The Bunker Presentation
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Transcript of The Bunker Presentation
Table of Contents1.Is there a Bubble?2.Emerging Opportunities3.What do Angels Look For in A Startup?4.NDAs-Why they hurt you5.Counter Intuition6.Q+A
Jeff CarterThought leader. Co-Founded Hyde Park Angels in April 2007 (Angel #1), the Midwest’s leading angel group. Helped start other angel groups.
Successful. Has made over 19 successful early stage investments, many getting follow on rounds.
Highly competitive. Works. Knows how to win. Self employed since 1986.
Respected. Elected by peers to CME Board and ran several committees. Strategic Planning and Budget Committee
High integrity. Tells you straight, means what he says and follows through. BS University of Illinois and Chicago Booth MBA; Member of the National World War Two Museum Board
LinkedIn.com/in/jeffreyrcarter/enblogs every day at PointsAndFigures.com@pointsnfigures on Twitter
Why The TimeIs Now
“Startups are transforming our society. Over the past 100 years, we’ve gone from an industrial era to a post information era where the network is rapidly disrupting
the hierarchy and transforming the way we work and live.”
-Brad Feld, Foundry Group
Society is Rapidly Changing
Faster Bigger Better
Everyone connected all the time. Bandwidth and speed are getting exponentially faster allowing for more transaction volume.
Speed and Mobile
Sales In Mobile Growing
Slope of curves shows valuation up, But investors assume risk later
Angel/Seed Stage Unchanged
Average pre-money valuation is $2.5M
What Kind of Business Should
You Build?
Networks not HierarchiesOrganizations operate from top down. Software and technology enables them to be flatter, fleeter, and first.
Everything Will Be UnbundledOrganizations that are generalists will be disintermediated by focused competitors that engage specialized business silos
Everyone is a Node on the NetworkMobile technology makes everyone a node on the network they operate in. This has deep ramifications for companies and society
Software is Eating the WorldTechnological changes are changing the way we produce, interact and transact enabling flatter, customized chains of distribution and peer to peer networks.
“What’s different today is that we are seeing on a daily basis revolutionary new ideas, devices, and form factors, not evolutionary enhancements.”-Arvind Sodhani Intel Capital in the WSJ (Jan 1. 2014)
The MegaTrends
Government is ill equipped to keep up with rapid changeTechnological and social change is happening so fast, government bureaucracy is too large and inefficient to keep pace. 63% of the federal budget goes to entitlements today. (Uber, Airbnb)
Rise of the SolopreneurMobile technology makes everyone a node on the network they operate in. This has deep ramifications for the way we work, where we work, when we work, and how we work. It also has implications to how we raise and educate our children.(Food Trucks, Independent Consultants, RIAs)
Bitcoin and Mobile Paymentsnew technology is mobile enabled, closes loopholes and strings in internet technology, and provides a searchable, online, transparent accountability function
The Minor Trends
Math Sucks
Angel MathAngels need to invest in Gazelles, not Unicorns
Gazelles are 30xInvest in a 3M post valuation company, sells for $90M you get 30x. Most angel deals exit at $20M-$60M
Unicorns are Billion dollar plus firms. There aren’t many of them, although they are more prevalent
Angel MathAssume $1,000,000 to invest in 10 companies
Probability at seed is equal. All companies are Identical and Independently Distributed
Goal=27% IRR over 5 years
5=0% return2-4= Some return1=30xHence, Angels look for Gazelles!
Investment ThesisInvest in People first, that use technology to transform existing industries.
.
Risk Reward for seed stage startup investing beats risk reward for other asset classes in the current financial environment
.
Why We Say NoRed flag #1 is team. We bet on people first.
Red flag #2 is product. We bet on unique solutions to big problems.
Red flag #3 is structure. Risk vs reward.
.
Why We Say NoRed flag #4 is time. Sometimes it’s just too early
Red flag #5 is “coachability”. Can we work with this
Person over the long haul?
Red flag #6 Salesmanship. Can this person sell?
.
Why We Say Yes Product is Live
ValuationRoadmap
Adoption rate is growing, Or Product is sticky. For SaaS 40%
Monthly growth/low churn; If Social 30/30/10 Salesmanship.
Technical Co-Founder
Non-Disclosure Means
No Dough
Venture Capitalists and Angels Won’t Sign Them
1. Dealing with a Lawyer and paperwork is time consuming. Would rather talk to entrepreneur about their business2. Would have to keep track of all NDAs signed.3. Value is in execution and creating the thing, not the idea4. Starts “Trust Relationship” off on the wrong foot.5. Reputation Cost to the VC if they divulge or act on Information
Problems With NDAs for Investors
Startups Are Counter Intuitive
They think they know everything and are outfitted with all they need
When they launch all hell breaks loose
Startups Look More
Like This
The best laid plans almost never work out the way they were drawn up
You Won’t Have Everything You Need At Launch
Be Flexible. Add as You Go
Listen to Your Customers
Be Intuitive and ProActive
Don’t Focus on Exit
Focus on Building Something Great
Focus on Survival
Get to the Next Round
Questions And
Answers