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Warning!
• Allgeneraliza+onssoontobemadecanbeproved“wrong”duetoexcep+onalcases– StartupdatahasaverybroaddistribuBon
• Large“tails”atbothendsofthespectrum(winnersandlosers)
– Hugesurvivorshipbias– PressreportsfocusontheexcepBonalcasesnottheaverageornormalones
TheBadNewsFirst….StaBsBcallyYouWillFail• AngelCapitalFoundaBonsays“ItisextremelyimportanttoidenBfytherisksofa
venturebecauseeveninopBmalcondiBons,manyelementsarerequiredforsuccess.Takethefollowingscenario:
•ManagementiscapableandmoBvated90%•Marketdemandisasexpected90%•ProducBonisscaledupasplanned90%•CompeBBonisheldatbayandIPisdefendable90%•LiabilityandliBgaBonisavoided90%•Companyhassufficientcapital90%•ExisBngcustomersareableandwillingtopay90%
=SuccessProbability48%• Intheeventthatevenoneoftheserisksisnotassessedcorrectly,andthe
chanceofsuccessisactually50percent,theoverallprobabilitysuccessisreducedto27percent.”
• SomaybethatjobinabigslowmovingbureaucraBccompanylooksabitbeber?
CONFIDENTIAL PRESENTATION | PAGE 6
Venture Capital: Regional Comparison
California: $85B
New York: $20B
Massachusetts: $20B
VC Capital Under Management - 2014
Source: NVCA 2015 Yearbook 80% of total VC $ in these 3 regions
Courtesy of Jeff Bussgang General Partner, Flybridge Capital Partners
CONFIDENTIAL PRESENTATION | PAGE 7
Venture Capital Per Capita
California: $3.7k/person
New York: $1.0k/person
Massachusetts: $4.3k/person
VC Capital Under Management Per Capita - 2014
Source: NVCA 2015 Yearbook, US Census, CA is counted as four MSAs (LA, SF, San Jose, San Diego)
Courtesy of Jeff Bussgang General Partner, Flybridge Capital Partners
Boston is second only to Silicon Value in Ecosystem Value with $46 billion and ranked #5 in Startup Output with 3,700 to 4,500 active tech startups.
Boston’s startup ecosystem is a worldwide leader in science and technology-based enterprises in areas like pharma, life sciences, biotech, and robotics. Entrepreneurs in Boston generally benefit from a rich network of mentors and supportive organizations such as Bolt, Techstars Boston, Harvard Innovation Lab, and MassChallenge—the latter claiming to be the largest startup accelerator in the world. Boston ranks third in Funding with $4.4 billion in VC investments.
QuotaBonsFromTheGlobalStartupEcosystemRanking2015By:Compass.co
Portfolio Models VC Model:
Go Big or Go Home Angel Model: Base Hits and Runs
StrikeOuts
StrikeOuts
Basehits
Doubles
Triples&HomeRunsTriples&HomeRuns
Doubles
Ineithercase,mostinvestmentsfail.Minorityofinvestmentsprovidesmajorityofreturn.UnlikeVCs,Angelstrytopreservecapitalandgetonbasebybeingcarefulaboutcapitalintensive
all-or-nothingbets.
10
Types of Angel Groups
FundsIndividualMembersWithSidecarFund
IndividualMembersInvesBngviaLLCVehicle
IndividualMembers
• LaunchpadVentureGroup
• WalnutVentureAssociates
• BostonHarborAngels
• CommonAngels
• GoldenSeeds
• TechCoastAngels
• BeaconAngels
• VirginiaAcBveAngels
• HubAngels
ListofallangelgroupsinUS,byGeography:hbp://www.angelcapitalassociaBon.org/directory/
AngelsFundMajorityofStartupsinUSA
Sources: Center for Venture Research/ UNH; NVCA 2014 Yearbook; PwC MoneyTree
• $24.8billion• 71,000deals• 32,000seed• 29,000earlystage• 9,200expansion• >298,000individuals
AngelInvestors(2013)• $29.6billion• 4,050deals• 120seed• 1,375earlystage• 2,550later/expansion• 548acBvefirms
VentureCapital(2013)AngelsProvide~90%ofOutsideEquityforStartups
FundingStaBsBcsSource(HaloReportandAngelcapitalAssociaBon)
BostonArea(13%ofdealsintotalUSA)• $0.6mm=mediansizeofAngelfundingroundfrom2010–2015(2015=$1mm)• AddinVC’sandmediansizejumpsto$1.5mm(2015=$2.9mm)
SeedRound2014Pre-MoneyValuaBonsbyQuarBle
5to10mm 4to5mm2.5to4mm 0.3to2.5mm
Median2010–2015=$3mmMostacBveangelgroupsinBostonArea:Launchpadis#1CherrystoneAngelsinRIMaineAngels
Many Accelerators / Incubators
• GreentownLabs(energy&Cleantech)• MassChallenge(Largestinworld)• BOLT(hardware)• TechStars• ArBstsAsylum(art)• CIC• MITVMS+others
Clean energy companies that have recently received >$10M in financing (Source: Crunchbase)
CompanyEnbalaPowerNetworksCoolPlanetEnergySystemsSolexelIBnerisJouleUnlimitedEosEnergyStorageSenBentEnergyStemNextStepLivingSolarUniverseOutSmartPowerSystemsSolantroSemiconductorViZnEnergySystemsGreenRoadTechnologiesBostonPowerSolariaBloomEnergy
KeySectorSmartGridRenewableEnergySolarPVSmartGridRenewableEnergyEnergyStorageSmartGridEnergyEfficiencyEnergyEfficiencySolarPVEnergyEfficiencySolarPVEnergyStorageAutomoBve/EnergyEfficiencyEnergyStorageSolarPVRenewableEnergy
DateofLastRoundSep-15Sep-15Aug-15May-15May-15May-15Apr-15Apr-15Apr-15Apr-15Apr-15Apr-15Apr-15Mar-15Feb-15Feb-15Jan-15
AmountRaised$29,580,000$146,770,000$223,920,000$20,900,000$190,000,000$401,000,000$22,500,000$67,100,000$87,800,000$11,000,000$10,700,000$33,800,000$15,440,000$98,900,000$370,600,000$116,200,000
$1,100,000,000
Key Items in a Startup
• Pathtorevenue• Solvingacommercialproblem
• Oxygen,Aspirin,Jewelry• Team• Shorttermfunding
• SBIR/DOEetc.• TalktoCustomers• Preparetopivot• Preparetochange/befired
• FoundersAgreement• IPprotecBon• Mentors• Opinionleadersnearyou• LocaBon,locaBon,locaBon!• CommercialskillsnotjustscienBficskills
• 6pitchbooks(2/10/30Pages)• Problem,Marketsize,YoursoluBon,IP• Team,FinancialProjecBons,$Needed,Exit
Energy Startups
• Infrastructure• CapitalIntensive• MoreSecure?
• GeographicMonopoly• ShorterTimeFrames?• PolicyDependent• Local“Culture”
• Technology• TechnologyIntensive
• SocheckyourIPworldwide• LessSecure?• LongLeadTimestoAdopBon• Possibletobea“Unicorn”• MoreFun?• SBIR/DOE(policy)Dependent
Development
• 2–10xreturns• 50%+failurerate• 0.5to3+yearsBme• Rampedcashouxlows
• Capitallight(lessthan$100K/MW)
• Salespricecirca$100to200K/MW
ConstrucBon
• 20+%IRR’s• Lessthan10%failurerate• 1year+• Capitalintensive(usually$10’sto$100’sofmillions)
• Lumpycashouxlowsweightedtobeginning
OperaBon
• 8-14%IRRs• Rarelyfailsexceptforweather(insurance)
• 15+yearcashflows• CashouxlowsmostlyatBmeofacquisiBon(andmajoroverhauls)
Useful Links
• HowtoCreateyourBusinessPlan• BillAulet’s24steps
• hbp://disciplinedentrepreneurship.com/
• BusinessModelCanvass• hbp://www.businessmodelgeneraBon.com/canvas/bmc
• ForPresentaBonTechniques• ChuckGoldstone
• hbp://newventureinsBtute.org/about.html
• LindaPlano• hbps://www.planoandsimple.com/about-linda/
• Legalfeesarenotabarrier:onlinesources+“deals”frombigfirms
More links for more informaCon
• www.angelcapitalassociaBon.org• hbp://techscene.at/boston• hbp://bostontechguide.com/• hbp://bostonvcblog.typepad.com/vc/2015/09/what-makes-the-boston-startup-scene-special.html
• hbps://www.f6s.com/techstarsapp
• hbp://masschallenge.org/accelerator/model• hbp://masstech.org/innovaBon-ecosystem/innovaBon-economy-resources/incubators-and-accelerators-0
• hbp://blog.startupcompass.co/the-2015-global-startup-ecosystem-ranking-is-live• hbp://www.maps-inc.org/our-community/portuguese-speaking-community-in-massachusebs/
Thank you
• AdamdeSolaPool• Telephone+16175475717or+16467854946• [email protected]• Skypenameisadampool• 105IrvingStreet,CambridgeMA02138USA