Leveraging Data to Change Industry Paradigms

Report
There is a large opportunity to reinvent industries
using data
…Resulting in significant data and
revenue growth
Costs have come down…
Projected annual
Global "big data" revenue “big data” growth is
37% through 2017
Cost of storage / GB
$300K
$50B
CAGR
(13-17)
Infrastructure
& Networking
XaaS
40
200
28%
33%
Database
25%
Applications
40%
30
Storage
20
100
Source: Wikibon
22%
1990: $10
2000: $1
0
1981
Compute
26%
1990
2000
2010: $0.10
2010
10
Professional services
0
2011 2012 2013 2014 2015 2016 2017
26%
Significant venture capital dollars have been invested in
“big data” in recent years
>30% annual growth
in deal volume and
investment size from
2008-2012
Venture capital investments in "big data"
$2.0B
1.5
1.5
1.4
1.0
0.5
0.0
Deals
Source: Orrick
0.5
0.6
0.7
2008
2009
2010
2011
2012
55
65
96
132
164
Much of data analytics today is focused on
serving incumbents
Opportunity to rebuild approach to serving customers
from the ground up
Feedback loops with data are a powerful
mechanism for product improvement
New business models use data to provide
a higher level of service to customers
Companies must be reinvented from the ground up to
fully leverage the potential of data
Incumbent model
Gaming
• Studio model with large
sunk development cost with
limited pre-launch testing
Taxi
• Dispatch systems expensive
dedicated equipment, no
driver or passenger feedback
Venture
Capital
New model
• Very manual process with
limited optimization or use
of data
Starting with a clean slate can lead to radically new models,
products, and services, and startups are best poised to do this
Early stage investors look for data opportunities with
specific criteria
1) Large, valuable markets that haven’t innovated… yet
 Capital requirements in line with market opportunity
2) Opportunity to transform status quo with data
 Cost savings, personalization, or a better customer experience
3) Team that blends industry skills and a strong engineering mindset
4) Product development emphasizing rapid iteration and optimization of product and
processes; lean startup approach
5) Sustainable competitive advantage
 Networks effects, proprietary data, high switching costs, etc.
Many industries are being transformed
Finance
Media
Security &
gov’t
Health
Education
Data analytics
Data infrastructure
Travel &
transport
Retail
Other
Case studies
1
SignalFire
2
ClassDojo
3
Metromile
Entrepreneurs have lower Capex requirements and more
funding options than ever before…
Large VC
Incubator
… VCs must be more proactive
Low barriers have increased the noise; now it’s possible
to process signal
Organized Channels
Digital Channels
Unstructured Channels
Data integration, cleansing,
and structuring
Filtering
FILTERING
FEEDBACK LOOPS w/
MACHINE LEARNING
Machine learning
Investment team
Feedback loop from
team, fundings, and
company performance
Platform informs seed-stage investments with full
information and low cost structure
Large investments
Boutique VCs
Full resource VCs
Sweet spot for early stage
investor / startup alignment
Small investments
Incubator program
SignalFire is reinventing venture capital with a new
business model, new architecture, and data analytics
• Competitive advisory and VC firm built on top of a data analytics
platform
• Rethought venture business from the ground up using large amounts of
data
• Tracking key company characteristics based on venture capital best
practices
• Machine learning algorithms process and highlight emerging
opportunities
• Building a networked partnership structure with feedback loops
• Platform will help identify opportunities for investment, partnership, and
acquisition, and provide general competitive intelligence
ClassDojo: Behavior management
software for the classroom
Customer
pain point
ClassDojo
data solution
Competitive
advantage
•
Teachers spend significant time in the classroom focused on student behavioral issues,
which detracts from teaching
•
Existing process of logging behavioral issues is time-consuming and memory-based
•
Parents only receive feedback from teachers ~2 times per year, so feedback between
the classroom and the home is discontinuous
•
Smartphone app that enables teachers to
immediately reward good behavior and call out
bad behavior
•
The teacher can track students over time
•
Gives parents real-time feedback on how their kids
are doing behaviorally, tightening the feedback loop
•
Incumbent players in education are slow to innovate and execute
•
Have established first mover advantage with 17M teachers and students in 120
countries
•
Ability to scale virally since it is curriculum agnostic (applicable across countries)
MetroMile: Pay-as-you go car insurance
Customer
pain point
MetroMile
data solution
Competitive
advantage
•
Drivers that drive less pay disproportionately higher
rates
•
Car insurance companies do not take distance driven
into consideration when setting premiums, though
accidents occur less often with infrequent drivers
•
Targeted car insurance product for those who drive less
than 10,000 miles per year
•
Product plugs into existing car diagnostic ports (OBD-II)
and collects data on key vehicle usage metrics
•
Pricing is in line with distance driven
•
Opportunity to add unique services based on data insights
•
Incumbent insurance companies run the risk of cannibalization; lower premiums for
infrequent drivers would increase premiums for frequent drivers and customer churn
•
MetroMile is focused on disrupting car insurance through innovation and has an
engineering culture; incumbents lack engineering culture and tend to outsource
•
Rapid scalability even in highly regulated markets through strategic partnerships; will be
available to 40% of the US within 6 months
As VCs, we are excited about opportunities both in data
analytics as well as vertical solutions with data at their core
Finance
Media
Security &
gov’t
Health
Education
Travel &
transport
Retail
What’s the next industry to
be transformed by data?
Data analytics
Data infrastructure
Other

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