IDCEE 2013: Emerging themes and trends in technology and digital media - Alan Patricof (Founder & MD...

Emerging Themes and Trends in Technology and Digital Media

October 10, 2013

2NYC 131010 - IDCEE presentation vf

Agenda

• Greycroft overview

• Investment thesis

• Areas of focus today-Mobile

-Mobile payments

-Video

-Native Advertising

-Connected devices


Fund I(April 2006)

•Greycroft I - $75MM•34 investments

Fund I themes:•Adtech, primarily paidmedia

•Social media (B2B, B2C)•Analytics•Online Publishing

Fund II(April 2010)

•Greycroft II - $131MM•56 investments

Fund II themes:•Adtech, primarily owned media

•eCommerce (B2B, B2C)•Gaming•Online Video•Small seed portfolio

Quick history of Greycroft

2006 2007 2008 2009 2010 2011 2012 2013

Twitter iPhone iPadFacebook hits 100M users

Facebook hits 800M users

PinterestInstagram

Fund I Annex(Feb 2012)

•Greycroft I Annex - $12MM

•4 investments to date


And our newest fund

2013

iPhone iPadFacebook hits 100M users

Facebook hits 800M users

PinterestInstagram

Fund III(January 2013)

•Greycroft III - $175MM•6 investments to date

Fund III themes:•Marketing SaaS•Cloud enablement•Small seed portfolio


Agenda




-Mobile payments

-Video

-Native Advertising

-Connected devices


Investment thesis

•Offices in LA and NYC – both emerging tech leaders

•Small Funds – $400 Million under management -Investments range from $100,000 - $5 Million

•Recent addition of a Seed Fund

•Focus on early stage digital media and Internet startups

•Investing in Teams-Repeat entrepreneurs-Repeat experts in the space


0

200

400

600

198519

8619

8719

8819

8919

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9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

12

Venture-backed M&A dealsVenture-backed IPOs

More than 90% of reported VC exits have been M&A

Note: IPO totals include all companies with at least one U.S. VC investor that trade on U.S. exchanges; regardless of domicile M&A totals only accounts for VC backed deals with disclosed values

Source: Thompson Reuters; 2012 NVCA Yearbook

Venture-Backed Liquidity Events – Total number of exits


0

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200

300

400

$500M

198519

8619

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0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

12

Average M&A dealsize

Average transaction value has held steady

Note: M&A totals only accounts for VC backed deals with disclosed valuesSource: Thompson Reuters; 2012 NVCA Yearbook; BLS

Average exit size for venture backed M&A transactions


The Greycroft approach to investing is different

Lead every deal

Board seats

$1B expectations

Largest possible fund

No syndication

20% ownership

$5M minimum

IPO expectations


Agenda




-Mobile payments

-Video

-Native Advertising

-Connected devices


Mobile

•Shift to mobile is accelerating-Last year, nearly 12% of time spent with media by an adult was consumed via a mobile device

•Digital ad-spend is going to migrate rapidly onto mobile-$8.8B in 2012 is forecast to become nearly $63B in 2017


0

1,000

2,000

3,000M

2006 2007 2008 2009 2010 2011 2012 2013F 2014F 2015F

Tablet

Sm

artp

hon

e

PC 8%

51%

N/A

(06-12)CAGR

6%

27%

50%

(12-15)CAGR

Mobile and tablet sales have grown rapidly

Global internet device sales (M)

Source: Gartner, IDC, Strategy Analytics, company filings, BI Intelligence

26.2% 24.3%


0

10

20

30

40%

2011

4.6

2012

8.5

2013

14.2

2014

19.8

2015

25.6

2016

31.0

2017

36.3

482 503Total ad spend ($B)

104Digital ad spend ($B)

16.7 26.3 37.5 49.6 62.8Mobile ad spend ($B)

517 543 567 593 616

86 118 133 146 160 173

4.0 8.8

Globally, more than one third of digital ad spend will be on mobile by 2017

Note: Excludes SMS, MMS and P2P messaging based advertisingSource: eMarketer

Mobile ad spending shareof total digital ad spend worldwide


The shift to mobile media is accelerating – growing at 53% p.a.

Share of media time spent per day on mobile (US adults)

Note: Time spent multi-tasking is counted for each mediumSource: eMarketer; Needham & Co.


Agenda




-Mobile payments

-Video

-Native Advertising

-Connected devices


Highlighted trends in payments

•Though early, mobile payments represent strong area of growth, with ~40% CAGR expected in transaction value through 2017-The majority of this growth is being driven by mobile commerce and money transfers

•Consumers are increasingly seeking convenience and a simplified and unified mode of both online and offline payments -Google, Facebook, Apple, payment platforms, and retailers are all working to provide solutions that help to bridge the “digital divide”


0

200

400

600

$800B

2011

106

2012

163

2013P

235

2017F

721

161 201 246 450Mobile paymentusers (MM)

Mobile payments expected to grow dramatically

’11-’17F CAGR = 38%

Global mobile payments ($B)

Note: Includes bill payments, merchandise purchases, money transfers, and NFC transactionsSource: Gartner


0

20

40

60%

NFC/Mobile Wallet

1115

43 3

Barcode/QR Scanning

24

38

18

1214

MobileShopping

30

43

26

1517

MobileBanking

38

51

33

22

28

ItalyUKRussiaUSSouth Korea

Global smartphone users’ mCommerce activities

mComm activities of smartphone users, 2012 (% resp)

Note: Select ‘developed’ countries selectedSource: Nielsen; Gartner


Companies innovating in online and mobile payments

P2P payments

Payment platforms

Retailer closed apps

Mobile Wallets

Mobile POS


Key takeaways on mobile commerce

•Mobile banking and commerce increasingly common among smartphone users

•NFC growth expected to be limited over next few years, with challenges on both the consumer and merchant adoption front-There is no incentive for consumer to tap rather than swipe a credit card and the interface can be less reliable

•Banking and payment networks are established. There is room for innovation in ancillary services surrounding the payments infrastructure


Agenda




-Mobile payments

-Video

-Native Advertising

-Connected devices


Strong Trends•60% of US network traffic is devoted to online video streaming•50% of all mobile traffic is video•89 million people in the US are going to watch 1.2 billion online videos today•YouTube attracts 1 billion unique visitors who watch over 6 billion hours of video each month - this is estimated to be 1/3 of all online video traffic and grows to almost 60% when you exclude porn

-Maker Studios is responsible for 4B video views per month

Imbalance with advertising dollars•Online advertising only accounts for less than $100B of the $800B in total global ad spend (<12%)

-Of which, online video advertising is only 7-10% of all online ad spend

•24% of US brands are advertising against online video today (of approximately 4,300 national brands)

Video


0

2

4

6

8

$10B

2011

2.0

2012

2.9

2013

4.1

2014

5.8

2015

7.0

2016

8.0

2017

9.1

Digital video ad spend forecast to grow rapidly

Note: Includes advertising that appears on desktop and laptop computers as well as mobile phones and tabletsSource: eMarketer; IAB; PWC

US Digital Video Ad Spending


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10

20

30

2010

10

2011

17

2012

24

Consumer behavior shows increased time allocated

Note: Ages 13-64Source: eMarketer; IAB; GfK; One Productions

Online video – daily minutes spent

Average YouTube video is 4:21 minutes


0

100

200

300M

2012

172

2013

183

2014

191

2015

197

2016

201

2017

205

72.2 75.0 76.6 77.3 77.8 78.1% of internetusers

Nearly three quarters of US internet users view video

Online video viewers (US)

Source: eMarketer; comScore; Nielsen


Agenda




-Mobile payments

-Video

-Native Advertising

-Connected devices


Native Advertising

•The concept of Native advertising isn’t new, -it’s just being ‘discovered’ in the online business and advertisers are finding clever new uses

•73% of online publishers offer native advertising•Over half of all display ads are never in view (below the fold)•Native advertising in the context of social media alone was $1.63B -> expected to climb to $4.57B in 2017

•41% of Facebook’s Ad Revenue came from native mobile ads in 2013 Q2

•Twitter ads (all native) are projected to generate nearly $1B next year

•Native advertising can be controversial or risky because it allows advertising to appear in the same format as editorial content


0

3

5

8

10

$13B

2012

4.6

2013

6.1

2014

7.2

2015

8.4

2016

9.7

2017

11.0

35.2% 38.9% 39.9% 40.5% 41.1% 41.7%Native as a %of total spend

DisplayNative

Native advertising is becoming increasingly important

Note: Native defined as branded content integrated directly within social network experienceSource: eMarketer; BIA/Kelsey

US Social media ad spend


0

1

2

3

$4B

2011

1.1

2012

1.5

2013

1.9

2014

2.3

2015

2.6

2016

2.9

2017

3.1

Sponsorship dollars are flowing into native advertising

Note: Includes advertising that appears on desktop and laptop computers as well as mobile phones and tabletsSource: eMarketer

US Digital sponsorship ad spending


Agenda




-Mobile payments

-Video

-Native Advertising

-Connected devices


Connected devices

•Connected devices and the Internet of Things is a rapidly emerging sector with nearly 25B new devices coming online over the next five years-These include your phone, embedded and wearable health devices, smart watches, new control interfaces, smart appliances, tracking tags for your possessions, and even your car

•The volume of data these devices will create unrivaled volumes of data and that data presents opportunities for entrepreneurs


0

20

40

60B

2012

8.7

2013

11.2

2014

14.4

2015

18.2

2016

22.9

2017

28.4

2018

34.8

2019

42.1

2020

50.1

0.60 0.72 0.87 1.05 1.27 1.54 1.85 2.24 2.70Penetration ofconnecteddevices (%)

Connected devices expected to grow rapidly, but will not become ubiquitous over the next 5-7 years

Connected devices, worldwide

Source: Cisco


0

200

400

600PB

2012

24

2013

45

2014

85

2015

159

2016

300

2017

563

Internet of things data traffic expected to grow 89% p.a. over the next five years

Volume of data created byconnected devices (monthly)

Source: Cisco

1PB = 1,073,741,824 MB


•Offline data gathering/analytics-Tremendous amounts of data are being created through the connected device revolution – harness it

•Quantified self-We are moving to a world where every part of ones self can be studied and quantified – find solutions to our biggest health problems

•Over the top TV-Content is everywhere and at low cost – disrupt incumbents in the delivery market

•Sharing economies-Bike shares, home shares, car shares, even private jet shares – make our society more efficient in our use of resources

•Prize driven innovation-Competition for prizes is helping to solve some of our toughest problems and driving innovation – these are more important than creating the next social network

A few big ideas to consider

Date post:	09-May-2015
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IDCEE 2013: Emerging themes and trends in technology and digital media - Alan Patricof (Founder & MD...

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