Bill Tai

Blackbird Ventures – Dealflow observations in the 8 months since launch – Rick Baker @blackbirdvc

Rick Baker is the Managing Director of Blackbird Ventures, a Sydney based Venture Capital fund raised early this year by Rick Baker, Niki Scevak, and VC Veterans Bill Bartee and John Scull and backed by numerous names in the Australian and US tech scene including Mike Cannon-Brooks from Atlassian, Dave McClure from 500 Startups, Bill Tai the Kite Surfing VC and Southern Cross Ventures. 

Rick-Baker-Blackbird-VC

Rick Baker Blackbird Ventures

 

 

I wrote this piece as a newsletter to our investors a few weeks ago.  We thought we’d share it to give you some more insights on what’s out there and what we’re looking for.

After 8 months since the fund opened, we’ve logged 226 companies in our database and seen another 100 or so that weren’t worth logging. Add to this 260 Startmate applications, and we’ve seen a lot of business ideas.

From this deal flow we’ve made 9 investments and have one more in progress.  So we’re getting good at saying no!  Nevertheless we’re very happy with the deal flow coming out of the Aussie tech ecosystem at the moment.

Blackbird-VC-Logo

Here are some observations from the deal flow so far, our filters and what we’re looking for:

Blackbird Investment Map - Credit Blackbird.vc

Blackbird Investment Map – Credit Blackbird.vc

1. Sources:

As would be expected, by far the majority of deal flow by quantity comes from our contact@blackbird.vc email address. This is despite us and our website imploring founders to find a warm introduction to us through their networks.

By far the majority of quality deal flow comes from the Blackbird community of investors, founders and Startmate. We’ve been very pleased with the way this is developing and all of our investments to date have originated from these sources. It’s given us a number of opportunities that are outside the general flow of usual sources: accelerators, incubators, angel groups and well-known founders in capital cities.

There is a third category, which is investment advisors – i.e. people who promise to raise money for young companies for a cut of the raising or equity. While there are some good advisors with interesting companies, we’re a little cynical of deal flow that comes from this source as it tends to indicate a founder who is not able to get to us directly, or does not know or care about fund raising.  Fund raising is such an important part of the early years of many tech startups, that this is a factor we have to take into account. They also tend to come with 60 page business plans and detailed forecast spreadsheets to justify high valuations!  We haven’t yet found a company introduced by an advisor that we’ve really fallen in love with, but this may change of course. [By the way, this is not a dig at the advisor community and we we certainly take all companies introduced to us seriously.  I’ll try to write some more detail on this soon, but please do feel free to comment below if you think differently.]

2. Stage:

As you know we have a strong focus on companies that have a product in the hands of a “core group of happy customers”. While revenues are not essential, it’s often the best measure of this.  So we’ve quickly filtered out a lot of pre-product, pre-revenue businesses, pointing these founders to the angel communities.  We have only made one exception to this rule: Canva, where the founders had built a previous business in a similar area and I (Rick) had been mentoring the founders for some time.

It’s encouraging that we’re seeing more and more series A stage companies, where the business is around 2 years old and starting to generate decent and growing revenues. We love companies with $30-100k in monthly recurring revenue and seem to be finding a steady stream of these! We still see very little Australian capital targeting this space. Our key collaborator is Square Peg Ventures, and we hope to continue investing alongside them.

3. Global vs local:

The second quick filter is businesses that do not meet our passion for global markets. The majority of Australian deal flow is either Aussie focussed, or Aussie first. We are constantly challenging founders to think bigger and smash local boundaries from day one. Each of the businesses we have backed so far is truly global, with founders who have a real passion to be the best in the world, rather than the best in Australia.

4. Scalable business models:

One of the key attributes we’ve become more and more focussed on is finding scalable marketing and sales models. This usually comes in the form of digital and content marketing, with only light touch human sales efforts. We are particularly avoiding business models which require scaling up sales teams in Australia and around the world. We think this is a difficult model to execute from Australia.

5. Founders with an authentic connection to the problem they’re solving:

Finally and most importantly, we’re looking for founders who we think have a real passion and expertise in the area they are tackling. We have to believe that this person has a better chance than 99.999999% of the global population of being able to have insights to crack apart a market. We’re not interested in people who want to be entrepreneurs for it’s own sake, or have chosen random problems while gazing at their navel. We want founders who have become immersed in their niche and have a driving passion to make it better. They are rare, but we love it when we find these founders, and have found them in all the companies we’ve backed so far.

That’s all for this month. Please do keep your antennae tuned to find great businesses to send us!

Blackbird.vc or fill out the form to contact via staging.startup88.flywheelsites.com

 

 

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The next big wave of internet investment – Bill Tai @kitevc presentation @Fishburners

Bill Tai - Credit http://about.me

Bill Tai – Credit http://about.me

I attended a presentation by Venture Capitalist Bill Tai of Charles River Ventures last week, (apparently the largest Sydney Tech Meetup ever) at @Fishburners.  Bill is a mad keen kiteboarder who teamed up with Susi Mai to create Mai Tai Global a group of exclusive events where Venture Capitalist, Industry and Entrepreneurs get together to talk business and kite surf at fantastic locations around the world (Bill seems to love his work).

He made the observation that successful internet companies achieved explosive growth when they removed friction from existing real world processes.

Google = Accessing Information

Amazon = Commerce

Facebook = Keeping in contact with Friends

Twitter = Broadcast

Uber = Getting a good Cab/Town Car fast

Internet Waves of Growth and Investment

Bill outlined the early waves of internet investment and growth

  • Wave 1  Raw physics silicon chips etc Intel, nVidia and TI
  • Wave 2 Cisco, Dell, Juniper, 3com, Bay Networks, Sun –  Switches, Routers and Server hardware providing connectivity
  • Wave 3  Connected boxes Cloud services, Amazon EC2,  Rackspace

The first 3 waves were very capital-intensive, with companies raising $100s of millions,  10 years ago even for a small play startup you had to raise millions of dollars to buy servers, fit out a data centre put everyone in groovy offices and run a huge launch party to get the buzz going.

The 4th wave is far more capital efficient, they work from home, use Open Source software, use Cloud Computing and pay by the hour and most of their tools or free or almost free. As a result startups are launching successfully on $20-100k and getting enough traction to either get to cashflow or at least to a series A round.

  • Wave 4 Is essentially about User Interface’s pulling data from cloud via APIs or big databases

As an example one of Bill’s investment’s Tweetdeck was written by unemployed IT contractor who liked Twitter but didn’t like the user interface and decided to build something better, he started with $300k angel round, $1m Series A and then $3m Series B and then sold for a rumoured $40-50 million to Twitter a few years later.

What’s next

Wave 5 will be about Big data, collecting and storing data being created by our mobile devices and the estimated 50 billion smart devices which have some sensor and computing capability but are not traditional computing devices, collectively grouped as the Internet of Things.

  • Personalised Health Data
  • Internet of Things
  • Personal Genomics
  • Unstructured data is everywhere, he gave the example of a Map being full of data, but most of it is not sitting in tables on a database.When you add Structured Data + unstructured data = info
  • Traditional Analytics + big data = provides rapid insights with immense value

One of Bill’s investee companies Treasuredata has a dream team of entrepreneurs and investors including Bill,  Jerry Yang and James Lindenbaum from Heroku. The data platform has just passed the milestone of 1 trillion records uploaded and on the current run rate expect to hit 2 trillion records next quarter.

He made the comment that “Old world winners” such as Walmart really understood their data well.

New world winners are virtualising physical assets and turning them into Virtual Assets. Examples were Uber, AirBnB, VMware and Dropbox generating huge databases with tags and meta data about physical assets.and unlocking huge value in the process. 

Australia

Bill seems to spend a lot of time out here (for a US based VC) and has made a quite a few investments including the recent $3m round in Canva after founder Melanie Perkins spent 3 years pitching him.

CanvaFounders

Canva Founders

One of the things he finds attractive is some of the grant programs such as Commercialisation Australia’s Early Stage Commercialisation grants which offer matching funds which basically double the VCs investment.

We were starting to see big global tech companies formed and emerging from Australia such as Atlassian, Freelancer and others, where the businesses were becoming significant on the world stage or leaders in their space.

Increasingly investors were putting funds directly into Australian Pty Ltd companies rather than forcing them to move to the US and form a Delaware company.

Other companies Bill mentioned included

  • Tableau a big data analytics platform that allows users to upload data and use their slick front end to analyse data in real time without using any database or excel queries 
  • Scribd new deal monthly subscriber deal where you can read unlimited books for a flat monthly fee, they are trying to become the Netflix for books
  • Glyde a used goods site which allows users to buy and sell used Smart Phones and Tablets but will expand to other used goods as the market depth of each category hits critical mass.

 

 

 

 

 

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