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How VCs discover and fund innovation PRESENTATION | PROPRIETARY AND CONFIDENTIAL Eight Rules of Venture Capital PRESENTATION | PROPRIETARY AND CONFIDENTIAL 2 Ta b l e of Contents Rule #1 }Deal flow is everything.~ Marc Andreessen, Founder of Andreessen Horowitz PRESENTATION | PROPRIETARY AND CONFIDENTIAL 3 Rule #2 success is rare PRESENTATION | PROPRIETARY AND CONFIDENTIAL Rule #2: Success is rare Journey of 1,000 companies Seed Round • Raise $250k - $7m Seed • Sell 15% - 40% of company Assume • 1,000 Companies Funded CB-Insights PRESENTATION | PROPRIETARY AND CONFIDENTIAL Rule #2: Success is rare Journey of 1,000 companies Series A • $2m - $15m Seed • Sell 20% - 40% of Series A startup Success Funnel q 46% Raise Series A q✓14% Exit (1x– 3x) ✗q 40% Fail to raise CB-Insights PRESENTATION | PROPRIETARY AND CONFIDENTIAL Rule #2: Success is rare Journey of 1,000 companies Series B • $5m - $300m Seed • Sell 15% - 30% of Series A startup Series B Success Funnel q 28% Raise Series B q✓7% Exit (1x– 3x) ✗q 11% Fail to raise CB-Insights PRESENTATION | PROPRIETARY AND CONFIDENTIAL Rule #2: Success is rare Journey of 1,000 companies Series C • $10m - $500m Seed • Sell 10% - 25% of Series A startup Series B Series C Success Funnel q 14% Raise Series C q✓5% Exit ✗q 9% Fail to raise CB-Insights PRESENTATION | PROPRIETARY AND CONFIDENTIAL Rule #2: Success is rare Journey of 1,000 companies Series D • $10m - $1 billion+ Seed • Sell 5% - 20% of startup Series A Series B Series C Success Funnel q 6% Raise Series D Series D q✓2% Exit ✗q 7% Fail to raise CB-Insights PRESENTATION | PROPRIETARY AND CONFIDENTIAL Rule #2: Success is rare Journey of 1,000 companies Winners Losers Seed 28% Series A Series B Series C 6% Series D 66% CB-Insights PRESENTATION | PROPRIETARY AND CONFIDENTIAL Rule #3 swing for the fences PRESENTATION | PROPRIETARY AND CONFIDENTIAL $100b $120b $140b $160b $20b $40b $60b $80b $0b Wikipedia Rule #3 Rule Ant Financial Uber Didi Chuxing Xiaomi Meituan-Dianping Airbnb SpaceX Flipkart Palantir Technologies CATL : Toutiao Swing for the fences Cainiao Logistics Lufax WeWork Pinterest Jiedaibao Tencent Music DJI Paytm WeBank Stripe To p 7 0 PingAn HealthTech PRESENTATION | | PRESENTATION Koubei Moderna JD Finance Hulu Homelink Robinhood WeBank by startups PROPRIETARY AND CONFIDENTIAL AND PROPRIETARY Lyft Coupang NIO United Imaging Magic Leap Zenefits Meizu BAIC BJEV Yello Mobile GO-JEK UBtech Robotics Slack Technologies valuation Garena Shouqi Car Rental Credit Karma Meizu e-Shang Redwood Oscar Health Fanatics Ali Music Jia.com Kuaishou Meili United Group Wanda E-commerce Ping An Good Doctor ContextLogic Grab SoFi Royole Corporation VANCL LY.com Yixia Technology Ola Cabs Bloom Energy Pivotal UnionPay AmWINS Vice Media Lazada Group Qualtrics Mozido $100b $120b $140b $160b $20b $40b $60b $80b $0b Wikipedia Rule #3 Rule Ant Financial Uber Didi Chuxing Xiaomi Meituan-Dianping Airbnb SpaceX Flipkart Palantir Technologies CATL : Toutiao Swing for the fences Cainiao Logistics Lufax WeWork Pinterest Jiedaibao Tencent Music DJI Paytm WeBank Stripe To p 7 0 PingAn HealthTech PRESENTATION | | PRESENTATION Koubei Moderna JD Finance Hulu Homelink Robinhood WeBank by startups PROPRIETARY AND CONFIDENTIAL AND PROPRIETARY Lyft Coupang NIO United Imaging Magic Leap Zenefits Meizu BAIC BJEV Yello Mobile GO-JEK UBtech Robotics Slack Technologies valuation Garena Shouqi Car Rental Credit Karma Meizu e-Shang Redwood Oscar Health Fanatics Ali Music Jia.com Kuaishou Meili United Group Wanda E-commerce Ping An Good Doctor ContextLogic Grab SoFi Royole Corporation $ VANCL 2.3 billion 2.3 LY.com Yixia Technology Ola Cabs Bloom Energy Pivotal UnionPay AmWINS Vice Media Lazada Group Qualtrics Mozido $100b $120b $140b $160b $20b $40b $60b $80b $0b Wikipedia Rule #3 Rule Ant Financial Uber Didi Chuxing $150 billion $150 Xiaomi Meituan-Dianping Airbnb SpaceX Flipkart Palantir Technologies CATL : Toutiao Swing for the fences Cainiao Logistics Lufax WeWork Pinterest Jiedaibao Tencent Music DJI Paytm WeBank Stripe To p 7 0 PingAn HealthTech PRESENTATION | | PRESENTATION Koubei Moderna JD Finance Hulu Homelink Robinhood WeBank by startups PROPRIETARY AND CONFIDENTIAL AND PROPRIETARY Lyft Coupang NIO United Imaging Magic Leap Zenefits Meizu BAIC BJEV Yello Mobile GO-JEK UBtech Robotics Slack Technologies valuation Garena Shouqi Car Rental Credit Karma Meizu e-Shang Redwood Oscar Health Fanatics Ali Music Jia.com Kuaishou Meili United Group Wanda E-commerce Ping An Good Doctor ContextLogic Grab SoFi Royole Corporation $ VANCL 2.3 billion 2.3 LY.com Yixia Technology Ola Cabs Bloom Energy Pivotal UnionPay AmWINS Vice Media Lazada Group Qualtrics Mozido $100b $120b $140b $160b $20b $40b $60b $80b $0b Wikipedia $ 343 billion 343 Rule #3 Rule Ant Financial Uber Didi Chuxing $150 billion $150 Xiaomi Meituan-Dianping Airbnb SpaceX Flipkart Palantir Technologies CATL : Toutiao Swing for the fences Cainiao Logistics Lufax WeWork Pinterest Jiedaibao Tencent Music DJI Paytm WeBank Stripe To p 7 0 PingAn HealthTech PRESENTATION | | PRESENTATION Koubei Moderna JD Finance Hulu Homelink Robinhood WeBank by startups PROPRIETARY AND CONFIDENTIAL AND PROPRIETARY Lyft Coupang NIO United Imaging Magic Leap Zenefits Meizu BAIC BJEV Yello Mobile GO-JEK UBtech Robotics Slack Technologies valuation Garena Shouqi Car Rental Credit Karma Meizu e-Shang Redwood Oscar Health Fanatics Ali Music Jia.com Kuaishou Meili United Group Wanda E-commerce Ping An Good Doctor ContextLogic Grab SoFi Royole Corporation $ VANCL 2.3 billion 2.3 LY.com Yixia Technology Ola Cabs Bloom Energy Pivotal UnionPay AmWINS Vice Media Lazada Group Qualtrics Mozido $100b $120b $140b $160b $20b $40b $60b $80b $0b Wikipedia $343 billion $343 Rule #3 Rule Ant Financial Uber Didi Chuxing Xiaomi Meituan-Dianping Airbnb SpaceX Flipkart Palantir Technologies CATL : Toutiao Swing for the fences Cainiao Logistics Lufax WeWork Pinterest Jiedaibao Tencent Music DJI Paytm WeBank Stripe To p 7 0 PingAn HealthTech PRESENTATION | | PRESENTATION Koubei Moderna JD Finance Hulu Homelink Robinhood WeBank by startups PROPRIETARY AND CONFIDENTIAL AND PROPRIETARY Lyft Coupang $341 billion $341 NIO United Imaging Magic Leap Zenefits Meizu BAIC BJEV Yello Mobile GO-JEK UBtech Robotics Slack Technologies valuation Garena Shouqi Car Rental Credit Karma Meizu e-Shang Redwood Oscar Health Fanatics Ali Music Jia.com Kuaishou Meili United Group Wanda E-commerce Ping An Good Doctor ContextLogic Grab SoFi Royole Corporation $ VANCL 2.3 billion 2.3 LY.com Yixia Technology Ola Cabs Bloom Energy Pivotal UnionPay AmWINS Vice Media Lazada Group Qualtrics Mozido To p 1 5 Agrifood Te c h Startups 2017 – Seed Stage Starship Technologies $17M Bowery Farming Inc $8M Koia $8M Platterz $7M Basket $6M Farmwise $6M Grow Food $5M Cafe X Technologies $5M LifeFuels $5M Minibar Delivery $5M Utkal Tubers $5M Pure Harvest $5M Pure Harvest Smart Farms $5M Yumi $4M Milklane $4M AgFunder PRESENTATION | PROPRIETARY AND CONFIDENTIAL To p 1 5 Agrifood Te c h Startups 2017 – Series A Maihuolang $150M Bayer–Gingko Partnership $100M Two Pore Guys, Inc. $25M Cannabco Pharmaceutical Corp $24M Hyliion $21M Perfect Day Foods $21M Bowery Farming Inc $20M Seasoned.co $20M Nuritas $19M Momentum Machines $18M Kolonial $18M Memphis Meats $17M Fenfenzhong $17M Astro Digital $17M Flirtey $16M AgFunder PRESENTATION | PROPRIETARY AND CONFIDENTIAL To p 1 5 Agrifood Te c h Startups 2017- Series B Plenty Inc. $200M Picnic $109M Convoy $62M Protix Biosystems $50M Brandless $50M Soylent $50M ZUME Pizza $48M Daily Harvest $43M Ritual $43M MycoTechnology $42M Shipt $40M BEFORE Brands $35M Swift Navigation $34M Frichti $34M Descartes Labs $30M AgFunder PRESENTATION | PROPRIETARY AND CONFIDENTIAL Rule #3: Swing for the fences 10x Returns PRESENTATION | PROPRIETARY AND CONFIDENTIAL Rule #3: Swing for the fences 10x $1B Returns Markets PRESENTATION | PROPRIETARY AND CONFIDENTIAL Rule #4 swing often PRESENTATION | PROPRIETARY AND CONFIDENTIAL 80% 60% Money Loosing 40% Investments 20% <1x 1-2x 2-3x 3-5x >5x Chris Dixon, A16Z Return Multiple of the Fund PRESENTATION | PROPRIETARY AND CONFIDENTIAL 80% Bad Funds 60% Money Loosing 40% Investments 20% <1x 1-2x 2-3x 3-5x >5x Chris Dixon, A16Z Return Multiple of the Fund PRESENTATION | PROPRIETARY AND CONFIDENTIAL 80% Bad Funds 60% Money Loosing 40% Investments 20% Good Funds <1x 1-2x 2-3x 3-5x >5x Chris Dixon, A16Z Return Multiple of the Fund PRESENTATION | PROPRIETARY AND CONFIDENTIAL 80% Bad Funds 60% Money Loosing 40% Investments Good Funds 20% Great Funds <1x 1-2x 2-3x 3-5x >5x Chris Dixon, A16Z Return Multiple of the Fund PRESENTATION | PROPRIETARY AND CONFIDENTIAL $100b $120b $140b $160b $20b $40b $60b $80b $0b Wikipedia Rule #4: #4: Rule Ant Financial Uber Didi Chuxing Xiaomi Meituan-Dianping Airbnb SpaceX Flipkart Palantir Technologies CATL Toutiao Swing often Cainiao Logistics Lufax WeWork Pinterest Jiedaibao Tencent Music DJI Paytm WeBank Stripe PingAn HealthTech PRESENTATION | | PRESENTATION Koubei Moderna JD Finance Hulu Homelink Robinhood WeBank PROPRIETARY AND CONFIDENTIAL AND PROPRIETARY Lyft Coupang NIO United Imaging Magic Leap Zenefits Meizu BAIC BJEV Yello Mobile GO-JEK UBtech Robotics Slack Technologies Garena Shouqi Car Rental Credit Karma Meizu e-Shang Redwood Oscar Health Fanatics Ali Music Jia.com Kuaishou Meili United Group Wanda E-commerce Ping An Good Doctor ContextLogic Grab SoFi Royole Corporation VANCL LY.com Yixia Technology Ola Cabs Bloom Energy Pivotal UnionPay AmWINS Vice Media Lazada Group Qualtrics Mozido $100b $120b $140b