Post on 25-Feb-2016
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Projected annual “big data” growth is 37% through 2017
0
10
20
30
40
$50B
Global "big data" revenue
2011 2012 2013 2014 2015 2016 2017
26%
25%
33%28%
22%
26%
40%
(13-17)CAGR
Infrastructure & Networking
XaaSDatabase
Applications
Storage
Compute
Professional services
There is a large opportunity to reinvent industries using data
Costs have come down… …Resulting in significant data and revenue growth
0
100
200
$300K
Cost of storage / GB
1981 1990 2000 2010
Source: Wikibon
2010: $0.102000: $1
1990: $10
Significant venture capital dollars have been invested in “big data” in recent years
Source: Orrick
0.0
0.5
1.0
1.5
$2.0B
Venture capital investments in "big data"
2008
0.5
2009
0.6
2010
0.7
2011
1.5
2012
1.4
55 65 96 132 164Deals
>30% annual growth in deal volume and
investment size from 2008-2012
Much of data analytics today is focused on serving incumbents
Opportunity to rebuild approach to serving customers from the ground up
Feedback loops with data are a powerful mechanism for product improvement
New business models use data to provide a higher level of service to customers
Companies must be reinvented from the ground up to fully leverage the potential of data
Starting with a clean slate can lead to radically new models, products, and services, and startups are best poised to do this
Gaming
Venture Capital
Taxi
• Studio model with large sunk development cost with limited pre-launch testing
• Dispatch systems expensive dedicated equipment, no driver or passenger feedback
• Very manual process with limited optimization or use of data
Incumbent model New model
Early stage investors look for data opportunities with specific criteria
1) Large, valuable markets that haven’t innovated… yet Capital requirements in line with market opportunity
2) Opportunity to transform status quo with data Cost savings, personalization, or a better customer experience
3) Team that blends industry skills and a strong engineering mindset
4) Product development emphasizing rapid iteration and optimization of product and processes; lean startup approach
5) Sustainable competitive advantage Networks effects, proprietary data, high switching costs, etc.
Many industries are being transformed
Data infrastructure
Data analytics
Finance Media Security & gov’t
Health Education Travel & transport
Retail Other
Case studies
SignalFire
ClassDojo
Metromile
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2
3
Entrepreneurs have lower Capex requirements and more funding options than ever before…
… VCs must be more proactive
Large VC
Crowdfund
Incubator
MicroVC
Midsize VC
Low barriers have increased the noise; now it’s possible to process signal
Organized Channels Digital Channels Unstructured Channels
FEEDBACK LOOPS w/MACHINE LEARNING
FILTERING
Data integration, cleansing, and structuring
Filtering
Machine learning
Investment team
Feedback loop from team, fundings, and company performance
Platform informs seed-stage investments with full information and low cost structure
Incubator program
Boutique VCs
Large investments
Small investments
Full resource VCs
Sweet spot for early stage investor / startup alignment
SignalFire is reinventing venture capital with a new business model, new architecture, and data analytics
• Competitive advisory and VC firm built on top of a data analytics platform
• Rethought venture business from the ground up using large amounts of data
• Tracking key company characteristics based on venture capital best practices
• Machine learning algorithms process and highlight emerging opportunities
• Building a networked partnership structure with feedback loops
• Platform will help identify opportunities for investment, partnership, and acquisition, and provide general competitive intelligence
ClassDojo: Behavior management software for the classroom
Customer pain point
Competitive advantage
ClassDojo data solution
• Teachers spend significant time in the classroom focused on student behavioral issues, which detracts from teaching
• Existing process of logging behavioral issues is time-consuming and memory-based• Parents only receive feedback from teachers ~2 times per year, so feedback between
the classroom and the home is discontinuous
• Smartphone app that enables teachers to immediately reward good behavior and call out bad behavior
• The teacher can track students over time• Gives parents real-time feedback on how their kids
are doing behaviorally, tightening the feedback loop
• Incumbent players in education are slow to innovate and execute• Have established first mover advantage with 17M teachers and students in 120
countries• Ability to scale virally since it is curriculum agnostic (applicable across countries)
MetroMile: Pay-as-you go car insurance
Customer pain point
Competitive advantage
MetroMile data solution
• Drivers that drive less pay disproportionately higher rates
• Car insurance companies do not take distance driven into consideration when setting premiums, though accidents occur less often with infrequent drivers
• Targeted car insurance product for those who drive less than 10,000 miles per year
• Product plugs into existing car diagnostic ports (OBD-II) and collects data on key vehicle usage metrics
• Pricing is in line with distance driven• Opportunity to add unique services based on data insights
• Incumbent insurance companies run the risk of cannibalization; lower premiums for infrequent drivers would increase premiums for frequent drivers and customer churn
• MetroMile is focused on disrupting car insurance through innovation and has an engineering culture; incumbents lack engineering culture and tend to outsource
• Rapid scalability even in highly regulated markets through strategic partnerships; will be available to 40% of the US within 6 months
As VCs, we are excited about opportunities both in data analytics as well as vertical solutions with data at their core
Data infrastructure
Data analytics
Finance Media Security & gov’t
Health Education Travel & transport
Retail Other
What’s the next industry to be transformed by data?