Learn how to be a successful Angel Investor

Learn how to be a successful Angel Investor!

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Learn how to be a successful Angel Investor

The venture world is changing profoundly and over the next few months we will see a huge increase in “big” seed stage (Pre Series A) deals.

As Ben Levy, co-founder of BootstrapLabs, mentioned in his recent blog post “Seed is the New Series A”, we will over time see more and more seed stage investors creating syndicates and inviting fellow angels to co-invest in their deals.

The number of angel deals, crowdfunding platforms and micro VCs is growing dramatically.

Number of active Micro-VCs

Number of active Micro-VCs

*the majority of these funds of this size are closed without any traditional institutional LP backing. Source: CBInsights; graphic BootstrapLabs.

Learning the ins and outs, strategies, and best practices needed to be a successful angel investor is not easy, but here are a few steps you can follow in order to get started in this exciting new world of “private is the new public”.

Angel investing is often considered by many people to be like a poker game, but with the new market structure and the emerging models of crowdfunding, I believe that Angel investing is becoming more of a team game than a solo gambling endeavor.

One of the most important steps for an Angel Investor is gaining access to quality investment opportunities and spreading their risk by diversifying investments (into a minimum of 10/15 deals if you are active and closer to 30 if you are passive). To invest in 10 good deals you should meet and evaluate at least 100 startups, and this is not easy thing if you are doing angel investments on the side!

You should probably not make 10 investments at once or in a short time span by the way…each deal you invest in will teach you something, and you definitely want your later deals to benefit from your early ones.

This is also why joining a syndicate on a crowdfunding platform or investing alongside or in a Venture Capital fund is recommended. Participating in deals with experienced and expert investors will reduce your risk and save you the time of doing due diligence.

In any case, if you have not already done so, the first thing you need to do to become an angel investor is to verify your Accredited Investor status for a variety of reasons, not the least of which is to make sure the startups do not get into hot water with the SEC for selling private securities to “naive” investors.

To be an Accredited Investor you need to be eligible with one of the following criterias:

  • Individuals with annual income over $200K (individually) or $300K (household) over the last 2 years and an expectation of the same this year
  • Individuals with net assets over $1 million, excluding their primary residence (unless more is owed on the mortgage than the residence is worth)
  • An institution with over $5 million in assets, such as a venture fund or a trust
  • An entity made up entirely of accredited investors

For more information read the SEC documentation.

What Angel Investing means?

Angel investing is buying equity (or convertible securities that can be converted into equity) in a startup company at the earliest stage of a company’s lifecycle. These investments are high risk but also potentially the most profitable since investors benefit from lower valuation and their relatively small check still buys a decent amount of ownership. On that note, angel investors should not aim to “own” or “control” a business if they want to ensure the long term success of their investment. If you should feel you have to do this for the company to succeed, you might be better off investing in another company altogether.

Why is access to good deals limited today?

Because good deals are mostly funded by people who do angel investing as a full time job, and includes a few friends in their trusted network, the financing round will be filled very quickly and will be closed before anyone else even knows about it.

Today, competition is very high in this space and the majority of good startups are participating in accelerator programs and/or having their deals syndicated on platforms like AngelList by expert seed stage angel investors and even Micro-VCs.

Why do startups need Angel Investors?

To pay for their initial expenses and to provide capital to build the first version of their product. Also for many startups, finding an Angel Investor is a good way to prove that their endeavor is or will be valuable. Validation by expert and successful Angel Investors is considered by other angels or seed stage VCs as almost a requirement these days to rise above the noise level.

From a startup’s perspective, it is very important to have respected and value-add Angel Investors on their cap table at the beginning of their journey, especially when the time to raise another round arises, and it will always be sooner than a founder would like to admit.

What does the typical Angel Investment Strategy look like?

As described above, one of the most important steps to becoming a successful Angel Investor is having access to good deal flow. Angel Investing is a high risk investment and you have to invest in at least 10 deals (would recommend even more with small checks) over time in order to diversify your risk.

While the typical Angel Investment is between $5K to $25K; the return of a successful Angel investment can be up to 500x but you will also face the very real fact that 50% of the investments you make will have a low or even zero return, as many startups fail.

To reduce your risk and increase your chance of investing in the next unicorn at an early stage (500x return) as a new Angel Investor, the best thing to do is to participate in deals with other trusted investors or invest a bigger check into a VC to start building your network and knowledge in this space!

Learn more about BootstrapLabs Syndicate here

I will publish more articles regarding this topic soon, so if there is anything you would like to add or ask, please contact me @luigicongedo !

Also I would like to recommend this NY Times article to learn how the world of angel investing has changed in Silicon Valley in the last decade.

AngelListlogo

AngelList Syndicates 1-0-1

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AngelList logoAs most you know I have been an early supporter of what Naval and his team is doing with AngelList, I think AngelList is disrupting the whole angel and early-stage Venture Capital landscape, and thus we are also an investor in AngelList.

Because I get a lot of questions about how AngelList works in general and about how our syndicate works, I thought I should share a quick Q&A here on our blog, please ping me with any additional questions, and I will add them to this blog post.

What happens when I back a syndicate? Does that mean that I commit funds for future deals?

Because only if you back our syndicate you will have access to our deal flow, get notify about new deals and have access to future co-invest opportunity with us in the deal.

How much do I have to commit?

This varies with every syndicate, for BootstrapLabs syndicates (our Seed Syndicate and our A+ Syndicate) the minimum investment is $2,500. Usually Angels back the syndicate with amount from $10K to $25K. Please note the amount you choose when you back a syndicate represent the maximum you will be able to invest and you will have the ability to opt-in or opt-out on every deal that is syndicated (and you can always pick a lower amount for a particular deal).

For example if you back a syndicate with $10k you can also invest $2.5K on the next deal but you have a limit of $10K for all deals syndicates on that syndicate.

More Resources:

 

Venture: Seed is the New Series A

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In a world where access is king and real “value-add” to startup founders creates true differentiation, some Series A (and even Seed) VC firms are in for a rude awakening.

The Shift

Seed is the New Series A captures much of what is going on in the startup and VC world these days. The cost of building technology startups has plummeted by a factor of 5 – 10x in the last decade, resulting in founders often needing far less capital and time to achieve similar results.

A startup typically remains in its seed stage until it has tested and validated a scalable product market fit. Then they shoot for a Series A round of funding from a top VC firm that could ideally take them all the way to an IPO or an exit.

In many respects, the level of maturity and risk associated with these Series A companies would be equivalent to the Series B and C rounds from a decade ago. Yet, VCs are still calling them Series A rounds since it is usually the first investment they would make in a startup.

The chart below is an attempt at visualizing the shift that took place in the equity value creation acceleration curve in relation to the various financing rounds of a successful, but not out of this world (e.g. Uber, Slack, etc.) startup.

Investment, Stages and Equity Value Creation

The reduction in Series A risk profile certainly explains some of the increased Series A round size and associated valuation. You would think that the much talked about Series A crunch would have kept the valuations in check, but truth be told, not every company can clear the Series A bar, and when they do, every investor wants in.

If Series A VCs were previously rewarded for taking risk, having the ability to “pick” potential winners early, and help the founders craft and shape their companies, that know-how appears to have now migrated toward the seed stage investors.

Naval Ravikant recently addressed VCs, saying: “you can lie to your LPs but don’t lie to yourself, you are doing series B and C rounds these days.”

Another brilliant quote came from Sumon Sadhu (wrongly attributed to Dave Morin in the article) who said during the NVCA annual meeting that: “today, when VCs get involved in a startup, 900 of the 1000 first critical decision have been made.”

The proverbial VC quote: “we are value-add guys”

So how much value are VCs really providing entrepreneurs these days?

Fred Wilson recently wrote on his blog about What VC can learn from Private Equity,  “there is a lot of talk about value add from VCs, but often that is just for show during the process of winning the deal. The number of VCs who actually add a lot of value to their investments is much smaller than you would think.”

In another interesting twist, Silicon Valley startups can and must go global faster than ever before if they want to avoid being copied by professional cloning factories such as Rocket Internet.  Which brings up another troubling fact: the vast majority of VC firms, including some of the most well known in Silicon Valley, have little to no experience helping their startups scale globally.

Some critics have even gone as far as accusing traditional VCs of becoming money managers and that the only benefit one would find in raising money from a VC is the size of the check they can cut.

In today’s world, a good entrepreneur has the ability to pick his investors. If the ones providing the most help are their seed investors, then it is likely that these same seed investors will be invited to participate or even lead their Series A round.

Our latest blog post on The Rise of Angel(List) definitely shows how Syndicates and SPVs can be leveraged by angels and earlier stage funds in order to participate and even lead in later stage rounds.

BootstrapLabs follows these trends closely and after years of providing high-touch hands-on value-add work with the founders of each of our portfolio companies, we are on the verge of launching a very tangible, scalable, and disruptive way to deliver value to all our founders. Stay tuned for more …

Trusted Insight: Disrupting the $6 Trillion Alternative Asset Market

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Two weeks ago, we wrote about how AngelList is disrupting the angel investment landscape with its syndication model, and last week we announced our own AngelList syndicate in partnership with Gil Penchina, the #1 AngelList Syndicate lead. Today we would like to tell you about Trusted Insight, a company that is applying the same disruptive syndication model, but to the entire alternative asset industry, not just startup investing and venture capital.

Our recent posts created a lot of engagement and sharing on social media (thank you for that) and were recently reinforced by a series of conversations and posts that emerged from interviews of Naval Ravikant and Gil Penchina at the NVCA Annual Meeting in San Francisco and the Collision Conference in Vegas.

What are Alternative Assets and how big is the industry?

Alternative assets usually include illiquid and private investment opportunities such as Venture Capital, Private Equity, Real Estate, Hedge Funds, Infrastructure, and Illiquid Credits. Institutional investors, including family offices, professional fund managers, endowments, pension funds, and other wealth managers, invest in these “assets” as part of their allocation strategy, either directly or via specialized funds.

Globally, the alternative assets industry represents $6 Trillion each year, dwarfing the $30Bn US Venture Capital Industry.

 

Global asset Industry

Why total addressable market and average deal size matters?

Last year, AngelList, the leading startup investment platform, enabled over $100M in private financing, and while not all of these were syndication deals, it is fair to assume that the vast majority were. On average, a syndicate financing on AngelList is ranging from $150K to $500K per deal, with individual angel investor checks ranging from $1K to $100K.

In contrast, a typical investment opportunity at the institutional investor level ranges between $25M to $1Bn per deal (e.g. fund, real estate project, buy-out), with each investment check in the millions, if not tens of millions of dollars.

In other words, the market opportunity is 100 to 1000x bigger than angel and venture investing.

Basic unit economics: private placement fees vs. syndication carry

Traditionally, players in this space have been entrenched in the private placement business model (i.e. broker-dealers regulated by FINRA / SAIC) as it provides them with the following benefits:

  • Commissions are paid at closing
  • Fee as a percentage of transaction amount provides some level of scalability (linear)
  • Commission is “earned”, independently of the investment outcome, successful or not

Private Placement Model
Fee percentages tend to range from 7%+ for smaller private placements to 1-2% for larger transactions. In the example above, we assumed a 2% fee, given the $100M financing amount.

In contrast, the syndication model provides a profit share return on work performed only if the opportunity that was syndicated in the first place is an overall success, meaning that cash or liquid securities are being delivered to the investors as a result of their ownership of the asset.

An average timeline to exit or return on investment might be 7 years, with some being shorter (rarely) and some being much longer (especially real estate or infrastructure deals). As the platform facilitating these syndicated financing deals, your are now sharing the investment risk but are also looking at a much higher return potential.

Syndication Platform Model

Additionally, that increased risk is being mitigated in a few ways:

  • Positive selection: for a deal to be syndicated, it needs to be vetted and syndicated by a “lead” who is not only respected as a professional in the space, but who is also investing his own capital, thereby creating long term alignment with fellow investors backing his syndicate/investment opportunity
  • Diversification: the syndication model, across alternative assets and geographies, will provides for a natural risk diversification of the “carry portfolio” owned by the platform
  • Syndicate lead incentive: syndicate leads will naturally emerge as the platform provides them with a highly efficient and scalable way to syndicate opportunities and capture carry from 3rd party investors that leverage their access, knowledge and expertise. As shown in the table below, the incentive is significant
  • Scalability: the marginal effort required to run a new syndication on the platform, including discovery, vetting, marketing, due diligence and closing, will add minimal costs to the platform (compared to a traditional private placement process), while maximizing the overall upside potential

    Syndication Lead Model

    About Trusted Insight and why BootstrapLabs lead their Series A Round

    Trusted Insight is a New York-based big data alternative asset management platform disrupting the way institutional investors discover, connect, analyze, and ultimately syndicate deals with one another across different verticals and geographies.

    Since its inception, the company has experienced continuous growth and engagement from its user base including many of the world’s largest asset management institutions and family offices, representing over $18 trillion in assets under management globally.

    At BootstrapLabs we have known Alex Bangash, the founder of Trusted Insight, for many years and have been tracking the progress of the company since its inception. We have great respect for the work Alex and his team have accomplished thus far and we look forward to contributing our technology and fintech expertise to help the company reach the top.

    We believe the winner in the space will need to bring 3 core components to the table:

  • Curated professionals engaging via an industry-centric social network driven by content, communication, events and jobs
  • Big data analytics, behavioral science, and pattern recognition algorithms enriching user experience and personalization, and facilitating targeted syndication
  • Ability to jumpstart the syndication model with proprietary fund-of-funds vehicles that have credibility with the institutional investor community

Overall, the alternative asset industry is ripe for disruption and represents a massive opportunity for those who dare to try.

Alex and his team at Trusted Insight are leaders in this space and we are truly excited to be working closely with them, in true BootstrapLabs’ fashion, to shape the future of the global alternative asset investment space.

Learn more at www.thetrustedinsight.com

(Disclosure: BootstrapLabs is an investors in both AngelList and Trusted Insight.)

BootstrapLabs partners with Gil Penchina, launches AngelList Syndicates

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AngelList logoBootstrapLabs is partnering with Gil Penchina, the #1 Syndicate Lead on AngelList with over $6.5M in backing (more info below), and launches its syndicates.

Last week we published the blog post “The rise of Angel(List)” because we felt it was important for the world to wake up to AngelList and its disruptive potential when it comes to angel investing.

At BootstrapLabs we have been early adopters, advocates and investors in AngelList and we have watched the platform evolve and grow. Launched in the fall of 2013, it took some time for the Syndicate business model to take off but it is now here to stay.

By launching our syndicates on AngelList, BootstrapLabs will be able to provide its investors and portfolio companies additional value, which has always been our goal.

Syndication Framework Summary

Initial Seed Investment – BootstrapLabs Seed Fund
All our Seed Investments are made out of BootstrapLabs Seed Fund, where we curate, cherry pick and lead investments into some of the world’s most promising and innovative technology companies. All our portfolio companies go through our 12 months hands-on Lab model.

Follow-on Seed Investment – BootstrapLabs’ Syndicate ($25K lead; $2.5K min. backing)
As our seed portfolio companies start to grow and seek additional capital (before a Series A), we will systematically syndicate a tranche of their new financing to our backers on AngelList using our BootstrapLabs’ Syndicate.

Series A (and up) Investment – BootstrapLabs A+ Syndicate ($25K lead; $2.5K min. backing), in partnership with Gil Penchina
BootstrapLabs will syndicate a tranche of all the Series A (and up) rounds it will participate in (including pro-rata rights from its seed portfolio investments).

It is interesting to note that until now, very few deals promoted on AngelList have been Series A and up. Angels and accredited investors have historically only been able to access Seed and Pre-IPO stage deals (mostly via secondaries with the right connections), the growth phases – Series A, B, C, D, etc. rounds – have usually been the exclusive playground of VCs and their Limited Partners. Arguably, Angels were left with the two riskiest parts of the equation, very early stage deals with high risks and high rewards, and supposedly lower risks and (most certainly) lower return – due to high pricing – pre-IPO opportunities.

Now, with BootstrapLabs A+ Syndicate, our backers have the ability to invest alongside us across all stages of venture investing.

To engage with the exciting opportunity of AngelList, explore our AngelList Syndicates below:

Our Seed Syndicate Our A+ Syndicate Our AngelList Profile

About Gil Penchina

Gil PenchinaGil Penchina arrived in Silicon Valley in the 90’s and has since had an extraordinary career as an executive, entrepreneur and prolific angel investor. Today, he is one of the most successful angel investors in the Bay Area, and likely globally, with over $25 Billion in combined exits.

Gil has held several executive positions in the Bay area, including eBay, GE and as the CEO of Wikia (now a top 50 website). He has been investing in over 70 companies as an angel investor over the past 17 years and is today one of the most well-known and respected startup investors in Silicon Valley and globally. Some of his well-known investments include companies like LinkedIn, PayPal, AngelList, Evite, Couchsurfing, Wealthfront, Indiegogo and many more.  He is currently the #1 Syndicate Lead on AngelList with over $6.5M in backing.

Note: Some information on AngelList may not be available to you if you are not deemed an accredited investor.

The Rise of Angel(List) and how it is rapidly changing the game of angel investing

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Disclosure: BootstrapLabs invested in AngelList, see our profile here.

The cost of building technology companies over the past decade has decreased by a factor of ten. Software has been eating the world, yielding incredible productivity gains that empower entrepreneurs to execute two to five times faster. Globalization, standardization and connectivity have all been driving unprecedented scalability, allowing a small group of people to reach millions, across the globe.

In a world where it takes less capital to do more, the winners are the entrepreneurs – as they can hold on to more of their companies (especially early on) – and angel investors – whose smaller checks when combined with many others, represent a significant enabler for early stage companies.

Regulatory changes allows new investors

The Job Act of 2012 dramatically broadened the definition of who could invest in private companies as long as they invested within certain boundaries and through registered broker-dealers. Equity crowdfunding and the technology platforms that support them became a hot topic of conversation (and still is).  In effect, the rank of potential angel investors had just been multiplied to accommodate a flood of new, mostly inexperienced aspiring angel investors. As players started to jockey for position, two camps formed on the platform side. The ones that were or sought to become registered broker-dealers in order to leverage the new regulation and capture upfront success fees, and the ones, like AngelList, that decided to forgo the short term focused success fee model and instead share the risks and rewards with fellow investors by capturing a small share of the profits (a.k.a. carry), if any.

AngelList is born

Naval Ravikant, founder of AngelListAngelList was started by Babak Nivi and Naval Ravikant, first as Venture Hacks, a blogging website bringing the startup community together and aiming at increasing the transparency of the VC world. After crawling under the avalanche of requests from entrepreneurs to connect them with angel investors, Naval suggested to “simply list them online”. AngelList was born. (Image: AngelList co-founder, Naval Ravikant)

What is AngelList?

What is AngelList?
AngelList is designed to make capital raising less taxing and more flexible for entrepreneurs, and at the same time more efficient, transparent and scalable for angel investors. One of the unique and disruptive element of AngelList is its Syndication Business Model, launched in the fall of 2013. Instead of registering with FINRA / SIPC as a broker-dealer in order to charge commissions, AngelList sought and received a No Action Letter from the SEC to deploy its disruptive syndication model.

How AngelList delivers value to all players

AngelList’s technology platform delivers value to all players involved; founders, backers and angels.

Benefits for Founders

Why founders love Angelist

  • Reach many angels with one online profile; build a following.
  • Amplify noise signal with each progress, milestones, commitment.
  • Convince one top angel and have many more chip in via their syndicate with no extra effort.
  • Syndicate backers (up to 95) become potential  “fan” and can help you and your startup succeed.
  • All the backers are lumped into a single LLC, managed by the Lead Angel and AngelList, which keeps the capitalization table simple.

Benefits for “Backers”

Why backers love AngelList?High profile angels usually build a group of “backers” – fellow angel investors – for their syndicate so that they can easily share investment opportunities with them and receive carry in exchange for providing them access, vetting and post investment value-add to increase success/outcome.

  • Backers can rely on experienced and reputable angel investors to discover, vet and invest in quality opportunities they would otherwise never see.
  • Backers get to cherry-pick the deals they are investing in and build their own portfolio allocation.
  • Backers are aligned with the syndicate lead who is also investing and risking its own capital.
  • Backers are not charged upfront fees but pay a share of their future profit (“carry”), if any.

Benefits for Syndicate Leads

Why top angels love AngelList syndicates?

  • High profile angels can share investment opportunities with a group of “backers” (definition above). In exchange the angels receive carry.
  • Syndicate Leads don’t have to manage funds or go raise a fund with institutional investors that are usually slow and for which smaller investments or funds do not make sense.
  • Syndicate Leads can increase their appeal to founders by being in a position to invest larger amounts and provide more value-add to their portfolio companies by leverage their Backers.
  • Syndicate Leads can rank backers and ultimately curate their syndicate members based on value-add, investment patterns, etc.
  • Deal per deal carry is yielding better returns for the syndicate leads than if they were running a  traditional VC fund with equivalent carry terms.


Top Syndicates on AngelList


These top angels have formed Syndicates that are potentially capable of funding startups to the tunes of several million dollars, elevating themselves to the ranks of Super Angels or Micro-VCs. In this context, strength definitely comes in numbers and the trends are in favor of platforms like AngelList that are leveraging technology to deliver values to all players involved; startups, angels and backers.

What have the VCs been doing in the mean time?

Interestingly, in this very fast changing landscape, the venture industry and its economic model have seldom changed, with General Partners raising money for 10 years from institutional investors, charging 2%+ annual management fees and 20% carry after repaying the LPs’ principal. The funds usually get invested within 3-4 years and the General Partners then seek to raise another fund, hopefully on the early successes of the prior vintage funds.

In another post, we will cover the disruption happening among the VC firms, how some are leveraging platforms such as AngelList and what the benefits are for the angel investors/backers. Stay tuned and as always, stay foolish!

 

Our Seed Syndicate Our A+ Syndicate Our AngelList Profile

Software Powered Innovation – what does it really mean?

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At BootstrapLabs we invest in the best entrepreneurs from all over the world with a focus on Software Powered Innovation or “Software will Eat the world” – as we see a huge opportunity for disruption and value creation when software and data meet in an innovative way that can change the world as we know it.

“Essentially every process will be virtualized by software and driven by data, even the wearable device and hardware 2.0 revolutions that are happening now are powered by commodity hardware, generic components (or “virtualized”) that innovators are using to quickly build and iterate on to develop game changing ways to apply technology”.

This can sometimes be very complex to explain, especially when you live and breathe the idea that software is the main innovation driver for almost everything on this planet, but somebody clever made this very visual video  showing how our physical desks have been transformed from hardware to software over the past 30 years. The most amazing thing is that most of these changes only happened in the last 5-10 years:

 

 

Simple but telling and credit to Marc Andreessen, that coined the term of Software will eat the world.

Happy New Year!

 

BootstrapLabs Holiday Cheers!

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Dear Bootstrappers,

It has been a terrific  year for BootstrapLabs and no doubt 2015 will be even greater!

The quality of our deal-flow is incredible and we are privileged to be in a position to invest in, and work side-by-side with, some of the best entrepreneurs the world has to offer.

Prezi’s latest round of funding was just further validation (for the outside world) that our model to take the founders of a startup early on to Silicon Valley to build global while maintaining their development team back home could mean the difference between global success or local failure.

On that note, we thought we would share with you a short and fun holiday video about startups and founders:

Wishing you happy holidays and best wishes for 2015.

As always, stay hungry, stay foolish and keep your eyes on the ball!

from
The Team at BootstrapLabs

Google Root Access: How to choose technology to maximize funding, with investor Bootstraplabs

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Google interview BootstrapLabs founder on how you apply technology impacts investment criteria and building startups.

Prezi raises $57M growth equity round, BootstrapLabs portfolio follow-on funding pass $90M

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preziOur portfolio company Prezi, that has been eating away at Microsoft’s Powerpoint and Apple’s Keynote market shares for the last few years, is poised to become a far more mainstream product than some might have previously thought. It’s making two major announcements today.

The company announced this week on stage at Slush in Helsinki — that it has secured a $57M growth investment lead by Spectrum Equity, a growth private equity firm.

Prezi has passed the 50 million users mark, nearly doubling its user base in the past twelve months, and is attracting roughly 55,000 new users every day. Those users have now created 160 million ‘Prezis’ to date, allowing it to justifiably call itself the world’s largest publicly available database of presentations. By contrast Slideshare has only 15 million presentation. Prezi now employs 70 people in its San Francisco office, and 180 in its original home town, Budapest, which, in part thanks to them, has become a buzzing ecosystem for startups and innovation in Europe.

CEO and co-founder Peter Arvai says Spectrum has “a long term perspective, just like we do” which hints at his plans to take the platform to the next level.

Victor Parker, managing director at Spectrum Equity says they were attracted to the platform because it is “quickly becoming the preferred application for businesses, entrepreneurs and educators” and were impressed by its “growing user base and content library” as well as its “compelling business model”.

“We want to help make two billion people make better decisions,” he says. It’s not often you meet entrepreneurs quite so focused on their product, but Arvai is the archetypical product-focused startup founder, who delights in talking about his product, his team and his company.

Humans don’t just think in a logical, chronological order, they also think spatially. It’s so much easier to recall information if you can remember where it sat in relation to something else, whether that be location or by spacial association within the context of a story.

So it was that Prezi’s interactive, zoomable canvas which could show the relationships between a big story and the finer details, that created such waves in 2009.

This also means that follow-on funding for BootstrapLabs’ portfolio companies pass $90M.

Innovation is NOT that single break-through idea

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Innovation Road Sign with dramatic clouds and sky.

Innovations are often thought of something that is coming from a single disruptive or break-through idea. But in reality innovation is more like “ideas having sex” – it is just like the genes that merge to create a new set of genes. Innovation is created through memes that meet and combine into new memes.

This is why innovation thrives in places like Silicon Valley where there is an open mindedness, open doors and where different cultures and disciplines meet to a large extent.

This is also why BootstrapLabs has a global outlook and is searching the world for smart and talented founders in order to increase the cross-pollination that fuels innovation. That is why we evolve around our core in Silicon Valley while we have a deep engagement and comittment all over the globe.

Today we see that ~ 60 % of the successful founders in Silicon Valley were not even born in the US. This make us confident that BootstrapLabs Venture Capital model to scout the world for the most talented founders (and not just Silicon Valley) to empower them to build global companies is the best way to find the most exciting and disruptive ideas.

At Steve Blank's Request: Here is BootstrapLabs' Go Global Startup Playbook

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globalplaybookSteve Blank recently published an interesting post called: Born Global or Die Local – Building a Regional Startup Playbook. I have to say that I loved the first part of the title as I often make the point that today, startups have to think Global because while they can go and market their product anywhere on the planet, startups from anywhere on the planet can come compete in their local market.

I often site the example of Cyworld, a now defunct Korean social network that launched a Facebook-like service 2 years before Facebook ever existed, was used by the majority of people in the country…yet, died within 12-18 months after Facebook entered Korea. Koreans were seating on the global social network revolution but never realized (or cared) to think that maybe other people around the world would want to use a similar service.

As you can see in the comment section of Steve Blank’s blog, I was not in full agreement with some of his point, or maybe we were in agreement and I just mis-interpreted it as it seems he was just putting a “straw-man” out and awaited for the community to engage and share their own best practices. At his invitation, I shared what I like to call BootstrapLabs’ “Go Global Playbook” for (tech/software) startups and here is the outline of the post (which can also be read on Steve Blank blog).

If you are a founders with differentiated products and technology and have the passion, drive and ambition to build a global company, no matter where you are from or currently located in the world continue reading:

  • Ask yourself why you want to build this business?
  • Ask yourself how big is the opportunity/market?
  • Ask yourself if your goal is to support yourself and your family or making a dent in the universe (and hopefully achieving the former at the same time)?

If the later, keep on reading:

  • Assemble a kick-ass team that can code, design, hustle
  • Be confident about what you know, humble about what you don’t
  • Fall in love with the pain point you want to solve, not the solution
  • Learn, live and breathe lean startup mindset, methodology
  • Add a bit of Innovation Jugaad spirit (“do more, with less, for more”)
  • Build MVP, validate problem/solution fit with happy(ish) customers/users
  • Raise a bit of capital/seed/love money if you must but don’t mess-up your cap table with silly deals as it will kill your chances of future success faster than you can pronounce “Series A”.
  • Be very vary of early large customers offering you money for your product in exchange for customization. This may end up killing your dream of scaling globally and unfortunately a pattern we detect in every ecosystem outside of Silicon Valley given the lack of follow-on funding options…startups end up scarifying the scalability of their product in exchange for early revenue.

If you want to scale and haven’t given up on your dream to make a dent in the universe, keep reading:

  • Ask yourself: is my product/market/solution global or regional. Say is it “Africa for Africa” or “Middle East for Middle East”; am I a “me too” of something that already exist in Silicon Valley or elsewhere?

If answer is yes, you should probably stay local and find (local) capital that cares about this market and opportunity. If answer is no and you are differentiated, if your product has global potential, if you users/early adopters are somehow already in the US (and curiously in the Bay Area), then do as follow:

Contact me or Nicolai at BootstrapLabs to confirm all of the above. Worse case scenario we could save you a lot of expenses, disappointment and headache by telling you that you are probably best off staying where you are…If we think you are indeed pretty amazing, we will do the following things together:

  • Invest some seed capital in your company to give you some boost and Silicon Valley social proof
  • Reincorporate your company in Delaware
  • Convert your local company into a wholly-owned subsidiary so you can hire talented developers in your home country (in-sourcing) and not have to compete for engineers with Facebook, Google, Twitter, etc.
  • Coordinate corporate, immigration and tax attorney to make sure you can secure a long term visa so you can stay and work in america, build your startup
  • Work side-by-side, day-in and day-out to achieve first product market fit, then scalable product market fit in the next 12 months.
  • Open all the relevant doors in our network to accelerate your iteration loop/information flow and attach the right skill sets and people to your founding team.
  • Upon successfully raising your Series A round in Silicon Valley, we will help you think about leveraging (our) global grass-route network across the globe sooner rather than later to scale back to the world from here, otherwise companies like RocketInternet and other clone factory will do it for you.

People say “Silicon Valley is a state of mind more than it is a place”, I would agree but for that very reason, it will take decades for other ecosystems to “change their mindsets” and be more like Silicon Valley.

In conclusion, my best advise for founders that want to go global (and have all the right stuff per the above), come to Silicon Valley sooner rather than later, get adopted by this amazing ecosystem and scale back to the world from here with deep pocketed, patient, smart investors on your side.

The journey is not an easy one but I guarantee one worth living for and BootstrapLabs is there to help you along the way.Here you can find a related Prezi why “Your startup will fail to go global unless…”.

 

Ben Speaks @ East Meets West Conference – Hawaii Nov 5-7, 2014

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How hard can it be for us to convince you…it’s in Hawaii people! Come attend this great event where US, Japanese, Korean and Chinese startups will meet global minded investors and battle it out to penetrate each others’ market. Ben Levy, co-founder of BootstrapLabs, will speak on the Opportunities and Headaches of Cross-Border Investing, alongside Rui Ma @500Startups (US/China), Jay Onda @Docomo Capital (US/Japan), Wilton Chau @Hong Kong Angel Group (HK), Tak Miyata @SCRUM Ventures (US/Japan) and many others.

Register here to attend. RT Ticket to Hawaii are quite affordable during that period too.

EMW

What can Emerging (Asian) Leaders learn from the Startup Revolution?

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BootstrapLabs spoke to a group of Emerging Leaders Fellow  on technology empowerment, lean governments and late adopters’ opportunities at The Asia Foundation round table last September. With offices in South East Asia and Korea, BootstrapLabs has a a strong pulse on cultural differences, opportunities and challenges in the region, and believes Asia has been and will remain a key geographic area for growth, innovation and investment opportunities.

Click here to learn more about The Asia Foundation and its Emerging Leaders Fellowship

Who needs a Bank anymore? Millennials are asking just that!

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BootstrapLabs recently spoke about the danger of Banks becoming irrelevant and shared its thoughts on Globalization, Disruption and the “Future of Money” with 10 Senior Executive from Swiss banks (i.e., BCV, Lombard Odier, Pictet, Julius Baer, NorInvest, Piguet Galland, etc.) during Swissnex ‘Future of Money” Tour. According to the Millennial Disruption Index, Banking is the most likely industry to be disrupted with 71% of Millennials saying they would rather go to the Dentist than listen to what Banks have to say.

Bottom Line: “Deliver Value or Die”; and here is another hint:“Seeking new products and chasing returns? Track the rise of new private startup portfolio managers on the new NASDAQ: it’s called AngelList!”