Archive for the ‘entrepreneurship’ Category
Monday, May 6th, 2013
The Business Innovation & Growth Council (BIG) has released results of its second annual Entrepreneurial Growth Index, a measure of the health of the Charlotte-region’s entrepreneurial companies.
Terry Cox, president and CEO of BIG says, “It is especially notable that we had 28% more companies respond to the survey in 2013 than 2012, while nationally the number of entrepreneurial startups has dropped slightly two years in a row.”
David Jones, CEO of managed hosting and cloud services provider Peak 10, and a leadership advisor to BIG noted the increased revenue reported by companies in 2013.
“The companies responding to this year’s survey have revenue just under one billion dollars and an average growth rate of 37% over the last 3 year,” Jones says.
“The survey indicates that entrepreneurial companies will add another 928 jobs to the local economy in 2013. That is an impressive message as we consider today’s economic environment.”
Key findings of the 2013 study show:
- 120 companies responded, compared to 94 in 2012
- Projected revenue for 2013 is $960 million, an 18% increase over 2012 revenue of $817 million and a 3-year average growth rate of 37%.
- A 24% 3-year average growth rate in employment (full time, part time, and contract) with projected 928 in headcount for 2013, of which 42% are contractors.
- Average headcount of 49 per company, with an average weighted salary of $54,000, as compared to an average of 30 per company and average salary of $55,000 reported in the 2012 survey.
- Funding sources for businesses surveyed were:
- 2% Grants
- 5% Venture Capital
- 5% Private Equity
- 13% Bank Financing
- 19% Angel Investment
- 56% Self Funded
- Twenty percent (20%) of the companies participating were founded in the past two years and fifty two percent (52%) of the companies are less than five years old.
- 84% of the companies are located in Charlotte, while 16% are in the outlying cities/towns.
- 47% of those surveyed are in technology, 11% business services, 8% technology based education, 7% healthcare, 5% retail, 5% marketing, 4% transportation and distribution, and 14% in various other industries.
BIG continues to track data from entrepreneurial companies as a measure of the health of the local start-up economy. “The Charlotte region continues to grow through the contributions of our high growth entrepreneurial community,” Jones notes. “An important part of the region’s economic future is to continue to develop the supporting infrastructure that enables entrepreneurial companies to grow.”
Tuesday, April 30th, 2013
Eighty-four percent of entrepreneurs said they are confident or very confident in their companies’ prospects for profitability in the next 12 months, which is the highest confidence level since the survey launched early last year and reflects a 1 percent increase over the fourth-quarter 2012 survey.
Furthermore, confidence levels of the youngest entrepreneurs – those 18 to 30 years old – started to rebound, as 96 percent reported they were confident or very confident that their businesses’ profitability will increase in the year ahead, a 3 percent jump over fourth quarter 2012.
This is just the latest of a number of surveys showing that small businesses, startups and even private equity firms are showing more confidence about their businesses than they have in years, despite concerns about the overall economy and political machinations.
Granular feel for entrepreneurial sentiment
“The findings of this survey from quarter to quarter provide an important gauge for entrepreneur sentiment, which plays a significant role in their business decisions,” said Dane Stangler, director of research and policy at the Kauffman Foundation. “This also is a way to give entrepreneurs, who are as diverse as their companies, a collective voice.”
Confidence levels among other age groups fell as the entrepreneurs’ ages increased. Nevertheless, even entrepreneurs aged 61 and older – the oldest category – expressed 73 percent confidence in 2013 profitability.
“These reports continue to benchmark entrepreneurial confidence across the country,” said John Suh, CEO of LegalZoom. “They also provide a more granular feel as to how an entrepreneur’s experience with consumer demand and perceived outlook on the economy may impact the decision to hire.”
No so optimistic about overall economy
Despite their optimism for their own companies’ profits in the year ahead, entrepreneurs’ faith in U.S. economic growth deteriorated from fourth quarter 2012. Just 39 percent said they expected the economy to improve over the next 12 months, compared to 44 percent in the previous quarter’s survey.
The number of entrepreneurs planning to hire more employees also declined. In fourth quarter 2012, 37 percent of the respondents planned to hire. In the most recent survey, only 32 percent expected to hire more employees in the next 12 months.
Entrepreneurs’ outlook for consumer demand dipped with 44 percent expecting an increase in customer demand, down from 45 percent in the previous survey.
The Kauffman Foundation sponsors the Startup Confidence Index surveys in conjunction with LegalZoom, a leading national provider of online legal solutions and legal plans to young companies.
The findings are based on 1,650 responses to a nationwide, February 2013 survey distributed via email to LegalZoom customers who formed their entities within the last 12 months. The Index is conducted quarterly to gauge entrepreneurial confidence.
View the Kauffman LegalZoom Startup Confidence Index infographic. Follow the conversation online at #startupconfidence.
Thursday, April 25th, 2013
Time Inc. today unveiled its third annual list of the 10 NYC Startups to Watch for 2013.
Each Spring, editors from Time Inc. brands, including TIME, FORTUNE, CNNMoney.com, PEOPLE, Sports Illustrated, Entertainment Weekly, InStyle and Real Simple, comb New York’s technology scene to discover the ten most promising startups of the past year.
This year’s diverse list spotlights New York City-based companies with the most potential to transform areas from shopping, personal health and dating to customer service, social media, and data analysis.
Past honorees that have experienced considerable success include the curated design shop Fab (2012), which now has 10 million members and is reportedly valued at $1 billion; eyewear designer and retailer Warby Parker (2011), which recently opened its first flagship retail store in New York City, and Stamped (2012), which was Marissa Mayer’s first acquisition at Yahoo!
NYC startup scene hotter
“Each year, the temperature of NYC’s start-up scene seems to get turned up another five degrees, with 2013 yielding by far the largest number and widest spectrum of companies for our judging committee to consider,” says Time Inc. Style & Entertainment Group Editor Mark Golin.
“As journalists, it’s our job to bring news of the latest digital products, services and trends to our audiences. But, as a media company looking to lead in a rapidly evolving industry, Time Inc. ends up winning every bit as much as the companies that made this list by allowing ourselves to be inspired by their innovative example.”
Time Inc.’s “10 NYC Startups to Watch” in 2013 are:
- ARCHETYPEME: ArchetypeMe redefines ‘personal’ search and discovery by placing users within a community of like-minded people where they’ll receive original, relevant content and videos.
- CUSTORA: Custora is a marketing analytics platform that helps leading online retailers like Birchbox, Etsy, and LivingSocial identify and keep valuable customers.
- FIFTYTHREE: FiftyThree builds tools for creativity – they crafted the breakthrough app, Paper, named Apple’s App of the Year. Users who have relied on traditional journals and notebooks now have a professional-quality app for drawing, graphing and coloring on a tablet.
- FITOCRACY: With more than 1 million users, Fitocracy is a workout tracker and social network that empowers users to succeed at fitness by connecting them to communities just like them and providing guidance to help reach their goals.
- GROUPER: A dating site with a twist, Grouper matches two groups of friends together based on information pulled from their Facebook profiles and then arranges a destination for an offline blind group date.
- HUKKSTER: Hukkster is a digital platform that allows shoppers to track products at more than 1000 popular online stores – from Asos to Zappos – and get notified when those products go on sale.
- IMRSV: A breakthrough in real-world, real-time data analysis, IMRSV’s Cara software transforms web cameras into intelligent sensors that capture data including age, gender and attention time.
- KLOOFF: A smartphone app for pet owners who love their pets, Klooff lets users share photos, meet people with similar animals, create customized products and much more.
- QWIKI: Qwiki, already a leader in automated video production, recently released an iPhone app that automatically creates beautiful movies from the events captured on your iPhone.
- UPWORTHY: Upworthy’s mission is to lift up things that matter using irresistible social media – to make really important issues as shareable as a video of a guy jumping on his bed and falling out the window.
For more information on Time Inc.’s 10 NYC Startups To Watch, you can find it here, or on Facebook.
Wednesday, April 24th, 2013
In the current financial climate, new high-tech businesses rely more than other firms on outside loans and investments, while non-technology businesses owned by African Americans, Latinos, and women simply operate on less capital, says a report issued today by the U.S. Small Business Administration (SBA) Office of Advocacy.
The report, called Access to Capital among Young Firms, Minority-owned Firms, Women-owned Firms, and High-tech Firms looks at how the changing financial environment affects new firms.
“We know that startup businesses with access to financing drive innovation, job creation, and economic growth,” said Dr. Winslow Sargeant, Chief Counsel for Advocacy.
“Policies that help close the financing gaps for minorities and women and for high-tech startups will benefit the whole economy.”
Minority firms rely more on their own funds
The author, Alicia Robb , finds that minority firms in particular rely more on their own funds—and have less capital to start up and grow. High-tech businesses that rely on patents, copyrights, and trademarks also faced bank financing hurdles, possibly because their products rely on knowledge, which is harder for banks to assess than physical assets.
The report uses data from the Kauffman Firm Survey to look at new businesses’ access to capital during the 2004-2010 period.
African American and Latino owners of young firms are less likely than others with similar credit scores to have access to bank financing. During the financial crisis, women and minority owners of new startups were less likely to apply for credit, fearing loan denial.
The Office of Advocacy, an independent office that serves as the voice for small business within the federal government, sponsored the report. The full report is available on the Office of Advocacy website at http://www.sba.gov/advocacy/7540.
Wednesday, April 24th, 2013
Owning a business is stressful, but running a business from home brings additional challenges, according to a new survey by Wakefield Research forCarbonite, Inc. (NASDAQ: CARB), a leading provider of cloud backup solutions.
The study found that while home-based small business owners are concerned about data loss and struggle to find a proper work/life balance, a majority (79 percent) aren’t taking full advantage of cloud-based business tools.
“Running a business out of your house usually means insufficient IT support and a blurry line distinguishing when you ‘go home for the day,’” said Pete Lamson , SVP Cloud Backup at Carbonite.
“Nearly half (45 percent) of home-based business owners feel it’s more stressful working for themselves, which is why solutions that are easy to use and set-it-and-forget-it are especially important for these small businesses.”
Take a look at this infographic on Home business trends: http://www.carbonite.com/docs/default-source/infographics/carb-igraph-working-from-home.pdf
Here at the TechJournal we’re intimately aware of the benefits and challenges of running a home business. We’ve spent whole days trying to solve IT problems, from PC glitches to security problems.
Work-life balance doesn’t exist under one roof
Small business owners working from home often find separating personal life from professional life a challenge, as they strive to manage everything from time constraints to data loss. Carbonite’s survey revealed that:
- Fifty-six percent of home-based business owners will forgo personal commitments like happy hour, a child’s recital or workout to finish work projects. On average, home-based business owners skip five personal commitments per month.
- To get work done, a majority (78 percent) say they have a place to “hide” to avoid distractions. The most common places are their bedroom (45 percent), yard (16 percent), basement (15 percent), bathroom (13 percent) or garage (12 percent).
- Work often leads to arguments between a home-based business owner and their significant other. The top three reasons couples argue are: work cluttering other parts of the house (32 percent), working late takes away from family time (31 percent) and the inability to separate personal life from professional life (30 percent).
- Forty-five percent of parents who work from home have experienced data loss because someone in their home used their work computer.
As longtime home office users, we forbid others to use our work equipment – even though they may complain about it. We have a dedicated home office shut away from the rest of the house, so we aren’t bothered by a lot of distractions.
White lies are as common as white rice
More than half (54 percent) of home-based business owners have missed a business opportunity or had to redo a project because of a lost or deleted file.
To cover up a technical glitch, 41 percent have told a “white lie” to someone they do business with, such as a colleague, client or vendor. The most common fibs include a computer or internet crash/malfunction (20 percent), blaming someone else (11 percent) and faking an illness, emergency or accident (9 percent).
Here comes the pitch. Carbonite has a dog in this hunt.
Opportunity Lost: Most home-based businesses miss out on cloud’s advantages
When asked, 46 percent of home-based business owners say they don’t use cloud-based tools at work. However, confusion about cloud services still exists, as the survey found that nearly all (94 percent) home-based business owners are indeed using cloud services.
Regardless of whether they realize they are using the cloud or not, 79 percent admit that they aren’t taking full advantage of the cloud in their business, which means they are missing out on the business benefits that 97 percent of admitted cloud users experience. These benefits include:
- Saving time (70 percent);
- Helping them run their business more smoothly (66 percent);
- Allowing them to use technology previously unavailable to small businesses (52 percent);
- Saving them money (47 percent); and
- Making their business appear larger or more established than it is (31 percent).
More information and resources on how small businesses can take full advantage of the cloud, increase business productivity and streamline business operations, is available on Carbonite’s Small Business Hub at smallbiz.carbonite.com.
Tuesday, April 16th, 2013
Angel investing trends remained stable in 2012, with valuations and round sizes consistent with prior years, according to The Angel Resource Institute (ARI),Silicon Valley Bank (SVB) and CB Insights in the 2012 Halo Report, a national survey of angel group investment activity.
The report shows angel investing for the year was stable with prior years. Pre money valuations for early-stage companies remained steady at $2.5M and round sizes were relatively consistent.
The sectors and geographies getting funding are shifting, however, most notably with mobile and telecom companies gaining share of angel investment deals and dollars, while healthcare companies are losing share of angel investments. Companies in the Northwest and the Southwest US are gaining ground on the number of deals and total investments they receive over companies in California and New England.
This infographic details the report’s findings:
Angels playing important role
“Angel investors continue to play an important role in funding startups,” said Rob Wiltbank, Vice Chairman of Research, Angel Resource Institute.
“The steady valuation, growth in investment size, and wide geographic activity among angel investors is more evidence that angels are a reliable and a critical part of growing the next generation of great new companies in this country.”
One new company in the mobile sector benefitting from angel investment is GlobeSherpa, based in Portland, Oregon. “We are entirely angel funded,” said Nat Parker, CEO of GlobeSherpa, a mobile ticketing software company.
“We are disrupting legacy payment systems and ticket machines with extremely convenient mobile tickets that consumers can purchase and use with their smart phones. In the process we’re helping transit systems save millions of dollars and we are able to do this on the backs of our angel investors who put their trust in us.”
Halo Report 2012 Highlights: (View Infographic)
Median angel round sizes hit a five quarter high at $690K in Q4 2012 for the second quarter in a row, and ended the year at $600K, down from $625K in 2011 and up from $500K in 2010. When angel groups co-invest with other types of investors, the median round size is higher at $1.5M.
Pre-money valuations in early stage companies remain steady at $2.5M for both 2012 and 2011.
Mobile and telecom companies gained share of angel investment deals and dollars in 2012, responsible for 13% of all investment deals and receiving 14% of angel group dollars, which was more than double its share in 2011. Internet and healthcare companies still receive more than half of angel group investments, although healthcare investments dropped significantly to 27% share in 2012 from 35% share in 2011.
Sixty three percent of companies that received angel group investment had revenue and 44% were follow-on rounds, as opposed to new investments.
Most Active Angel Groups 2012 – Deals
||New York Angels
||New York, NY
||Tech Coast Angels
||Launchpad Venture Group
||Central Texas Angel Network
||New York, NY; Boston, MA; San Francisco, CA
|6 / New
||Sand Hill Angels
||Alliance of Angels
Companies in the Northwest and Southwest regions of the US grew their share of both angel deals and dollars over 2011. California and New England continue to see the majority of deals and investments, yet 69% of angel investment deals are done outside those regions. Share of investments in California companies dropped to 23% share in 2012 from 31% in 2011. Investments in New York remained flat.
Additional data in report
The Halo Report includes aggregate analysis of investment activity by angels and angel groups and highlights trends in round sizes, location and industry preferences. The data is collected via survey and aggregation of public data using CB Insights innovative data analyses.
The 2012 Halo Report data is based on 783 deals totaling $1.1 billion dollars invested. The transaction details are available in the CB Insights subscription database for users to review and analyze themselves. Academics may also access some of the data through ARI.
Angel groups and individual angel investors interested in including their data in the Halo Report should contact Sarah Dickey, ARI Research Director, for details. She can be reached at 913-894-4700 and firstname.lastname@example.org.
Friday, April 12th, 2013
Chris Shaw, an Entrepreneur-in-Residence at Kansas City-based startup accelerator and business incubator Think Big Partners has been selected by Google to be a beta tester of its exclusive Glass hardware.
Google selected 8,000 people worldwide to be part of its Glass Explorers program, an initiative to test the limits of the Glass wearable computer hardware.
Connects to mobile phone
Google Glass is a head-mounted display unit that connects with the user’s mobile phone to allow for seamless communication over the web. Glass also has a video camera that allows for pictures and video to be streamed over the web.
Chris Shaw, a serial entrepreneur who founded LexSpot and has advised over a dozen technology startups, said he wanted to use Glass to give back to the community that enabled his success.
“Glass is a truly innovative way to tell stories and share experiences,” says Shaw. “While our primary use for Glass will be for developing mobile applications in spaces like healthcare and enterprise, we wanted to test the media capabilities of Glass in a unique way.”
Tech Trek documentary
As a result of this thought, Herb Sih, Founder and Managing Partner of Think Big Partners encouraged Chris to create Tech Trek, a Glass-enabled documentary that explores the different startup hubs, technologies and innovations throughout the country.
“When Chris said he wanted to give folks a birds-eye view into what it’s like to be an entrepreneur, we were enthusiastic to support Tech Trek,” says Sih. “Think Big has started dozens of companies either directly or indirectly and we feel like we have an obligation to give back to the community.”
Tech Trek is using Kickstarter to raise funds for the ambitious project to tell the story of technology entrepreneurship in the tech hubs of Silicon Valley, Ca., Los Angeles, Ca., Las Vegas, Nv., Boulder, Co., and Kansas City, Mo.
Funds will sponsor entrepreneurs
In addition, Shaw explains that some of the funds from the Kickstarter campaign will be used to sponsor entrepreneurs to attend Tech Trek who cannot afford to visit the cities and companies that Tech Trek will feature at incubators like Y Combinator, 500 Startups, Science and TechStars.
“Our goal with Tech Trek is to show people what we do and how technology and entrepreneurship are building the future of our world,” says Shaw.
Spencer Walsh is an independent film producer and director who will be filming and producing Tech Trek.
“Google Glass provides a very unique opportunity for documentary work. I’m already excited to capture the effect this new technology has on the people interacting with it physically and virtually,” explains Walsh.
“Also, most of my productions are for startups so I know how creative entrepreneurs are. In my opinion, the possibilities of Glass will really begin to reveal themselves as Chris interacts with these established and growing communities. This might be selfish, but I feel like I’ll be getting a glimpse into the near future.”
To learn more about Tech Trek, please visit www.techtrek.co. To become a part of the Tech Trek Kickstarter campaign, please visit http://kck.st/10OBm3R.
Tuesday, April 9th, 2013
By Allan Maurer
Brian Wong, founder and CEO of Kiip, is participating in the Atlanta Digital Summit May 14-15.
On a long flight to Asia some time ago, Brian Wong, founder and CEO of Kiip, one of the top four online ad companies according to Forbes, noticed that as he walked down the jet’s aisle, everyone was playing games on smartphones. What an opportunity for advertisers, Wong thought.
“But it’s terrible the way it played out,” Wong, the youngest person who ever received venture funding according to the Wall Street Journal, said. Many mobile apps and services, for instance, let users pay to have advertising removed.
“I feel bad for the hundreds of thousands of people involved in a creative industry like advertising. The idea of having people pay to remove your work is depressing,” Wong says.
Say display advertising had never existed, he suggests. Then how would you engage users on smartphones and other mobile devices?
That’s what led to the philosophy of Kiip, (pronounced “keep”, which is transforming mobile advertising from “billions of moments of annoyance into billions of moments of delight,” says Wong.
Participating in the Atlanta Digital Summit
Wong has been recognized with many awards for his accomplishments and leadership, including: the Top 20 Under 20 awards for all of Canada; Business Insider’s Top 25 Under 25 in Silicon Valley and 18 Most Important People in Mobile Advertising; Forbes’ 30 under 30; Mashable’s Top 5 Entrepreneurs to Watch; and the AdAge Creativity Top 50. Before starting Kiip, Brian led key publisher and tech partnerships at the social news website Digg.com, where he accelerated the company’s mobile presence by launching the Digg Android mobile app.
He is one of dozens of digital thought-leaders participating in the upcoming Digital Summit in Atlanta, May 14-15.
San Francisco-based Kiip lets premium brands provide rewards to casual mobile gamers for in-game achievements. Their platform is designed for in-game engagement via a universal game moment: the achievement moment.
Catch those special moments
The idea is to catch the user while he or she is the most engaged, happy, and attentive. It’s the first solution to help premium brands reach the exploding casual mobile gaming market using fleeting real estate in meaningful moments. It is venture backed by Hummer Winblad, True Ventures and a group of rockstar angels.
“We work with clients to find out which moments they’d like to own,” Wong explains. A client such as Gator Aide wants fitness moments, for instance. Where are those moments? They’re when a user logs a run, checks into a gym for the fifth time, or completing a workout.
Then, Gator Aide rewards them with say a free song for their workout.
Kiip isn’t the only organization taking advantage of moments of achievement, Wong notes. “Facebook gifts lets you send a physical gift to a friend on a birthday or other moments of achievement and is making a lot of money making it easy,” he says.
“I don’t want to sell people hard,” Wong says.
Kiip, which is just over three years old, thinks creatively to find those special moments when a marketing ploy might be welcome instead of annoying. Just finished a run? You might be thirsty and appreciate a Gator Aide. Just looked up and bookmarked a recipe? That could be messy. You might need some Sparkle paper towels.
“Marketers burden themselves complaining about how limiting a phone’s screen size is,” Wong, now just 21, says. “They bitch and moan, it’s a tiny screen. But it’s one of the most intimate devices we own. So there are opportunities for a brand to create a close connection to the user.”
Advisor to XPCP
Just today is was announced that Wong has joined CrossPacific Capital Partners (XPCP) as Advisor. Brian will focus on advising XPCP’s investments in the areas of internet, gaming, social media, and mobile. Wong graduated from the University of British Columbia at the age of 18. In 2010 Wong became the youngest entrepreneur to ever raise Venture Capital in North America.
After initial seed contributions by a number of angel investors including XPCP Managing Partner Frank Christiaens, Wong closed a total of more than $4M for his A Round, and all this before he turned 20. Other investors in KIIP include Verizon, Hummer Winbladt, and Relay.
In 2012 KIIP did a B Round of more than $11M on the strength of its rewards platform, which reached 1 billion moments at the end of 2012. In 2013 KIIP is seeing major revenue growth as its products continue to sell exponentially.
Thursday, April 4th, 2013
Despite a challenging year for venture capital investment in 2012, the U.S. VC-backed industry remains substantial. Better portfolio company exits and returns suggest the slump in fundraising could be over in 2013, according to Ernst & Young’s tenth annual Venture Capital Insights and Trends Report.
According to the report, there is evidence of money flowing into companies that are perceived as lower risk. For example, there is a shift away from social media towards enterprise– the companies that are attracting greater VC interest are those that provide a service and are getting paid for it, rather than those that have a good idea, but have difficulty monetizing it.
Historically, the U.S. venture industry has been dominated by investments in technology and healthcare since in the U.S. more than half of the VC pool consists of companies in these two sectors.
Healthy exit environment crucial
Though U.S. VC investment activity overall declined by 15 percent to $29.7 billion in 2012 compared with 2011, and the number of investment rounds also fell, the drop was not as pronounced, declining by only four percent to 3,363. These U.S. numbers compare to global VC declines at 20 percent in amount invested and eight percent in deals.
“While 2012 was a tough year for global venture capital, the U.S. held relatively steady,” said Bryan Pearce , Director, Venture Capital Advisory Group, Ernst & Young LLP. “However, a healthy environment for venture backed company exits will be crucial for the U.S. VC industry outlook in 2013. Equity markets have started the year positively, which suggests these better exit prospects may materialize.”
Exit activity is also an important pre-condition for an uptick in fund-raising by VC firms. While global exits of VC backed companies declined by 27 percent in terms of amount raised and by 30percent based on the number of IPOs, the number of VC-backed IPO exits and the capital raised in the U.S. were relatively stable, after adjusting for the Facebook IPO proceeds of $6.8 billion.
Companies exiting via IPO are typically more advanced than those exiting via M&A. The median amount raised prior to IPO of$78.4 million and time to exit of 7.4 years, far exceeds the respective figures of $16.7 million and 5.1 years for M&A exits.
A number of venture capitalists who participated in the recent Southeast Venture Conference (SEVC) in Charlotte, NC, noted that most firms today are going to exit via M&A and should consider that from the very beginning.
VC model is realigning
VC firms are rethinking their investing strategies favoring investing smaller investments, at a later stage and on tougher terms.
This shift reflects two trends – the substitution for VC fund money in early stage companies by Angel investors, incubators/accelerators and corporate initiatives as well as a need to demonstrate a shorter time to exit in order to return capital to their investors, show a track record of success and, thus, start the process of opening and raising a new fund.
“The flow of capital being returned to LP investors has slowed significantly, which in turn has restricted investors’ ability to re-invest in new funds,” added Pearce. “Therefore, investors are showing a preference for the most successful ‘brand’ name funds, seeking out depth of experience and track record. They are also demanding better terms from VC funds, while the funds are requiring portfolio companies to meet stricter milestones and meet tighter time frames.”
Increasing role of corporate venture
Corporate venture investing is on the rise surpassing pre-dotcom levels in 2012. Corporate venture activity is especially strong in the IT sector and being driven by a combination of healthy corporate cash balances and corporate seeking external innovation due to the rapid pace of technological change as the rise of mobile, big data and cloud computing has created a disruptive business environment.
Corporations are eager to invest in venture-backed companies that can help them fill the innovation deficit in their strategy and innovation capabilities. The link between corporate investment and ultimate acquisition, however, is not always present in the U.S. In all sectors in the US only 2 percent of companies were acquired by an existing corporate investor in 2011 and 2012.
“In 2012, corporates cemented their important role in the VC ecosystem,” continued Pearce. “Where they choose to make an investment, typically in the later stage in the U.S., the valuation of the business in that round was usually greater than in companies at a similar stage with no corporate investor.”
U.S. Regional Outlook
As of January 2013, $167.9 billion was invested in 8,288 companies. Investment remains heavily weighted towards Silicon Valley –since 2000, cumulative equity raised in the Bay Area of $62.2 billion exceeds the total raised in New York, New England and Southern California - the next largest hotbeds – combined.
These same areas also ranked top five globally in terms of number of deals. New York witnessed the largest increase of active VC investors, approximately 150 percent in 2012 compared to 2006.
At the SEVC in March, one VC noted that it took substantially more investment dollars to get those West Coast firms to an exit. East Coast firms, he noted, used their capital more efficiently. A number of VCs at the event said they were actively seeking to diversify geographically and specifically interested in regions such as the Mid-Atlantic and the Southeast.
The data in our Turning the corner: Global venture capital insights and trends 2013 report has been sourced from Dow Jones VentureSource.
Friday, March 29th, 2013
How do successful entrepreneurs deal with uncertain economic times? Businesses that survived the Great Recession and are thriving today didn’t focus on losses then – and they aren’t now, says Donna Every, a financial expert who has published three non-fiction business books.
“The entrepreneurs who are successful during times of uncertainty are so because they don’t rely on the standard approaches they’d use in predictable times, and they look for opportunities – the positives — in situations that would have been considered negatives five years ago,” Every says.
“It’s similar to how we deal with the weather. In places where it’s sunny most of the summer, we wouldn’t leave our house each morning packing coats and umbrellas just in case. The weather’s predictable. But in the winter and other seasons when the weather can quickly change, we head out with a different mindset.”
For businesses, switching gears to deal with inclement economic conditions involves adopting new perspectives and practices, she says.
What are some of those strategies? Every outlines them:
• Build on what you have, not toward what you want: Instead of setting goals and then seeking out the resources you’ll need to meet them, assess what you have available and decide what you can achieve with that. This not only saves you the time and expense of pulling together resources you may not have, it also gives you the advantage of working from your business’s individual and unique strengths.
• Follow the Las Vegas rule: Tourists planning a weekend in Las Vegas will often set aside the amount of money they’re willing to gamble – and lose — on cards or the slots. That way, they won’t lose more than they can afford. During an uncertain economy, entrepreneurs should calculate their risks the same way. Rather than going for the biggest opportunities as you would in prosperous times, look for the opportunities that won’t require as much of your resources. Calculate how much you can afford to lose, and always consider the worst-case scenario.
• Join hands and hearts: Competition is fine when things are going well, but when times are tough, you need allies. Explore forming partnerships with other entrepreneurs so you can strategize to create opportunities together. With what your partners bring to the table, you’ll have more strength and new options to work with.
• Capitalize on the unexpected: Surprises can have positive outcomes if you handle them nimbly by finding ways to use them to your advantage. Instead of planning damage control for the next unexpected contingency, look at it as an opportunity. Get creative as you look for the positives it presents.
• When life is unpredictable, don’t try to forecast:Focus on what you can do and create now rather than what you can expect based on what happened in the past. In good times, that information can be a helpful and reliable way to make predictions, but savvy entrepreneurs don’t count on that in uncertain times.
“While the U.S. economy certainly is improving, there’s still too much uncertainty both here and abroad to go back to the old ways of doing business just yet,” Every says.
“If you’ve survived the past five years, you’ve probably been relying on many of these strategies – maybe without even realizing it,” she says. “Don’t abandon them yet, and if there are some here you aren’t using, work toward incorporating them, too.”
Tuesday, March 12th, 2013
Draper University, a cutting edge boarding school for young entrepreneurs from all over the world, will launch its first session on April 17, 2013. Students learn the fundamentals of starting a company, then create a business.
Three student businesses created in a pilot program have already received funding.
The university, located in downtown San Mateo, oreffers an innovative program designed to inspire, cultivate, and educate students who dream to build companies that change the world around them. Draper University will offer four eight-week sessions a year and is intended for entrepreneurs between the ages of 18 to 26.
The program curriculum teaches startup fundamentals combined with personal mentoring and fun, experiential activities, which include a steady stream of events connecting students with the entrepreneurial world of Silicon Valley.
Pitch workshops, media training, survival skills
Activities include public speaking, media training, pitch workshops, urban and rural survival skills, banking and finance, lie detection, yoga, car racing, future projection exercises, speed reading, and business simulations. Students are taught and mentored by guest speakers who are experienced real-world ‘practitioners’ who are change agents in their industry.
“I started this school because I believe the world needs more heroes. By training a few select entrepreneurial heroes each quarter, I think that Draper University can start to help save the world economy, cure any disease, explore new worlds of innovation, and spread free markets and competitive governance,” said Tim Draper, founder and managing director at Draper Fisher Jurvetson and founder of Draper University.
See Draper discuss the program in a video.
Each student will create a business, or refine their existing business, over the duration of the program, which culminates with a business pitch competition to a panel of venture capitalists, where students have the opportunity to obtain funding for their business.
In June 2012, Draper University held a four-week pilot program with 40 students and provided the opportunity test the curriculum before officially launching.
Three of the students received funding while Surbhi Sarna, Founder and CEO of nVision Medical Corporation, won the competition.
Campus includes “The Collective”
“Winning the business plan competition at Draper University changed the way I see my business and gave me confidence to tell my story,” said Sarna. “It also exposed me to a vast network of investors in the bay area, and I am excited about closing my next round and getting our device into the hands of physicians.”
Further attracting entrepreneurs and promoting their success, the Draper University Campus includes “The Collective,” a three-story entrepreneurial center across the street (open in late May 2013).
The Collective, a co-working space open to Draper University students and non-affiliated entrepreneurs and startups, promotes innovation, collaboration and community with its peer-to-peer work environment. The Collective will also offer pop-up retail space that can be rented on a short-term basis, and a theater/speakers forum that can be rented on the evenings and weekends for large events.
Monday, March 4th, 2013
By Allan Maurer
David Jones, President & CEO, Peak 10.
Even though Peak 10, the Charlotte-based data center and managed services provider now has 350 employees, CEO David Jones says the company still tries to foster an entrepreneurial spirit.
“We don’t make all our decisions centrally,” says Jones.
Jones co-founded Peak 10 in March of 2000 and has led the company to a top market position as a leading independent data center, managed services, and cloud computing solutions provider in the United States, with facilities in Charlotte, Atlanta, Jacksonville, Cincinnati, Louisville, Nashville, Tampa, South Florida, Raleigh, and Richmond.
Participating in the Southeast Venture Conference
Jones, who speaks often to entrepreneurial groups and is a past chair and still a director of the North Carolina Technology Association, is one of dozens of thought-leaders, venture capitalists, angel investors and entrepreneurs participating in the Southeast Venture Conference in Charlotte, NC, March 13-14.
“I think it’s going to be a great event for Charlotte,” Jones says. “It has an informative agenda, not the same old stuff you usually see at conferences. It’s going to bring a lot of faces into Charlotte who don’t normally spend time here.”
The Southeast Venture Conference is headed to Charlotte, NC, in March 2013. The event offers firms a chance to present to top national venture capitalists and angel investors.
Specifically, that includes speakers and panelists from national and regional venture capital firms and 50 innovative presenting companies from the Southeast and Mid-Atlantic regions. Last we heard, there were only a handful of seats left for the event, so it’s a good idea to reserve yours now if you plan on attending.
Part of the Peak 10 entrepreneurial culture derives from its growing an average of about 25 percent a year and regularly opening new facilities to meet demand in the areas it serves.
Four pieces of advice for entrepreneurs
We asked Jones what advice he thinks is most important to starting a company.
First, he says, “Stay focused. We’ve all heard stories of companies that try to do too many things at once and don’t do any of them well.”
But even more important, he says, “Hire the best people you can. Don’t be complacent about that.” In the end, “That will make you successful or not.”
Get the right financial leadership
Next, he says, “Make sure you have the right financial leadership. A lot of startups fly by the seat of their pants. You need to know your operating costs. I’ve always tried to find the best financial officer I could. If nothing else, have a financial advisor who can help you strategize where you are and the things you’ll need.”
Doing that can prevent you from “Hitting a brick wall when you find you didn’t plan for what you need on the development side.”
Finally, he adds, “Make sure you have a plan that can get funded. Great ideas go nowhere unless you have a plan to get there. Keep it simple. The more complex you make it, the harder it will be to get to where you want to be.”
In general, Jones says, “We’re in challenging times, but there are still a lot of opportunities out there.”
Friday, March 1st, 2013
By Allan Maurer
Brett Reizen launched his startup Entertainment Benefits Group (EBG) on September 12, 2001, a day after 9-11, so he learned the value of running a lean operation quickly in the economic turmoil that followed.
Today, EBG, which has 200 employees and 7,000 corporate clients, reaches 34 million people and is still growing. It provides travel and entertainment worldwide, reaching corporations and consumers through their corporate benefits program, TicketsAtWork.com, and several consumer sites: BestOfVegas.com, BestOfOrlando.com, BestOfNewYork.com.
Brett, 35, tells the TechJournal that he learned very quickly that he needed to stay on top of bills and the financial side of the business, but if he had one thing to do over, he would pay attention to that even earlier.
It’s challenging for a startup to hire professional help with accounting and financial planning, he notes, but says if you can’t do it yourself, you need to bring someone in from outside.
He also warns against buying an office condo or other unnecessary property. “Liquid cash is more important than anything,” he says. “Rent. It gives you a lot more flexibility if you grow more quickly than you expected to or if you have to downsize.”
He also says entrepreneurs need to “Stay focused. I still have a lot of ideas every day. Focus on areas you can expand with your resources and your business model. Don’t try to do everything at once.”
Here are his nine top cost-saving tips for startups:
1. Have good personal credit - Get credit cards, pay them off in full and keep asking for a higher credit line. I did this for the first 24 months and also earned membership rewards points. I soon paid for all travel expenses with the credit card rewards points.
2. Lower your living expenses – I was young and saved enough money to go about two years without making any money. I lived with my parents for six months to start the company and then had a roommate for three years. When working 12-15 hour days consistently with the ultimate goal of moving up, your confidence is high in knowing that with hard work, you will get there. Where you live and sleep doesn’t seem to matter much.
3. Find a good landlord - For a new company this is always the challenging part. Try to find a landlord willing to be flexible and supportive. You shouldn’t get too much space, but the trick is always the length of the lease and what to do if you grow fast and need more space. Always be a close friend with your landlord.
4. Rent and do not own. (unless you already do). Renting gives you more flexibility. Stay away from office condos.
5. Spend more on the company and less on you. Remember that when spending more on the company means less money for you short-term, but the long-term and bigger picture will make it all the more worthwhile later.
6. Review all bills. It can be surprising how many errors vendors make on all sorts of bills. Make sure you review your phone plans, electric, server expenses, photocopy details and almost every bill you get. The little numbers add up and a monthly reconciliation can save you thousands. We didn’t pay attention to this early on and when we woke up and started, we were pleasantly surprised.
7. Don’t underestimate the importance of good bookkeeping. The only way you truly know your bottom line is quality reporting. It is mind boggling in how many entrepreneurs focus on the gross sales and neglect all expenses and proper accounting. I also learned the hard way and learned through mistakes early on. Make sure to not cut any corners, pay the extra money to hire a professional or a strong person to evaluate your accounting and reconcile your finances every month.
8. Don’t by new equipment. No need to buy brand new furniture. Large companies move all of the time and in many cases they leave behind their furniture, often times great furniture, which looks brand new. Spending some extra time asking friends, family, associates and business colleagues can save you thousands, and in many cases if you find the right used furniture –it can look brand new. I never bought new furniture during the first 6 years we were in business.
9. Start when you’re young. You are used to spending less and have not yet developed expensive tastes. You need a healthy balance of having enough experience or mentors in your life to help with answers that you think you should know but don’t, but age is an important factor in starting a business. It’s much easier before marriage and kids come into the picture because if things don’t work out, you don’t have the stress and responsibility that you will have when you’re 35-45.
Thursday, February 28th, 2013
By Allan Maurer
Technology media has been raining coverage on the cloud services revolution, but Carter Griffin, general partner with Updata Partners, says, “The cloud is actually under-hyped.”
He means that there is still a sky full of growth to come for cloud services as they’re more widely adopted in the Enterprise space.
“Software as a service (SaaS) penetration of Enterprise customers is only 13 percent,” he says. He notes that the only areas with double-digit penetration are customer relationship management (pioneering SaaS firm salesforce.com) and collaboration.
Founded pioneering SaaS firm
“All other app tool sets are only single-digit penetration,” Griffin says.
Griffin joined Updata in 2005 and is a General Partner. Updata has $500 million in assets under management and invests from $5 million to $20 million per company in software, internet and business service firms.
Prior to Updata, Carter co-founded Brivo Systems in 1999 and served as Chairman and CEO until selling the company to a strategic acquirer. Brivo Systems pioneered the software-as-a-service model in the physical security market by introducing the first-ever on-demand system for facility access control.
Participating at the Southeast Venture Conference
He’s one of more than two-dozen venture capitalists participating in the upcoming Southeast Venture Conference in Charlotte, NC, March 13-14.
Regarding cloud services being under-hyped, he adds, “Look at the consumer trends, the small and medium-sized business trends. Consumers are using Dropbox, iTunes, apps on smartphones, all touching the cloud to make them useful.”
SMBs, he points out, “Don’t have the legacy of an Oracle. With a clean slate to choose from, they pick a hosted cloud-based phone system, gmail, Webx for meetings, Dropbox for collaboration.”
Employees driving the trend in the Enterprise
Those trends will ultimately influence Enterprises, “So you’re going to continue to see cloud adoption rise at a very fast rate,” Griffin says. “It’s penetrating the Enterprise because individual employees pull those mobile devices and work habits into the office. It’s truly a massive seachange.”
What makes the cloud model so interesting for startups and smaller firms?
“They’re much less expensive for a company (than buying and installing software and infrastructure) and allow a much shorter startup time. So you get time effectiveness at a lower cost.”
Mistake to “roll your own?”
He notes, however, “Over time you may wind up paying more with your cloud provider. Typically, you’ll use those tools on a recurring basis.”
Griffin says he thinks it may be a mistake even for larger companies with the luxury of big balance sheets to invest instead in the infrastructure to “roll their own.”
“It’s often wrong because the services required to maintain on premises apps can be five and ten times the cost of managed services.”
Griffin thinks we’ll see “across the board” adoption of cloud services by Enterprise firms. “The deepest penetration will be in firms with distributed employees – benefited by the mobile trend.”
He adds that he expects to see companies with heavy computing needs turn to the cloud as well. “In the past you needed your own data center with a lot of horsepower to crunch big data in house. It was the only way you could do it. Now look at genomics, oil and gas exploration – the thinking is to push all the computing to the cloud.”
Massive opportunity for startups
The laggards, Griffin says, “are the financial institutions and heavily regulated industries.”
Cloud-based tools also offer “A massive opportunity for startups,” he says. “All the old traditional on-premise tools have SaaS counterparts now. The obvious ones are taken, but there are many, many opportunities within that for growth.”
Another important factor for startups is that the cloud is “An equalizer for geography. All these tools are available to everyone in the developed world. That’s fantastic news for entrepreneurs who don’t live in Silicon Valley. If you have access to enough engineering talent, it’s just as easy to build a great company using the cloud if you’re in Topeka, Kansas.”
Thursday, February 28th, 2013
You can make connections with 50 high growth technology companies from the Southeast and Mid-Atlantic as they present to hundreds of executives from the region’s innovation, entrepreneurial and venture communities at the Southeast Venture Conference March 13-14th at the Ritz-Carlton Charlotte, North Carolina.
In addition to presenting companies and hours of executive networking – the conference will feature a speaker line up inlcuding SAP CEO Bill McDermott, dozens of leading venture capital investors from groups like Advanced Technology Ventures, Intel Capital and Edison Ventures; industry insiders like Forbes publisher Rich Karlgaard and policy makers such as North Carolina Governor Pat McCrory.
This year’s confirmed presenting company line-up includes:
- addshoppers - Charlotte, NC
- AirSage - Atlanta, GA
- avidxchange - Charlotte, NC
- Badgy - Atlanta, GA
- blue nano - Charlotte, NC
- BoomTown - Charleston, SC
- BrightContext - Arlington, VA
- Bronto - Charlotte, NC
- Buystand - Durham, NC
- Campaign.io - Charlotte, NC
- CanDiag - Waxhaw, NC
- Clearleap - Duluth, GA
- dealcloud - Charlotte, NC
- deja mi - Raleigh, NC
- Digitalsmiths - Durham, NC
- Distil - Arlington, VA
- Entigral - Raleigh, NC
- Fitsistant - Durham, NC
- flomio - Miami, Florida
- Fotopigeon - Tampa, Florida
- Freebeepay - Atlanta, GA
- gematouch - Raleigh, NC
- Hinge - Washington, DC
- HireIQ - Atlanta, GA
- infina connect - Cary, NC
- Koupon Media - Frisco, TX
- nContact - Morrisville, NC
- Nextinput - Atlanta, GA
- PatientPay - Durham, NC
- PopUp - Raleigh, NC
- Punch Technologies - Charlotte, NC
- Respirion - Winston Salem, NC
- ReverbNation - Durham, NC
- Savveo - Charlotte, NC
- Sensory Analytics - Greensboro, NC
- Smart Sky Networks - Charlotte, NC
- Sweet Relish - Charlotte, NC
- t1 visions - Charlotte, NC
- Tales2Go - Washington, DC
- The Targeted Group - Charlotte, NC
- umatch - Greenville, NC
- Valencell - Raleigh, NC
- veenome - Arlington, VA
- viddlz - Charlotte, NC
- WealthEngine - Bethesda, MD
- Wildfire Connections - Charlotte, NC
- Worthpoint - Atlanta, GA
The Southeast Venture Conference is headed to Charlotte, NC, in March 2013. The event offers firms a chance to present to top national venture capitalists and angel investors.
In addition to the showcase presenters and hours of networking – SEVC 2013 will feature current market relevant panel and presentation topics for investors and executive entrepreneurs. These events sell out, so register now if you plan on going.
Panel & Presentation topics include:
- State of Venture Capital
- Early Stage Fundraising
- Value Creation: Company/Investor Relationship
- Growth Stage Funding
- M&A Outlook and Strategies
- LP Viewpoint
- SaaS Investment Trends
- Getting to Market
- IPO & Secondary Market Outlook
- Entrepreneur’s Roundtable
- International Health Care Trends
Tuesday, February 26th, 2013
By Allan Maurer
While landing a round of venture financing can help drive a startup’s growth, the best venture firms bring more than money to the table when they make a deal.
Justin Reger, a principal at LLR Partners, a middle market private equity firm with more than $2 billion under management, says that the first step his firm takes following its investments – whether as a majority or minority investor – is set-up a strategic planning session.
Reger, who manages LLR’s technology practice and previously an investment banker with Citigroup focused on technology, about the added value investors provide their portfolio companies at the upcoming Southeast Venture Conference in Charlotte, NC, March 13-14.
First: strategic planning
“Soon after we close a deal,” says Reger, we hold a two-day offsite strategic planning session, first for one-year and then for three. We hire a moderator who knows the industry.”
LLR starts by sharing its due diligence findings with the company and its management team. “We put that on the table and build the strategic plan with the team. We don’t say what they could do. It’s more to create a framework. Then we build up operations and tactics to support the plan.”
LLR then revisits the plan with the company each year. Some have accomplished their goals, some have not. The plan is updated annually.
Second: augment management teams
Next, LLR looks at a company’s management team. “Often, teams are incomplete,” says Reger. “They may have a solid CEO, a CFO, and maybe a head of sales. They may not have a product or marketing manager. We don’t look to replace senior management, but rather to augment the bench from our network.”
That is often guided by the results found by an outside assessment firm hired during LLR’s due diligence process. “They identify key areas that need to be upgraded or augmented to drive value.”
Third: Getting to $100 Million
Next, LLR looks at the company’s finance function, where infrastructure is “typically lacking,” says Reger. “The typical company we invest in has a strong product in a well defined market, but has to breakthrough from $10 million to $15 million in revenue to $100 million.”
Fourth: M&A possibilities
Reger says LLR also sometimes “Serves as an outsource M&A arm for the company. We canvas the network of adjacent players and make calls, qualify opportunities, work with management to see if it’s a fit and help with integration.”
Many companies in which LLR invests also benefit from channel partner development, Reger notes. “There is an ecosystem of larger players, resellers, OEM sales channels and a portfolio company’s ultimate acquirer might be in that system. The IBMs, SAPs, and HPs of the world. We have pretty good contacts at those organizations.”
Thursday, February 21st, 2013
William McDonough, winner of two U.S. Presidential awards for environmental sustainability, is teaming with Cherokee to support environmental startups through the Cherokee-McDonough Challenge.
Based in North Carolina’s Research Triangle, the Challenge is designed to identify, fund and develop high impact environmental startups.
Now accepting applications, the Challenge is sponsored by Cherokee, an investment fund manager and globally recognized leader in environmentally sustainable business practices.
McDonough, co-author of Cradle to Cradle: Remaking the Way We Make Things (2002) and The Upcycle: Beyond Sustainability — Designing for Abundance (2013), will partner with an advisory committee of experienced entrepreneurs and investors to counsel the Challenge entrepreneurs.
Challenge will invest in five startups
“The Cherokee-McDonough Challenge is important because it encourages and empowers solutions to the massive environmental challenges that face our world,” says McDonough.
Now entering its third year, the Challenge will again invest in three to five high impact environmental startups.
Each venture will receive:
- $20,000 in seed funding
- free office space for three months in Raleigh, NC, (a focal point in the renowned Research Triangle)
- complimentary back office support from Cherokee Investment Services, including help with incorporation, accounting and IRS compliance
- hands-on mentoring from an advisory committee of experienced entrepreneurs and investors
- an opportunity to present to other investors and the public
Cherokee-McDonough Challenge portfolio companies should finish the summer with a working prototype, a refined and vetted environmental strategy, a professional web presence, knowledge of intellectual property strategy and tactics, investor-ready fundraising documents, a stronger network of investors and mentors, a polished pitch and a runway towards a Series A capital raise.
For more information, visit www.cherokeechallenge.com or email JT Vaughn email@example.com or firstname.lastname@example.org
Tuesday, February 19th, 2013
Starting their own business made life better for many entrepreneurs, says PlanetSoho, a provider of easy-to-use online management tools and services for small office / home office businesses (SOHOs), in its new State of America’s SOHOs study.
Results from surveying 1,300 SOHO owners show life improved for these entrepreneurs after they took the leap to turn their passion into a business.
The State of America’s SOHOs study reveals that nearly 2/3 of PlanetSoho members consider their business a success in less than two years. Additional findings include:
- 46% say the main reason they have a SOHO is to do what they love
- 46% report having more time to spend with friends and family since starting a SOHO
- 37% are sleeping better
- 14% report having more sex
Why people love being a SOHO:
- 61% love creating their own schedule
- 56% enjoy being their own boss
- 41% like not commuting to work
What kept them from “Taking the Leap” to become a SOHO sooner:
- 36% weren’t sure where to start
- 31% didn’t have the money needed to get started
Top four SOHO industries:
1. Computer and Internet
2. Health, Wellness and Fitness
3. Marketing and Advertising
SOHOs are not just improving their own lifestyle; they are improving the U.S. economy. These smallest-of-the-small businesses are pumping $1.8 trillion into the U.S. economy every year – $5 billion every day. The trend of turning passion, talent and skills into bankable income is on the rise.