MARCO MARINUCCI

Founder & CEO, Mind the Bridge Foundation

ALBERTO ONETTI

Chairman, Mind the Bridge Foundation

Naples – May 12, 2014

Entrepreneurship 360

@MindTheBridge

#jobcreator

What we believe

Investors

Startups

Corporates

Entrepreneurship

Startups

Base Ingredients for a Startup

4

The Entrepreneur profile:

Italy vs. US

5

Entrepreneurs 30 to 49 started businesses at ahigher rate than other age groups did

The Kauffman Foundation and LegalZoom

Startup Environment Index 2012 Mind The Bridge Survey 2012

Age distributionIn Italy 84% are in the 26-45 range. 33 is theaverage 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. orMBA

Prior Experience

4 57% have 6+yrs of priorindustry/work experienceand 44% had startedcompanies in the past

Funding & Incubation period

Almost 80% has 8/9 yrs avg.prior working experienceand 23% has founded atleast one company before

5 80% of early-stage businessowners in US used personalfunds to finance theircompanies.

Bootstrapping rules (58%),while 38% got also fundingby external investors.

More info here: “Startups - Italy vs US - Onetti IID 2013”, A. Onetti, Italian Innovation Day, Mountain View, 2013

Business Idea

6

THE BIG IDEA!!!

… THAT MATTERS A LOT, BUT IT’S ALL

ABOUT EXECUTION …

The Business Plan?

“Business plans and 5 years financial

projections are a waste of time”

7

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

The Lean Startup Methodology

“The Lean Startup method teaches you how to drive a startup, how to steer, when to turn, and when to persevere and grow a business with maximum acceleration.”

Eric Ries

Vision Steer Accelerate

TEST the product, collect

FEEDBACK, understand

CUSTOMERS NEEDS

FAIL fast (Pivoting?)

or GROW fast.

MODIFY your MVP, IMPROVE it

SCALE

“Get out of the Building!”

Build-Measure-Learn

9

1

3 2

What is the problem we aim atsolving?

MVP: Minimum Viable Product

Metrics, Traction

No plan survives first contact with customers

Pivoting or scale?

Validated learning

Investors

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

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Bootstrapping Equity Financing

Early sources

Later sources

Angels: General Investment

Process

Informal

Close to Home

Ancillary

Individual vs Group Investment

Source:

NVCA Yearbook

Center for Venture Research, University of New

Hampshire

John Backus, 2012

12

VC: General Investment Process

13

Limited Partners

VC Firm (General Partners)

Startup Companies

IPO/M&A

Fund Fund Fund

Exit

Distributions Fundraising Commitments

Investment DisbursementsProceeds

Valuation is a two side process

Size of market opportunity

how big is the market segment, what market share can you

gain?

Comparables

Multiple of Revenue (trailing/forward) or EBITDA

Terms

Liquidation Preferences/Management Carve-out/Cash vs

Paper/Earn-out/Lock-up

Time

Better «quick and dirty» than never

Ultimately

Bid vs. Ask negotiation

14

VC Average Investment Portfolio

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

Venture Capital Returns follow the

Power Law

16

16

Tumblr-Yahoo Deal

Who are The Kings?

17

Just look at the VC firms that are behind the top 100 tech exits

The Selection Aptitude?

18

Corporates

Disruptive innovation

Is yours far behind?

Innovators in large organizations...

Kodak invented digital

photography, but could not

shift its focus quickly enough

from film.

“My organization gives new ideas a

fair hearing and implements them

quickly, when they make sense.”

Sorry, no ideas are born fully formed

Risk averse leadership

And what about your employees?

David & Goliath Must Dance:

Startups are the fast track to

disruptive innovation

Silicon

Valley:

trends

What’s shaking?

1. The lean startup movement

Lean Startups do not require a lot of cash

The startup no longer needs $5M before

launching

28

LEAN is everywhere

2. The rise of

accelerators and

incubators

Plenty of

“Archimedes labs”

all over the world

Typically under

$20,000 money

offered

29

What’s shaking?

Source: Duncan Davidson (Bullpen Capital) cited in No.1 -The Startup Valley of Death - December 2013

30

3. Accelerators’

Bubble?

Seed capital and

growth capital is

available

Only 27% are

funded after 1 year

What’s shaking?

4. The retreat of VCs to

later stage (Series A

Crunch)

Why not wait to see who

did well and selectively

invest only in the winners?

Most VCs abandoned earlystage investing

+90% of startups and 73% of

incubated startups end up in the Valley of Death

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What’s shaking?

Angel vs Venture Capital Investments

There is a lot of angel

money ($20B), indeed:

3X the money that goes

in to Early-Stage Venture

($7.4B)

1.5X the money that

goes in to late stage

ventureSource:

NVCA Yearbook

Center for Venture Research, University of New Hampshire

John Backus, 2012

32

5.Angel Bubble?

Only 2.5% of angel-

funded companies will

ever raise venture capital.

What happens to the rest?

Acqui-hiring= nice exits

Source:

NVCA Yearbook

Center for Venture Research,

University of New Hampshire

John Backus, 2012

33

“We are in an angel bubble that will keep inflating when Crowdfunding meets Main Street in 2013. The bubble will burst. Not tomorrow. But soon”

(John Backus, NAV)

What’s shaking?

6. The Series B Trap

Source: No.1 - The Startup Valley of Death - December 2013

34

Pile of cash for

companies that

get the elusive “traction”

Raising tens or even

hundreds of millions of

dollars without massive

dilution

What’s shaking?

6. (Equity) Crowdfunding

Disintermediation

Transparency

Lowering the bar: We are all

investors

Syndicates= VC like $$

35

What’s shaking?

7. Acqui-Hires fuel the Market

36

What’s shaking?

Top 10 Acquirers In Silicon Valley1 Cisco 160

2 Google 143

3 Microsoft 132

4 IBM 117

5 Yahoo! 107

6 Rent My Vacation Home USA 96

7 Hewlett-Packard 86

8 Oracle Corporation 84

9 AOL 62

10 EMC 58

Font: Crunchbase April 2014

Funding

FUNDING TOTAL $1.16B

Acquisitions

# Acquisitions 31

M&A TOTAL: $630M

FUNDING(pre-IPO)/ACQUISITION SPENT ratio: 1.84

MAJOR ACQUISITION: MOPUB ($350M)

ACQUISITIONS (2008-2014)Mesagraph, 3/2014 1

SecondSync, 3/2014 2

MoPub, 9/2013 3 $350M

Trendrr, 8/2013 4

Marakana, 8/2013 5

Spindle, 6/2013 6

Lucky Sort, 5/2013 7

Ubalo, 5/2013 8

Bluefin Labs, 2/2013 9 $80M

Crashlytics, 1/2013 10 $100M

Cabana, 10/2012 11

Vine, 10/2012 12 $30M

Clutch.io, 8/2012 13

Hotspots.io, 4/2012 14

Posterous, 3/2012 15 $10M

Dasient, 1/2012 16

Summify, 1/2012 17

Whisper Systems, 11/2011 18

Julpan, 9/2011 19

Bagcheck, 8/2011 20

BackType, 7/2011 21

AdGrok, 5/2011 22 $10M

TweetDeck, 5/2011 23 $40M

Fluther, 12/2010 24

Smallthought Systems, 6/2010 25

Dabble DB, 6/2010 26

Cloudhopper, 4/2010 27

Atebits, 4/2010 28

Mixer Labs, 12/2009 29 $5.2M

Values of n, 11/2008 30

Summize, 7/2008 31 $15M

Source: Crunchbase April 2014

Growth Strategy: Twitter

37

Exit

Public NASDAQ:TWTR

Date nov-13

Raised $1.82B

Post IPO Valuation $18.1B

In total, the startups acquired raised $73M in funding across 42 transactions prior to beingacquired by Twitter.

Of the acquired startups that raised funding, only 6

ever reached the Series B stage.

9 startups were acquired by Twitter after receivingjust seed or angel funding.

On average, Twitter startups with funding raised 2.4 rounds prior to acquisition.

The average time between first funding and acquisition was 2.1 years.

18/31 acquisitions have come since 2012 highlighting the company’s accelerated pace of acquisition.

Twitter Acquisition Strategy

38

58% of Twitter’s

acquired firms were

based in California.

10% of acquisitions

each were for New

York or Massachusetts-

based companies.

Twitter Acquisitions: Locations

39

Funding

FUNDING TOTAL $2.33B

FUNDING IPO $113.8B

Exit

Public NASDAQ:FB

Date may-12

Raised $18.4B

Post IPO Valuation $104B

Acquisitions # Acquisitions 45

Total $22.5B

ACQUISITIONS (2007-2014)Oculus VR, 3/20141 $2B

WhatsApp, 2/2014 2 $19B

Branch, 1/2014 3 $15M

Little Eye Labs, 1/2014 4

SportStream, 12/2013 5

Onavo, 10/2013 6 $150M

Jibbigo, 8/2013 7

Monoidics, 7/2013 8

Parse, 4/2013 9 $90M

Spaceport.io, 4/2013 10

Osmeta, 4/2013 11

Storylane, 3/2013 12

Atlas Advertiser Suite, 2/2013 13

threadsy, 8/2012 14

Spool, 7/2012 15

Bolt | Peters, 6/2012 16 $50M

Face.com, 6/2012 17 $60M

Karma, 5/2012 18

Lightbox, 5/2012 19

Glancee, 5/2012 20

Tagtile, 4/2012 21

Instagram, 4/2012 22 $1.01B

GazeHawk, 3/2012 23

Friend.ly, 3/2012 24

Sendoid, 3/2012 25

Gowalla, 12/2011 26

WhoGlue, 11/2011 27

Strobe, 11/2011 28

Digital Staircase, 11/2011 29

Snaptu, 9/2011 30 $60M

Push Pop Press, 8/2011 31

Sofa, 6/2011 32

Beluga, 3/2011 33

Rel8tion, 1/2011 34

Pursuit, 2011 35

Zenbe, 11/2010 36

drop.io, 10/2010 37

Nextstop, 9/2010 38 $2.5M

Chai Labs, 8/2010 39 $10M

Hot Potato, 7/2010 40 $10M

ShareGrove, 5/2010 41

Divvyshot, 4/2010 42

Octazen Solutions, 2/2010 43

FriendFeed, 8/2009 44 $47.5M

Parakey, 7/2007 45

MAJOR ACQUISITION: WHATSAPP ($19B)

• $4B Cash • $12B FB shares • $3B Stock options

Source: Crunchbase, April 2014

Growth Strategy: Facebook

40

VIDEO: WHY FB BUYS STARTUPShttp://www.youtube.com/watch?v=OlBDyItD0Ak

”My company acquires other, smaller startups to hire great people.

The fact that so many of the people who are leading products

within Facebook are coming from a startup just creates an incredibly

entrepreneurial environment at scale.”

Mark Zuckerberg, CEO Facebook

“We think about either acquiring

talent or actually looking at

technologies that we can bring

in and build products on.”

“We don’t usually acquire products.”

Christian Hernandez, Facebook’s head of

international business development

Facebook Acquisition Strategy

41

Before getting acquired, Glancee had only been

downloaded 30k times and 20k users using it in the

background on their iPhone

Instagram had 35 million users and was growing fast.

INSTAGRAM vs GLANCEE

Facebook -> Glancee

42

Deal Glancee was last acquisition before IPO (after Instagram), mainly undisclosed terms

Acquihired: Talent & Technology acquisition

Facebook -> WhatsApp

43

Regarding the size it is equal to 25 Instagram ones

WHATSAPP vs INSTAGRAM

Instagram had 13 employees before the deal.

WhatsApp and its 55 employees were gaining

one million new users every day.

Deal WhatsApp will operateindependently retaining its brand, $3Bstock options for founders andempoyees if they work at least 4years@ Facebook

1. Let’s build Entrepreneural Ecosystems thinking at

long term economical impact

2. Startups cannot prosper in a vacuum: smart

money + exit strategies needed + link to large

corporates

3. Education is key at startup/investor/corporate

levels

.

Conclusions

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