Investor Panel Included: Ellen Sandles, Tristate Private Investors Network • Mike Segal, Joshua Capital • John Ason, Angel Investor • Roy Simkhay, Greycroft Partners
After a few slow months when start-ups seemed to have left the marketplace - the tide turned. Really turned. But now, entrepreneurs are staring at another kind of challenged marketplace. The investors are back with money – since most stayed out of the stock market – but it is a buyers market, so valuations are down and investors can really afford to pick and choose.
Entrepreneurs today really have to be able to survive on their own for as long as possible. But then again, strange things happen once you they in play: one entrepreneur who pitched his plan and won an iEvening in 2008 wound up being hired by an investor on the panel to run a different, but related company.
So his start-up turned out to be his job application! We wish him well!
At this event we were oversubscribed but nevertheless managed to cram 8 new companies into the pitching arena.
First was Clothingwarehouse.com, a moderately profitable company selling men’s closeouts at highly competitive prices. Using SEO they have developed a good Internet presence but they need to build the software to handle more precise customer needs. Sometimes its better to be pre-revenue and offer the moon than be moderately profitable and ask for help to make the next step forward.
Myclasscancelled.com is a seemingly needed service that informs students if their class has been cancelled for the day. Apparently, this is a frequent occurrence and colleges have no obligation to inform the students. The investors however thought much bigger things than this and wondered if it could be used for all kinds of cancellations. As it happens, the next day I found that my dentist had unexpectedly cancelled my appointment and I never got the memo. So we get the pain!
Escapeer is an aggregator of escapist and adventurist events. There are plenty of these outings and the people who seek them out – the under 40 set - are a prized demographic. As slick as the site looked and as compelling as the presentation is, it appeared that the judges needed to be told just how big this market really is.
Parent Media is a company that first appeared to us as a profitable photo-contest site for proud parents. When we discussed the plan with the entrepreneurs before presenting - as we usually do - we found that the photo site was really the hook for a much larger enterprise: a loyalty site for parents with babies and of great interest to marketers like Proctor & Gamble and so on. So the pitch was duly restated and the proposition was compellingly delivered.
ClipboardMD is a great idea in a market that is clearly about to explode – digitized medical records. This system enables people to keep their medical records in one place and have them verified as well when being admitted with ease by a doctor or hospital. However, the issue with an idea like this – even though it only needs to be used by a relatively small number of practitioners - is customer adoption. What the investors want to know is which doctors are using it and what will it take to get more to adopt it in a cost-effective way?
Povertysdemise.org is an interesting non-profit that could, in a way, be a profit center. It also suggests how welfare and other government services will be cost-effectively delivered. With this site, you can pick a child, family, block or region that you want to help and how - then the site makes sure the insurance, grocer or whichever service you support is paid as the recipient needs it. The money goes out as it is used and never directly into the hands of the recipient. Unfortunately, it is tough getting angels to think of investing in non-profits or, as one angel said: “most of my investments are non-profit!” On the other hand, if the business partners paid for the service – it could be a profit center.
Hollyhood is a kind of hybrid music and social media site that also has a special hankering for the Philadelphia sound. Even though the presenter is experienced in the field and comes with a gilt-edged legal background, it is tough to differentiate in this market place.
ApparitionAds is a company that serial entrepreneur, Richie Hecker, has cleverly bootstrapped with some strong players from the online ad business. The idea is to sell ads that appear during that tiny moment between website loads. So the slower your site – the more you’ll be hammered. (All the more reason to get FIOS and drop your Wi-Fi router!) This could be the most successful little ad company since Gator, but it could also be just as hated! The judges probably felt it was somewhere in between.
The judges picked Parent Media as the winner with ClothingWarehouse.com as the runner-up. Congratulations, and good luck at Private Equity Forum.
Monday, June 29, 2009
Friday, June 26, 2009
The VC Outlook - Report from June 24 Event
Charlie Federman, Crossbar Capital • Jeanne Sullivan, Co-Chair, StarVest • Owen Davis, NYC Seed • Ben Boissevain, Agile Equity • F. Morgan Rodd, Milestone Ventures
We usually do a VC Outlook iBreakfast once or perhaps twice a year – and they are good. But somehow the June 24th event was special in an extraordinary way.
Maybe it’s the strange times we are in. People really needed to understand where we are headed and so Investors, by telling us where they are placing their bets – are also giving us a view into the future.
It is also a tricky time because, on the one hand, there appears to be a rising tide of private equity. On the other hand, we see a lot of entrepreneurs but for all their enthusiasm, also lack a vision about the future. Most of all, entrepreneurs may not be thinking of what the Venture marketplace wants – only what they want to do.
We understand that deals have become cheaper and investors can cherry-pick them in a way they may not have been able to do in the past. But what are they looking for?
So this iBreakfast was a wake-up call to “game” the Venture marketplace – getting your plan in line with what the market wants instead of wondering what’s wrong with the market…...
According this iBreakfast - here is the lay of the land:
Most of the exits are closed – the IPO market is all but dead, few investors speak of building a great profitable company in the old enterprise-building sense of the word. M&A is the main exit. Fortunately, many companies have strong balance sheets and after having laid off staff, they are finding that buying start-ups is the cheapest form of R&D. Great. Perhaps even better, foreign companies too, are eyeing the US market and they will often pay a premium if they feel they can get market entry.
So what are investors looking for? According to Jeanne Sullivan, the companies they look for include tech-enabled service businesses, platforms and any high perceived value service that once required custom tailoring, that can be delivered in a mass format is in demand.
Charlie Federman of Crossbar, a noted early stage investor looks for the first new idea in a marketplace. First to market is big deal and if properly executed, usually carries over in the long term. He especially likes ones that "export deflation" - i.e. offer a really low-cost alternative to a current business under price pressure. More importly, he looks for entrepreneurs who can adapt, since most start-ups find their real opportunity later. The business they end up is never quite what they started with. Somewhere, they’re going to have to take a left turn. Will they be ready to respond to that…..?
Owen Davis has analyzed various investment deals and has laid out a kind of roadmap that would be an invaluable guide for an entrepreneur to determine which sector has the highest probability of raising capital in the New York area. Hint: social media and communities highest pitch topic – least invested in.
(Note to Entrepreneurs: check back with us for the best bets.)
Morgan Rodd noted that Milestone Ventures was increasingly interested in tech-enabled medical services.
Based on the surge of investor/entrepreneurial interest we will be producing a new series of Start-Up bootcamps, business and deal structure sessions and more investor meetings.
View Presentations
Ben Boissevain - Agile Equity
We usually do a VC Outlook iBreakfast once or perhaps twice a year – and they are good. But somehow the June 24th event was special in an extraordinary way.
Maybe it’s the strange times we are in. People really needed to understand where we are headed and so Investors, by telling us where they are placing their bets – are also giving us a view into the future.
It is also a tricky time because, on the one hand, there appears to be a rising tide of private equity. On the other hand, we see a lot of entrepreneurs but for all their enthusiasm, also lack a vision about the future. Most of all, entrepreneurs may not be thinking of what the Venture marketplace wants – only what they want to do.
We understand that deals have become cheaper and investors can cherry-pick them in a way they may not have been able to do in the past. But what are they looking for?
According this iBreakfast - here is the lay of the land:
Most of the exits are closed – the IPO market is all but dead, few investors speak of building a great profitable company in the old enterprise-building sense of the word. M&A is the main exit. Fortunately, many companies have strong balance sheets and after having laid off staff, they are finding that buying start-ups is the cheapest form of R&D. Great. Perhaps even better, foreign companies too, are eyeing the US market and they will often pay a premium if they feel they can get market entry.
So what are investors looking for? According to Jeanne Sullivan, the companies they look for include tech-enabled service businesses, platforms and any high perceived value service that once required custom tailoring, that can be delivered in a mass format is in demand.
Charlie Federman of Crossbar, a noted early stage investor looks for the first new idea in a marketplace. First to market is big deal and if properly executed, usually carries over in the long term. He especially likes ones that "export deflation" - i.e. offer a really low-cost alternative to a current business under price pressure. More importly, he looks for entrepreneurs who can adapt, since most start-ups find their real opportunity later. The business they end up is never quite what they started with. Somewhere, they’re going to have to take a left turn. Will they be ready to respond to that…..?
Owen Davis has analyzed various investment deals and has laid out a kind of roadmap that would be an invaluable guide for an entrepreneur to determine which sector has the highest probability of raising capital in the New York area. Hint: social media and communities highest pitch topic – least invested in.
(Note to Entrepreneurs: check back with us for the best bets.)
Morgan Rodd noted that Milestone Ventures was increasingly interested in tech-enabled medical services.
Based on the surge of investor/entrepreneurial interest we will be producing a new series of Start-Up bootcamps, business and deal structure sessions and more investor meetings.
View Presentations
Ben Boissevain - Agile Equity
Wednesday, June 17, 2009
Media's Act II - Report from Digital Downtown
Media’s Act II at the Digital Downtown Conference at the CEA Lineshow in NY
Alan Brody, ViziPress (and the iBreakfast); Debbie Steirs, HarperStudio; Eric Frank, Flatworld Knowledge; Brad Inman, Vook.com
Last week I joined 3 other publishers to talk about the next phase in publishing at a consumer electronics road show in New York. We did something unusual – we talked about the way media content needs to change – and we showed eye-opening examples.
Clearly, Consumer Electronics guys are mostly interested in TV and mobile apps. Reading is not their highest priority - but then you never where convergence is going take you.
So here we talked about eBooks, mobile reading devices, the digitization of books generally but, more importantly what the title of this panel was all about: the change in media – its Act II. How content is about to become something different because the Media has changed - and so have we.
This phrase, Media's Act II, came from Google’s CEO Eric Schmidt at the American Newspapers Association convention earlier this year. He informed the execs, nervously watching their papers edge out of existence, that they had done a great first Act in the 90’s by going online but now they needed an Act II.
So what was Act I? I argue that it was what we used to call, in an earlier era, “shovelware” – they shoveled the contents of a newspaper online and threw in a few bells and whistles – a little search, a little feedback, a slide or two and a place to click. But for the most part, you read just like you did in print but with the inconvenience of a monitor.
Shouldn’t the computer enhance the reading experience – either make it faster, better or something else? And now, with mobile (why we were at the Consumer Electronics space), something more suited for on-the-go reading?
We showed 4 new publishig models, each unique but each complimentary in a way that probably defined the 4 corners of this coming universe: We showed books that are way shorter (ViziPress), way richer (Vook.com), way more social media involved (HarperStudio) and way more adaptable to higher educational needs (Flatworld Knowledge).
Vook.com is about taking you into the world of a book – using video, interviews, multimedia and so on. If you love Sherlock Holmes, you’re in heaven. They hope that every great author will bring you into this afterworld of their creative space. If you’re the kind of person who watches the extras on your movie DVDs then you’re going to want this for your favorite books. They even hope you will pay a little extra for the privilege and publishers are interested in - not just the book - but the book world.
ViziPress, my creation, is about visual condensations – a kind of visual "Cliff Notes" – of popular business books. If you are lacking in time we can tell you what a book is about in around 3 minutes - and do it in a profound a memorable way. We add music because it makes the process a lot more digestible (according to mysterious research) and we think their world will demand this for every book in existence. Interestingly, it doesn’t kill books - it excites interest in books that people may have otherwise ignored. It also helps that we can cite Albert Einstein as using visualization in all his theorizing (remember the one about riding next to a light beam?) and that we have the best-selling "What Would Google Do?" as an example of a visual summary.
HarperStudios is a new kind of publishing arm of HarperCollins – like Saturn was for GM but, we hope, with all the upside. Their idea is to create a new kind of relationship with authors and booksellers alike – something like the 360-degree relationship record labels are establishing now with their artists. They look for authors to share the burden on marketing - especially through social media and they actively seek out authors who have already developed major online followings (e.g. Gary Vaynerchck from the Wine Library). Instead of high advances and low royalties, they offer low advances and high royalties hoping the author is more motivated to make waves. And they don’t take returns, so they force the booksellers to be more judicious in how they order and place the books. All told, they represent the newer, leaner and more entrepreneurial style of publishing.
Flatworld Knowledge is a start-up comprised of savvy college textbook people who have similarly reinvented their space but with even more twists – they have added a kind of modified Wiki. They hire the top educators to create college textbooks, enable the professors to customize the books for their own courses and then they give it away online. What students pay for is the on demand version of the book - printed for them at the college bookstore - but at much, much lower prices than typical textbooks. They also sell multimedia course material. As their investor explained to me, they plan to take a declining $10bn industry and turn it into a high growth $1bn industry – with Flatworld leading the growth.
One thing is clear, the book as we know it – this final and only product of the writer’s creative process is about to become something quite different – an ongoing conversation delivered over many media and probably on the go…..
UPDATE Google is about to launch its version of news condensation with Flipper. Look out for this market to take off!
Alan Brody, ViziPress (and the iBreakfast); Debbie Steirs, HarperStudio; Eric Frank, Flatworld Knowledge; Brad Inman, Vook.com
Last week I joined 3 other publishers to talk about the next phase in publishing at a consumer electronics road show in New York. We did something unusual – we talked about the way media content needs to change – and we showed eye-opening examples.
Clearly, Consumer Electronics guys are mostly interested in TV and mobile apps. Reading is not their highest priority - but then you never where convergence is going take you.
So here we talked about eBooks, mobile reading devices, the digitization of books generally but, more importantly what the title of this panel was all about: the change in media – its Act II. How content is about to become something different because the Media has changed - and so have we.
This phrase, Media's Act II, came from Google’s CEO Eric Schmidt at the American Newspapers Association convention earlier this year. He informed the execs, nervously watching their papers edge out of existence, that they had done a great first Act in the 90’s by going online but now they needed an Act II.
So what was Act I? I argue that it was what we used to call, in an earlier era, “shovelware” – they shoveled the contents of a newspaper online and threw in a few bells and whistles – a little search, a little feedback, a slide or two and a place to click. But for the most part, you read just like you did in print but with the inconvenience of a monitor.
Shouldn’t the computer enhance the reading experience – either make it faster, better or something else? And now, with mobile (why we were at the Consumer Electronics space), something more suited for on-the-go reading?
We showed 4 new publishig models, each unique but each complimentary in a way that probably defined the 4 corners of this coming universe: We showed books that are way shorter (ViziPress), way richer (Vook.com), way more social media involved (HarperStudio) and way more adaptable to higher educational needs (Flatworld Knowledge).
Vook.com is about taking you into the world of a book – using video, interviews, multimedia and so on. If you love Sherlock Holmes, you’re in heaven. They hope that every great author will bring you into this afterworld of their creative space. If you’re the kind of person who watches the extras on your movie DVDs then you’re going to want this for your favorite books. They even hope you will pay a little extra for the privilege and publishers are interested in - not just the book - but the book world.
ViziPress, my creation, is about visual condensations – a kind of visual "Cliff Notes" – of popular business books. If you are lacking in time we can tell you what a book is about in around 3 minutes - and do it in a profound a memorable way. We add music because it makes the process a lot more digestible (according to mysterious research) and we think their world will demand this for every book in existence. Interestingly, it doesn’t kill books - it excites interest in books that people may have otherwise ignored. It also helps that we can cite Albert Einstein as using visualization in all his theorizing (remember the one about riding next to a light beam?) and that we have the best-selling "What Would Google Do?" as an example of a visual summary.
HarperStudios is a new kind of publishing arm of HarperCollins – like Saturn was for GM but, we hope, with all the upside. Their idea is to create a new kind of relationship with authors and booksellers alike – something like the 360-degree relationship record labels are establishing now with their artists. They look for authors to share the burden on marketing - especially through social media and they actively seek out authors who have already developed major online followings (e.g. Gary Vaynerchck from the Wine Library). Instead of high advances and low royalties, they offer low advances and high royalties hoping the author is more motivated to make waves. And they don’t take returns, so they force the booksellers to be more judicious in how they order and place the books. All told, they represent the newer, leaner and more entrepreneurial style of publishing.
Flatworld Knowledge is a start-up comprised of savvy college textbook people who have similarly reinvented their space but with even more twists – they have added a kind of modified Wiki. They hire the top educators to create college textbooks, enable the professors to customize the books for their own courses and then they give it away online. What students pay for is the on demand version of the book - printed for them at the college bookstore - but at much, much lower prices than typical textbooks. They also sell multimedia course material. As their investor explained to me, they plan to take a declining $10bn industry and turn it into a high growth $1bn industry – with Flatworld leading the growth.
One thing is clear, the book as we know it – this final and only product of the writer’s creative process is about to become something quite different – an ongoing conversation delivered over many media and probably on the go…..
UPDATE Google is about to launch its version of news condensation with Flipper. Look out for this market to take off!
Tuesday, June 2, 2009
iPhone Apps - Report from May Mobile iBreakfast
iPhone & Mobile Apps
As cell phone users increasingly turn to smart phones – how important is it to offer a mobile App? It is cheap ($99 registration fee with Apple), relatively easy to develop and distribution is assured. However, with 35,000 apps out there, it is tough to stand out from the crowd.
THE APP LOTTERY
If you are lucky, like iBird (see NY Sunday Times) and Apple thinks you can really showcase the iPhone - they will give you millions of dollars of free advertising. A little less lucky - and you become the featured selection and so on. But this is a kind of lottery, most developers have to think about the long hard slog and such time-tested techniques as piggy-backing on other platforms.
AD SUPPORTED
According to Eric Litman, whose company, Medialets helps companies track and optimize the use of apps, having a mobile app may be a necessity of doing business. Instead of selling them though, many will become ad-supported. Think mobile widgets…..
BUSINESS TRANSFORMATION – GOING MOBILE
More significantly, as mobile increasingly becomes a business platform as well as a lifestyle utility, the applications will become useful extensions to existing businesses – whether it is mobile sales people on a contact- and order-management system, or field engineers using specialized software to solve technical problems. These will be more than cool apps - they will be the future of the workforce. Any business that can put you in the field, will. And they can manage their workforce through control software - and stop paying rent on your cubicle.
MANY SMART PLATFORMS
While Apple is leading the mobile App charge because of the iPhone’s extraordinary range, power and graphics, the other platforms are already in the game and are likely to follow their example. In the case of Alex Muller’s Slifter, local shopping has been an important driver. Since his company began developing in 2007, having reached out to many platforms and worked with many telcos - they are mindful of the developments from Google’s Android, Nokia, Palm Blackberry and that dark horse in the race, Microsoft. Apple is hot but still has only 26% of the Smartphone marketplace.
No one expects Microsoft to lay low for long. When they wake up to this marketplace - it could spell opportunity for developers since Microsoft has a way of spending itself to the top.
NEW WORLD TRADING PLATFORM
Mobile use is not only likely to grow, but it is poised to become a ubiquitous platform: it is a computer that happens to be a phone. In many parts of Europe, where the telco’s charges are less onerous, it is a kind of charge card. In the 3rd world, especially Africa, phone usage has grown in 15 years from a few million landlines to over 50 million cell phone users with generally high quality service. As smart phones enter the picture they have the potential to become the standard trading platform that could transcend national borders and economic systems. Ditto for many parts of Latin America and Asia. The new versions of SmartPhones (iPhone 3.0) will greatly enhance the eCommerce possibilities of this platform.
MULTIMEDIA TRAINING AND SUPPORT
The specifics of Ken Engels' Curious Brain, a guitar teaching tool that uses the sound and graphics of the iPhone in an extraordinary way – think iChord instead of iBird - make it clear that the iPhone's potential to train, inform and empower will be tapped worldwide.
That may just be the beginning - Version 3 of the iPhone adds the ability to sell within applications. This way users of an app – say a training store - can buy more lessons or other content while they are on the training site. This opens to the door to new kinds of upsells and giveaways. The current model is typically, the Fremium – give away a trial, low-cost or free app and then upgrade the user. Now it’s about selling add-ons or more content – giving away the razor and selling the blades.
NEW TECHNOLOGY LINEUP
While no one thinks that mobile will displace the laptop or even the desktop, it is clear that a reordering is taking place – technology will exist over a complex system with a server, a network, possibly a desktop and a laptop workstation. In all cases, whatever can be done quickly, on the road or on the run, will be on a smartphone. Everything bigger will be support or back-up, the smartphones will be the tip of the technology spear
So have have you taken your place in the mobile App space yet?
As cell phone users increasingly turn to smart phones – how important is it to offer a mobile App? It is cheap ($99 registration fee with Apple), relatively easy to develop and distribution is assured. However, with 35,000 apps out there, it is tough to stand out from the crowd.
THE APP LOTTERY
If you are lucky, like iBird (see NY Sunday Times) and Apple thinks you can really showcase the iPhone - they will give you millions of dollars of free advertising. A little less lucky - and you become the featured selection and so on. But this is a kind of lottery, most developers have to think about the long hard slog and such time-tested techniques as piggy-backing on other platforms.
AD SUPPORTED
According to Eric Litman, whose company, Medialets helps companies track and optimize the use of apps, having a mobile app may be a necessity of doing business. Instead of selling them though, many will become ad-supported. Think mobile widgets…..
BUSINESS TRANSFORMATION – GOING MOBILE
More significantly, as mobile increasingly becomes a business platform as well as a lifestyle utility, the applications will become useful extensions to existing businesses – whether it is mobile sales people on a contact- and order-management system, or field engineers using specialized software to solve technical problems. These will be more than cool apps - they will be the future of the workforce. Any business that can put you in the field, will. And they can manage their workforce through control software - and stop paying rent on your cubicle.
MANY SMART PLATFORMS
While Apple is leading the mobile App charge because of the iPhone’s extraordinary range, power and graphics, the other platforms are already in the game and are likely to follow their example. In the case of Alex Muller’s Slifter, local shopping has been an important driver. Since his company began developing in 2007, having reached out to many platforms and worked with many telcos - they are mindful of the developments from Google’s Android, Nokia, Palm Blackberry and that dark horse in the race, Microsoft. Apple is hot but still has only 26% of the Smartphone marketplace.
No one expects Microsoft to lay low for long. When they wake up to this marketplace - it could spell opportunity for developers since Microsoft has a way of spending itself to the top.
NEW WORLD TRADING PLATFORM
Mobile use is not only likely to grow, but it is poised to become a ubiquitous platform: it is a computer that happens to be a phone. In many parts of Europe, where the telco’s charges are less onerous, it is a kind of charge card. In the 3rd world, especially Africa, phone usage has grown in 15 years from a few million landlines to over 50 million cell phone users with generally high quality service. As smart phones enter the picture they have the potential to become the standard trading platform that could transcend national borders and economic systems. Ditto for many parts of Latin America and Asia. The new versions of SmartPhones (iPhone 3.0) will greatly enhance the eCommerce possibilities of this platform.
MULTIMEDIA TRAINING AND SUPPORT
The specifics of Ken Engels' Curious Brain, a guitar teaching tool that uses the sound and graphics of the iPhone in an extraordinary way – think iChord instead of iBird - make it clear that the iPhone's potential to train, inform and empower will be tapped worldwide.
That may just be the beginning - Version 3 of the iPhone adds the ability to sell within applications. This way users of an app – say a training store - can buy more lessons or other content while they are on the training site. This opens to the door to new kinds of upsells and giveaways. The current model is typically, the Fremium – give away a trial, low-cost or free app and then upgrade the user. Now it’s about selling add-ons or more content – giving away the razor and selling the blades.
NEW TECHNOLOGY LINEUP
While no one thinks that mobile will displace the laptop or even the desktop, it is clear that a reordering is taking place – technology will exist over a complex system with a server, a network, possibly a desktop and a laptop workstation. In all cases, whatever can be done quickly, on the road or on the run, will be on a smartphone. Everything bigger will be support or back-up, the smartphones will be the tip of the technology spear
So have have you taken your place in the mobile App space yet?
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