Tag Archives: venture capital

Guy Kawasaki on Venture Capital

Highly recommended videos for anyone planning to ask funding from venture capital. Guy Kawasaki is one of the star entrepreneurs and venture capitalists of Silicon Valley, and if you listen to his speech you will understand why.

I extract from the talk the ten slides Guy advises when presenting your idea to a VC:

  1. Title. Add contact info.
  2. Problem. What pain you solve.
  3. Solution. How you solve it.
  4. Business Model. How you make money.
  5. Underline Magic. Why you will succeed.
  6. Marketing & Sales. How you go to market.
  7. Competition. What you can do they can’t do. What they can do you can’t do.
  8. Team.
  9. Projections. Show the metrics behind.
  10. Status & Timeline. Where you are.

Guy’s 10-20-30 rule: 10 slides, 20 minutes, 30pt minimum font size

There are plenty of books about how to prepare a business case for a start-up. These ten slides are the best summary I have ever seen.

Facebook clinches another $100 million

Without a clear (public) business case, the latest king of the social networks is raising $100 million, according to Business Week’s FaceBook: Friends with Money, and also echoed by TechCrunch.

Here is some interesting data from the Business Week article:

  • Facebook already raised $360m in last seven months: $240m from Microsoft for a 1.6% stake, and $120m from Hong Kong billionaire Li Ka-shing
  • Facebook CFO Gideon Yu, former CFO of YouTube and treasurer at Yahoo, says “It will be used entirely for servers
  • The $100m is a loan from TriplePoint, not capital
  • In March Facebook had 35 million users in US, 71% YoY growth
  • Worldwide number of users tripled to 109.2 million, opening sites in Spanish, German and French
  • Analysts estimate Facebook has 10,000 servers. The new funds could buy 50,000 servers more
  • Google is estimated to buy 500,000 servers a year, and Microsoft 200,000

My conclusions:

  • These are good news for server vendors: IBM, HP, Sun, Dell and Rackable System (the latter known to be a supplier of Facebook)
  • Who said that barriers of entry for Internet business were too low? You’d better get a good CFO before you try to build your Data Center.
  • Facebook CFO admits that it is easier and better to raise money when you are not in a hurry… and when the VC are still hot on Social Networks!

Good luck.

SpinVox: Do just one thing but do it right

SpinVox, founded in 2003, is a pioneer in delivering speech-to-text applications. SpinVox claims it has agreements with twelve telcos, to provide a system to translate voice mail messages into SMS or emails. These days SpinVox has been in the news because it just secured $100 Million financing from Goldman Sachs, GLG Partners and others, to fund their international expansion. See the blogsphere reaction:

Considering Automatic Speech Recognition as just a Voicemail feature, $500M valuation seems really high when compared to Voicemail suppliers.  Current price for Voicemail systems can easily be under $2/user. Even assuming Spinvox could sell the feature to carriers at $2/user, how many customers do they need to have to justify their valuation? Note the many competitors in this domain: startups (Jott, GotVoice, SimulScribe), specialized software (Nuance), big players (Microsoft, IBM, Google) and messaging vendors such as Comverse, Openwave or Alcatel-Lucent. The valuation reminds me of the Internet Bubble, where money was coming from investors instead of from the customers.

Nonetheless a good learning for any start-up seeking financing. SpinVox just does once thing, speech-to-text, and builds on its core competency to provide related applications (voicemail, blogs, social networks, etc). Do one thing, and be the best at doing it. Venture capital will love you, and hopefully your customers too.