1. The Mystery of Venture Capital Victor W. Hwang T2 Venture Capital, Kauffman Fellows Class XII World Bank STI Global Forum * December 10, 2009

2. Money is everywhere. But money is not the same everywhere.

3. Thanks to Endeavor Egypt HIGH-IMPACT ENTREPRENEURIAL CAPITAL

4. Hernando de Soto focuses on legal structures, but this is only part of the picture. The U.S. has strong laws throughout all 50 states, so why does venture capital thrive only in some parts of the U.S.? The mystery must be deeper.

5. Where Does Entrepreneurial Capital Really Come From?

6. ? … $ ≠ entrepreneurial capital

7. ?... failure of efficient markets theory

8. ? … we can do better than luck and prayer

9. The Secret Art of Venture Capital Venture capital is learned through apprenticeship. Venture capital operates in a highly-networked community. Venture capital is dependent on human qualities more than transactional structures. Venture capital must compete in a global marketplace today.

10. Barriers to Growth Thanks to Endeavor Egypt

11. “It is not the strongest of the species that survives, nor the most intelligent … … but the one most responsive to change.” – Charles Darwin

12. Plantation Rain Forest A different approach to economic growth…

13. In a rainforest temperature, humidity, precipitation, sunlight, soil/nutrients, other flora/fauna In a startup capital, entrepreneurs, laws/norms, ideas/inventions, talent, markets

14. Our View of the Innovation Landscape Innovation is complex –Serendipity happens –Regions that can quickly mobilize critical resources – including capital – around opportunities will succeed economically –Critical mass of diverse assets You can’t have clusters of technological innovation without social and behavioral change Networks that cross professional and social boundaries play a key role People are the most important IP Failure can be a positive metric Commercialization is a ‘body contact’ sport

15. Differences Between Venture Capital and Ordinary Capital Trust-based, high transparency, and integrity in motivations Win-win, not win-lose Relationship first, transaction second Guidance, mentorship, experience in building companies (“return on involvement”) Personal counseling Access to the rest of the ecosystem: strategic relationships and critical know-how

16. The Mystery of Venture Capital? One possible solution…

17. Kauffman Fellows Venture Corps –Empowers and educates a generation of venture leaders in emerging geographies –Connects talent in emerging regions to the world’s ecosystem for talent, ideas, capital, markets A unique venture program that activates a global ecosystem…

18. … While Tied to the World’s Best VCs and Entrepreneurs The Society of Kauffman Fellows consists of 500 venture capitalists in 180 funds, managing $80 billion in 28 countries around the world

19. A Global Venture Ecosystem Venture Corps Network Build a global family of interconnected VC funds in emerging geographies Sponsored new talent in the Kauffman Fellows Program Global training/mentoring programs by industry leaders Hands-on work to catalyze new startups a highly interactive “neural network” for sharing resources Venture Corps HQ Office at Kauffman Fellows, the world’s leading venture network Superior access to the world’s best VCs and entrepreneurs for mentoring and collaboration Global summits to share deals, trends, expertise, talent

20. Contact Victor W. Hwang victor@t2vc.com Thank You