Published on February 5, 2014
Startups: Go LOCAL or GLOBAL? (Do BOTH!) @DaveMcClure @500Startups #startupgrind Mountain View, CA (Feb 2014)
This Talk Is About… • 500 Startups – Internet Seed Fund + Accelerator + >100 Intl Startups • Assessing Global Markets – (# users, by language/geo) * (avg $ GDP) * (% internet) = avail online spend by lang/geo • Why You Shouldn’t Go Global – You’re a Crappy Little Startup with no customers, revenue, or funding – You Don’t Speak the Language (not very well, anyway) – Your local market is >50M+ users, and nobody else is going after it • Why You Should Go Global – You Live in a Small Country / Startup Ghetto – There aren’t any local market investors worth a famn. – There ARE local market investors, but they might be predatory, too revenue-focused, riskaverse – Your customers and partners are in [X] (where X = California, NYC, London, Beijing, Brazil, etc
Dave McClure Founding Partner & Sith Lord, 500 Startups 00’s & 10’s: • Investor: Founders Fund, Facebook fbFund, 500 Startups • Companies: Mint.com, SlideShare, Twilio, WildFire, SendGrid • Marketing: PayPal, Simply Hired, Mint.com, O’Reilly 80’s & 90’s: • Entrepreneur: Founder/CEO Aslan Computing (acq’d) • Developer: Windows / SQL DB consultant (Intel, MSFT) • Engineer: Johns Hopkins‘88, BS Eng / Applied Math
500 Startups Mountain View, CA – Founded 2010 • Seed Fund & Startup Accelerator – $90M under management – ~30 people / 12 investing partners – 10,000 sq ft / Silicon Va – SV, SF, NY, MEX, BRZ, IND, CH, SEA – 1000+ Founders / 200+ Mentors – Focus: Design, Data, Distribution • 650+ Co’s / 200 Intl / 40+ Countries – Wildfire (acq GOOG, $350M) – MakerBot (acq SSYS, $400M) – Viki (acq Rakuten, $200M) – Twilio – SendGrid – other shit
GeeksOnaPlane.com (my excuse for an Intl road trip w/ geeky friends) • • • • Travel The World with Geeks & VCs Meet MORE Geeks & VCs in other countries Learn about Intl markets, technology, people Get drunk & eat great food with friends who don’t speak your language ☺ • East Asia (3x), Europe (2x), LatAm (2x), India • Next: Middle East, India, SE Asia, Africa
Global Languages • English: 1-2B+ 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, 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 (700M+): 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) * ($GDP) – % Growth rates of ppl, lang, internet, GDP • • • • • • Currency, country, culture, etc Online disturb platforms (search, social, mobile, video, etc) Online payment methods / credit card distr Physical goods delivery / logistics Social media usage / behavior 3 markets in 1: rich, middle-class, internet poor
Distribution Platforms Customer Reach: 100M+ • Search: Google (also Baidu, Yandex, Yahoo-J) • Social: Facebook, Twitter (also TenCent, Sina, vKontakte) • Mobile: Apple (iPhone, iPad), Android • Media: YouTube (Video), Blogs, Photos, Music • Comm: Email, IM/Chat, SMS, Voice
Why You SHOULD NOT Go Global because ur a tiny little startup, you don’t speak the language, & your local market is big enough
Why Stay Local? Because it’s HOME. • You don’t speak English (well enough). • Your solution won’t travel well / you won’t localize it well. • There’s not as many people competing locally. • Your local market has 50M+ users. • You have customers / revenue. • You have great living situation, family, kids, etc
Why You SHOULD Go Global Because u live in a tiny little country, local investors are too conservative, don’t write[enough] checks and/or give u crappy, low valuations.
Why Go Global / US / China? (because California is *awesome*) • It’s BIG. (US, China are huge markets) • All the [rich, online] customers are here. • All the investors are here (Silicon Valley) – also: Local Investors Screw You / Don’t Invest / Low Val$ • All the platforms & partners are here (Silicon Valley). – NorCal: Google, Facebook, Twitter, Apple, Android, YouTube • Because you watch too many action movies and rap videos. • Because you love California / NYC. (hey, we understand ☺)
Angel* List: It Rocks. (angel.co) • • • Startups & Investors Activity & Metrics Platform & APIs • *ps – not just for Angels, not just for USA
How Big is MicroVC / Seed Stage Market? 5,000 microVCs invest 100,000 startups/yr @ $500K/startup = $50B/yr $500K/startup = $50B/yr How many people are entrepreneurs? How many startups get started every year? • ~1% of Humanity is “Entrepreneurial” (def’n: “can create a $10M rev/yr business”) • 1% x 7B ppl = 70M entrepreneurs, each of which starts 1-5 businesses lifetime • 1-5 startups / 75 yrs avg life = (~1 startup/25 yrs) * 70M = ~3M startups per year How much capital is needed globally to get seed stage startups rolling? • Assume 1M-3M startups/yr x $50K-$500K funding/each • Low: 1M x $50K = $50B/yr (*this is the LOW end estimate) • High: 3M x $500K = $1.5T/yr (that’s “T” as in “Trillion”…) How many metros? How many investors / metro? How many startups / metro? • 1 microVC can do 10-20 startups/yr * $50K-$500K = $500K-$10M/yr budget • 100-500 global metros @ >1-2M ppl can generate ~500-2,000 startups / metro / yr • guesstimate = ~100K-200K startups/yr in top 200 global metros • 10-50 micro VCs / metro * 200 metros = 2,000-10,000 microVCs globally • EST: 5,000 microVCs can deploy $5M/yr each, or $50B/yr in ~100,000 startups 15
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