A Brief History of Venture Capital Innovation from 1946 to Today, from Sand Hill Rd to Startup Studios, Accelerators, Crowdfunding, AngelList and ICOs.

1. VC70YEARS
OF
sosv.com/70vcINNOVATION

2. FOREWORD
“Venture Capital” — financing
an endeavor in exchange for a
share of proceeds in a broad
sense is as old as Columbus,
and beyond.
Its modern form as a type of
“private equity” for early stage
high growth firms — beyond
wealthy individuals and
families — started in 1946
with French-born American
Georges Doriot, the “father
of venture capitalism”.
Disrupting the Spice Trade
Christopher Columbus pitched the rulers of
Portugal, Genoa, Venice and Spain over
7 years until the latter agreed to fund him.

3. This presentation lists some of
the significant evolutions in the
financing of early stage high
growth companies.
We used a broader definition
of venture capital to include
various forms of crowdfunding.
VC INNOVATION

4. Investors are always looking
for new ways to allocate
capital.
The key questions revolve
around risks, returns, liquidity,
costs, volatility, velocity,
difficulty and amount of capital
that can be deployed.
WHY INNOVATE?

5. TIMELINE OF VC INNOVATION
19721946 2010 20122005 20172009 20112004 20071996 2013 20152006 2008
Sand Hill Rd Super Angel
Sponsored Accelerator Product Crowdfunding
Secondary Market Angel List
Accelerator Fund
JOBS Act
Vertical Accelerator
Corporate Accelerator Regulation A+
VC ICO
ARDC
First VC
Product Crowdfunding
Startup Studio Accelerator Company Builder Platform VC“DST Deal” Equity Crowdfunding ICO
RegA+ NYSE IPO
SPAC
Note: HAX is a hardware-focused vertical program part of SOSV

6. Startup accelerators are
(generally) companies
offering seed money,
advice and connections
over an intense and
limited time period,
in exchange for equity.
Co-founded in March 2005 by Paul Graham
Y Combinator created a new category of incubators
ACCELERATORS

7. As of 2017, the world
counts thousands of
accelerators.
Some focus on a sector,
geography or stage.
They can be for-profit,
non-profit, government-
backed, sponsored,
corporate, etc.
ACCELERATORS
Accelerators Come In Many Flavors
The “Big Four” Invest In >100 Startups / Year
Vertical
Non-Profit University Corporate
Sponsored Government

8. ACCELERATORS AND FOLLOW-ON FUNDING
Source: Pitchbook

9. Some investment firms
build startups themselves,
providing capital and
management.
Germany’s Samwer Brothers Founded
Rocket Internet To Build Local Clones
Of Successful Startups
COMPANY
BUILDERS

10. Several venture capital
firms started offering a
broad range of services
to attract and support
startups, from recruiting
to marketing.
The firm AndreessenHorowitz is among
the most prominent “platform VCs”
PLATFORM VCs

11. Secondary markets
can offer early liquidity
to founders, investors
and/or employees.
SecondMarket helped buy and sell illiquid
assets such as private company stocks.
It was acquired by NASDAQ in 2015.
SECONDARY
MARKETS

12. Created in 2010 as a
matchmaking platform
between startups and
angel investors.
Since 2015 it allows
startups to raise capital
from private investors
free of charge.
Naval Ravikant
Co-Founder of AngelList
ANGELLIST

13. As of October 2017
AngelList saw over
$650M invested in
1,705 startups and
$5.7B in follow-ons.
0
200
400
600
2014 2015 2016
Source: AngelList
STARTUP INVESTMENTS VIA ANGELLIST

14. OCULUS
Raised $2.4M
Acquired for $2B
PRODUCT
CROWDFUNDING
Product crowdfunding
is a useful source of capital
for startups, particularly
in hardware.
Backers generally receive
products as reward
but no equity.
Note: SOSV is an investor in Makeblock
MAKEBLOCK
Raised $185,000 in 2012
500 staff in 2017

15. The “Jumpstart Our
Business Startups” Act
is a law intended to help
small businesses with
funding.
President Barack Obama
signed the JOBS Act
into law on April 2012
JOBS ACT

16. Further updates to the
JOBS Act clarified and
eased the rules for equity
crowdfunding.
REG A+ / D / CF
Source: SeedInvest

17. EQUITY
CROWDFUNDING
Equity crowdfunding
platforms allow individuals
to invest directly in
companies.
SeedInvest is one of the leading platforms
for equity crowdfunding

18. EQUITY CROWDFUNDING

19. “Initial Coin Offerings” are
a largely unregulated
means of crowdfunding via
use of cryptocurrency.
In most cases, the
“tokens” sold give access
to services and do not
equate to company shares
or voting rights.
Mastercoin (now Omni) completed the world’s
first ICO in 2013, raising about $500k.
ICOs

20. ICOs HAVE MULTIPLIED
Source: CoinDesk

21. Several investors have
turned to ICOs to raise
new funds. Those funds
are often dedicated to
investing in crypto-related
startups shares or tokens.
Two key benefits is to
provide immediate
liquidity and a more
inclusive base of “LPs”.
Blockchain Capital raised US$10 million in an ICO
VC ICO

22. Special Purpose
Acquisition Companies
(SPAC) are “blank-check”
or “shell” firms that have
no operations but go
public with the intention
of using the proceeds
to merge with or buy
part or all of a company.In Sept’17, the IPO of a SPAC by Social Capital
raised US$600M on the NYSE. Draper Oakwood
raised US$50M on NASDAQ.
SPAC
Source: Wikipedia

23. New ideas are coming,
from “Reverse ICO” and a
Stock Exchange favoring
long-term holding. Both
are yet to be tried out.
Time will tell if VCs
discover new ways to find
capital to deploy, and offer
startups more access
to funding, communities
and customers.
Tulip bulbs were a highly speculative
asset class circa 1636.
WHAT NEXT?

24. 1995 201420122010 2018
SOSV EVOLUTION TIMELINE
Angel investor
China/Cross-border
Accelerator
Single LP Fund
Hardware
Lab to Market
Vertical
Accelerator
Life Sciences + Food
Multiple LPs
2015
(next fund)Platform
VC
Mobile-OnlySean O’Sullivan
Hardware Sales & Marketing

25. 70 YEARS OF
INNOVATIONS
IN VENTURE
CAPITAL
sosv.com/70vc