
The Road to Digital Business (and Beyond)
Business
Business
Business
Business
Things
Business
Things
Change of Kind Change of Degree

38. Driver: Digital Business is a Strategic Imperative for all
Organizations to…
Compete Globally
A source of competitive differentiation and
advantage
Attain Operational
Excellence
Improve the Efficiency and Effectiveness of
Business Operations
Implement Business
Diversification
Allows to embrace new business opportunities,
reach new targets
Physical Digital
The creation of new business designs by blurring
the digital and physical worlds
Gartner

39. …and CEOs are ready to invest on IT, Digital and R&D!
• 2014 Gartner CEO and Senior Executive Survey reveal:
- Top three investment areas to be:
IT up from 3rd place in 2012, 2013
Digital Capabilities (New Entry)
R&D ranks 3rd up from 7th
- Topmost Technology-Enabled Capability Investments Over the Next Five Years:
Digital Marketing;
e-Commerce; Customer experience management;
Business Analytics
- CEOs See Digital as a Team Game, and the CIO Still Has the Highest Visibility
38
Gartner

40. The MegaSuite Vendors Cannot Keep Up
Yesterday Today/Tomorrow
Wish (IT dominant)
• One Suite
• One Instance
• One Vendor/Contract
• One Architecture
Vendor Promise
• Buy into my Vision
• Suite Centric
• Solves the Integration Issue
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Wish (Business Dominant)
• Business Agility Dominates
• Happy Users Consuming
• Speed to Use: SeeITBuyITUseIT
• Architectures is IT’s issue
Vendor Promise
• Buy into my Brand & Ecosystem
• Multi Product/Service Centric
• Provide Integration Tools

41. Enterprises Looking for Innovation Beyond The Usual
Suspects
• “Other” - the most influential vendor in 10 years for +30% of enterprises (more
than Google, any other named vendor, more than Microsoft / SAP/ Oracle
combined*
•
• Corporate VC investments grown 100%+ YOY to Q1 2014 and to 30% of total
VC investment (up from 20%)
•
• “Rethink and extend supplier, vendor, and partner and service provider
relationships, including the use of smaller, faster, more innovative partners,
and working with partners in new domains such as mobile, design, etc” *
*Gartner 2014 CIO Survey Gartner
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42. Much lower costs of production and distribution mean
lower barriers to entry
• Innovative technologies coupled with convenient mass consumption models
favor cheaper, faster and easier web app development
- Examples of client-side development technologies: HTML 5; CSS ; JavaScript; Ajax (Asynchronous
JavaScript and XML); jQuery ; MooTools ; Dojo Toolkit …
- Examples of server-side development technologies: PHP; Zend Framework; ASP ; ASP.NET;
ColdFusion; Ruby on Rails; Perl; Python…
- Examples of Mass Consumption Models: Freemium, OSS, Subscription-Based, Free Redistribution,
Developer Communities …
Gartner

43. The Road to Digital Business Starts
With
Ubiquitous
Smart Things
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44. Horizon: 2020
Ten billion connected Things
shipped in one year
Excluding smartphones, tablets, PCs
Gartner

45. The Virtuous Circle Driving Smart Things
The
"Virtuous
Circle" of
Smart
Things
Falling Costs
Increasing
Connectivity
Greater
Functionality
Growing
Diversity
Rising
Ubiquity
Gartner

46. Wearable, Injested and Embedded Things
Gartner

47. Locally-Designed-and-Made Things
Gartner

48. "Industrial" Things
Source: General Electric

49. Expect Many Types of Things; Highly Fragmented
Market
By 2017, 50% of Internet of Things solutions will originate in startups less than three years
old.
Connected LED Lamps
Smart meters
Smoke alarms
Security cameras
Point of sale terminals
Smart household
appliances
Toys
Digital signage
Consumer door and
window locks
Vending
machines
Smart weighing
scales
Parking
meters
Hotel door
locks
Digital set top box
The Internet of (Very Different) Things
Bluetooth peripherals
Anti-theft
tags
Wearables
Selected items for illustration
Gartner

50. Market Opportunities Extend Well Beyond "Things"
Consumers Enterprises
Level 1:
"Things"
Big data, user analytics
Data centers, servers, storage
M2M Communications: cellular, mesh, WiFi,
ZigBee, TV White Space, …
Gateways, data compression, aggregation and security
Baby monitor, home
automation devices
Level 4:
Apps and
services
Baby monitoring service or
app; home security service
Vending machine refilling
and maintenance service
Level 5:
Analytics
Level 3:
Computing
and storage
Level 2:
Comms &
networking
Revenue (2020)
$ Billions*
262
18
17
31
Vending machine refilling
and maintenance service
Gartner

51. Mobile Devices + IOT = Smart Home
50
Security
Sports & fitness Lighting Smart clothing
e-cigarette
Plant care Pet feeding Cooking
Media &
entertainment
Garden
irrigation
Environmental control
Smart assistants
and avatars
Gartner

52. Mobile Devices + IOT = Smart Office
51
Proximity
services
Security &
access
control
Lighting
Environmental control
Refreshments
Media and
display
Window blinds
Smart
furniture
Find equipment &
resources
Industrial
automation &
monitoring
Gartner

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54. My Startup Graph
Gartner

55. 54
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56. Your Startup needs Smart Money!
• Find the right VC’s
• Know the VC’s you are talking to and their portfolio
• Do a due diligentce on the VC, they will be your boss!
• Strategic money is now more important than ever before.
• Create Custom VC decks for different VC’s
• Talk to Corporate VC’s and your customers
55
Gartner

57. What does your VC deck needs to cover?!
• The Problem
• The Market Opportunity
• Your Solution/Technology
• Biz Model
• The Competition
• Your Team/Advisors
• Traction/Case Studies
• Financial Projections
• Why Should the VC invest
• Funding Needs and Use 56
Gartner

58. Top Rules for successful VC Pitch Deck
• Tell a story
• Show, don’t tell
• 10-15 slides max
• 5 Sec Rule
• 5-7 Bullets max, Font 22+, 25-30 words max per page
• One Picture per page
• Your Title is a message
• Don’t make things up
• Know the Ricks
• Explain the Funding needs and the deliverables
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Gartner

59. Avoid Common Mistakes
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No
Experienced
Advisors
Wrong
Business
Wrong
Investor
Weak
Business
Plan
Top-down
Market
Estimate
Weak
Competitive
Knowledge
Selling the
Product
Unrealistic
Valuation
Control
Issues
Gartner

60. “Unfair” Competitive Advantages
• Functionality
• Patents
• References
• Sales Channels
• Business Model
• Community
• Network
• Scale
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Versus Current
Competitors
Versus Big
Companies
Versus
Commoditizers
VCs don’t
invest in fair
races
Gartner

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63. A “Good Enough” Management Team
• Done it before (successfully)
- This stage of company
- This team
- This market
- Generated returns for VCs
• Trustworthy
• Passionate
• Realistic
• Think like an investor
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Prove it out
Take it public
Scale it
Your investment is
bigger than any
investor’s
Gartner

64. Real Traction
Product Customers Channels Financials
Seed Prototypes Pre-sold
customers
Channel pre-commitments
Contained
expenses
Early Production
releases
Lighthouse
customers
First sales and
channel
agreements
Fast revenue
growth
Mid Products at
scale
Customer
growth
Deal size and
channel
growth
Fast, break-even
growth
Late Successful
expansion
products
New market
segments
Whole market
sales success
Fast,
profitable
growth
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Gartner

65. Key Takeaways
1. Make sure VC is right for you and your company
- Think like an investor
2. Sell the investment; not the product
a) $1 billion market
b) Unfair competitive advantages
c) Good enough management team
d) Traction
64
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66. Silicon Valley is all about Tech…
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73. The Gartner Startup Curve – Assessing
& Managing Startups
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74. The Startup Curve
Gartner

75. Sales Startup
74
Product &
Technology
People
Capital Market
Timing
Startup forces affecting the Curve:
Gartner

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The Startup Forces: People
• VCs invest in People
• The founding team makes or break a company
• Team:
- Founders, developers, marketing, sales, support, finance
• Compensation and equity, titles and ego management
• Experience and networking connections
• How to hire and attract the right people
• Team players, Ex-athletes, Ex-Military, MBAs, out of school…
Gartner

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The Startup Forces: Capital
• How much money do I need?
• Do I need smart money, corporate funding, or a load?
• How should I used the money to get the most out of it?
• How can I get a better evaluation and when should I get funding?
• Why do companies care about my funding?
• What is your go –to- VC strategy
• Is my pitch deck telling the right story
• What mistakes should I avoid?
• How to find the right VC? What should I ask them?
Gartner

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The Startup Forces: Market
• What is the rate of customer or user growth?
• Who is the target customer and how big is that market?
• Where are the customers (EU, US, verticals…)?
• What is the forecast for this market?
• What is the best pricing model for the solution?
• What do CIO’s demand and what is their budget?
• How do they compare with their competition growth?
• What is your GTM strategy?
• Competitive Landscape
Gartner

79. The Startup Forces: Product &Technology
• Is the startup using the right technology for their target customers?
• What are the implications of the NEXUS of forces?
• Startups know best their technology, but many CIO’s many not be
ready for them yet.
• What are the best practices for delivering the solutions from
business point of view, lowest cost, highest revenue.
• Where is the startup solution on the Hype Cycle?
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80. Secondary Startup Forces: Timing, Sales, location
• Where should I setup my startup: San Francisco, NYC, London?
• Where can I find qualified developers?
• Where will my developers cost less, but will be happy too?
• Is the market ready for my technology yet?
• What is my marketing strategy?
• What is my Social Media strategy?
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Key Takeaways:
• Think Big, Global, Scale, Cloud, Mobile, IOT, Future
• Stay Focused
• Build a Great Team and Advisors
• Get Smart VC money
• Find a Mentor
• Move to Silicon Valley when ready.
• Don’t worry about valuations.
• Just do it!
• Learn from the mistakes of others!
Gartner

82. What do you need to do next?!
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84. #GartnerSYM
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KEEP
CALM
AND
CREATE YOUR
STARTUP
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85. Vassil Mladjov
twitter: @vassko
Linkedin, Facebook, G+, Yahoo, 84
Flickr… :vassko