from zero to company

© Startup Monthly (2013). All Rights Reserved [email protected]

Sep 20, 2013

Seed Fund & Accelerator in Silicon Valley

© Startup Monthly (2013). All Rights Reserved [email protected] 2

• Born in Almaty Kazakhstan, 20 years in Haifa Israel, 4 years in Silicon Valley California

• B.Sc/M.Sc Information Systems• Worked in IDF, IBM Research, Startups• Entrepreneur: StartupMonthly.org, StartupSocials.com,

SmartMoney.io, Hack4Good.io, ExoticHack.com, SocialGood.io, SupperConnector.org, SocialExchange and many failed

• Mentor and advisor for early stage startups• Mentor and advisor for accelerators and funds• Super connector in Silicon Valley• Investor: 10 active investments

Yuri G. Rabinovich


StartupMonthly Ecosystem

Entrepreneurs Mentors

Investors Partners

15K+ GLOBAL NETWORK – entrepreneurs, investors, serial entrepreneurs, domain experts, partners and professionals.


Managing Partners

Yuri RabinovichManaging Partner SF

Founder and CEO at Startup Monthly, Entrepreneur, Research Scientist and Team Lead at IBM Research Haifa, Software Architect at Oxygen Cloud, Ensuant, Particle Code, IDFMSc IS at Technion, Israel

Vadim SlavinManaging Partner SF

Co-founder and COO at Startup Monthly, Entrepreneur, Senior Research Scientist and Program Manager at Lockheed Martin Advanced Technology Center

MSc CS at Brown, USA

Ziv YoashManaging Partner NY

Co-founder at Startup Monthly, Entrepreneur, Israel Practice Group Co-Chair at Perkins Coie LLP, Emerging Companies Advisor and Attorney, Angel investor

LL.B. Law Degree, B.A. IT, Israel


Investment Focus

Customer Channel Domain Vertical

B2C Web Big Data Gaming

B2B Mobile Analytics Consumer Web

B2B2C Big Screen Business Intelligence Enterprise

Smart Cars Recommendations

User Engagement

Developer Tools

Monetization

Payments


Sourcing

• Referrals – investors, accelerators, founders, partners• Venture partners (Future)• Startup elevator/showcase programs• Direct application

Due Diligence

• Partner meetings• Business due diligence• Tech due diligence• Legal due diligence• Term sheet

Accelerator

• Coaching • Business strategy and roadmap• Product architecture and user experience• Partnerships• Marketing and BizDev• Access to capital

Investment Process


Let’s build a Startup


“a startup is a temporary organization designed to search for a repeatable and scalable business model.”, Steve Blank

Organization - co-founders + employees

Search tools:• business model canvas• customer development • agile development

What is a STARTUP?


Idea Team Founders Pre-Seed

From IDEA to a COMPANY

Viable Idea Seed

Rounds

A,B,C,DEXIT

Death Valley


• Founder with just an idea• Initial customer development• Build a co-founding team

• Customer Development• Identify Early Adopters• Engage and build relationships• Collect feedback, usage metrics and learn• Test business models

• Rapidly Prototype – Lean Startup• UX – YES • MVP – YES (test, add/remove features based on feedback)• Scalability - NO

• Iterate and pivot if needed

From IDEA to a COMPANY


Problem + Solution:• New solution• New market• New geography• Better solution• Strategic acquirer need

Idea worth ZERO without a team that can build solution that customers need

Idea = ZERO


• Passion to change the world and solve a problem• 100% Committed• Hustler• Risk taking• Leadership• Charismatic• Opportunistic • Optimistic• Crazy

Entrepreneur


• Share idea with people• Search for like minded and complementary co-

founders• Listen to feedback and learn the market• Be efficient while networking• Ask friends for referrals• Date for couple of months• Attract the right people (A Players)• Hire A Players

Build a Team


• Complementary skills• Previous track record, worked on big projects• Domain and technical expertise• Have shared passion to solve the same problem• Clear definition of roles (CEO, CTO, etc)• Can backup each other if needed• Synergy• Can pivot without loosing team members• Have the right incentives (% and $)

14

An “A Team”


• Identify your customer• Interview and ask the right questions• Get feedback, suggestions, prioritize• Business Model Canvas• Show fake products/mockups• Concierge service• Collect emails and contacts of early adopters• Try to get paid customers• Iterate and summarize lessons learnt• Pivot if necessary

Customer Development


• Use rapid prototyping tools (JavaScript)• Release quickly to early adopters• User Experience is a must• Scalability is not important• Collect every metric possible• Analyze and learn • Customer Development• Add/Remove features• Pivot if necessary

Build Minimal Viable Product


• Seed the MVP to the right early adopters• Define metrics (number of users, $, etc.)• Collect and analyze – conversions, engagement• Surveys and interviews with engaged customers• Improve user engagement and value proposition• Create WORD of MOUTH• Growth? – build product that customers LOVE• Not traction - Lessons learnt• Pivot if necessary

Generate Traction


• Validate your assumptions• Update Business Model Canvas each time you make a

change (keep versions)• How do you monetize?

– Subscription– Pay per use– Free (Ads, In-App purchase)– Learn from similar services

• Validate your revenue model– User acquisition cost– Number of paying customers– Retention, why people come back?– $ spent by the customer per lifetime

Business Model


Why:• Leave your full-time job• Learn (Startup Accelerators, Events, Workshops)• Focus 100% on your venture

Source:• Personal savings• Friends, Family and Fools• Grants• Accelerators • Angels• Sell your car and apartment

Pre-Seed (up to $100K) - TEAM


When:• Live prototype• Validated the customer need• Initial Traction (user growth, revenues, retention)• Initial business model/paying customers

Why:• Scale the product• Hire 2-3 employees/consultants• Marketing • Operations (Office, Travel, etc)• Validate business model• Rent apartment and buy Toyota

Round Seed ($500K-$1.5M) - STARTUP


When:• Proven growth• Proven business model • Ready to scale sales• Revenue

Why:• Scale your product (scalability, features)• Scale your team (Management, Engineering, Marketing,

Biz Development, Sales, Operations, HR)• Marketing $ => $$$• Operations (Office, Travel, etc)• Buy a house and BMW

Round A, B, C, D, E ($3M+) - COMPANY


• Take Money from Experts (Smart Money)• Mentorship/Coaching• Network (Early adopters, Partners, Recruiting, etc.)• Strategy and roadmap• Board of directors/advisors• Money

• Type of investment• Angel - Convertible notes with/out Cap or common stock• Pre-Seed - $20K-$50K, 3%-10% common stock, convertible n.• Seed - $500K - $1.5M, 20%-30%• Round A - $2M – $10M, 20%-30%• Round B, C, D, E - 20%-30%

• When you EXIT you will have 10%-20%

Investments


When:• One of the top 3 players in the market• Strategic acquirer enters the market• Leader growth• Leader in the market - IPO

Why:• Founders are ready to sell• Investors want to cash out• Founders are tired• Become a public company• Buy a bigger house and Ferrari • Retire or become an angel investor or start your next startup

EXIT – 1 in 1000


Why Startups Fail?• Bad execution - co-founding team synergy,

fights, lack of talent, bad incentives• Business knowledge and experience• Lack of funding at the right time• Bad $$$ management• Timing to market (too late or too early)• Wrong market and customers• Wrong product• Don’t change direction, stubborn. • Patent violation, stronger competitors• No competitive advantage


Join StartupMonthly Moscow Events• Sep 22 – SmartMoney Roundtable for

investors (30+ investors)• Sep 23 – Startup Elevator for startups with

mentors and investors (MUST have LIVE product)

• Sep 26 – aahWINE Venture Capital Reception Moscow (Investors, executives and business professionals)

• Sep 29 – Startup Social Moscow at Stariki Bar (200+ guests, $10 - $20)


Questions

from zero to company

Economy & Finance