The venture-backed startup IPO market has remained strong over the past five quarters, with 20 or more IPOs in each of those quarters. I was curious how the strength of the IPO market has impacted the acquisition market. In particular, how the number and value of startup acquisitions has changed, and more specifically, whether there are any trends in the sizes of acquisitions.
It would seem hardware startups are booming. First, the amazing success of the GoPro business and IPO, which set a 23-year highwater mark for a consumer hardware company. Second, there seems to be a growing number of hardware startups bubbling in incubators like Lemnos Labs and Highway1. Third, Kickstarter and other crowdfunding sites have enabled hardware startups to mitigate one of the biggest risks in starting out: obtaining a reliable proxy for consumer demand. But do the data support the idea that the hardware ecosystem is as vibrant as it seems?
According to the WSJ, GoPro is the largest consumer hardware IPO in 23 years, though like most entrepreneurs, I don't remember the Duracell IPO. The last consumer hardware company IPO I remember is Tivo, which was in 1999. Because GoPro is the first sizable consumer hardware IPO in eons and because the startup world has a blossoming hardware segment, I thought it would be interesting to compare and contrast a top consumer hardware startup with the benchmarks of public SaaS companies. I have three goals with this analysis. First, to understand GoPro's business better. Second, to benchmark GoPro's capital needs, capital efficiency and attractiveness to investors. Third, to draw conclusions for other hardware startups.
Benjamin Morris, a writer for arguably the best computational journalism publication, fivethirtyeight, published "Lionel Messi is Impossible" which describes in words, statistics and charts why Lionel Messi is one of the greatest players in the world. Even if you're not a soccer/football fan, the article is worth reading because it's one of the finest examples of synthesizing data and a story to convey a point I've read a very long time.
Hometown investors, the local group of angels and VCs within a startup community, are an essential part of startup ecosystems. They can be great connectors, providers of advice and most importantly, suppliers of the venture capital to enable startups to grow. I was curious if hometown investment patterns differ across the 10 major cities in the US.
A terrific SaaS VP of Marketing once told me, "If the sales team is focused on hitting this quarter's revenue target, then the marketing team ought to be focused on next quarter and the following quarter." In SaaS companies, one of the marketing department's primary responsibilities is generating sufficient customer interest to enable the company to achieve their revenue targets.
Earlier this week, the Commerce Department announced US GDP in Q1 2014 fell by 3%, the most in a quarter since the recession. I've linked to the WSJ's chart depicting the trend above. The decline was 3x greater than forecasted. Silicon Valley seems unfazed.
Google revealed many novel projects and products at yesterday's Google IO Conference. At the moment, I'm most curious about the development of Android Wear, in part because of the beautiful Motorola 360 watch and in part because I suspect connected watches bring substantial change to the mobile device market.
Last week, the team at Wharton in San Francisco invited me to speak at the Entrepreneurs Workshop. I chose the topic of the "Five Forces Shaping the Fundraising Market" and prepared a Mary Meeker style presentation, with a chart and a bullet point on each slide, to illustrate the forces in tension.
There's a cyclicality to fundraising. Certain sectors rise quickly and become competitive while others decline. I've been wondering about the state of the market. First, which sectors are in vogue now in Seed investing and Series A investing? Second, is there a delay between the sectors attracting seed capital and Series A capital? In other words, do seed investors see trends before VCs do?