What Archimedes does

What Archimedes does
Archimedes founds “mobile first” companies
addressing the enormous opportunity created by
the meeting of human needs and mobile
platforms.
11/17/11
Confidential – Archimedes Labs
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Archimedes Since Formation in Jan 2011
¤  5 companies founded this year
¤  all 5 funded post-founding
¤  some through 2 rounds of financing
¤  Co-Investors include
¤  Vinod Khosla
¤  US Venture Partners
¤  Eric Schmidt
¤  Betaworks
¤  Google Ventures
¤  Charles Huang
¤  Michael Arrington
¤  True Ventures
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Confidential – Archimedes Labs
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Why Now?
The Post-PC era is here
Global unit shipments, PCs vs. Smart Mobile
(Smartphones + Tablets)
PCs
Units shipped (millions)
900
800
700
600
500
400
300
200
100
0
2007
2008
2009
Data from MSDW Research 2/11. PCs includes desktops, laptops, and netbooks.
Confidential – Archimedes Labs
2010
2011
2012
2013
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Why Now?
Key human behaviors are driving new technology solutions
4M daily CHECK-INS
200M daily TWEETS per day
Online video WATCHING up 45%
100M daily UPDATES
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Confidential – Archimedes Labs
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Why Now?
Winners in the huge mobile internet market are yet to be decided
1000s
10,000s
Millions
100s of MM
Billions
¤  Each era has brought a dramatic increase in market size
¤  Each era has created more company value & wealth than the previous
¤  Each era has opened more opportunities for investors
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Confidential – Archimedes Labs
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Why Now?
The market for mobile internet companies is global on Day One
More than
5B mobile
phones in
use across
the globe
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Confidential – Archimedes Labs
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Why Archimedes?
Unique means to Incubate, Accelerate, and Invest early
Angels, Y Combinator, 500 Hats, Early Stage VCs, Others
Typically worse economics and higher fail rate.
Pre-seed
Seed
Archimedes
A Round
B Round
Late Stage
VCs, Mezzanine Firms, Private Equity
FOCUS
•  Focus on post-pc opportunities.
•  Focus on emerging entrepreneurs from Stanford CS and others.
•  Marriage of Archimedes skill set with early stage needs.
•  Highly Engaged participation.
ECONOMICS
•  Incubation – 60-80% as co-founder, 2 or more incubations per year.
•  Acceleration – 8-15% as co-founder, 2-3 accelerations per year.
•  Investment – Typically 1% per $10,000, 5-10 investments per year.
Lower-return deals
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Confidential – Archimedes Labs
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Why Archimedes?
Going beyond investment, we help companies succeed
¤  Startup teams must excel at product design, technology, and business; yet
most young startups are weak in at least one, and often two areas
¤  Our track record, connection and expertise make us valuable co-founders
Kambiz Hooshmand
High tech executive for AMCC
and Cisco.
Jay Borenstein
Computer science academic,
successful entrepreneur.
Patrick Gannon
Product strategist
and financier
business
technology
product design
Kevin Doerr
Business and
product strategist in
mobile and web.
Matt Kaufman
Hands-on product and
engineering executive.
Keith Teare
Serial entrepreneur with over
$1 billion in exits.
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Confidential – Archimedes Labs
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Why Archimedes?
Partners with great track records
Partner
Track record
Experience
Keith Teare
Serial entrepreneur with over $1 billion in exits. Co-Founder, TechCrunch
Kambiz
Hooshmand
High tech executive for AMCC and Cisco.
Chairman, Infinera
Sr. Advisor, Silver Lake Management
CEO, Applied Micro (AMCC)
Group Vice President, Cisco
Kevin Doerr
Business and product strategist in mobile and
web software. Experience managing largescale engineering teams focused on web
services. Background in corporate and
business development.
VP, Products at Yahoo!
SVP, Oodle
GM, Premium Mobile, MSFT
Matt Kaufman
Hands-on product development leader who
has designed & built online and mobile
applications in the social, e-commerce,
search & online gaming spaces.
VP, Product at Oodle
Head of Product & Eng, edgeio
VP, Product Mktg, Forterra
VP, Product, There.com
Patrick Gannon
Product strategist and financier with long
record of innovations and disruptions in
online finance, financial services, and
computing systems.
SVP, Investor Services, LendingClub
VP, Strategic Planning, Wells Fargo
President, PJRG LLC
Principal, Diamond Tech. Partners
Jay Borenstein
Computer science academic, successful
entrepreneur and technology executive.
Stanford University Department of
Computer Science
CEO, founder Integration Appliance
CTO, LeaseExchange
CEO, founder RealNames
CTO, co-founder EasyNet
11/17/11
Confidential – Archimedes Labs
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Why Archimedes?
Smart model for better returns
¤  Early stage founding and cofounding approach means large equity
stakes
¤  Early investment approach lowers capital risk
¤  No fees or carry. This is not a fund, it is a company that distributes capital
gains to members.
¤  20% of all exits retained as investable funds for future deals. Evergreen
investing means no missed opportunities for investors
¤  Executives will also take no salary until $25m returned to the entity, then
market rates
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Confidential – Archimedes Labs
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Why Archimedes?
Portfolio companies created since inception worth millions
$MM company value
Total Company Value as of last round valuation
25.0
20.0
15.0
Seed $25K @
$500k
Seed $60K @
$2.5MM
Broomst
ick
Blurtt
10.0
5.0
Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11
Convertible
note $550k @
$3mm
Series A
$3.8MM @ $7MM Seed $780K @
$3.5m
TBD
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Confidential – Archimedes Labs
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Why Archimedes?
Strong early portfolio in Mobile First market
Accelera'ons
From $0 to
over $20MM in gross value in
9 months
Incuba'ons
Investments
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Confidential – Archimedes Labs
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Use of Proceeds
¤  Hire key developers to facilitate low-dilution, in-house prototyping and
services infrastructure for companies
¤  Enable up to $500,000 for primary incubations and up to $100,000 for
accelerations
¤  Permit opportunistic investments of up to $100,000 for early stage deals
¤  Terms subject to change
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Confidential – Archimedes Labs
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Terms of Opportunity
¤  $100,000 minimum investment
¤  $5 million maximum raise
¤  $20 million pre-money valuation
¤  First close by end December 2011, no less than $1 million
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Archimedes Labs
Appendix 1: Current companies we own shares in
Fall 2011
Confidential – Archimedes Labs
Just.me – mobile/social - for you!
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¤  just.me lets mobile device owners
capture, share and discuss their life with
individuals, groups, publicly or privately
using just their phone address book. They
can use video, images, audio or text in
any combination.
¤  Just.me changes the entire approach to
social networking, putting the user in
complete control, targeting the next
generation of Facebook and Google+
¤  Archimedes Labs has a 60% stake
¤  Co-investors: Google Ventures, Ron
Conway, Betaworks, True Ventures, Don
Dodge, more
¤  The company closed its seed round and is
being actively courted for possible Series
A investment by top-tier VCs
Confidential – Archimedes Labs
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Blurt it out with
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¤  Visual messaging from person to
person/people: Blurtt it out
¤  Multi-$billion sms/mms market
opportunity
¤  Accelerated at Archimedes, 8%
pre-dilution ownership
¤  $60k seed by Archimedes plus
friends and family
¤  Strong team and CEO
Confidential – Archimedes Labs
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Quixey – find the right mobile app
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¤  App stores everywhere need a
great search and discovery
experience. Search and
discovery are hard.
¤  Large search marketing
opportunity
¤  Archimedes investment, 1.6% predilution ownership. Co-invested
with Eric Schmidt’s Innovation
Endeavors. Series A led by USVP
¤  Strong team and CEO
Confidential – Archimedes Labs
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gTar unites performers with the cloud
¤  gTar is a consumer electronics
device that enables an interactive
music entertainment experience to
anyone without needing musical
knowledge
¤  gTar makes it possible for performers
to capture and share the exact way
they play songs. It is also possible for
other artists and students to have
those performances play on their
instruments using mobile and cloud
technology
¤  Archimedes investment, 1.6% predilution ownership. Co-invested with
with Charles Huang (Guitar Hero)
and Warner Bros Music
¤  The company closed its seed round
and is nearing the launch of its app
and devices
Confidential – Archimedes Labs
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Broomstick Productions
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¤  Children’s characters in animated
iPad stories
¤  Archimedes investment, 2% predilution ownership
¤  Kickstarter project backed by
David Hornik (August Capital) and
Guy Kawasaki (Garage Ventures)
and many others
¤  Hollywood special effects star and
Royal Storyteller on the team
http://www.kickstarter.com/projects/11766959/love-from-heckerty-from-paper-to-iphone-and-ipad/posts
Confidential – Archimedes Labs
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Archimedes Labs
Appendix 2: How we differ from a fund
Fall 2011
Confidential – Archimedes Labs
Investor’s competitive advantage
Comparison
Archimedes Labs
Typical investment as an LP
Investment model
Operating company: Members realize
value throughout the life of the
company. Continuity in management
and personnel
Fund approach gives access to a single,
closed-end, set of investments
Approach
Founder or co-founder approach
Shotgun approach in accelerators and
instantly scales selected portfolio
money-only approach for many latercompanies ensuring our capital performs stage investment vehicles
as well as possible
Timing
Engage with selected companies early,
many from tight relationship with
academic community. With today’s
minimal capital requirements for
launching mobile-first companies, this is
where the value can be extracted
Engage at latter stages, meaning fewer
opportunities and less value for initial
capital investment
Costs
No carry, no fees. We pay salaries like all
companies. Managers defer salaries until
exits produce $25 million return to
Archimedes.
Carry, fees irrespective of returns.
Ownership
Ongoing, all companies
Lifetime of fund, specific companies
Use of funds
Incubator employee salaries for
incubation and acceleration, plus direct
investment into companies
Equity in companies for small ownership
stakes.
Confidential – Archimedes Labs
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Entrepreneur’s competitive advantage
Comparison
Archimedes Labs
Typical investor relationships
Investment model
Seed investment and co-founder
Seed, A round investment
Value-add
ü 
ü 
ü 
ü 
Relationship
Full range of talents, connections and
skills of the Archimedes team is available
to assist
One angel or lead partner
Ownership
8-15%
20+% for typical A round institutional
investor
Introductions
Capital
No board level implications
Gain a “Co-founder” that instantly
scales company’s ability to:
ü  Refine product strategy
ü  Build product prototypes
ü  Wisely plan product
architecture
ü  Intelligently position for
future fundraising efforts
ü  Hire
ü 
ü 
ü 
Introductions
Capital
Board voting rights
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Confidential – Archimedes Labs
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Archimedes Labs Summary
¤  Operating Company in Palo Alto, CA, creating Mobile First startups since January
2011
¤  Co-founder model means active participation in portfolio companies
¤  Product strategy & prototyping, architecture planning & development, hiring,
fundraising, and beyond
¤  Executive and early employee level contributions through Archimedes
instantly scales capabilities of early stage portfolio companies
¤  Provides real, high-level human capital cycles to entrepreneurs unlike
traditional incubators
¤  Early engagement
¤  Traditional institutions frequently too slow/late to realize value with barriers to
entry for today’s mobile-first entrepreneurs getter lower every day
¤  Tight relationship with academic community facilitates opportunities
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Confidential – Archimedes Labs
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