SlideShare a Scribd company logo
1 of 62
Download to read offline
500.co/challenge                                         #moneyball4startups




   MONEYBALL STARTUPS                  +
                   IT’S NOT SPRAY AND PRAY. IT’S A PROCESS.



                                 PAUL SINGH

                                 500 Startups

            @paulsingh・paul@500startups.com・angel.co/paulsingh
500.co/challenge                                       #moneyball4startups




           GETTING TO KNOW




           500 STARTUPS      BECAUSE WE’RE KIND OF A BIG DEAL




                               PAUL SINGH

            @paulsingh・paul@500startups.com・angel.co/paulsingh
500.co/challenge                                   #moneyball4startups




     THE BIG OPPORTUNITY IN EARLY STAGE TECH INVESTING:




     API TO VENTURE CAPITAL
     & FUNCTIONAL EXPERTISE
     (FOR FOUNDERS. FOR INVESTORS. FOR GOVERNMENT.)
500.co/challenge   #moneyball4startups




     FOUNDERS:




     BUILD SOMETHING
     PEOPLE WANT
500.co/challenge   #moneyball4startups




     INVESTORS:




     WRITE CHECKS AND
     ADD VALUE
500.co/challenge   #moneyball4startups




     GOVERNMENT:




     MAKE LIFE EASY
     FOR INVESTORS &
     FOUNDERS
500.co/challenge                                #moneyball4startups




           “ VENTURE CAPITAL IS
                   OPEN TO ATTACK BY
                   DISRUPTIVE NEW
                   BUSINESS MODELS AND
                   TECHNOLOGY.
                   -- NAVAL RAVIKANT (@naval)
500.co/challenge               #moneyball4startups




           (R)EVOLUTION IN THINKING
500.co/challenge    #moneyball4startups




           EARLY STAGE
            STARTUPS
          HAVE CHANGED
500.co/challenge                                   #moneyball4startups




         CLOUD, OPEN SOURCE AND ONLINE DISTRIBUTION DRIVING




     STARTUP COSTS
    LOWER THAN EVERBUT SCALING STILL COSTS MONEY
500.co/challenge   #moneyball4startups




     WEB GETS BIGGER.
    WORLD GETS SMALLER.
500.co/challenge                                  #moneyball4startups




   TRACTION IS THE NEW
 INTELLECTUAL PROPERTY
 PLATFORMS (SEARCH, SOCIAL & MOBILE) PRIMARILY DRIVING THE CHANGE.
   NO LONGER “GOOD ENOUGH” TO DEPEND ON TECH DIFFERENTIATION.
500.co/challenge                             #moneyball4startups




             CAPITAL
          INCREASINGLY
          COMMODITIZED
                   RISE OF THE ANGELS, YO!
500.co/challenge        #moneyball4startups




              NEW REALITY:
             MONEY FOLLOWS
               FOUNDERS
500.co/challenge                                  #moneyball4startups




              SIGNALS ARE
              EVERYWHERE
      BIG DATA + OPEN SOURCE ANALYTICS = NEW TECHNIQUES FOR VC
500.co/challenge        #moneyball4startups




             WALL STREET
             BEAT US TO IT
500.co/challenge   #moneyball4startups
500.co/challenge                     #moneyball4startups




           “       UBS PROPRIETARY
                   SATELLITE PARKING LOT
                   FILL RATE ANALYSIS
                   POINTS TO AN
                   INTERESTING CADENCE
                   INTRA-QUARTER AND
                   POTENTIAL UPSIDE TO
                   OUR VIEW.
500.co/challenge                                 #moneyball4startups




             WALL STREET
             ISN’T ALONE
       THESE TECHNIQUES ALREADY USED TO UNDERWRITE IN-VITRO
         FERTILIZATION LENDING, PAYDAY LOANS, SUBPRIME AUTO
         LENDING, HOME/PERSONAL/AUTO INSURANCE AND MORE.
500.co/challenge     #moneyball4startups




     IT TURNS OUT,




    WE CAN DO IT, TOO   SURPRISE!
500.co/challenge                                  #moneyball4startups




          + “GUT” + TRUSTED MENTORS + MUCH, MUCH MORE DATA.
500.co/challenge                                  #moneyball4startups




                   SENTIMENT
                    ANALYSIS
       WHAT IS THE TEAM THINKING? WHAT DOES THE MARKET THINK?
                  WHAT DO MY PEERS/MENTORS THINK?
500.co/challenge                                    #moneyball4startups




           NEEDLE IN THE
            HAYSTACK
        REAL USE CASES: SIGNS THAT A FUNDING ROUND IS ABOUT TO
       OCCUR AND/OR SIGNS THAT A PRODUCT IS ABOUT TO EXPLODE.

         VERY HARD TO DO ACCURATELY BUT PAYOFF IS BIG & FAST.
500.co/challenge                                    #moneyball4startups




   FASTER PORTFOLIO
       TRENDS
          CURRENT SYSTEMS OF QUARTERLY/AD-HOC REPORTING IS
            BROKEN -- SELF REPORTED DATA IS OFTEN BIASED.

       THE RAW DATA IS THERE, THE SYSTEMS TO COLLECT IT AND THE
                ALGORITHMS TO ANALYZE IT ARE MISSING.
500.co/challenge                                      #moneyball4startups




          500 CHECKLIST
   Product solves a problem for a specific target customer
   Capital-efficient businesses - operational @ <$1M funding
   Primarily internet-based distribution - search, social, mobile, local
   Simple revenue models - transactions, subscriptions or affiliate
   Functional prototype before investment (or previous success)
   Small but measurable usage - some customers, early revenue
   Small but cross-functional team - engineer, design/UX, marketing
500.co/challenge   #moneyball4startups




        EARLY STAGE VC
         IS CHANGING
         HAS CHANGED
500.co/challenge                                  #moneyball4startups




  STATE OF THE ART IN EARLY
   STAGE INVESTING IS NOT
     VERY SOPHISTICATED
       TRUST REFERRALS. MOVE FAST. KEEP LEGAL/FINANCE SIMPLE.
  BUILD RELATIONSHIPS WITH OTHER INVESTORS, SYNDICATE EVERYTHING.
500.co/challenge                                         #moneyball4startups




                   MONEYBALL
                   IT’S NOT SPRAY AND PRAY. IT’S A PROCESS.
500.co/challenge                                    #moneyball4startups




                       MY PRIMARY GOAL IS TO




                   BUY WINS
            NOT NECESSARILY BUYING INTO THE HOTTEST DEALS.

              FOCUS ON TEAM, EXECUTION, TRACTION & DATA.
              (STICK AROUND... I’M GOING TO SHOW YOU HOW)
500.co/challenge   #moneyball4startups




 INITIAL BET DESIGNED TO
  GIVE US MORE DATA FOR
     SUBSEQUENT BETS
500.co/challenge                                   #moneyball4startups




            QUANTITATIVE
             PORTFOLIO
             APPROACH
        BENEFITS: CONTROLLED RISK + OUTSIZED RETURN POTENTIAL
500.co/challenge                                                                 #moneyball4startups


                                   Monte Carlo Simulation of Angel Investing
                  5

                                   mean              median                 std dev
                3.75
Exit Multiple




                 2.5



                1.25



                  0
                       0   2   4   6   8   10   12    14   16     18   20   22    24   26   28   30
                                                     # of Deals
500.co/challenge                              #moneyball4startups
                   MODERN PORTFOLIO THEORY:




      RISK MITIGATION
         THROUGH
      DIVERSIFICATION
500.co/challenge   #moneyball4startups




      HIGH VOLUME
   INVESTING ALLOWS
  FOR HIGH ERROR RATE
500.co/challenge                                     #moneyball4startups




   TRACK IRR &
VALUATIONS WITHIN
 YOUR PORTFOLIO    AT LEAST YEARLY. RECOMMEND QUARTERLY.
500.co/challenge   #moneyball4startups




   CONTROLLED RISK:
   OUTSIZED RETURN
      POTENTIAL
500.co/challenge                                 #moneyball4startups




      PORTFOLIO IRR
     QUICKLY POSITIVE
   (WITH SMALLER EARLY EXITS AND PROMISING DEALS GETTING FUNDED)
500.co/challenge                                       #moneyball4startups




      EVEN “SMALLER”
      EXITS CAN MOVE
        THE NEEDLE DON’T FORGET: YOU CAN SELL POSITIONS TO
                   DOWNSTREAM OR SECONDARY BUYERS TOO.
500.co/challenge       #moneyball4startups




             LAW OF LARGE
             NUMBERS FTW!
500.co/challenge                                     #moneyball4startups




      INDIVIDUAL BETS
         ARE SMALL
                   MUCH EASIER TO RUN AN EXPERIMENT ON A
                    $50K INITIAL CHECK INSTEAD OF $250K+
500.co/challenge                                #moneyball4startups




                   BAD BETS
                   FAIL FAST
  SMALLER CHECK SIZES FORCE COMPANIES TO PROVE THEORIES FASTER.
  ALLOWING INVESTORS TO QUICKLY ITERATE OUR FORECASTING/FUNDING
     MODEL. FEWER “LIVING DEAD” AND QUICKER RETURN ON RESULTS.
500.co/challenge                                   #moneyball4startups




          FAILURE RATES
            ARE HIGH
   DIVERSITY OF HIGH VOLUME INVESTING ALLOWS FOR HIGH ERROR RATE.
  FUND IRR QUICKLY POSITIVE WITH SMALLER, EARLY EXITS AND PROMISING
                        DEALS GETTING FUNDED.

  DILIGENCE HAPPENS IN THE REAR VIEW MIRROR, NOT THE CRYSTAL BALL.
500.co/challenge                                                          #moneyball4startups




  ALLOCATE FOR FOLLOW-ONS
                           30% Capital - Initial Bets
                                        target 10-20 deals




                           70% Capital - Follow On
                             filter out failures, follow-on the top 20%




                   (...OR “HOW TO AVOID GETTING SQUASHED”)
500.co/challenge                                      #moneyball4startups




               DEAL TERMS
                   SO YOU FOUND A STARTUP YOU LOVE?
500.co/challenge    #moneyball4startups




         DEBT VS EQUITY
500.co/challenge                                 #moneyball4startups




CONVERTIBLE NOTES
 ARE OK (REALLY!)
       LOWER LEGAL FEES, LESS DOCS, QUICKER TO EXECUTE. WHEN
          CAPPED, THEY FUNCTION SIMILAR TO PRICED ROUNDS.
500.co/challenge                                  #moneyball4startups




    STANDARD DOCS
   ARE YOUR FRIENDS
         WHEN IN DOUBT, DO NOT INNOVATE IN FINANCE OR LEGAL
500.co/challenge                                    #moneyball4startups




               PRO RATA &
               INFO RIGHTS
           ALWAYS. ALWAYS. ALWAYS. ALWAYS. ALWAYS. (GET IT?)
500.co/challenge                                 #moneyball4startups




               FOCUS ON
              VALUATION &
               MULTIPLES
       OWNERSHIP % MATTERS MUCH LESS. FOCUS ON REQUIRED EXIT
         SIZE RATHER THAN SOME MYTHICAL OWNERSHIP TARGET.
500.co/challenge                                  #moneyball4startups




 IT’S HARD TO MAKE
      MONEY ON
 VALUATIONS > $5M
(PRO TIP: CONSIDER MIN. RETURN REQUIREMENTS FOR DOWNSIDE SCENARIOS)
500.co/challenge                                    #moneyball4startups




                         YOUR PRIMARY GOAL




   LET FOUNDERS GET
     BACK TO WORK
      THIS IS A LONG GAME: AVOID LOSING YOUR REPUTATION OVER 1%.
           WHEN IN DOUBT, LEAN TOWARDS THE ENTREPRENEUR.
500.co/challenge   #moneyball4startups




AVOID BOARD SEATS
500.co/challenge   #moneyball4startups




     MOST BOARDS
    PROVIDE MINIMAL
       VALUE-ADD
500.co/challenge                                   #moneyball4startups




   BEST DEALS USUALLY
     REQUIRE LIMITED
     BOARD SUPPORT
          SPEND YOUR TIME SOURCING NEW DEALS. LIMIT TIME ON
           SIDEWAYS DEALS. LET THE WINNERS KEEP ON WINNING
            (AND ANSWER YOUR PHONE WHEN THEY NEED YOU).
500.co/challenge   #moneyball4startups




DO NOT INNOVATE IN
 FINANCE OR LEGAL
500.co/challenge                                     #moneyball4startups




               INVESTING
             IS A PROCESS
         DABBLING IN INVESTING IS (AT BEST) GAMBLING. BETTER TO
          WALK AWAY OR PURSUE INVESTING NEARLY FULL TIME OR
                FIND SOMEONE TO MANAGE YOUR MONEY
500.co/challenge                                  #moneyball4startups




             BE AN ACTIVE
              INVESTOR
PORTFOLIO EFFECTS & THE LEAN STARTUP MOVEMENT ARE YOUR FRIENDS

YOU CAN EXPECT FAVORABLE WITH 10 DEALS BUT IT TAKES 20+ TO BE SAFE
500.co/challenge                                 #moneyball4startups




                   BE A SMART
                    INVESTOR
         FOCUS ON INFORMATION ASYMMETRY & PRICE/MULTIPLES.
500.co/challenge                      #moneyball4startups




           “       BY ITS NATURE, THE
                   INTERNET UNDERMINES
                   ANYONE WHOSE STATUS
                   DEPENDS ON
                   PRIVILEGED ACCESS TO
                   INFORMATION.
                   -- MICHAEL LEWIS
500.co/challenge                                   #moneyball4startups




     THE BIG OPPORTUNITY IN EARLY STAGE TECH INVESTING:




     API TO VENTURE CAPITAL
     & FUNCTIONAL EXPERTISE
     (FOR FOUNDERS. FOR INVESTORS. FOR GOVERNMENT.)
500.co/challenge   #moneyball4startups




    500.co/challenge
500.co/challenge                                         #moneyball4startups




   MONEYBALL STARTUPS                  +
                   IT’S NOT SPRAY AND PRAY. IT’S A PROCESS.



                                 PAUL SINGH

                                 500 Startups

            @paulsingh・paul@500startups.com・angel.co/paulsingh

More Related Content

Similar to Moneyball: A Quantitative Approach to Angel Investing (Canada - Sept 2012)

Moneyball: A Quantitative Approach to Angel Investing (NASSCOM Product Concla...
Moneyball: A Quantitative Approach to Angel Investing (NASSCOM Product Concla...Moneyball: A Quantitative Approach to Angel Investing (NASSCOM Product Concla...
Moneyball: A Quantitative Approach to Angel Investing (NASSCOM Product Concla...Paul Singh
 
Growth Hacking Workshop for Hyper Island
Growth Hacking Workshop for Hyper IslandGrowth Hacking Workshop for Hyper Island
Growth Hacking Workshop for Hyper IslandIdea Hunt
 
Moneyball: Thinking Like An Early Stage Investor (San Luis Potosi - Nov 2012)
Moneyball: Thinking Like An Early Stage Investor (San Luis Potosi - Nov 2012)Moneyball: Thinking Like An Early Stage Investor (San Luis Potosi - Nov 2012)
Moneyball: Thinking Like An Early Stage Investor (San Luis Potosi - Nov 2012)Paul Singh
 
Evolution of the Private Market - Motley Fool
Evolution of the Private Market - Motley FoolEvolution of the Private Market - Motley Fool
Evolution of the Private Market - Motley FoolPaul Singh
 
Jim Goetz of Sequoia Capital at Stanford
Jim Goetz of Sequoia Capital at StanfordJim Goetz of Sequoia Capital at Stanford
Jim Goetz of Sequoia Capital at StanfordDealHorizon.com
 
The Evolution of the Private Market - TiEConCanada
The Evolution of the Private Market - TiEConCanadaThe Evolution of the Private Market - TiEConCanada
The Evolution of the Private Market - TiEConCanadaPaul Singh
 
the evolution of the private market - cleveland ew
the evolution of the private market - cleveland ewthe evolution of the private market - cleveland ew
the evolution of the private market - cleveland ewPaul Singh
 
The Rise of the Angels (and the Entrepreneurs) - Norfolk - March 2013
The Rise of the Angels (and the Entrepreneurs) - Norfolk - March 2013The Rise of the Angels (and the Entrepreneurs) - Norfolk - March 2013
The Rise of the Angels (and the Entrepreneurs) - Norfolk - March 2013Paul Singh
 
Hec inside venture capital PART 2 & 3
Hec inside venture capital   PART 2 & 3Hec inside venture capital   PART 2 & 3
Hec inside venture capital PART 2 & 3Christophe Raynaud
 
Hec inside venture capital part 2 part 3
Hec inside venture capital   part 2 part 3Hec inside venture capital   part 2 part 3
Hec inside venture capital part 2 part 3Christophe Raynaud
 
Hec inside venture capital part 2 & 3
Hec inside venture capital   part 2 & 3Hec inside venture capital   part 2 & 3
Hec inside venture capital part 2 & 3Christophe Raynaud
 
The Evolution of the Private Market - 10Xdemoday
The Evolution of the Private Market - 10Xdemoday The Evolution of the Private Market - 10Xdemoday
The Evolution of the Private Market - 10Xdemoday Paul Singh
 
"Lunch 'n Learn" Deck on "The Lean Startup"
"Lunch 'n Learn" Deck on "The Lean Startup""Lunch 'n Learn" Deck on "The Lean Startup"
"Lunch 'n Learn" Deck on "The Lean Startup"Paul Tongyoo
 
The Business of (Tech) Startups - Challenge Cup
The Business of (Tech) Startups - Challenge CupThe Business of (Tech) Startups - Challenge Cup
The Business of (Tech) Startups - Challenge CupPaul Singh
 
Executive MBA Workshop - Startup funding, Initial Coin Offering.
Executive MBA Workshop - Startup funding, Initial Coin Offering.  Executive MBA Workshop - Startup funding, Initial Coin Offering.
Executive MBA Workshop - Startup funding, Initial Coin Offering. MichalGromek
 
MBA Guide to Startup Finance
MBA Guide to Startup FinanceMBA Guide to Startup Finance
MBA Guide to Startup FinanceMichalGromek
 
#FounderHacks by Raj Kapoor - cofounder.co
#FounderHacks by Raj Kapoor - cofounder.co#FounderHacks by Raj Kapoor - cofounder.co
#FounderHacks by Raj Kapoor - cofounder.coRajil Kapoor
 
Corporate Venturing: the future is called collaboration
Corporate Venturing: the future is called collaborationCorporate Venturing: the future is called collaboration
Corporate Venturing: the future is called collaborationDuval Union Consulting
 
Raising Money for Your Startup: Why Fundraising is a Literary Process, Not Fi...
Raising Money for Your Startup: Why Fundraising is a Literary Process, Not Fi...Raising Money for Your Startup: Why Fundraising is a Literary Process, Not Fi...
Raising Money for Your Startup: Why Fundraising is a Literary Process, Not Fi...Tearsheet
 

Similar to Moneyball: A Quantitative Approach to Angel Investing (Canada - Sept 2012) (20)

Moneyball: A Quantitative Approach to Angel Investing (NASSCOM Product Concla...
Moneyball: A Quantitative Approach to Angel Investing (NASSCOM Product Concla...Moneyball: A Quantitative Approach to Angel Investing (NASSCOM Product Concla...
Moneyball: A Quantitative Approach to Angel Investing (NASSCOM Product Concla...
 
Growth Hacking Workshop for Hyper Island
Growth Hacking Workshop for Hyper IslandGrowth Hacking Workshop for Hyper Island
Growth Hacking Workshop for Hyper Island
 
Moneyball: Thinking Like An Early Stage Investor (San Luis Potosi - Nov 2012)
Moneyball: Thinking Like An Early Stage Investor (San Luis Potosi - Nov 2012)Moneyball: Thinking Like An Early Stage Investor (San Luis Potosi - Nov 2012)
Moneyball: Thinking Like An Early Stage Investor (San Luis Potosi - Nov 2012)
 
Evolution of the Private Market - Motley Fool
Evolution of the Private Market - Motley FoolEvolution of the Private Market - Motley Fool
Evolution of the Private Market - Motley Fool
 
Jim Goetz of Sequoia Capital at Stanford
Jim Goetz of Sequoia Capital at StanfordJim Goetz of Sequoia Capital at Stanford
Jim Goetz of Sequoia Capital at Stanford
 
The Evolution of the Private Market - TiEConCanada
The Evolution of the Private Market - TiEConCanadaThe Evolution of the Private Market - TiEConCanada
The Evolution of the Private Market - TiEConCanada
 
the evolution of the private market - cleveland ew
the evolution of the private market - cleveland ewthe evolution of the private market - cleveland ew
the evolution of the private market - cleveland ew
 
The Rise of the Angels (and the Entrepreneurs) - Norfolk - March 2013
The Rise of the Angels (and the Entrepreneurs) - Norfolk - March 2013The Rise of the Angels (and the Entrepreneurs) - Norfolk - March 2013
The Rise of the Angels (and the Entrepreneurs) - Norfolk - March 2013
 
Hec inside venture capital PART 2 & 3
Hec inside venture capital   PART 2 & 3Hec inside venture capital   PART 2 & 3
Hec inside venture capital PART 2 & 3
 
Hec inside venture capital part 2 part 3
Hec inside venture capital   part 2 part 3Hec inside venture capital   part 2 part 3
Hec inside venture capital part 2 part 3
 
Hec inside venture capital part 2 & 3
Hec inside venture capital   part 2 & 3Hec inside venture capital   part 2 & 3
Hec inside venture capital part 2 & 3
 
The Evolution of the Private Market - 10Xdemoday
The Evolution of the Private Market - 10Xdemoday The Evolution of the Private Market - 10Xdemoday
The Evolution of the Private Market - 10Xdemoday
 
"Lunch 'n Learn" Deck on "The Lean Startup"
"Lunch 'n Learn" Deck on "The Lean Startup""Lunch 'n Learn" Deck on "The Lean Startup"
"Lunch 'n Learn" Deck on "The Lean Startup"
 
The Business of (Tech) Startups - Challenge Cup
The Business of (Tech) Startups - Challenge CupThe Business of (Tech) Startups - Challenge Cup
The Business of (Tech) Startups - Challenge Cup
 
Executive MBA Workshop - Startup funding, Initial Coin Offering.
Executive MBA Workshop - Startup funding, Initial Coin Offering.  Executive MBA Workshop - Startup funding, Initial Coin Offering.
Executive MBA Workshop - Startup funding, Initial Coin Offering.
 
short version
short versionshort version
short version
 
MBA Guide to Startup Finance
MBA Guide to Startup FinanceMBA Guide to Startup Finance
MBA Guide to Startup Finance
 
#FounderHacks by Raj Kapoor - cofounder.co
#FounderHacks by Raj Kapoor - cofounder.co#FounderHacks by Raj Kapoor - cofounder.co
#FounderHacks by Raj Kapoor - cofounder.co
 
Corporate Venturing: the future is called collaboration
Corporate Venturing: the future is called collaborationCorporate Venturing: the future is called collaboration
Corporate Venturing: the future is called collaboration
 
Raising Money for Your Startup: Why Fundraising is a Literary Process, Not Fi...
Raising Money for Your Startup: Why Fundraising is a Literary Process, Not Fi...Raising Money for Your Startup: Why Fundraising is a Literary Process, Not Fi...
Raising Money for Your Startup: Why Fundraising is a Literary Process, Not Fi...
 

More from Paul Singh

The Business of (Tech) Startups - VSW2015 - Sep 2015
The Business of (Tech) Startups - VSW2015 - Sep 2015The Business of (Tech) Startups - VSW2015 - Sep 2015
The Business of (Tech) Startups - VSW2015 - Sep 2015Paul Singh
 
The Business of (Tech) Startups - TiETueDC - Oct 2014
The Business of (Tech) Startups - TiETueDC - Oct 2014The Business of (Tech) Startups - TiETueDC - Oct 2014
The Business of (Tech) Startups - TiETueDC - Oct 2014Paul Singh
 
The Business of (Tech) Startups - iSummit Orlando - Sept 2014
The Business of (Tech) Startups - iSummit Orlando - Sept 2014The Business of (Tech) Startups - iSummit Orlando - Sept 2014
The Business of (Tech) Startups - iSummit Orlando - Sept 2014Paul Singh
 
The Business of (Tech) Startups - MEDA Annual Conference - Apr 2014
The Business of (Tech) Startups - MEDA Annual Conference - Apr 2014The Business of (Tech) Startups - MEDA Annual Conference - Apr 2014
The Business of (Tech) Startups - MEDA Annual Conference - Apr 2014Paul Singh
 
The Evolution of the Private Market - RV Meetup
The Evolution of the Private Market - RV MeetupThe Evolution of the Private Market - RV Meetup
The Evolution of the Private Market - RV MeetupPaul Singh
 
the evolution of the private market - entrepreneur expo
the evolution of the private market - entrepreneur expothe evolution of the private market - entrepreneur expo
the evolution of the private market - entrepreneur expoPaul Singh
 
The Business of (Tech) Investing -- MentorCamp
The Business of (Tech) Investing -- MentorCampThe Business of (Tech) Investing -- MentorCamp
The Business of (Tech) Investing -- MentorCampPaul Singh
 
Evolution of the Private Market
Evolution of the Private MarketEvolution of the Private Market
Evolution of the Private MarketPaul Singh
 
The State of DC Tech
The State of DC TechThe State of DC Tech
The State of DC TechPaul Singh
 
Accelerators as an API - Accelerator Rally - July 2013
Accelerators as an API - Accelerator Rally - July 2013Accelerators as an API - Accelerator Rally - July 2013
Accelerators as an API - Accelerator Rally - July 2013Paul Singh
 
Fundraising for Startups - Startup Chile - June 2013
Fundraising for Startups - Startup Chile - June 2013Fundraising for Startups - Startup Chile - June 2013
Fundraising for Startups - Startup Chile - June 2013Paul Singh
 
Evolution of the Private Market - Atlantic Venture Forum - June 2013
Evolution of the Private Market - Atlantic Venture Forum - June 2013Evolution of the Private Market - Atlantic Venture Forum - June 2013
Evolution of the Private Market - Atlantic Venture Forum - June 2013Paul Singh
 
Fundraising For Startups - Atlantic Venture Forum - June 2013
Fundraising For Startups - Atlantic Venture Forum - June 2013Fundraising For Startups - Atlantic Venture Forum - June 2013
Fundraising For Startups - Atlantic Venture Forum - June 2013Paul Singh
 
Evolution of the Private Market - Paradoxos - June 2013
Evolution of the Private Market - Paradoxos - June 2013Evolution of the Private Market - Paradoxos - June 2013
Evolution of the Private Market - Paradoxos - June 2013Paul Singh
 
Accelerators as an API - Durham, NC - June 2013
Accelerators as an API - Durham, NC - June 2013Accelerators as an API - Durham, NC - June 2013
Accelerators as an API - Durham, NC - June 2013Paul Singh
 
Fundraising for Startups (500 Startups Batch 6)
Fundraising for Startups (500 Startups Batch 6)Fundraising for Startups (500 Startups Batch 6)
Fundraising for Startups (500 Startups Batch 6)Paul Singh
 
The Rise of the Angels (and the Entrepreneurs) - GrowLabs Demo Day - Feb 2013
The Rise of the Angels (and the Entrepreneurs) - GrowLabs Demo Day - Feb 2013The Rise of the Angels (and the Entrepreneurs) - GrowLabs Demo Day - Feb 2013
The Rise of the Angels (and the Entrepreneurs) - GrowLabs Demo Day - Feb 2013Paul Singh
 
Accelerators as an API (GrowLabs Accelerator Symposium 2013)
Accelerators as an API (GrowLabs Accelerator Symposium 2013) Accelerators as an API (GrowLabs Accelerator Symposium 2013)
Accelerators as an API (GrowLabs Accelerator Symposium 2013) Paul Singh
 
The Rise of the Angels (and the Entrepreneurs) - Baltimore - Feb 2013
The Rise of the Angels (and the Entrepreneurs) - Baltimore - Feb 2013The Rise of the Angels (and the Entrepreneurs) - Baltimore - Feb 2013
The Rise of the Angels (and the Entrepreneurs) - Baltimore - Feb 2013Paul Singh
 
The Rise of the Angels (and the Entrepreneurs) - Bangalore - Dec 2012
The Rise of the Angels (and the Entrepreneurs) - Bangalore - Dec 2012The Rise of the Angels (and the Entrepreneurs) - Bangalore - Dec 2012
The Rise of the Angels (and the Entrepreneurs) - Bangalore - Dec 2012Paul Singh
 

More from Paul Singh (20)

The Business of (Tech) Startups - VSW2015 - Sep 2015
The Business of (Tech) Startups - VSW2015 - Sep 2015The Business of (Tech) Startups - VSW2015 - Sep 2015
The Business of (Tech) Startups - VSW2015 - Sep 2015
 
The Business of (Tech) Startups - TiETueDC - Oct 2014
The Business of (Tech) Startups - TiETueDC - Oct 2014The Business of (Tech) Startups - TiETueDC - Oct 2014
The Business of (Tech) Startups - TiETueDC - Oct 2014
 
The Business of (Tech) Startups - iSummit Orlando - Sept 2014
The Business of (Tech) Startups - iSummit Orlando - Sept 2014The Business of (Tech) Startups - iSummit Orlando - Sept 2014
The Business of (Tech) Startups - iSummit Orlando - Sept 2014
 
The Business of (Tech) Startups - MEDA Annual Conference - Apr 2014
The Business of (Tech) Startups - MEDA Annual Conference - Apr 2014The Business of (Tech) Startups - MEDA Annual Conference - Apr 2014
The Business of (Tech) Startups - MEDA Annual Conference - Apr 2014
 
The Evolution of the Private Market - RV Meetup
The Evolution of the Private Market - RV MeetupThe Evolution of the Private Market - RV Meetup
The Evolution of the Private Market - RV Meetup
 
the evolution of the private market - entrepreneur expo
the evolution of the private market - entrepreneur expothe evolution of the private market - entrepreneur expo
the evolution of the private market - entrepreneur expo
 
The Business of (Tech) Investing -- MentorCamp
The Business of (Tech) Investing -- MentorCampThe Business of (Tech) Investing -- MentorCamp
The Business of (Tech) Investing -- MentorCamp
 
Evolution of the Private Market
Evolution of the Private MarketEvolution of the Private Market
Evolution of the Private Market
 
The State of DC Tech
The State of DC TechThe State of DC Tech
The State of DC Tech
 
Accelerators as an API - Accelerator Rally - July 2013
Accelerators as an API - Accelerator Rally - July 2013Accelerators as an API - Accelerator Rally - July 2013
Accelerators as an API - Accelerator Rally - July 2013
 
Fundraising for Startups - Startup Chile - June 2013
Fundraising for Startups - Startup Chile - June 2013Fundraising for Startups - Startup Chile - June 2013
Fundraising for Startups - Startup Chile - June 2013
 
Evolution of the Private Market - Atlantic Venture Forum - June 2013
Evolution of the Private Market - Atlantic Venture Forum - June 2013Evolution of the Private Market - Atlantic Venture Forum - June 2013
Evolution of the Private Market - Atlantic Venture Forum - June 2013
 
Fundraising For Startups - Atlantic Venture Forum - June 2013
Fundraising For Startups - Atlantic Venture Forum - June 2013Fundraising For Startups - Atlantic Venture Forum - June 2013
Fundraising For Startups - Atlantic Venture Forum - June 2013
 
Evolution of the Private Market - Paradoxos - June 2013
Evolution of the Private Market - Paradoxos - June 2013Evolution of the Private Market - Paradoxos - June 2013
Evolution of the Private Market - Paradoxos - June 2013
 
Accelerators as an API - Durham, NC - June 2013
Accelerators as an API - Durham, NC - June 2013Accelerators as an API - Durham, NC - June 2013
Accelerators as an API - Durham, NC - June 2013
 
Fundraising for Startups (500 Startups Batch 6)
Fundraising for Startups (500 Startups Batch 6)Fundraising for Startups (500 Startups Batch 6)
Fundraising for Startups (500 Startups Batch 6)
 
The Rise of the Angels (and the Entrepreneurs) - GrowLabs Demo Day - Feb 2013
The Rise of the Angels (and the Entrepreneurs) - GrowLabs Demo Day - Feb 2013The Rise of the Angels (and the Entrepreneurs) - GrowLabs Demo Day - Feb 2013
The Rise of the Angels (and the Entrepreneurs) - GrowLabs Demo Day - Feb 2013
 
Accelerators as an API (GrowLabs Accelerator Symposium 2013)
Accelerators as an API (GrowLabs Accelerator Symposium 2013) Accelerators as an API (GrowLabs Accelerator Symposium 2013)
Accelerators as an API (GrowLabs Accelerator Symposium 2013)
 
The Rise of the Angels (and the Entrepreneurs) - Baltimore - Feb 2013
The Rise of the Angels (and the Entrepreneurs) - Baltimore - Feb 2013The Rise of the Angels (and the Entrepreneurs) - Baltimore - Feb 2013
The Rise of the Angels (and the Entrepreneurs) - Baltimore - Feb 2013
 
The Rise of the Angels (and the Entrepreneurs) - Bangalore - Dec 2012
The Rise of the Angels (and the Entrepreneurs) - Bangalore - Dec 2012The Rise of the Angels (and the Entrepreneurs) - Bangalore - Dec 2012
The Rise of the Angels (and the Entrepreneurs) - Bangalore - Dec 2012
 

Recently uploaded

ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINTACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINTindexPub
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfAdnet Communications
 
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismTaipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismBrian Lin
 
LIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxLIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxsonamyadav7097
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfMichael Silva
 
The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...Antonis Zairis
 
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...mwangimwangi222
 
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESKumarJayaraman3
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Commonwealth
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources PresentationAdnet Communications
 
India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023SkillCircle
 
The CBR Covered Bond Investor Roundtable 2024
The CBR Covered Bond Investor Roundtable 2024The CBR Covered Bond Investor Roundtable 2024
The CBR Covered Bond Investor Roundtable 2024Neil Day
 
Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Guillaume Ⓥ Sarlat
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklosbeduinpower135
 
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGeckoRWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGeckoCoinGecko
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxPrecize Formely Leadoff
 
CLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfCLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfSCBEICSCB
 

Recently uploaded (20)

ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINTACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
 
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismTaipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
 
LIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxLIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptx
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdf
 
The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...
 
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
 
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]
 
Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation
 
India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023
 
The CBR Covered Bond Investor Roundtable 2024
The CBR Covered Bond Investor Roundtable 2024The CBR Covered Bond Investor Roundtable 2024
The CBR Covered Bond Investor Roundtable 2024
 
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
 
Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklos
 
Commercial Bank Economic Capsule - March 2024
Commercial Bank Economic Capsule - March 2024Commercial Bank Economic Capsule - March 2024
Commercial Bank Economic Capsule - March 2024
 
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGeckoRWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptx
 
CLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfCLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdf
 

Moneyball: A Quantitative Approach to Angel Investing (Canada - Sept 2012)

  • 1. 500.co/challenge #moneyball4startups MONEYBALL STARTUPS + IT’S NOT SPRAY AND PRAY. IT’S A PROCESS. PAUL SINGH 500 Startups @paulsingh・paul@500startups.com・angel.co/paulsingh
  • 2. 500.co/challenge #moneyball4startups GETTING TO KNOW 500 STARTUPS BECAUSE WE’RE KIND OF A BIG DEAL PAUL SINGH @paulsingh・paul@500startups.com・angel.co/paulsingh
  • 3. 500.co/challenge #moneyball4startups THE BIG OPPORTUNITY IN EARLY STAGE TECH INVESTING: API TO VENTURE CAPITAL & FUNCTIONAL EXPERTISE (FOR FOUNDERS. FOR INVESTORS. FOR GOVERNMENT.)
  • 4. 500.co/challenge #moneyball4startups FOUNDERS: BUILD SOMETHING PEOPLE WANT
  • 5. 500.co/challenge #moneyball4startups INVESTORS: WRITE CHECKS AND ADD VALUE
  • 6. 500.co/challenge #moneyball4startups GOVERNMENT: MAKE LIFE EASY FOR INVESTORS & FOUNDERS
  • 7. 500.co/challenge #moneyball4startups “ VENTURE CAPITAL IS OPEN TO ATTACK BY DISRUPTIVE NEW BUSINESS MODELS AND TECHNOLOGY. -- NAVAL RAVIKANT (@naval)
  • 8. 500.co/challenge #moneyball4startups (R)EVOLUTION IN THINKING
  • 9. 500.co/challenge #moneyball4startups EARLY STAGE STARTUPS HAVE CHANGED
  • 10. 500.co/challenge #moneyball4startups CLOUD, OPEN SOURCE AND ONLINE DISTRIBUTION DRIVING STARTUP COSTS LOWER THAN EVERBUT SCALING STILL COSTS MONEY
  • 11. 500.co/challenge #moneyball4startups WEB GETS BIGGER. WORLD GETS SMALLER.
  • 12. 500.co/challenge #moneyball4startups TRACTION IS THE NEW INTELLECTUAL PROPERTY PLATFORMS (SEARCH, SOCIAL & MOBILE) PRIMARILY DRIVING THE CHANGE. NO LONGER “GOOD ENOUGH” TO DEPEND ON TECH DIFFERENTIATION.
  • 13. 500.co/challenge #moneyball4startups CAPITAL INCREASINGLY COMMODITIZED RISE OF THE ANGELS, YO!
  • 14. 500.co/challenge #moneyball4startups NEW REALITY: MONEY FOLLOWS FOUNDERS
  • 15. 500.co/challenge #moneyball4startups SIGNALS ARE EVERYWHERE BIG DATA + OPEN SOURCE ANALYTICS = NEW TECHNIQUES FOR VC
  • 16. 500.co/challenge #moneyball4startups WALL STREET BEAT US TO IT
  • 17. 500.co/challenge #moneyball4startups
  • 18. 500.co/challenge #moneyball4startups “ UBS PROPRIETARY SATELLITE PARKING LOT FILL RATE ANALYSIS POINTS TO AN INTERESTING CADENCE INTRA-QUARTER AND POTENTIAL UPSIDE TO OUR VIEW.
  • 19. 500.co/challenge #moneyball4startups WALL STREET ISN’T ALONE THESE TECHNIQUES ALREADY USED TO UNDERWRITE IN-VITRO FERTILIZATION LENDING, PAYDAY LOANS, SUBPRIME AUTO LENDING, HOME/PERSONAL/AUTO INSURANCE AND MORE.
  • 20. 500.co/challenge #moneyball4startups IT TURNS OUT, WE CAN DO IT, TOO SURPRISE!
  • 21. 500.co/challenge #moneyball4startups + “GUT” + TRUSTED MENTORS + MUCH, MUCH MORE DATA.
  • 22. 500.co/challenge #moneyball4startups SENTIMENT ANALYSIS WHAT IS THE TEAM THINKING? WHAT DOES THE MARKET THINK? WHAT DO MY PEERS/MENTORS THINK?
  • 23. 500.co/challenge #moneyball4startups NEEDLE IN THE HAYSTACK REAL USE CASES: SIGNS THAT A FUNDING ROUND IS ABOUT TO OCCUR AND/OR SIGNS THAT A PRODUCT IS ABOUT TO EXPLODE. VERY HARD TO DO ACCURATELY BUT PAYOFF IS BIG & FAST.
  • 24. 500.co/challenge #moneyball4startups FASTER PORTFOLIO TRENDS CURRENT SYSTEMS OF QUARTERLY/AD-HOC REPORTING IS BROKEN -- SELF REPORTED DATA IS OFTEN BIASED. THE RAW DATA IS THERE, THE SYSTEMS TO COLLECT IT AND THE ALGORITHMS TO ANALYZE IT ARE MISSING.
  • 25. 500.co/challenge #moneyball4startups 500 CHECKLIST Product solves a problem for a specific target customer Capital-efficient businesses - operational @ <$1M funding Primarily internet-based distribution - search, social, mobile, local Simple revenue models - transactions, subscriptions or affiliate Functional prototype before investment (or previous success) Small but measurable usage - some customers, early revenue Small but cross-functional team - engineer, design/UX, marketing
  • 26. 500.co/challenge #moneyball4startups EARLY STAGE VC IS CHANGING HAS CHANGED
  • 27. 500.co/challenge #moneyball4startups STATE OF THE ART IN EARLY STAGE INVESTING IS NOT VERY SOPHISTICATED TRUST REFERRALS. MOVE FAST. KEEP LEGAL/FINANCE SIMPLE. BUILD RELATIONSHIPS WITH OTHER INVESTORS, SYNDICATE EVERYTHING.
  • 28. 500.co/challenge #moneyball4startups MONEYBALL IT’S NOT SPRAY AND PRAY. IT’S A PROCESS.
  • 29. 500.co/challenge #moneyball4startups MY PRIMARY GOAL IS TO BUY WINS NOT NECESSARILY BUYING INTO THE HOTTEST DEALS. FOCUS ON TEAM, EXECUTION, TRACTION & DATA. (STICK AROUND... I’M GOING TO SHOW YOU HOW)
  • 30. 500.co/challenge #moneyball4startups INITIAL BET DESIGNED TO GIVE US MORE DATA FOR SUBSEQUENT BETS
  • 31. 500.co/challenge #moneyball4startups QUANTITATIVE PORTFOLIO APPROACH BENEFITS: CONTROLLED RISK + OUTSIZED RETURN POTENTIAL
  • 32. 500.co/challenge #moneyball4startups Monte Carlo Simulation of Angel Investing 5 mean median std dev 3.75 Exit Multiple 2.5 1.25 0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 # of Deals
  • 33. 500.co/challenge #moneyball4startups MODERN PORTFOLIO THEORY: RISK MITIGATION THROUGH DIVERSIFICATION
  • 34. 500.co/challenge #moneyball4startups HIGH VOLUME INVESTING ALLOWS FOR HIGH ERROR RATE
  • 35. 500.co/challenge #moneyball4startups TRACK IRR & VALUATIONS WITHIN YOUR PORTFOLIO AT LEAST YEARLY. RECOMMEND QUARTERLY.
  • 36. 500.co/challenge #moneyball4startups CONTROLLED RISK: OUTSIZED RETURN POTENTIAL
  • 37. 500.co/challenge #moneyball4startups PORTFOLIO IRR QUICKLY POSITIVE (WITH SMALLER EARLY EXITS AND PROMISING DEALS GETTING FUNDED)
  • 38. 500.co/challenge #moneyball4startups EVEN “SMALLER” EXITS CAN MOVE THE NEEDLE DON’T FORGET: YOU CAN SELL POSITIONS TO DOWNSTREAM OR SECONDARY BUYERS TOO.
  • 39. 500.co/challenge #moneyball4startups LAW OF LARGE NUMBERS FTW!
  • 40. 500.co/challenge #moneyball4startups INDIVIDUAL BETS ARE SMALL MUCH EASIER TO RUN AN EXPERIMENT ON A $50K INITIAL CHECK INSTEAD OF $250K+
  • 41. 500.co/challenge #moneyball4startups BAD BETS FAIL FAST SMALLER CHECK SIZES FORCE COMPANIES TO PROVE THEORIES FASTER. ALLOWING INVESTORS TO QUICKLY ITERATE OUR FORECASTING/FUNDING MODEL. FEWER “LIVING DEAD” AND QUICKER RETURN ON RESULTS.
  • 42. 500.co/challenge #moneyball4startups FAILURE RATES ARE HIGH DIVERSITY OF HIGH VOLUME INVESTING ALLOWS FOR HIGH ERROR RATE. FUND IRR QUICKLY POSITIVE WITH SMALLER, EARLY EXITS AND PROMISING DEALS GETTING FUNDED. DILIGENCE HAPPENS IN THE REAR VIEW MIRROR, NOT THE CRYSTAL BALL.
  • 43. 500.co/challenge #moneyball4startups ALLOCATE FOR FOLLOW-ONS 30% Capital - Initial Bets target 10-20 deals 70% Capital - Follow On filter out failures, follow-on the top 20% (...OR “HOW TO AVOID GETTING SQUASHED”)
  • 44. 500.co/challenge #moneyball4startups DEAL TERMS SO YOU FOUND A STARTUP YOU LOVE?
  • 45. 500.co/challenge #moneyball4startups DEBT VS EQUITY
  • 46. 500.co/challenge #moneyball4startups CONVERTIBLE NOTES ARE OK (REALLY!) LOWER LEGAL FEES, LESS DOCS, QUICKER TO EXECUTE. WHEN CAPPED, THEY FUNCTION SIMILAR TO PRICED ROUNDS.
  • 47. 500.co/challenge #moneyball4startups STANDARD DOCS ARE YOUR FRIENDS WHEN IN DOUBT, DO NOT INNOVATE IN FINANCE OR LEGAL
  • 48. 500.co/challenge #moneyball4startups PRO RATA & INFO RIGHTS ALWAYS. ALWAYS. ALWAYS. ALWAYS. ALWAYS. (GET IT?)
  • 49. 500.co/challenge #moneyball4startups FOCUS ON VALUATION & MULTIPLES OWNERSHIP % MATTERS MUCH LESS. FOCUS ON REQUIRED EXIT SIZE RATHER THAN SOME MYTHICAL OWNERSHIP TARGET.
  • 50. 500.co/challenge #moneyball4startups IT’S HARD TO MAKE MONEY ON VALUATIONS > $5M (PRO TIP: CONSIDER MIN. RETURN REQUIREMENTS FOR DOWNSIDE SCENARIOS)
  • 51. 500.co/challenge #moneyball4startups YOUR PRIMARY GOAL LET FOUNDERS GET BACK TO WORK THIS IS A LONG GAME: AVOID LOSING YOUR REPUTATION OVER 1%. WHEN IN DOUBT, LEAN TOWARDS THE ENTREPRENEUR.
  • 52. 500.co/challenge #moneyball4startups AVOID BOARD SEATS
  • 53. 500.co/challenge #moneyball4startups MOST BOARDS PROVIDE MINIMAL VALUE-ADD
  • 54. 500.co/challenge #moneyball4startups BEST DEALS USUALLY REQUIRE LIMITED BOARD SUPPORT SPEND YOUR TIME SOURCING NEW DEALS. LIMIT TIME ON SIDEWAYS DEALS. LET THE WINNERS KEEP ON WINNING (AND ANSWER YOUR PHONE WHEN THEY NEED YOU).
  • 55. 500.co/challenge #moneyball4startups DO NOT INNOVATE IN FINANCE OR LEGAL
  • 56. 500.co/challenge #moneyball4startups INVESTING IS A PROCESS DABBLING IN INVESTING IS (AT BEST) GAMBLING. BETTER TO WALK AWAY OR PURSUE INVESTING NEARLY FULL TIME OR FIND SOMEONE TO MANAGE YOUR MONEY
  • 57. 500.co/challenge #moneyball4startups BE AN ACTIVE INVESTOR PORTFOLIO EFFECTS & THE LEAN STARTUP MOVEMENT ARE YOUR FRIENDS YOU CAN EXPECT FAVORABLE WITH 10 DEALS BUT IT TAKES 20+ TO BE SAFE
  • 58. 500.co/challenge #moneyball4startups BE A SMART INVESTOR FOCUS ON INFORMATION ASYMMETRY & PRICE/MULTIPLES.
  • 59. 500.co/challenge #moneyball4startups “ BY ITS NATURE, THE INTERNET UNDERMINES ANYONE WHOSE STATUS DEPENDS ON PRIVILEGED ACCESS TO INFORMATION. -- MICHAEL LEWIS
  • 60. 500.co/challenge #moneyball4startups THE BIG OPPORTUNITY IN EARLY STAGE TECH INVESTING: API TO VENTURE CAPITAL & FUNCTIONAL EXPERTISE (FOR FOUNDERS. FOR INVESTORS. FOR GOVERNMENT.)
  • 61. 500.co/challenge #moneyball4startups 500.co/challenge
  • 62. 500.co/challenge #moneyball4startups MONEYBALL STARTUPS + IT’S NOT SPRAY AND PRAY. IT’S A PROCESS. PAUL SINGH 500 Startups @paulsingh・paul@500startups.com・angel.co/paulsingh