finding the next waze:an insider view of startup investing and due diligence
DESCRIPTION
Breaking down the Waze Investment: Google just paid over $1 billion to acquire the Israeli social driving app. This presentation breaks down the Waze investment to show how early stage investors identified a promising startup investment and exited with a 10X return.We discuss how to create a winning investment checklist.Lastly, we provide professional insight into how to conduct a due-dilligence process that helps identify promising investment candidates.TRANSCRIPT
Finding the next Waze: An insider view of startup investing and due diligence
How to conduct professional due-diligence
Creating a winning investment checklist
Breaking down the Waze investment: From startup to $ billion exit
Tuesday, July 30, 13
Zack Miller, OurCrowdHead of Investor Community
David Stark, OurCrowdInvestment Associate
Meet OurCrowd’s Team
OurCrowd: 7 months since launch, OurCrowd has invested $17M in 26 startups
Tuesday, July 30, 13
Waze/Google Deal
• >$1 billion• team gets to stay in Israel• Israel and the consumer web
Tuesday, July 30, 13
The investment case for Israel
Tuesday, July 30, 13
The investment case for Israel
Tuesday, July 30, 13
Special Guest:
Gadi MazorOurCrowd
General Partner/CTO
Tuesday, July 30, 13
2008
BlueRun leads $12M round, Magma and Vertex join
Same investors Qualcomm
Ventures: $25M round, $95M
valuation
2010 2011
$30M round inc Kleiner Perkins,
$200+M valuation
2013
Google buys Waze app for $1.1 billion
Waze: Anatomy of a super investment
“Our bet was basically that they could disrupt old-fashioned cartography, and that they were at just the right time to begin trying it.” -- BlueRun’s John Malloy
2.2M us
ers
7M us
ers
Tuesday, July 30, 13
“We’ll also work closely with the vibrant Waze community, who are the DNA of this app, to ensure they have what’s needed to grow and prosper.
The Waze community and its dedicated team have created a great source of timely road corrections and updates. We welcome them to Google and look
forward to working with them in our ongoing effort to make a comprehensive, accurate and useful map of the world. ”
Posted by Brian McClendon, Vice President, Google
Tuesday, July 30, 13
Where to find the next Waze (or, how do I invest in the next $billion exit)??
Tuesday, July 30, 13
Building deal flow pipelineSources of dealflow
• web, email, referrals
• tech events
❖ Resources: TechAviv, Garage Geeks, incubator demo days
• proactive sourcing
• Jeff Pulver’s Twitter investment (just a Tweet away)
❖ Resources: OurCrowd, AngelList, CrunchBase, blogs/articles
Tuesday, July 30, 13
Initial screening process• Elevator Pitch
• (big) * (idea, market, team)
❖ disruptive idea
❖ market > $500M
❖ team = serial
• Coffee Chat with Founder(s)
❖ Blink theory: experience breeds good intuition
• Pitch Deck
Tuesday, July 30, 13
In-depth diligence• Follow-up meetings with
management
• Research: biz plan, competition, industry trends/forecasts, intellectual property, financial projections, HR
• Customer/strategic partner interviews (see handout)
• Industry experts/mentors
❖ Resource: DIY Expert Networks (see Quora, Laughing at Wall Street)
• Scorecarding (see handout)
Tuesday, July 30, 13
Legal negotiation/diligence
• Term sheets• Valuation• Common vs. Preferred• Important rights and protections❖ Resource: Passion Capital Plain English Term Sheet,
Founders Fund Transparent Term Sheet
• legal diligence, final review...
Tuesday, July 30, 13
The morning after... from investor to mentor
• Can I add value?
• customers/partners/hires/investors
• perfect balance
• annoying <--> helping
• aligned expectations
Tuesday, July 30, 13
How will OurCrowd identify the next Waze?
Tuesday, July 30, 13
...the 6 point investment checklist
Tuesday, July 30, 13
So, how does Waze score?
1. Great team
2. Large market
3. Easy to understand
4. Traction
5. Sponsorship
6. A good deal
✓
✓
✓
✓
✓
Tuesday, July 30, 13
#1: Great team
Tuesday, July 30, 13
AE-Squaredfounders have sold 3 companies
between the two of them
Case Study: AE-Squared’s great team
Tuesday, July 30, 13
#2: Large market
Tuesday, July 30, 13
Fireblademultibillion dollar market of
website securityanti-bots, anti-scraping
Case Study: Fireblade’s billion dollar market
Tuesday, July 30, 13
#3: Easy to understand
Tuesday, July 30, 13
Abe’s MarketAmazon for green products
Case Study: Abe’s Market is easy to
understand
Tuesday, July 30, 13
#4: Traction
Tuesday, July 30, 13
KelaExisting customers include
Fortune 100 + top hedge fundslarge pipeline
250% revenue growth YoY
Case Study: Kela’s traction
Tuesday, July 30, 13
#5: Sponsorship
Tuesday, July 30, 13
Argo/ReWalktop Israeli venture capital investors (Pontifax, Israel HealthCare Ventures, SCP
Vitalife)
Case Study: Argo’s sponsorship
Tuesday, July 30, 13
#6: Good deal
Tuesday, July 30, 13
Parkoinvestment made at good
valuation
Case Study: Parko’s early stage valuation
Tuesday, July 30, 13
Summary
• Waze exemplifies a new type of Israeli startup
• Conduit, Wix, Mobileye, GetTaxi
• Finding quality angel investments requires a formal process
• OurCrowd is helping make investing in startups easier and accessible
➡Now, for accredited investors and hopefully in the near future, open to all investors
Tuesday, July 30, 13
Any questions?
Zack Miller, Head of Investor Communityemail: [email protected]: +1.914.401.6422
Tuesday, July 30, 13
Accredited investor?
Register now
OurCrowd.com
Sign up
blog.OurCrowd.com
OurCrowd Newsletter
Tuesday, July 30, 13