DEAR CEOs ARTIFICIAL INTELLIGENCE IS YOUR BIGGEST THREAT AND YOUR BIGGEST OPPORTUNITY

Dear CEOs: Artificial Intelligence is your biggest threat, and your biggest opportunity

It is no secret that artificial intelligence (AI) is poised to take the world by storm. But what exactly does that mean if you are a business leader? It means you need a strategy, and you need to act fast.

Just ask Mark Fields, the former CEO of Ford who was replaced back in May by Jim Hackett, head of their future focused Ford Smart Mobility division. Though it will take time for any company’s internal AI capability to grow, the time to get started is now – and waiting might end up costing you at lot more.

What is your game plan?

Beyond the dwindling profits motive for Ford, we are talking about entire industries and their supply chains being transformed at unprecedented speed. Amazon’s recent acquisition of Whole Foods suggests that even successful, profitable companies, in what most would consider a non-tech sector,  are not immune to changing times and technology disruption.

We have already seen early AI adopters like Facebook, Google, Uber, Microsoft and IBM establish new standards for data analysis and customer experience, and those standards will continue to sharpen as more companies take advantage of this technology. With $1.7 billion invested in AI startups in Q1 2017 alone, and the exponential efficiencies created by this sort of technology, this evolution will happen quicker than many business leaders are prepared for.

If you aren’t sure where to start, don’t worry – you’re not alone. The good news is that you still have options:

  1. You can acquire, or invest in, an innovative technology company applying AI/ML in your market, and gaining access to new product and AI/ML talent.
  2. You can seek to invest as a limited partner in a few early stage AI focused VC firms like BootstrapLabs, gaining immediate access and exposure to vetted early stage innovation, a community of experts and market trends.
  3. You can set out to build an AI-focused division to optimize your internal processes using AI, and map out how AI can be integrated into your future products. But recruiting in the space is painful and you will need a strong vision and sense of purpose to attract and retain the bests.
  4. You can use outside development-for-hire shops like new entrant Element.ai, who raised over $100M last June,  or more traditional consulting firms like Accenture, Capgemini, and others to fill the gaps or get the ball rolling.

What’s more, these options are by no means mutually exclusive. On the contrary, as an executive leader in the digital era, you need to adopt a lean and iterative philosophy around execution: build/partner/buy, measure, learn, and double down on what’s working for your company.

The best companies in the world are already doing this, and many more are preparing to do so soon. Are you?

Connect to the Community and Start Building

Since our second annual Applied AI Conference back in May, which gathered over 700 senior executives, we have been amazed at the level of enthusiasm surrounding the AI advancements and possibilities taking shape across all industries.

What was once but a body of research has given way to massive investment, adoption, and before long we will see large-scale market adaptation taking place well beyond the current use cases. The technology is there, ready for action, and an amazing community has formed around it, across many important industries.

Over the last several years, BootstrapLabs has lead the way in connecting this community. From the technologists and evangelists to the entrepreneurs and investors, we are much more knowledgeable and capable together than any one of us could be alone.

The same principle applies to your business. The talent war around AI is already raging, and as you build your strategy, you need a plan for attracting and retaining top personnel. This means that you have to do more than just “lip service” or “innovation theater” and execute in all aspect of your business to make AI part of your brand and core infrastructure. Your stakeholders will first ask for it, then quickly demand it.

Be Future-Ready

Okay, you’re sold on creating and executing your AI strategy – but how do you prepare for the unknown?

Not only must you focus on adapting for the near-term impact that AI will have on your market, but you must build out capabilities which will set you up for long-term success. This is where your leadership is so important.

Create and mobilize an ecosystem of human capital, venture capital, and technology that will help your organization sail through the seas of change. Empower your domain experts with a robust and agile business strategy, and the innovation will happen more organically.

The puzzle pieces are all there, it’s just up to you to start putting them together. You have much to gain. As Akli Adjaoute, President and CEO of AI company Brighterion suggests, we are talking about “10x ROI for enterprise: you could solve problems within a minute using this technology, instead of weeks.” This opens up space to solve bigger and better problems, increasing employee engagement and productivity and reducing the risk of inefficiencies eating away at your margins.

Don’t wait to be in Mark Fields’ position. Be remembered as the visionary leader that managed to plan, take action, and come out ahead of this challenging innovation curve. Just reflect back on the move that Mark Zuckerberg made with Instagram in 2012. He chose to spend $1 billion (10% of Facebook’s valuation at the time) to buy a revenue-less, two year old mobile photo sharing company – and invested several million dollars since to keep supporting its growth.

He knew that mobile was transforming everything, and Facebook had to stay relevant. Seeing how far we’ve come since this move, you would take that bet any day of the week. Now let me ask you: How much of your market cap are you investing in your AI transformation today?

If the answer is not enough, not fast enough, then refer back to the above section on game plan and reach out to the community!

Corporate investment in artificial intelligence “is predicted to triple in 2017, becoming a $100 billion market by 2025,” writes Ray Wang of Harvard Business Review. He and his colleagues agree that “the question now is not about whether managers should investigate adopting AI, but about how fast they can do so.”

Don’t be mistaken, though – you can’t do it overnight. Developing your AI capability will take some serious effort, commitment, and consultation from multiple invested parties in the space before it can really take flight.

Never forget that innovation and entrepreneurship is a team sport, so ask yourself, who is on my team?


BENJAMIN LEVY

Ben is the Co-Founder of BootstrapLabs, a leading venture capital firm, based in Silicon Valley and focused on Applied Artificial Intelligence.

Some of BootstrapLabs’ portfolio companies include Prezi, AngelList, Zerply, Trusted Insight, AEye, Qurious.io, Roger.ai, Vidora, and Sibly.

Born in France and living in Silicon Valley for the past 18 years, Ben is a repeat entrepreneur who launched, built, and exited two startups in the financial technology space. Read more.

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Announcing the Applied AI Conference 2017

BootstrapLabs is pleased to announce the return of the Applied Artificial Intelligence Conference in San Francisco on May 11, 2017.

After the incredible success of last year’s Applied AI Conference, we have expanded into a new venue and this year’s conference will be 2x bigger. There are only a few tickets left – don’t miss out – register now at this link.

Discover the latest innovation in Artificial Intelligence, and see why everyone is talking about AI today:

 

This year’s conference is focused on practical applications and the current commercialization of AI technologies across industries such as Transportation & Logistics, Internet of Things (IoT), Future of Work (FoW), Financial Technologies (FinTech), Cybersecurity, and Healthcare Technologies (HealthTech).

The 2017 conference agenda will provide insights into the present and future impact of AI on your organization, as well as in your daily life. It will also feature concrete ways, tools, and methods to prepare, organize, and tap AI’s transformative power. As active early stage investors in Applied AI, BootstrapLabs will provide an overview of the investment and consolidation landscape at the conference.

Meet our world-class speakers for this year’s conference:
  • Amir Khosrowshahi, CTO AI Products Group, Intel
  • Lanny Cohen, Group Chief Technology Officer, Capgemini
  • Jack Clark, Strategy & Communications Director, OpenAI
  • Richard Socher, Chief Scientist, Salesforce
  • Mårten Mickos, CEO, HackerOne
  • Hema Raghavan, Head of Growth Relevance, LinkedIn
  • Angie Moody, VP Innovation & Strategic Partnerships, Visa
  • Danny Lange, VP of AI and Machine Learning, Unity Technologies
  • Nicolai Wadstrom, CEO and Founder, BootstrapLabs

Full speakers list at this link.

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Announcing the Applied Artificial Intelligence in the New Industrial Revolution

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BootstrapLabs is thrilled to announce the Applied Artificial Intelligence in the New Industrial Revolution.

Event Summary:

  • Date and Time: Thu, April 13, 2017 | 5:45pm to 8:30pm
  • Location: 44 Tehama St
  • Registration at this link.

We stand in front of the 4th and largest wave of the industrial revolution, powered by AI and Data. This is the biggest opportunity, so far, for innovation and entrepreneurship, and every single industry will be disrupted and redefined by companies that are not yet even born.

With the AI market projected to grow over 20 fold in the next 10 years, to $3Tn annually, we believe Applied Artificial Intelligence represents one of the major wealth creation opportunities of this century.

Manufacturing robots, unmanned vehicles for transportation, warehouses drones as well as space exploration and environmental monitoring empowered by new architectures for distributed computing and intelligent systems are the initial signals of the next generation of industrial systems.

The power of AI will ultimately empower humans to work closely with robots, and bring us to the new age of collaborative systems that can operate side by side with humans.

 

Speakers:

 

Ben Levy, Co-Founder, BootstrapLabs

Joshua Bloom, CTO, Wise.io (Acquired by GE Digital)

George Mathew, CEO and Chairman, Kespry

Ruban Phukan, Co-Founder, Chief Product Officer, DataRPM

Eduardo Torres Jara, Founder, Robot Rebuilt

 

Learn more about the Agenda at this link.

Special Opportunity

Attendees of the Applied Artificial Intelligence in the New Industrial Revolution will receive a special discount for the Applied Artificial Intelligence Conference 2017.

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Thank You To Our Host and Partner

Galvanize

 

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How to Learn Machine Learning by Ben Levy

(This article was originally published at techemergence.com)


How to Learn Machine Learning – an Investor’s Perspective

Episode Summary: There’s been lot of hype around AI and ML in business over the past five years. Even among investors exist a lot of misconceptions about using ML in a business context, and how to get up to speed on and learn machine learning as it applies to utility in industry. Recently, I talked with Benjamin Levy of BootstrapLabs in San Francisco, whom I met through an investment banking friend in Boston.

BootstrapLabs invests in Bay area companies, and Levy also travels around the world speaking about investing in AI companies and raising funds for new ventures. In this episode, Levy gives his perspective on what investors and executives get wrong about ML and and AI, and discusses how they can get up to speed and leverage the applications for these technologies and related expertise to really make a difference (i.e. increased ROI) in their businesses.

Expertise: Technology; Corporate Development & Strategy; Product Development

Brief Recognition: Ben Levy is the co­-founder of BootstrapLabs, a leading venture capital firm, based in Silicon Valley and focused on Applied Artificial Intelligence.

Born in France and living in Silicon Valley for the past 18 years, Ben is a repeat entrepreneur who launched, built, and exited two startups in the financial technology space. Praedea Solutions, a data mining software company using machine learning and image recognition technology, was acquired by Mergent in 2005, and InsideVenture, a financial social network for the founders of venture-­backed pre-­IPO startups and long­-only institutional investors on Wall Street, was acquired by SecondMarket in 2009 (and is now part of NASDAQ).

Earlier in his career, Ben was a Technology, Media, and Telecom Investment Banker who advised startup founders and CxOs of Fortune 500 companies on corporate strategy, financing, and M&A. Ben is also a frequent keynote and panel speaker on innovation, technology investing, entrepreneurship, artificial intelligence, and globalization in the US, Europe, and Asia.

Current Affiliations: Co-founder of BootstrapLabs

Interview Highlights:

The following is a condensed version of the full audio interview, which is available in the above links on TechEmergence’s SoundCloud and iTunes stations.

(1:54) What do you see as some of the bigger misconceptions around machine learning in industry by business people and investors?

Benjamin Levy: We’ve had the benefit of traveling around the world…we talk to executives, family offices, people that are running businesses, and I think there’s been a lot of hype around AI…it’s nothing new, it’s been around about 50 years, there’s been an incredible breakthrough lately, but that’s coming as a result of the explosion of big data, of computing power at scale…

…I think it actually starts with basic lack of understanding of how the technology is going to impact their business…if you’re a business person, at the end of the day, you’re going to be caring about your ROI—is my product better, faster, cheaper; am I selling it to my customers and are my customers happier, and am I competitive. In 2 to 3 years, people will not be selling you AI software, they’ll be selling you upgrades, and that upgrade will have a lot of machine intelligence and a lot of AI, and you’re not going to talk about it because the way you sell AI technology is not going to change…now, the ability that you have as an executive, to have the right talent in-house to evolve your products so that they become smarter…that is the hard part….

(7:20) Talk about the notion (that you mentioned) of “lumpier” in the markets —what do you mean in that regard?

BL: If you look at the global perspective…just from a pure business stand point, we live in a world that is a lot more subject to interconnections and prices impacting one another and the terminal effect, I think in a world where we’re going to continue to see these ups and downs…the waves of disruptions are going to come in faster and faster…if you think about AI, we went from a world where we started to automate to a world that’s becoming more autonomous, a lot more intelligent; so we look at a world that is machine intelligence augmented by human beings…the two combine, but we’re going to move from a world where 80 percent of the work is being done by humans and 20 percent is begin done by machines to a world where 80 percent of the work is done by machines and 20 percent of the work is done by humans…

(10:14) Do you think that people are prepared for the investment involved?

BL: …are you going to be as a business investing heavily in your own capabilities of adopting and applying AI technologies so that you do? Who owns AI inside your company, who owns automation, and who’s going to be driving products that incorporate this other way of looking at things and solving problems?…There’s so many cooks in the kitchen on the inside is side in the corporations; on the other side, you have a lack of vision as to what these products and endpoint should be…

(12:50) What is the talent game for (those outside of Silicon Valley)…what does it look like for the folks who aren’t in the Bay?

BL: …when I think about these dynamics, if you were to be a startup in France focusing on AI, you have a great local pool of talent and you’re not in as much aggressive competition with the local Googles and Facebooks and Amazons of the world that they want to suck up all the talent from these universities, so play that to your advantage. We only invest in companies in Silicon Valley (SV), but the founders can be from anywhere in the world, the company could have ben started elsewhere, which means that we’re completely in favor of you maintaining an R&D somewhere in the place where you come from, where you speak the language, where you know the universities….

(18:35) What do companies do to start to grasp what is possible, see how they could be disrupted, where the opportunities lie?

BL: As a venture capitalist, we’re in a very unique, privileged position…we are educated constantly so we see patterns that are very interesting; my advice would be, talk to people who are in the business to get smarter and wiser, not just by reading things…but you need to talk to people that are on the front lines, who are doing it, you need to potentially be a corporation investing in (venture) funds as well…

…people should be using budgets to actually learn, you should be thinking where can we allocate money…you might actually get closer to people who organize that (sponsored) event and have incredible access, you could be working with incubators and accelerators…there’s a few different tools that corporations have that are accessible to them.

Big Ideas:

1 – People are not buying AI as a company, they’re buying results – a return on investment. AI shouldn’t be looked on as a “neat” thing, but something that has requirements, costs, and results, with a need for smart business decisions, the same as any valuable business tool.

2 – SV doesn’t necessarily have more talent, it just has more resources that allow companies to scale. AI and ML companies can and should get started and grow outside the SV ecosystem. The reason BootstrapLabs wants those companies to eventually have a presence in SV is the ability to scale ideas and ROI; returns are driven by acquisitions, and most of those willing to pay for these technologies are in SV.

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Announcing The Autonomous Corporation

The Autonomous Corporation

We stand in front of the 4th and largest wave of the industrial revolution, powered by AI and Data. This is the biggest opportunity so far for innovation and entrepreneurship, and every single industry will be disrupted and redefined by companies that are not yet even born.

With the AI market projected to grow over 20 fold in the next 10 years to $3Tn annually, we believe Applied Artificial Intelligence represents one of the major wealth creation opportunities of this century.

Any system that is not learning will soon die, and applying AI to new or existing systems will extend and accelerate societal improvement.

AI-driven systems will soon be able to build better, more efficient products that scale and solve problems in ways that have not been possible before. While everyone is talking about Autonomous Vehicles, we want to talk to you about the Autonomous Corporation, where most actions will be automated, decisions autonomously taken and where outcome will be learned from to continuously improve results. We are moving away from the world of Automated Systems and stepping into a world of Autonomous Systems.

 

The power of AI is about leveraging technology and big data, automating repetitive mechanical tasks, capturing more data from the real world, and ultimately empowering humans with actionable intelligence, rather than replacing them, and finally changing our world for the better!

Join us @ BootstrapLabs HQ for an exciting evening with the leaders of the Autonomous Revolution!

Space is very limited and we expect to reach full capacity quickly.

AGENDA

17:45 – 18:15: Registration
18:20 – 18:25: Welcome message
18:20 – 19:00: “The Autonomous Corporation” Keynote and Fireside Chat

  • Dr. Danny B. Lange, Head of Machine Learning at Uber
  • Ben Levy, Co-Founder at BootstrapLabs

19:00 – 20:00: “Enabling The Autonomous Corporation: AI Founders Insights”

  • Sabrina N. Atienza, Founder at Qurious.io
  • Alex Holub, Co-Founder at Vidora
  • Cathrine Andersen, Co-Founder at Roger.ai

20:00 – 20:30: “Drinks & Networking”


Meet speakers and companies presenting:

 

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Keynote: Dr. Danny B. Lange, Head of Machine Learning at Uber
Moderator: Ben Levy, Co-Founder, BootstrapLabs

19:00 “Enabling The Autonomous Corporation: AI Founders Insights”

 Autonomous Corporations AI Leaders Insights

Sabrina N. Atienza, Founder at Qurious.io

Alex Holub, Co-Founder at Vidora

Cathrine Andersen, Co-Founder at Roger.ai

See you on November 15th!

BootstrapLabs Autonomous Corporations

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Announcing AI PitchForce. Apply now!

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Presented by BootstrapLabs and PeopleConnect, AI Pitchforce is a can’t-miss opportunity for AI startup entrepreneurs to present to top angel investors and VCs. It will take place August 25th from 5:00-8:30 PM at Reed Smith, 101 2nd Street, San Francisco.

The AI PitchForce judges will be:

Companies presenting can expect the following:

  • A demo table on the show floor
  • Multiple networking opportunities with guests and investors
  • An opportunity to earn $500K – $1.5M in seed funding
  • The opportunity to present in front a panel of distinguished investors

Event Format:

During the demo period in the first hour, guests and investors will be able to vote on their favorite five companies. These companies will be granted a 4 minute pitch to the panel, followed by a 4 minute Q&A session and 4 minutes of feedback from the panel. The bottom companies will then be allowed a one minute elevator pitch to the panel. From these companies, one will be chosen to have a full 4 minute pitch in front of the panel. The winner will then be selected by the panel and receive a meeting with BootstrapLabs, a meeting with Javelin Venture Partners and a $1,500 scholarship to the Keiretsu Forum Capital Access Series.

Here’s how to apply:

Rules: Any early stage company specializing in AI or Applied AI may apply

Cost: Totally Free!

Email your Executive Summary and pitch deck to info@bootstraplabs.com to apply.

Guests interested in attending can purchase tickets here: https://www.eventbrite.com/e/ai-pitchforce-tickets-26669745928

Thank you to our sponsor

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Venutre Capital Industry: at the dawn of a new era

Venture Capital Industry: At the Dawn of a New Era

2015 has been a banner year for BootstrapLabs. During the past 12 months, we led our first Series A round in an exciting FinTech company, all our portfolio companies raised follow-on funding at higher valuation and we continued to expand our Expert in Residence team to support our portfolio companies.

We believe that technology is a driving force for positive change in the global economy, in society in general, and our daily lives in particular. We continue to be impressed by the talent and passion our founders demonstrate every day and look forward to continuing investing in disruptive technology companies that can transform the way we live, the way we work, and the way we connect with the world around us.

Many believe private companies are overvalued, while others think the next tech bubble is coming. At the same time we see that seed stage investments, where BootstrapLabs focuses, are more vibrant and exciting than ever (e.g., a $25K seed stage investment in Uber would be worth ~ $125M at the $40B valuation mark; even if you assume that Uber is worth $1B, it would still be an investment worth ~ $3M, or 125x the invested amount).

BootstrapLabs is “deep in the stack” alongside its founders day after day, driving the venture market momentum forward. Our global innovation discovery network, combined with our Silicon Valley investment and execution model, provides us with a unique vantage point on what is happening in every corner of the world. Here is what we are observing:

The HOT tech industry is attracting new, mostly late stage, institutional investors that need to invest tens of millions per deal to move the needle.

In 2015, over 566 deals were financed by investment banks, mutual funds, hedge funds, asset managers, and others, while 78% of the deals over $1 Billion have been lead (read priced) by non-VC investors.

Rounds into Tech Companies

Rounds into Tech Companies

Late stage deals are becoming more competitive and less price sensitive due to a combination of i) pent-up demand driven by lower public market returns and the relative rarity of such high growth private technology companies and ii) more financial engineering and deal structuring that aims at lowering the risk for investors, independent of valuation paid (e.g. preferences, ratchets, dividends, etc.) Arguably, these higher valuations are behaving more like “out-of-the-money strike prices” of call options rather than rational valuations driven by operational and technological performance. The chart below outline the dramatic increase in valuation in the later stage as well as the larger amount of money invested by these non-VC investors.

late stage private company median valuation

late stage private company median valuation

Median round size for mid & late stage startup rounds by investor type

Median round size for mid & late stage startup rounds by investor type

There are also NEW sources of capital targeting the Tech Industry via Equity Crowdfunding and platforms that are driving retail investors into the venture market.

Global Equity crowdfunding amount

Global Equity crowdfunding amount

As these platform emerge and private companies can do “public offering of private equity”, secondary market for private equity trading/exchange will gain momentum and importance. One big signal of such trend was the recent acquisition of SecondMarket, the leader in the space by Nasdaq.

Why are non-VCs investing in the tech space?

Startups are staying private longer prior to IPOs today, which means that private investors are making the most of the value from their investment during the pre-IPO period. Traditional public investors, like hedge funds and mutual funds, are starting to realize that in order to capture more value they have to move earlier in the game and start investing in pre-IPO rounds (Private IPOs). See this prior post from Ben Levy, Co-Founder of BootstrapLabs on How to Milk a Unicorn…

Also, traditional VCs have realized that they have to invest earlier in the cycle in order to maximize their investments and not become irrelevant themselves in a world that is changing fast.

Value is Captured Earlier

Because it takes a lot less capital and people to build a proven and scalable product/model, early stage investment has become the most important and possibly the most lucrative part of the value creation chain in our opinion.

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late stage valuation

Later, Access is King

Late stage investors will only succeed if i) they can identify outliers early and ii) they can win a seat at the table during the next fundraising round (hint: money is not enough)

These structural changes, combined with deregulation, have created a once in a lifetime opportunity to form and scale new ventures, as well as new VC firms to finance them. As shown by this recent research report published by Cambridge Associate, more than ever before in the history of the Venture Capital industry, newly formed VC firms have been able to invest and capture some of the top performing startups.

Yet, the opportunities for individual investors remains limited as the industry is shifting to a new model/structure. Similar to the situation with established VCs and hot startups, an individual investor better gain access to future hot new VC funds/managers now, because the best performing funds will have limited access for existing LPs and possibly no access for non-existing LPs in their future funds.

Quality vs Quantity

The number of startups created each year has exploded and will continue to grow quickly as the cost of building technology companies has decreased by at least 10x in the last 20 years, and success stories continue to be blasted across the media as a source of inspiration and validation. The problem will be to identify the good startups as the noise level continues to rise.

Early stage growth no longer signals long term success and the ability to iterate, build and improve your product has become one of the most valuable success skills in the tech space. At BootstrapLabs we excel at finding top talent, bringing them to the best ecosystem (Silicon Valley) and supporting them in their full-cycle “build-measure-learn” iterations.

Innovation is a constant requirement for corporations to remain relevant and it is a pillar of subsistence for our society. Tech innovation will continue to grow and generate outlier returns for the best VCs (and their investors) in the industry. As someone recently mentioned to us “VC is at a dawn of a new era”. Just look at these numbers:

  • 3.6 Billion unique mobile subscribers in 2014
  • 2+ Billion people connected on major social media networks (1.4B FB, 250M TW, 300M LNKD, 300M Instagram)
  • 120x faster online speed (6.7 Mbps US average today)
  • 243 million machine-to-machine connections
  • 50 Billion connected devices by 2020
  • $1.7 Trillion e-commerce spend

The total of all the Unicorn valuations today is worth about half the value of Apple. Some of them will go public, some will be acquired. Apple could actually acquire most of the Unicorns and still have billions in its bank account to spare.

The slow growth in the number of IPOs is a consequence of a historical switch and the growing importance of innovation. Companies need to invest most of their cash flow in innovation, while public market investors expect short term revenue first. Many startups are building for long term success, and if they go public too early they will be unable to maximize their innovation or opportunity. As Marc Andreessen said during a recent interview: “It’s not a tech bubble, it`s a tech bust”… many of the innovation and technology companies are still undervalued and we are strongly optimistic about the great future in front of us”. So is BootstrapLabs!

Venture Capital Disrupts Itself- Breaking the Concentration Curse

Venture Capital Disrupts Itself: Breaking the Concentration Curse

Please note this is a short version of the Venture Capital Disrupts Itself: Breaking the Concentration Curse report published by the Cambridge Associates. At the end of this blog post you can find the link to access to the original file.


 

Venture Capital Disrupts Itself: Breaking the Concentration Curse

The Old Wives Tale … Conventional investor wisdom holds that a concentrated number of certain venture firms invest in a concentrated number of companies that then account for a majority of venture capital value creation in any given year. Therefore, LPs seeking compelling venture capital returns should only commit to a handful of franchise managers. And those are precisely the managers that do not offer access. Thus, LPs are “cursed” and will never experience the differentiated return pattern offered by venture capital exposure.

Is Flawed. As the venture capital industry and technology markets have evolved and matured, however, more managers are creating significant investment value for LPs, with value increasingly created through companies located outside the United States and across a range of subsectors. Specifically, our analysis of the top 100 venture investments as measured by value creation (i.e., total gains) per year from 1995 through 2012, an 18-year period, demonstrated:

  • an average of 83 companies each year account for value creation in the top 100 investments in the asset class for each year;
  • in the post-1999 (i.e., post-bubble) period, the majority of the value creation in the top 100 each year has, on average, been generated by deals outside the top 10 deals;
  • an average of 61 firms account for value creation in the top 100 investments in venture capital per year; and
  • the composition of the firms participating in this level of value creation has changed, with new and emerging firms consistently accounting for 40%–70% of the value creation in the top 100 over the past 10 years.

In short, the widely held belief that 90% of venture industry performance is generated by just the top 10 firms (which our analysis shows was somewhat relevant pre-2000) is a catchy but unsupported claim that may lead investors to miss attractive opportunities with managers that can provide exposure to substantial value creation.

You can access the full Cambridge Associates report here.

Oracle and BootstrapLabs Insider

Oracle Inspiration Tour 2015: a morning with BootstrapLabs

As part of Oracle OpenWorld 2015 this week, Oracle France organized a 5 day “inspiration” tour of San Francisco/Silicon Valley for about 30 French corporate executives. After visiting some of our friends at LinkedIn, Lending Club, and Uber, the group spent Tuesday morning with BootstrapLabs at our San Francisco offices.

Ben_Oracle_InspSettled in with coffee and pastries, the group met with Ben Levy, BootstrapLabs co-founder, who spoke of his journey as an entrepreneur, our work at BootstrapLabs, and the economic impact of venture capital, and the unique role that Silicon Valley plays in terms of innovation, disruption and growth.

Ben2_Oracle_Insp

 

 

 

 

 

 

Oracle_inspThe executives from Alcatel-Lucent, Kering, Lafarge, Ubisoft, Société General, and other top French firms, had plenty of questions about how the changes we see here in Silicon Valley will affect the large corporations they run, with concerns about mobile apps, SaaS, financial systems and customer relations leading the way. Ben shared some facts and figures, as well as concrete examples of why collaborating, innovating and adapting to the changes that we see firsthand here in Silicon Valley are crucial to global companies.

 

As the event concluded with presentations from five startups that are working in the areas of transit, retail, collaboration, marketing, and sales, our visitors left to continue their tour and gather more inspiration.

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BootstrapLabs at Innovation Skåne – Advice for Swedish entrepreneurs

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Lund, Sweden | Wednesday 21 October 2015

In a room full of entrepreneurs, BootstrapLabs founder Nicolai Wadström shared his thoughts on Silicon Valley unicorns, and the speculation of tech bubbles and overvalued startups. He reminded his audience to focus on value, and the fundamentals of the companies being touted as Unicorns.

Read more