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VC70YEARS
OF
sosv.com/70vcINNOVATION
FOREWORD
“Venture Capital” — financing
an endeavor in exchange for a
share of proceeds in a broad
sense is as old as Columbus,
and beyond.
Its modern form as a type of
“private equity” for early stage
high growth firms — beyond
wealthy individuals and
families — started in 1946
with French-born American

Georges Doriot, the “father
of venture capitalism”.
Disrupting the Spice Trade
Christopher Columbus pitched the rulers of
Portugal, Genoa, Venice and Spain over
7 years until the latter agreed to fund him.
This presentation lists some of
the significant evolutions in the
financing of early stage high
growth companies.
We used a broader definition
of venture capital to include
various forms of crowdfunding.
VC INNOVATION
Investors are always looking
for new ways to allocate
capital.
The key questions revolve
around risks, returns, liquidity,
costs, volatility, velocity,
difficulty and amount of capital
that can be deployed.
WHY INNOVATE?
TIMELINE OF VC INNOVATION
19721946 2010 20122005 20172009 20112004 20071996 2013 20152006 2008
Sand Hill Rd Super Angel
Sponsored Accelerator Product Crowdfunding
Secondary Market Angel List
Accelerator Fund
JOBS Act
Vertical Accelerator
Corporate Accelerator Regulation A+
VC ICO
ARDC
First VC
Product Crowdfunding
Startup Studio Accelerator Company Builder Platform VC“DST Deal” Equity Crowdfunding ICO
RegA+ NYSE IPO
SPAC
Note: HAX is a hardware-focused vertical program part of SOSV
Startup accelerators are
(generally) companies
offering seed money,
advice and connections
over an intense and
limited time period,
in exchange for equity.
Co-founded in March 2005 by Paul Graham
Y Combinator created a new category of incubators
ACCELERATORS
As of 2017, the world
counts thousands of
accelerators.
Some focus on a sector,
geography or stage.
They can be for-profit,
non-profit, government-
backed, sponsored,
corporate, etc.
ACCELERATORS
Accelerators Come In Many Flavors
The “Big Four” Invest In >100 Startups / Year
Vertical
Non-Profit University Corporate
Sponsored Government
ACCELERATORS AND FOLLOW-ON FUNDING
Source: Pitchbook
Some investment firms
build startups themselves,
providing capital and
management.
Germany’s Samwer Brothers Founded
Rocket Internet To Build Local Clones
Of Successful Startups
COMPANY
BUILDERS
Several venture capital
firms started offering a
broad range of services
to attract and support
startups, from recruiting
to marketing.
The firm AndreessenHorowitz is among
the most prominent “platform VCs”
PLATFORM VCs
Secondary markets
can offer early liquidity
to founders, investors
and/or employees.
SecondMarket helped buy and sell illiquid
assets such as private company stocks.
It was acquired by NASDAQ in 2015.
SECONDARY
MARKETS
Created in 2010 as a
matchmaking platform
between startups and
angel investors.
Since 2015 it allows
startups to raise capital
from private investors
free of charge.
Naval Ravikant
Co-Founder of AngelList
ANGELLIST
As of October 2017
AngelList saw over
$650M invested in
1,705 startups and
$5.7B in follow-ons.
0
200
400
600
2014 2015 2016
Source: AngelList
STARTUP INVESTMENTS VIA ANGELLIST
OCULUS
Raised $2.4M
Acquired for $2B
PRODUCT
CROWDFUNDING
Product crowdfunding
is a useful source of capital
for startups, particularly
in hardware.
Backers generally receive
products as reward
but no equity.
Note: SOSV is an investor in Makeblock
MAKEBLOCK
Raised $185,000 in 2012
500 staff in 2017
The “Jumpstart Our
Business Startups” Act
is a law intended to help
small businesses with
funding.
President Barack Obama
signed the JOBS Act
into law on April 2012
JOBS ACT
Further updates to the
JOBS Act clarified and
eased the rules for equity
crowdfunding.
REG A+ / D / CF
Source: SeedInvest
EQUITY
CROWDFUNDING
Equity crowdfunding
platforms allow individuals
to invest directly in
companies.
SeedInvest is one of the leading platforms

for equity crowdfunding
EQUITY CROWDFUNDING
“Initial Coin Offerings” are
a largely unregulated
means of crowdfunding via
use of cryptocurrency.
In most cases, the
“tokens” sold give access
to services and do not
equate to company shares
or voting rights.
Mastercoin (now Omni) completed the world’s
first ICO in 2013, raising about $500k.
ICOs
ICOs HAVE MULTIPLIED
Source: CoinDesk
Several investors have
turned to ICOs to raise
new funds. Those funds
are often dedicated to
investing in crypto-related
startups shares or tokens.
Two key benefits is to
provide immediate
liquidity and a more
inclusive base of “LPs”.
Blockchain Capital raised US$10 million in an ICO
VC ICO
Special Purpose
Acquisition Companies
(SPAC) are “blank-check”
or “shell” firms that have
no operations but go
public with the intention
of using the proceeds
to merge with or buy
part or all of a company.In Sept’17, the IPO of a SPAC by Social Capital
raised US$600M on the NYSE. Draper Oakwood
raised US$50M on NASDAQ.
SPAC
Source: Wikipedia
New ideas are coming,
from “Reverse ICO” and a
Stock Exchange favoring
long-term holding. Both
are yet to be tried out.
Time will tell if VCs
discover new ways to find
capital to deploy, and offer
startups more access
to funding, communities
and customers.
Tulip bulbs were a highly speculative
asset class circa 1636.
WHAT NEXT?
1995 201420122010 2018
SOSV EVOLUTION TIMELINE
Angel investor
China/Cross-border
Accelerator
Single LP Fund
Hardware
Lab to Market
Vertical
Accelerator
Life Sciences + Food
Multiple LPs
2015
(next fund)Platform
VC
Mobile-OnlySean O’Sullivan
Hardware Sales & Marketing
70 YEARS OF
INNOVATIONS
IN VENTURE
CAPITAL
sosv.com/70vc

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70 Years Of VC Innovation

  • 2. FOREWORD “Venture Capital” — financing an endeavor in exchange for a share of proceeds in a broad sense is as old as Columbus, and beyond. Its modern form as a type of “private equity” for early stage high growth firms — beyond wealthy individuals and families — started in 1946 with French-born American
 Georges Doriot, the “father of venture capitalism”. Disrupting the Spice Trade Christopher Columbus pitched the rulers of Portugal, Genoa, Venice and Spain over 7 years until the latter agreed to fund him.
  • 3. This presentation lists some of the significant evolutions in the financing of early stage high growth companies. We used a broader definition of venture capital to include various forms of crowdfunding. VC INNOVATION
  • 4. Investors are always looking for new ways to allocate capital. The key questions revolve around risks, returns, liquidity, costs, volatility, velocity, difficulty and amount of capital that can be deployed. WHY INNOVATE?
  • 5. TIMELINE OF VC INNOVATION 19721946 2010 20122005 20172009 20112004 20071996 2013 20152006 2008 Sand Hill Rd Super Angel Sponsored Accelerator Product Crowdfunding Secondary Market Angel List Accelerator Fund JOBS Act Vertical Accelerator Corporate Accelerator Regulation A+ VC ICO ARDC First VC Product Crowdfunding Startup Studio Accelerator Company Builder Platform VC“DST Deal” Equity Crowdfunding ICO RegA+ NYSE IPO SPAC Note: HAX is a hardware-focused vertical program part of SOSV
  • 6. Startup accelerators are (generally) companies offering seed money, advice and connections over an intense and limited time period, in exchange for equity. Co-founded in March 2005 by Paul Graham Y Combinator created a new category of incubators ACCELERATORS
  • 7. As of 2017, the world counts thousands of accelerators. Some focus on a sector, geography or stage. They can be for-profit, non-profit, government- backed, sponsored, corporate, etc. ACCELERATORS Accelerators Come In Many Flavors The “Big Four” Invest In >100 Startups / Year Vertical Non-Profit University Corporate Sponsored Government
  • 8. ACCELERATORS AND FOLLOW-ON FUNDING Source: Pitchbook
  • 9. Some investment firms build startups themselves, providing capital and management. Germany’s Samwer Brothers Founded Rocket Internet To Build Local Clones Of Successful Startups COMPANY BUILDERS
  • 10. Several venture capital firms started offering a broad range of services to attract and support startups, from recruiting to marketing. The firm AndreessenHorowitz is among the most prominent “platform VCs” PLATFORM VCs
  • 11. Secondary markets can offer early liquidity to founders, investors and/or employees. SecondMarket helped buy and sell illiquid assets such as private company stocks. It was acquired by NASDAQ in 2015. SECONDARY MARKETS
  • 12. Created in 2010 as a matchmaking platform between startups and angel investors. Since 2015 it allows startups to raise capital from private investors free of charge. Naval Ravikant Co-Founder of AngelList ANGELLIST
  • 13. As of October 2017 AngelList saw over $650M invested in 1,705 startups and $5.7B in follow-ons. 0 200 400 600 2014 2015 2016 Source: AngelList STARTUP INVESTMENTS VIA ANGELLIST
  • 14. OCULUS Raised $2.4M Acquired for $2B PRODUCT CROWDFUNDING Product crowdfunding is a useful source of capital for startups, particularly in hardware. Backers generally receive products as reward but no equity. Note: SOSV is an investor in Makeblock MAKEBLOCK Raised $185,000 in 2012 500 staff in 2017
  • 15. The “Jumpstart Our Business Startups” Act is a law intended to help small businesses with funding. President Barack Obama signed the JOBS Act into law on April 2012 JOBS ACT
  • 16. Further updates to the JOBS Act clarified and eased the rules for equity crowdfunding. REG A+ / D / CF Source: SeedInvest
  • 17. EQUITY CROWDFUNDING Equity crowdfunding platforms allow individuals to invest directly in companies. SeedInvest is one of the leading platforms
 for equity crowdfunding
  • 19. “Initial Coin Offerings” are a largely unregulated means of crowdfunding via use of cryptocurrency. In most cases, the “tokens” sold give access to services and do not equate to company shares or voting rights. Mastercoin (now Omni) completed the world’s first ICO in 2013, raising about $500k. ICOs
  • 21. Several investors have turned to ICOs to raise new funds. Those funds are often dedicated to investing in crypto-related startups shares or tokens. Two key benefits is to provide immediate liquidity and a more inclusive base of “LPs”. Blockchain Capital raised US$10 million in an ICO VC ICO
  • 22. Special Purpose Acquisition Companies (SPAC) are “blank-check” or “shell” firms that have no operations but go public with the intention of using the proceeds to merge with or buy part or all of a company.In Sept’17, the IPO of a SPAC by Social Capital raised US$600M on the NYSE. Draper Oakwood raised US$50M on NASDAQ. SPAC Source: Wikipedia
  • 23. New ideas are coming, from “Reverse ICO” and a Stock Exchange favoring long-term holding. Both are yet to be tried out. Time will tell if VCs discover new ways to find capital to deploy, and offer startups more access to funding, communities and customers. Tulip bulbs were a highly speculative asset class circa 1636. WHAT NEXT?
  • 24. 1995 201420122010 2018 SOSV EVOLUTION TIMELINE Angel investor China/Cross-border Accelerator Single LP Fund Hardware Lab to Market Vertical Accelerator Life Sciences + Food Multiple LPs 2015 (next fund)Platform VC Mobile-OnlySean O’Sullivan Hardware Sales & Marketing
  • 25. 70 YEARS OF INNOVATIONS IN VENTURE CAPITAL sosv.com/70vc