Williams School of Business
Bishop’s University
Dr. Kyung Young Lee
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 Dr.
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Kyung Young Lee
Assistant Prof. in Bishop’s University, Sherbrooke,
Quebec since Fall 2011
PhD in Management (Information Systems) from
McGill University (Fall 2012)
MBA from U of Ottawa
6 years working experience in IT and telecom
industry
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 Silicon
Valley
 Canadian
Environment of
Tech Startups
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History
Current trend
Success factors
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Definition: Silicon Valley is the southern region of the San
Francisco Bay Area in Northern California, in the United States.
The region is home to many of the world's largest technology
corporations as well as thousands of small start-ups. The term
originally referred to the region's large number of silicon chip
innovators and manufacturers, but eventually came to refer to all
the high-tech businesses in the area, and is now generally used
as a metonym for the American high-tech sector. (Wikipedia.org)
Rich, young, well-educated, diversified, and growing (population
& econ-index) area (SV index snapshot)
Home to many of the world's largest technology companies
including Apple, Cisco, Google, HP, Intel, Oracle, etc and
recent successful IT ventures (Uber, Snapchat, Airbnb, etc.)
The leading hub for high-tech innovation and R&D, accounting
for 1/3 of all of the venture capital investment in the US
http://siliconvalleyindex.org/
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http://www.scaleit.us/1404-2/
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2nd Q in 2014
COMPANY NAME
Uber
DESCRIPTION
Mobile car service application
Airbnb
Community marketplace for accommodations around the world
Lyft
Online social rideshare community
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3rd Q in 2014
COMPANY NAME
DESCRIPTION
Palantir Technologies Big data analytics and visualization
Houzz
Online platform for home remodeling and design
Lookout
Smartphone security software
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4th Q in 2014
COMPANY NAME
Uber
Survey Monkey
Instacart
Square
DESCRIPTION
Mobile on-demand car service application
Online survey solutions provider
Online and mobile grocery shopping and delivery
Payments and PoS systems provider
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Interaction with industry, research funding, and
creativity from universities.
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Students as inventors, disseminators, and workforce
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Encouragement of entrepreneurship on campus
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Talent pool and social networks
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Loyalty to technology (than to companies) with
unique openness
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Importance of immigrants (highly multicultural)
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Its many early adopters of new technology
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Job hopping culture
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Services infra with many suppliers for outsourcing (E.g.,
accounting, legal, financing etc.)
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Funding: angels, venture capitalist (VC’s), other
financing infra
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Entrepreneurial spirit, OK to fail…
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Flat organizational structures / Boundary-less
discussions
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Products, services, and platforms for engineers
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Technically savvy population (online)
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Globally connected issue-makers (online communities e.g., techcrunch)
Technical teams (still) rule the valley
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All things being equal, you can typically outdo competition and create
larger barriers to entry by applying additional technical expertise than you
can with added business expertise (at least in the early days).
Big data: If you mix big data or machine learning (AI: artificial intelligence) in
some way you will certainly get additional attention from investors.
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Automated Personal Finance
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People get more comfortable mixing their money and new technology.
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A growth in personal financial technology companies that will attempt to
automate our financial lives (e.g. m-payment, personal investment svc.)
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The “Sharing Economy”
The first model of ‘sharing economy’ is Ebay
 This turns Internet into “share and save” platform
 Difficult legal history but are now thriving.
 Examples: ZipCar (hourly car sharing), LendingClub (peer to peer
lending), AirBnb, TaskRabbit,Etsy and Uber.
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Better Communities and Support for Entrepreneurs
Better access to angels and incubators (e.g., Y-combinator, firstround.com
TechStars and 500 Startups)
 More accessible fundraising (for both investors and entrepreneurs) (e.g.,
AngelList and Kickstarter)
 Online communities for tech-entrepreneurs (e.g., Quora)
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Source: http://www.forbes.com/sites/rodebrahimi/2013/08/28/6-emerging-trends-in-silicon-valleyentrepreneurship/
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Canadian start-ups are known to be; 1) innovative, 2) global scale
(multi-cultural), and 3) young and better priced (?).
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Foreign funds see our raw technology and the quality of our
companies and think early stage opportunities are often better
priced in Canada than in the US, due to less competition among
VC's.
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More than half deals (by numbers of deals) are toward ‘SEED’
financing
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Venture capitals in Canada
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iNovia (http://inovia.vc/) – Montreal based
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Relay Ventures (http://relayventures.com/) – Toronto based
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Omers Ventures (http://www.omersventures.com) – Toronto based
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•Seed stage: an idea of products and services, no marketable products/services yet
(prototypes are usually created)
•Startup stage: First market analyses have been accomplished and the product is
on its way from the development stage to the market launch
•Series A: Scaling the product and getting to a business model.
•Series B: Scaling the business
•Series C onwards: More capital to scale
•Series D/E/F… : other milestones accomplished.
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According to Industry Canada, venture capital investments in Canada
totaled over $1.5B in the last four quarters (Q3’13 to Q2’14).
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Early-Stage (Seed & Series A) Makes Up Over 3/4 of Deals
 Ottawa-based Shopify raising a $100M Series C this past December,
which valued them at $1B
 Vancouver-based Hootsuite raising a $165M Series B in August 2013.
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Internet and mobile: In the past two years, VCs have invested heavily
in both Internet and Mobile services, (approx. 50% of all deals)
 Wattpad, read and write SNS, who closed a $46M Series D investment
from Union Square Ventures among others
 Triggerfox, a mobile address book company that raised $1.8M in seed
funding from Dharmesh Shah and Wayne Chang.
E-Commerce: came in second (approx. 15% of all deals)
 BuildDirect.com’s $27M Series B
 AskForTask’s $500k Seed round financing
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http://www.cbinsights.com/blog/canadian-vc-startup-funding/
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The largest investment over the past 2 years for each of the top 5 cities is below:
Vancouver - Hootsuite – 08/2013 – $165M Series B
Toronto - Wattpad – 04/2014 – $46M Series D
Ottawa - Shopify – 12/2013 – $100M Series C
Montreal - Enerkem – 06/2013 – $48.2M Series E
Burlington - Anaergia – 10/2013 – $46M
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Industry trends
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Venture capital activity will be at a record high
At least one big Canadian IPO: candidates are Shopify, Hootsuite,
and Vision Critical.
Technology trends
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Wearable devices - a few flourish, many fade: the rise of
complementary products for Wearable devices!
IOT (Internet of Things): Even more stuff will be connected in 2015.
LIVE FROM CES 2015
Payment systems (Bitcoin, P2P services, Mobile payment)
VR (Virtual Reality) will expand from its role in gaming into other
key areas like healthcare and education
http://www.theglobeandmail.com/report-on-business/small-business/sb-digital/biz-categoriestechnology/five-predictions-for-canadian-tech-in-2015/article21991603/
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http://www.techvibes.com/blog/jim-orlando-predictions-omers-2015-01-06
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Problems of potential customers: “I wish these photos I am sending this girl
would disappear!”  Founded in July 2011 as its first name “Pictaboo”, later
the name is changed to “Snapchat”
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Product description (WE DO NOT STORE USER’S INFORMATION!!!)
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A photo messaging application : Users can take photos, videos, and add
text (called ‘snaps’), and send them to a controlled list of recipients.
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Users set a time limit (1to10 sec) for how long recipients can view their
Snaps (as of April 2014, the range is from 1 to 10 seconds), after which
they will be hidden from the recipient's device and deleted from
Snapchat's servers.
Brief history
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In Dec 2012, Video snap launched.
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In Oct 2013, Snapchat Stories launched. / Evan Spiegel declined $3 B
buyout deal for Snapchat (with no revenue) from Facebook.
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In May 2014, Text chat and video chat added to the app.
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In Oct 2014, Snapchat introduced their first ads to Snapchat stories
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In Nov 2014, partnered with Square, they introduced Snapcash
http://techcrunch.com/gallery/a-brief-history-of-snapchat/
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Success factors
• Potential customers’ problem solved!
(Ephemerality)
• Technological environment: Smartphone & Mobile
internet penetration
• Users’ privacy protected.
• The most natural way of telecommunication!
http://www.digitalinformationworld.com/2014/09/the-history-of22
snapchat-infographic.html
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Product/Service model:
 Key users are mostly younger generation
 Current cost for the business: Snapchat is believed to be
spending $30 million a year with $15 million of that going to
Google for hosting its photos. The company is rumored to be
paying $3 million a month in legal fees for co-founder lawsuit.
Revenue models in 4th Q 2014
 Untargeted ads (disappear within 24H) :Not on snaps but on Stories
 Snapcash (partnered with Square): Their Snapcash (P2P payment
service) isn’t generating any revenue, just like Venmo (eBay)
Financing history (Most recent funding from Alibaba at 15B)
Stage
Seed
A
B
C
D or E
Mon/YR
Nov 2014
Feb 2013
June 2013
Dec 2013
Aug 2014
Raised
$0.485M
$13.5M
$80M
$50M
$485M
Valuation
$4.25M
$60~70M
$800M
$2B
$10B
Then, why is this almost revenue-less company valued over 10
Billion dollars?
http://www.bloomberg.com/news/2014-08-26/snapchat-said-to-nearfunding-with-kleiner-at-10b-value.html
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 C100
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http://www.thec100.org/
A non-profit organization that supports Canadian
technology entrepreneurship through mentorship,
partnership and investment.
Formed in 2010, by a group of ultra-successful
Silicon Valley business people from Canada
C100 supports the next generation of Canadian
entrepreneurs and help build the next billion dollar
Canadian tech company.
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http://www.thec100.org/our-network/funding-partners
http://www.thec100.org/companies
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