Startups: Go Local or Go Global? (ArabNet Dubai, June 2014)

Click here to load reader

Embed Size (px)


slides from my talk on "Startups Going Global" at ArabNet Dubai (June 2014)

Transcript of Startups: Go Local or Go Global? (ArabNet Dubai, June 2014)

  • Startups: Go LOCAL or Go GLOBAL? @DaveMcClure @500Startups #ArabNet Dubai, UAE (June 2014)
  • This Talk Is About 500 Startups Internet Seed Fund + Accelerator + >200 Intl Startups Assessing Global Markets (# users, by language/geo) * (avg $ GDP) * (% internet) = online spend by lang/geo growth of factors above ! ! Why You Shouldnt Go Global Youre a Crappy Little Startup with no customers, revenue, or funding You Dont Speak the Language (not very well, anyway) Your local market is >50-100M+ users, and nobody else is going after it Why You Should Go Global You Live in a Small Country / Startup Ghetto There arent [m]any local investors / they give you crappy valuations. There ARE local investors, but they are predatory, too revenue-focused, risk-averse Your customers and partners are in [X] (where X = USA, EU, China, Saudi, etc)
  • 3 Dave McClure Founding Partner & Chief Troublemaker, 500 Startups 00s & 10s: VC: Founders Fund, Facebook fbFund, 500 Startups Angel: Mashery,, SlideShare, Twilio, Wildfire, SendGrid Marketing: PayPal, Simply Hired,, OReilly ! ! 80s & 90s: Entrepreneur: Aslan Computing (acqd by Servinet/Panurgy) Developer: Windows / SQL DB consultant (Intel, MSFT) Engineer: Johns Hopkins88, BS Eng / Applied Math
  • 4 500 Startups Global Seed Fund & Startup Accelerator What is 500?! $100M silicon valley VC fund + startup accelerator! 30+ people / 10 investing partners! Locations: SV, NYC, MEX, BRZ, IND, CHN, SE Asia! 1500+ Founders / 200+ Mentors! Community + Content + Conferences! ! 750+ Portfolio Cos / 40+ Countries! Wildfire (acq GOOG, $350M)! MakerBot (acq SSYS, $400M)! Viki (acq Rakuten, $200M) Simple (acq BBVA, $117M) Twilio SendGrid ! Credit Karma Udemy
  • 5 500 Startups: Global Seed Fund Over 200+ startups outside US, in 40+ countries
  • 6 Silicon Valley Investor Ecosystem ! !Angels & Incubators ($0-10M) ! Micro-VC Funds ($10-100M) Big VC Funds ($100-500M) Mega VC Funds (>$500M) TrueFirst Round A16ZAtomico Y-Combinator TechStars SoftTech (Clavier) Felicis (Senkut) SV Angel (Conway) SequoiaGreylock Union Square Floodgate (Maples) Foundry Incubation Seed Series A Series B Series C+ Bootstrap, KickStarter, Crowdfunding
  • (my International road trip w/ geeky friends :) Travel The World with Startups, Geeks, VCs Meet MORE Startups, Geeks, VCs in other countries Learn about Intl markets, technology, people Socialize with friends all over the world ! 2009-2014: East Asia (3x), Europe (2x), LatAm (2x), India (2x), MENA (2X)
  • 8 Local vs Global? Emerging / Developing Markets! Global Languages: English, Chinese, Spanish, Arabic Critical Factors: Education, Mentorship, Capital Capital Availability: Incubation, Seed, Series A Positive Macro: SmartPhones, Tablets, Payments, Logistics, Growing Middle Class, Distribution Platforms Wealthy Global Users, Shoppers, Travelers
  • Global Languages English: 1-3B+ ppl, most online, high GDP, modest growth Mandarin: 1B+ ppl, lots online, med GDP, flat growth Spanish: 500M+ ppl, some online, med GDP, strong growth Arabic: 500M+ ppl, some online, low/med GDP, strong growth ! Others: Hindi, Portuguese, French, German, Japanese, Russian, Korean, Turkish, Farsi, Urdu, etc
  • Global Markets US/Can/UK/AU (400M+): big market, not much growth but lots of spend Europe (400-500M): not much growth, many lang, high GDP China / E. Asia (1B+): lots of ppl, growing usage / GDP, flat growth (pop.) LatAm (500M+): Brazil, Mexico, Argentina, Colombia, Chile; LOTS growth India/Pak/South Asia (1.5B+): lots of ppl, growing mobile, strong growth SE Asia (600M+): Indonesia, Vietnam, Thailand, Philippines; strong growth Middle East / Arabic (500M+): growing mobile, lots of future growth Africa (900M+): growing infrastructure, lots of future growth
  • How to Assess Global Markets 1) # of ppl / language speakers by geography 2) % internet usage (web, mobile, smartphone, etc) 3) $ Avg GDP / $ online spend / disposable income Online spend / lang, geo = (#ppl) * (%internet) * ($GDP) % Growth rates of ppl, lang, internet, GDP ! Currency, country, culture, etc Online disturb platforms (search, social, mobile, video, etc) Online payment methods / credit card distr Physical goods delivery / logistics Social media usage / behavior 3 markets in 1: rich, middle-class, internet poor
  • 12 Platforms 2.0 Search, Social, Mobile, Video, Messaging Customer Reach: 100M-1B+ ! Search: Google (also Baidu, Yandex, Yahoo-J) ! Social: Facebook, Twitter (also TenCent, Line) ! Mobile: Apple (iOS), Android ! Media: Video (YouTube), Photos (Pinterest, Instagram), Music ! Comm: Email, WeChat/WhatsApp/Line/Kakao, SMS, Voice !
  • Why You SHOULD NOT Go Global youre a tiny little startup, you dont speak the language, your local market is big [enough]
  • Why Stay Local? (Because its HOME) You dont speak English (well enough). Your solution doesnt travel well / you wont/cant localize it well. Theres not as many startups competing for your local market. Your local market has 50-100M+ users (ex: Japan, Germanu, Brazil) Your local market customers are REALLY RICH (ex: Saudi, Qatar) You have customers / revenue. You have a great living situation, family, kids, etc
  • Why You SHOULD Go Global you live in a small country, local investors are too conservative, dont write [enough] checks give u crappy, low valuations. ! or, you just love California :)
  • Why Go Global? (because California is *awesome*) Its BIG. (US, EU, China are huge markets also Saudi) All the [rich, online] customers are here. All the investors are here (Silicon Valley) All the platforms & partners are here (Silicon Valley). ! Because you watch too many action movies and rap videos. Because you love California / NYC. (we understand ) You really love Kim Kardashian, Jay-Z, JT, Beyonce, etc.
  • Angel* List: It Rocks. ( Startups & Investors Activity & Metrics Platform & APIs ! *ps not just for Angels, not just for USA
  • Critical Ecosystem Factors Optimism & Belief (Silicon Valley) Mentorship + Education (Knowledge) Universities + Companies (People) Capital, Legal, Finance (Infrastructure) Engineering + Design / UX (Product) Platforms + Distribution (Customers) Online Payments (Monetization) IPO / M&A Market (Exits) 18
  • Example Startup Ecosystem 1,000 Bootstrap Startups ($0-10K) 300 Accelerator Startups ($10-100K) 100 Seed-Stage Startups ($100K-$1M) 30 Series A/B Startups ($1-10M) 10 Later-Stage Companies ($10-100M) 1-3 Mature Company IPOs ($100M+) 19
  • Entrepreneur Education Business Plans Functional Prototypes Lean Startup Software Engineering / Design & UX Online Marketing / Unit Economics Monetization & Payments Customer Service + Support Fundraising & Pitch 20
  • Investor Education Startups are NOT Real Estate Most Startups Fail / Power Law Returns Portfolio Approach (10-20+ investments) Legal Structure, Financial Structure Syndication + Co-Investment Access to Downstream Capital Exits & Liquidity 21
  • How Big is MicroVC / Seed Stage Market? 5,000 microVCs invest 100,000 startups/yr @ $500K/startup = $50B/yr How many people are entrepreneurs? How many startups get started every year? ~1% of Humanity is Entrepreneurial (defn: can create a $10M rev/yr business) 1% x 7B ppl = 70M entrepreneurs, each of which starts 1-5 businesses lifetime entrepreneurs can create 1-5M new startup businesses every year ! How much capital is needed globally to get seed stage startups rolling? Assume 1M-5M startups/yr x $50K-$1M funding/each Low: 1M x $50K = $50B/yr High: 5M x $1M = $5T/yr ! How many metros? How many investors / metro? How many startups / metro? 1 microVC can fund 10-20 startups/yr * $50K-$1M = $1M-$10M annual budget 500+ global metros @ 1M+ ppl can generate ~100-1,000 startups / year guesstimate = min ~100K+ startups/yr across top 100-200 global metros 5-50 VCs / metro * 200 metros = 1,000-10,000 VCs globally FUTURE: 5,000 VCs deploy $10M->20 startups = $50B/yr -> 100,000 startups 15
  • Questions? Comments? More Info? (our company) (my blog) (our fund) Dave McClure, @DaveMcClure