Silicon valley (SV) and Canadian IT ventures
Description: Silicon valley (SV) and Canadian IT ventures Williams School of Business Bishops University Dr. Kyung Young Lee 1 Brief Intro about me Dr. Kyung Young Lee Assistant Prof. in Bishops University, Sherbrooke, Quebec since Fall 2011 PhD in
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slide1. Silicon valley (SV) and Canadian IT ventures Williams School of Business
Bishop’s University
Dr. Kyung Young Lee 1<br>
slide2. Brief Intro about me Dr. Kyung Young Lee
Assistant Prof. in Bishop’s University, Sherbrooke, Quebec since Fall 2011
PhD in Management (Information Systems) from McGill University (Fall 2012)
MBA from U of Ottawa
6 years working experience in IT and telecom industry 2<br>
slide3. Today’s Theme Silicon Valley
Canadian Environment of Tech Startups 3<br>
slide4. Silicon Valley History
Current trend
Success factors 4<br>
slide5. Silicon valley 5 Definition: Silicon Valley is the southern region of the San Francisco Bay Area in Northern California, in the United States. The region is home to many of the world's largest technology corporations as well as thousands of small start-ups. The term originally referred to the region's large number of silicon chip innovators and manufacturers, but eventually came to refer to all the high-tech businesses in the area, and is now generally used as a metonym for the American high-tech sector. (Wikipedia.org)
Rich, young, well-educated, diversified, and growing (population & econ-index) area (SV index snapshot)
Home to many of the world's largest technology companies including Apple, Cisco, Google, HP, Intel, Oracle, etc and recent successful IT ventures (Uber, Snapchat, Airbnb, etc.)
The leading hub for high-tech innovation and R&D, accounting for 1/3 of all of the venture capital investment in the US
http://siliconvalleyindex.org/<br>
slide6. Key Firms in SV 6 http://www.scaleit.us/1404-2/<br>
slide7. Key startup Deals in SV in 2014 2nd Q in 2014
3rd Q in 2014
4th Q in 2014 7<br>
slide8. SV Success factors 8 Interaction with industry, research funding, and creativity from universities.
Students as inventors, disseminators, and workforce
Encouragement of entrepreneurship on campus
Talent pool and social networks
Loyalty to technology (than to companies) with unique openness
Importance of immigrants (highly multicultural)<br>
slide9. SV Success factors (cont’d) Its many early adopters of new technology
Job hopping culture
Services infra with many suppliers for outsourcing (E.g., accounting, legal, financing etc.)
Funding: angels, venture capitalist (VC’s), other financing infra
Entrepreneurial spirit, OK to fail…
Flat organizational structures / Boundary-less discussions 9<br>
slide10. Sv in 2014 10 Products, services, and platforms for engineers
Technically savvy population (online)
Globally connected issue-makers (online communities e.g., techcrunch)
Technical teams (still) rule the valley
All things being equal, you can typically outdo competition and create larger barriers to entry by applying additional technical expertise than you can with added business expertise (at least in the early days).
Big data: If you mix big data or machine learning (AI: artificial intelligence) in some way you will certainly get additional attention from investors.
Automated Personal Finance
People get more comfortable mixing their money and new technology.
A growth in personal financial technology companies that will attempt to automate our financial lives (e.g. m-payment, personal investment svc.)<br>
slide11. Sv in 2014 (Cont’d) The “Sharing Economy”
The first model of ‘sharing economy’ is Ebay
This turns Internet into “share and save” platform
Difficult legal history but are now thriving.
Examples: ZipCar (hourly car sharing), LendingClub (peer to peer lending), AirBnb, TaskRabbit,Etsy and Uber.
Better Communities and Support for Entrepreneurs
Better access to angels and incubators (e.g., Y-combinator, firstround.com TechStars and 500 Startups)
More accessible fundraising (for both investors and entrepreneurs) (e.g., AngelList and Kickstarter)
Online communities for tech-entrepreneurs (e.g., Quora)
Source: http://www.forbes.com/sites/rodebrahimi/2013/08/28/6-emerging-trends-in-silicon-valley-entrepreneurship/ 11<br>
slide12. Canadian IT Entrepreneurship Trends 12<br>
slide13. Current trend Canadian start-ups are known to be; 1) innovative, 2) global scale (multi-cultural), and 3) young and better priced (?).
Foreign funds see our raw technology and the quality of our companies and think early stage opportunities are often better priced in Canada than in the US, due to less competition among VC's.
More than half deals (by numbers of deals) are toward ‘SEED’ financing
Venture capitals in Canada
iNovia (http://inovia.vc/) – Montreal based
Relay Ventures (http://relayventures.com/) – Toronto based
Omers Ventures (http://www.omersventures.com) – Toronto based 13<br>
slide14. Canadian Financing deals 14 Seed stage: an idea of products and services, no marketable products/services yet (prototypes are usually created)
Startup stage: First market analyses have been accomplished and the product is on its way from the development stage to the market launch
Series A: Scaling the product and getting to a business model.
Series B: Scaling the business
Series C onwards: More capital to scale
Series D/E/F… : other milestones accomplished.<br>
slide15. Canadian trends According to Industry Canada, venture capital investments in Canada totaled over $1.5B in the last four quarters (Q3’13 to Q2’14).
Early-Stage (Seed & Series A) Makes Up Over 3/4 of Deals
Ottawa-based Shopify raising a $100M Series C this past December, which valued them at $1B
Vancouver-based Hootsuite raising a $165M Series B in August 2013.
Internet and mobile: In the past two years, VCs have invested heavily in both Internet and Mobile services, (approx. 50% of all deals)
Wattpad, read and write SNS, who closed a $46M Series D investment from Union Square Ventures among others
Triggerfox, a mobile address book company that raised $1.8M in seed funding from Dharmesh Shah and Wayne Chang.
E-Commerce: came in second (approx. 15% of all deals)
BuildDirect.com’s $27M Series B
AskForTask’s $500k Seed round financing
http://www.cbinsights.com/blog/canadian-vc-startup-funding/ 15<br>
slide16. Canadian trends 16<br>
slide17. Canadian trends 17<br>
slide18. Canadian trends 18 The largest investment over the past 2 years for each of the top 5 cities is below:
Vancouver - Hootsuite – 08/2013 – $165M Series B
Toronto - Wattpad – 04/2014 – $46M Series D
Ottawa - Shopify – 12/2013 – $100M Series C
Montreal - Enerkem – 06/2013 – $48.2M Series E
Burlington - Anaergia – 10/2013 – $46M<br>
slide19. Key tech venture trends in Canada (Year 2015) Industry trends
Venture capital activity will be at a record high
At least one big Canadian IPO: candidates are Shopify, Hootsuite, and Vision Critical.
Technology trends
Wearable devices - a few flourish, many fade: the rise of complementary products for Wearable devices!
IOT (Internet of Things): Even more stuff will be connected in 2015. LIVE FROM CES 2015
Payment systems (Bitcoin, P2P services, Mobile payment)
VR (Virtual Reality) will expand from its role in gaming into other key areas like healthcare and education 19 http://www.techvibes.com/blog/jim-orlando-predictions-omers-2015-01-06 http://www.theglobeandmail.com/report-on-business/small-business/sb-digital/biz-categories-technology/five-predictions-for-canadian-tech-in-2015/article21991603/<br>
slide20. A case - SNAPCHAT 20<br>
slide21. Case– snapchat (History) Problems of potential customers: “I wish these photos I am sending this girl would disappear!” Founded in July 2011 as its first name “Pictaboo”, later the name is changed to “Snapchat”
Product description (WE DO NOT STORE USER’S INFORMATION!!!)
A photo messaging application : Users can take photos, videos, and add text (called ‘snaps’), and send them to a controlled list of recipients.
Users set a time limit (1to10 sec) for how long recipients can view their Snaps (as of April 2014, the range is from 1 to 10 seconds), after which they will be hidden from the recipient's device and deleted from Snapchat's servers.
Brief history
In Dec 2012, Video snap launched.
In Oct 2013, Snapchat Stories launched. / Evan Spiegel declined $3 B buyout deal for Snapchat (with no revenue) from Facebook.
In May 2014, Text chat and video chat added to the app.
In Oct 2014, Snapchat introduced their first ads to Snapchat stories
In Nov 2014, partnered with Square, they introduced Snapcash 21 http://techcrunch.com/gallery/a-brief-history-of-snapchat/<br>
slide22. Case– snapchat (Current) 22 http://www.digitalinformationworld.com/2014/09/the-history-of-snapchat-infographic.html Success factors
Potential customers’ problem solved! (Ephemerality)
Technological environment: Smartphone & Mobile internet penetration
Users’ privacy protected.
The most natural way of telecommunication!<br>
slide23. Case – snapchat (Biz model) Product/Service model:
Key users are mostly younger generation
Current cost for the business: Snapchat is believed to be spending $30 million a year with $15 million of that going to Google for hosting its photos. The company is rumored to be paying $3 million a month in legal fees for co-founder lawsuit.
Revenue models in 4th Q 2014
Untargeted ads (disappear within 24H) :Not on snaps but on Stories
Snapcash (partnered with Square): Their Snapcash (P2P payment service) isn’t generating any revenue, just like Venmo (eBay)
Financing history (Most recent funding from Alibaba at 15B)
Then, why is this almost revenue-less company valued over 10 Billion dollars? 23 http://www.bloomberg.com/news/2014-08-26/snapchat-said-to-near-funding-with-kleiner-at-10b-value.html<br>
slide24. Questions? 24<br>
slide25. C100 C100 http://www.thec100.org/
A non-profit organization that supports Canadian technology entrepreneurship through mentorship, partnership and investment.
Formed in 2010, by a group of ultra-successful Silicon Valley business people from Canada
C100 supports the next generation of Canadian entrepreneurs and help build the next billion dollar Canadian tech company.
http://www.thec100.org/our-network/funding-partners
http://www.thec100.org/companies 25<br>
Bishop’s University
Dr. Kyung Young Lee 1<br>
slide2. Brief Intro about me Dr. Kyung Young Lee
Assistant Prof. in Bishop’s University, Sherbrooke, Quebec since Fall 2011
PhD in Management (Information Systems) from McGill University (Fall 2012)
MBA from U of Ottawa
6 years working experience in IT and telecom industry 2<br>
slide3. Today’s Theme Silicon Valley
Canadian Environment of Tech Startups 3<br>
slide4. Silicon Valley History
Current trend
Success factors 4<br>
slide5. Silicon valley 5 Definition: Silicon Valley is the southern region of the San Francisco Bay Area in Northern California, in the United States. The region is home to many of the world's largest technology corporations as well as thousands of small start-ups. The term originally referred to the region's large number of silicon chip innovators and manufacturers, but eventually came to refer to all the high-tech businesses in the area, and is now generally used as a metonym for the American high-tech sector. (Wikipedia.org)
Rich, young, well-educated, diversified, and growing (population & econ-index) area (SV index snapshot)
Home to many of the world's largest technology companies including Apple, Cisco, Google, HP, Intel, Oracle, etc and recent successful IT ventures (Uber, Snapchat, Airbnb, etc.)
The leading hub for high-tech innovation and R&D, accounting for 1/3 of all of the venture capital investment in the US
http://siliconvalleyindex.org/<br>
slide6. Key Firms in SV 6 http://www.scaleit.us/1404-2/<br>
slide7. Key startup Deals in SV in 2014 2nd Q in 2014
3rd Q in 2014
4th Q in 2014 7<br>
slide8. SV Success factors 8 Interaction with industry, research funding, and creativity from universities.
Students as inventors, disseminators, and workforce
Encouragement of entrepreneurship on campus
Talent pool and social networks
Loyalty to technology (than to companies) with unique openness
Importance of immigrants (highly multicultural)<br>
slide9. SV Success factors (cont’d) Its many early adopters of new technology
Job hopping culture
Services infra with many suppliers for outsourcing (E.g., accounting, legal, financing etc.)
Funding: angels, venture capitalist (VC’s), other financing infra
Entrepreneurial spirit, OK to fail…
Flat organizational structures / Boundary-less discussions 9<br>
slide10. Sv in 2014 10 Products, services, and platforms for engineers
Technically savvy population (online)
Globally connected issue-makers (online communities e.g., techcrunch)
Technical teams (still) rule the valley
All things being equal, you can typically outdo competition and create larger barriers to entry by applying additional technical expertise than you can with added business expertise (at least in the early days).
Big data: If you mix big data or machine learning (AI: artificial intelligence) in some way you will certainly get additional attention from investors.
Automated Personal Finance
People get more comfortable mixing their money and new technology.
A growth in personal financial technology companies that will attempt to automate our financial lives (e.g. m-payment, personal investment svc.)<br>
slide11. Sv in 2014 (Cont’d) The “Sharing Economy”
The first model of ‘sharing economy’ is Ebay
This turns Internet into “share and save” platform
Difficult legal history but are now thriving.
Examples: ZipCar (hourly car sharing), LendingClub (peer to peer lending), AirBnb, TaskRabbit,Etsy and Uber.
Better Communities and Support for Entrepreneurs
Better access to angels and incubators (e.g., Y-combinator, firstround.com TechStars and 500 Startups)
More accessible fundraising (for both investors and entrepreneurs) (e.g., AngelList and Kickstarter)
Online communities for tech-entrepreneurs (e.g., Quora)
Source: http://www.forbes.com/sites/rodebrahimi/2013/08/28/6-emerging-trends-in-silicon-valley-entrepreneurship/ 11<br>
slide12. Canadian IT Entrepreneurship Trends 12<br>
slide13. Current trend Canadian start-ups are known to be; 1) innovative, 2) global scale (multi-cultural), and 3) young and better priced (?).
Foreign funds see our raw technology and the quality of our companies and think early stage opportunities are often better priced in Canada than in the US, due to less competition among VC's.
More than half deals (by numbers of deals) are toward ‘SEED’ financing
Venture capitals in Canada
iNovia (http://inovia.vc/) – Montreal based
Relay Ventures (http://relayventures.com/) – Toronto based
Omers Ventures (http://www.omersventures.com) – Toronto based 13<br>
slide14. Canadian Financing deals 14 Seed stage: an idea of products and services, no marketable products/services yet (prototypes are usually created)
Startup stage: First market analyses have been accomplished and the product is on its way from the development stage to the market launch
Series A: Scaling the product and getting to a business model.
Series B: Scaling the business
Series C onwards: More capital to scale
Series D/E/F… : other milestones accomplished.<br>
slide15. Canadian trends According to Industry Canada, venture capital investments in Canada totaled over $1.5B in the last four quarters (Q3’13 to Q2’14).
Early-Stage (Seed & Series A) Makes Up Over 3/4 of Deals
Ottawa-based Shopify raising a $100M Series C this past December, which valued them at $1B
Vancouver-based Hootsuite raising a $165M Series B in August 2013.
Internet and mobile: In the past two years, VCs have invested heavily in both Internet and Mobile services, (approx. 50% of all deals)
Wattpad, read and write SNS, who closed a $46M Series D investment from Union Square Ventures among others
Triggerfox, a mobile address book company that raised $1.8M in seed funding from Dharmesh Shah and Wayne Chang.
E-Commerce: came in second (approx. 15% of all deals)
BuildDirect.com’s $27M Series B
AskForTask’s $500k Seed round financing
http://www.cbinsights.com/blog/canadian-vc-startup-funding/ 15<br>
slide16. Canadian trends 16<br>
slide17. Canadian trends 17<br>
slide18. Canadian trends 18 The largest investment over the past 2 years for each of the top 5 cities is below:
Vancouver - Hootsuite – 08/2013 – $165M Series B
Toronto - Wattpad – 04/2014 – $46M Series D
Ottawa - Shopify – 12/2013 – $100M Series C
Montreal - Enerkem – 06/2013 – $48.2M Series E
Burlington - Anaergia – 10/2013 – $46M<br>
slide19. Key tech venture trends in Canada (Year 2015) Industry trends
Venture capital activity will be at a record high
At least one big Canadian IPO: candidates are Shopify, Hootsuite, and Vision Critical.
Technology trends
Wearable devices - a few flourish, many fade: the rise of complementary products for Wearable devices!
IOT (Internet of Things): Even more stuff will be connected in 2015. LIVE FROM CES 2015
Payment systems (Bitcoin, P2P services, Mobile payment)
VR (Virtual Reality) will expand from its role in gaming into other key areas like healthcare and education 19 http://www.techvibes.com/blog/jim-orlando-predictions-omers-2015-01-06 http://www.theglobeandmail.com/report-on-business/small-business/sb-digital/biz-categories-technology/five-predictions-for-canadian-tech-in-2015/article21991603/<br>
slide20. A case - SNAPCHAT 20<br>
slide21. Case– snapchat (History) Problems of potential customers: “I wish these photos I am sending this girl would disappear!” Founded in July 2011 as its first name “Pictaboo”, later the name is changed to “Snapchat”
Product description (WE DO NOT STORE USER’S INFORMATION!!!)
A photo messaging application : Users can take photos, videos, and add text (called ‘snaps’), and send them to a controlled list of recipients.
Users set a time limit (1to10 sec) for how long recipients can view their Snaps (as of April 2014, the range is from 1 to 10 seconds), after which they will be hidden from the recipient's device and deleted from Snapchat's servers.
Brief history
In Dec 2012, Video snap launched.
In Oct 2013, Snapchat Stories launched. / Evan Spiegel declined $3 B buyout deal for Snapchat (with no revenue) from Facebook.
In May 2014, Text chat and video chat added to the app.
In Oct 2014, Snapchat introduced their first ads to Snapchat stories
In Nov 2014, partnered with Square, they introduced Snapcash 21 http://techcrunch.com/gallery/a-brief-history-of-snapchat/<br>
slide22. Case– snapchat (Current) 22 http://www.digitalinformationworld.com/2014/09/the-history-of-snapchat-infographic.html Success factors
Potential customers’ problem solved! (Ephemerality)
Technological environment: Smartphone & Mobile internet penetration
Users’ privacy protected.
The most natural way of telecommunication!<br>
slide23. Case – snapchat (Biz model) Product/Service model:
Key users are mostly younger generation
Current cost for the business: Snapchat is believed to be spending $30 million a year with $15 million of that going to Google for hosting its photos. The company is rumored to be paying $3 million a month in legal fees for co-founder lawsuit.
Revenue models in 4th Q 2014
Untargeted ads (disappear within 24H) :Not on snaps but on Stories
Snapcash (partnered with Square): Their Snapcash (P2P payment service) isn’t generating any revenue, just like Venmo (eBay)
Financing history (Most recent funding from Alibaba at 15B)
Then, why is this almost revenue-less company valued over 10 Billion dollars? 23 http://www.bloomberg.com/news/2014-08-26/snapchat-said-to-near-funding-with-kleiner-at-10b-value.html<br>
slide24. Questions? 24<br>
slide25. C100 C100 http://www.thec100.org/
A non-profit organization that supports Canadian technology entrepreneurship through mentorship, partnership and investment.
Formed in 2010, by a group of ultra-successful Silicon Valley business people from Canada
C100 supports the next generation of Canadian entrepreneurs and help build the next billion dollar Canadian tech company.
http://www.thec100.org/our-network/funding-partners
http://www.thec100.org/companies 25<br>