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The State of the Venture Capital Markets Mark Suster VCJ Venture Alpha Conference – October 2011 @msuster
What is the State of the VC Market?  What Comes After Social Networking?
[object Object],[object Object],[object Object],[object Object],[object Object],Both Sides of The Table This Week in VC
The Set Up What is Driving Change?
It Is Dramatically Cheaper to Start a Company Open source Cloud Developers Start Companies 2000 $5m $500k 2005 $50k 2009 $5k 2011
Amazon & Ycombinator Have Fueled the Market ,[object Object],[object Object],[object Object]
So Founders Much Younger, More Technical
Huge Explosion in Tech Startup Creation Seed Deals / Incubation
While The Total Number of VCs Has Right-Sized
The Opportunities are Much Bigger 2001 2011 100 2,000 ,[object Object],[object Object],[object Object],[object Object],Millions Online
Conditions Actually Bode Really Well for VCs Active VCs Seed Deals Revenue Potential +
So What Exactly Is Changing in our Industry? Some Goods,  Some Bads
Mentorship-Led Investing Has Captured Enormous Talent Pool Access to Deals
Great New Focused &  Disciplined  VCs Created Super Early Territory Topic Area (i.e. big data) Early or Classic A Thrive
Some Traditional VCs Now Doing Many Seed Deals Seed C-E Round A, B Round
This is Driven by FOMO  (Fear of Missing Out) ,[object Object],[object Object],[object Object],[object Object]
In H1 2011 80% of LP Money Went to Just 7 Firms. The Billion Dollar Club. 7 Firms Total $6.3 $8.1 VC Money Raised ($ billion)
Which Begs the Question of Whether It’s Venture Capital or Growth Equity Seed C-E Round A, B Round
Fund Size + FOMO Driving Separation from Price & Underlying Value Time $ Historic Value Today’s Market
People are Paying Growth Prices for Market Risk Time Valuation Product Risk Growth / Scale Risk Monetization / Competition Risk Market Risk
Probably Less Traditional VCs Being Funded Lately.  Seed C-E Round A, B Round $25-75m Typical Fund Size $200-300m $500m-$1bn
Traditionally VCs Have Focused on Few Companies & Deep Commitments 1-2 deals per partner / year Many deals / year
Two great firms have reinvented model by focusing on the “group collective” Ops Support ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Winning Follow On $$
Some of Best Returns Seem to Be Driven By “Right-Sized” Traditional VCs ,[object Object],[object Object],[object Object]
Public Openness Helps With Every Major Stage of the VC Lifecycle Access to Deals Winning Follow On $$ Exits Top end of funnel much wider Founders want to work with you VCs work with others they know, like & respect Awareness with buyers for your portfolio
So What is the Next Big Investment Opportunity on the Internet? Television. Yes, really.
Americans watch 5.3 hours of TV / Day TV Reading < 1 Hour 5.3 Hours Media Patterns Online 3 Hours
You Tell Me What the Future of the Internet Is?
But VCs Hate Investing in Content – Hits Driven Business?
It’s Not Just Dogs on Skateboards Anymore
A Disruptive Breed of Digital Content Producer Has Emerged UGC Network TV YouTube TV Production Costs / Minute $100-400 $6,000-8,000
These 4 LA Companies Alone Doing > 3 Billion Video Views / Month YouTube TV Costs / Minute
YouTube is the New Comcast … And Notice the Change in Branding
With YouTube Content Distribution is Much More Predictable Viewer ,[object Object],[object Object],[object Object],YouTube Producer
Youth Demo Already 1/3 rd  of Time Online Watching Video Streaming Video Other Surfing
And Revenue Becoming Substantive
How Mainstream? 86% of All Internet Watch Online Video
Aug 11 42 billion  views 185 million  viewers 228   videos / person 17   hours
91% of Households Still Pay for TV (91%)
This Market Disruption Will Be Enormous – And It’s Arriving Now
</end> Thank you

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Final vcj conference oct 2011

  • 1. The State of the Venture Capital Markets Mark Suster VCJ Venture Alpha Conference – October 2011 @msuster
  • 2. What is the State of the VC Market? What Comes After Social Networking?
  • 3.
  • 4. The Set Up What is Driving Change?
  • 5. It Is Dramatically Cheaper to Start a Company Open source Cloud Developers Start Companies 2000 $5m $500k 2005 $50k 2009 $5k 2011
  • 6.
  • 7. So Founders Much Younger, More Technical
  • 8. Huge Explosion in Tech Startup Creation Seed Deals / Incubation
  • 9. While The Total Number of VCs Has Right-Sized
  • 10.
  • 11. Conditions Actually Bode Really Well for VCs Active VCs Seed Deals Revenue Potential +
  • 12. So What Exactly Is Changing in our Industry? Some Goods, Some Bads
  • 13. Mentorship-Led Investing Has Captured Enormous Talent Pool Access to Deals
  • 14. Great New Focused & Disciplined VCs Created Super Early Territory Topic Area (i.e. big data) Early or Classic A Thrive
  • 15. Some Traditional VCs Now Doing Many Seed Deals Seed C-E Round A, B Round
  • 16.
  • 17. In H1 2011 80% of LP Money Went to Just 7 Firms. The Billion Dollar Club. 7 Firms Total $6.3 $8.1 VC Money Raised ($ billion)
  • 18. Which Begs the Question of Whether It’s Venture Capital or Growth Equity Seed C-E Round A, B Round
  • 19. Fund Size + FOMO Driving Separation from Price & Underlying Value Time $ Historic Value Today’s Market
  • 20. People are Paying Growth Prices for Market Risk Time Valuation Product Risk Growth / Scale Risk Monetization / Competition Risk Market Risk
  • 21. Probably Less Traditional VCs Being Funded Lately. Seed C-E Round A, B Round $25-75m Typical Fund Size $200-300m $500m-$1bn
  • 22. Traditionally VCs Have Focused on Few Companies & Deep Commitments 1-2 deals per partner / year Many deals / year
  • 23.
  • 24.
  • 25. Public Openness Helps With Every Major Stage of the VC Lifecycle Access to Deals Winning Follow On $$ Exits Top end of funnel much wider Founders want to work with you VCs work with others they know, like & respect Awareness with buyers for your portfolio
  • 26. So What is the Next Big Investment Opportunity on the Internet? Television. Yes, really.
  • 27. Americans watch 5.3 hours of TV / Day TV Reading < 1 Hour 5.3 Hours Media Patterns Online 3 Hours
  • 28. You Tell Me What the Future of the Internet Is?
  • 29. But VCs Hate Investing in Content – Hits Driven Business?
  • 30. It’s Not Just Dogs on Skateboards Anymore
  • 31. A Disruptive Breed of Digital Content Producer Has Emerged UGC Network TV YouTube TV Production Costs / Minute $100-400 $6,000-8,000
  • 32. These 4 LA Companies Alone Doing > 3 Billion Video Views / Month YouTube TV Costs / Minute
  • 33. YouTube is the New Comcast … And Notice the Change in Branding
  • 34.
  • 35. Youth Demo Already 1/3 rd of Time Online Watching Video Streaming Video Other Surfing
  • 36. And Revenue Becoming Substantive
  • 37. How Mainstream? 86% of All Internet Watch Online Video
  • 38. Aug 11 42 billion views 185 million viewers 228 videos / person 17 hours
  • 39. 91% of Households Still Pay for TV (91%)
  • 40. This Market Disruption Will Be Enormous – And It’s Arriving Now