Navin Chaddha, Managing Director of Mayfield, the global venture capital firm, has written an interesting article in Forbes called "In Tech, Reasons For Optimism In Times Of Bubble Or Bust," in which he offers entrepreneurs some insights from his many years as an early-stage venture capital investor. It's a good article and worth a read.
Guy Kawasaki posted an interesting op-ed piece on The Daily Californian website that explains his Principles of Innovation he has learned through his career. It's a worthwhile read: http://www.dailycal.org/2014/03/07/art-innovation/
There are two recent Forbes articles that are food for thought for entrepreneurs. "5 Sure Signs A Startup Will Succeed" and "5 Sure Signs That a Good Startup is Going Bad" offer two views of startups. The first offers five signs for success:
I agree with the above, and would add leadership to the list. To me, leadership is a combination of installing an exceptional team (starting with management and board), articulating a vision, and then providing an environment that is conducive to success. Leadership overlaps with the elements of #4 and #5 above.
The second offers five signs that a startup is going bad:
5 Sure Signs A Startup Will Succeed:
5 Sure Signs That a Good Startup is Going Bad:
The TechCrunch post "Be Concise! - The Top Questions Asked At A Y Combinator Interview" has a list of over 50 questions that entrepreneurs have been asked during the Y Combinator interview process. As I reviewed the questions, it seemed to me that these questions are also useful to entrepreneurs as they prepare their marketing documents. For example, one of the questions is "How big an opportunity is there?" This is something every investor will want to know and all fundraising presentations I have worked on (as an investment banker and lawyer) have had something about the market opportunity (size, growth rate, addressable market, etc.). If entrepreneurs go through these questions before they prepare their marketing documents, the final product may be more thoughtful and complete.
Here's the link: http://techcrunch.com/2012/04/27/be-concise-the-top-questions-asked-at-a-y-combinator-interview/
Tech entrepreneurs are able to develop ideas much faster and for less money than in years past. This has led to entrepreneurs changing their company's business model mid-stream when they find the original business model didn't have traction or that feedback suggested moving in a new direction. This rapid shifting of business models is now known as "pivoting" and in the case of Instagram, paid off very well. Instagram, founded just a few years ago, was started as a mobile check-in site, but pivoted into the photo-sharing application that was acquired recently by Facebook for $1 billion.
The Wall Street Journal article "'Pivoting' Pays Off for Tech Entrepreneurs" discusses this phenomenon of pivoting, and how venture capitalists are embracing it. It's an interesting read. Here's the link: http://online.wsj.com/article_email/SB10001424052702303592404577364171598999252-lMyQjAxMTAyMDIwNjEyNDYyWj.html
Pebble is a new "e-paper watch" which is a smart watch (in development) that will download data and apps wirelessly from an iPhone or Android device. The video on the www.getpebble.com website is pretty informative. Basically, the Pebble is a customizable watch that runs apps and connects wirelessly to an iPhone or Android device. In addition to being a customizable watch, the Pebble can do things like act as a running odometer, a gps-enabled bike computer, show text message alerts, caller ID and control smartphone music apps, all available when your phone is with you.
Pebble is a project of a small team of engineers led by Eric Migicovsky, and they previously developed a smart watch for Blackberry called inPulse.
Pebble has received pledges of nearly $5.5 million (at the time of this writing, and rising fast) from over 37,000 backers on Kickstarter, the funding platform for creative projects. This is not an equity fundraising - this is funding obtained from people who believe in the project and want to see it succeed. In general, they get nothing in return other than the satisfaction that they helped the company get off the ground.
Why did Erick Migicovsky go to Kickstarter to fund this project? Based on several reports, it was because he could not receive backing from venture capitalists, despite having gone through the respected Y-Combinator program and having received backing from some respected angel investors.
To me, what Pebble has done is very impressive, and portends favorably for the new crowdfunding form or equity fundraising that was recently passed into law by the Jumpstart Our Business Startups (JOBS) Act. Soon sites like Kickstarter will be able to help companies raise equity financing directly from investors - small amounts - but it will enable people enthusiastic about a project to obtain a (very) small equity stake in the company in addition to helping it get off the ground. This could be big...
Pebble website: http://www.getpebble.com/
Kickstarter website: http://www.kickstarter.com/
Articles on Pebble and Kickstarter:
Prior posts of crowdfunding:
Wall Street Examining JOBS Financing Act: NY Times DealBookhttp://www.allenlatta.com/1/post/2012/04/wall-street-examining-jobs-financing-act-ny-times-dealbook.html
JOBS Act Jeopardizes Safety Net For Investors: Andrew Ross Sorkin
JOBS Fundraising Act to be Signed into Law on Thursday
The JOBS Act is Good, But SarbOx Shouldn't Get All the Blame:
Unintended Consequences of the JOBS Act:
Fundraising Bill Passes Senate:
When I was a lawyer representing companies and venture capital funds, I was always intrigued by the disparity of due diligence conducted by venture capital investors and entrepreneurs. Venture capitalists typically spend a lot of time conducting due diligence on the market, technology, business model and the entrepreneurs. Entrepreneurs typically spend a little bit of time investigating the venture capitalist and the venture capital firm, focusing mainly on reputation. The TechCrunch article "Things to Consider Before Saying 'I do' to Investors," explores some of the due diligence entrepreneurs should be conducting before accepting a check. One great piece of advice is for entrepreneurs to conduct reference checks on the investor. Here's the link: http://techcrunch.com/2012/04/08/things-to-consider-before-saying-i-do-to-investors/
Crowdfunding is a funding mechanism for small companies to raise capital from a group of individuals who each contribute a small amount of money; this financing is contemplated to occur over the internet. Currently illegal, there is a bill winding its way through the legislative process that would enable companies to raise either $1 million (without audited financials) or $2 million (with audited financials) from investors who each can contribute in any 12 month period up to $10,000 or 10% of their annual income. The bill (H.R. 2930) has been passed by the House of Representatives, and is currently working its way through the Senate.
Here's a link to the
Here's a good overview article on Forbes.com that discusses crowdfunding: http://www.forbes.com/sites/techonomy/2012/02/29/crowdfunding-set-to-explode-with-passage-of-entrepreneur-access-to-capital-act/
Here's a link to the bill (H.R. 2930): http://www.govtrack.us/congress/bill.xpd?bill=h112-2930
On the heels of my prior post on San Francisco as Tech Central, here's another link to a blog post on medriscoll.com "Start-ups Belong in San Francisco." The post discusses some of the qualities that contribute to making San Francisco such a vibrant and unique place for the start-up scene. Worth a read. Here's the link: http://medriscoll.com/post/18137813025/start-ups-belong-in-san-francisco
Here's a link to my prior post on San Francisco: http://www.allenlatta.com/1/post/2012/02/san-francisco-as-tech-central-uncrunched.html
"Entrepreneurial activity is on the rise in Brazil and spreading into new industries." This is the opening sentence to an interesting post by Mark Boslet on peHUB "Entrepreneurship is Growing Up in Brazil and So Are Investment Opportunities." The posting goes on to discuss how Brazilian entrepreneurship is moving from software into new sectors and identifies investors targeting companies in Brazil, including Accel Partners.
Jim Breyer of Accel Partners discussed Brazil in a video interview last year, which can be found in a prior post here: http://www.allenlatta.com/1/post/2011/11/jim-breyer-interview-on-techcrunch.html
Reuters has an interesting article "Silicon Valley: The Rise of the Adolescent CEOs" which examines the world of the under-21 year old entrepreneurs. These entrepreneurs have additional hurdles to jump, especially those under 18 years of age - for example, needing parents to act as co-signers on agreements. Here's the link: http://in.reuters.com/article/2012/02/21/venture-young-idINDEE81K04420120221
The NY Times yesterday posted an interesting article "In Tech, Starting Up By Failing" which discusses how entrepreneurs have been able to "pivot" and change direction for their companies. An interesting read. Here's the link: http://www.nytimes.com/2012/01/18/business/for-some-internet-start-ups-a-failure-is-just-the-beginning.html?_r=1&pagewanted=all
Business Insider has posted a presentation by Bill Gross, serial entrepreneur and founder of idealab, that Bill gave recently at the LeWeb conference in Paris. The presentation is entitled: "Learning from Failure*" with the footnote "* 12 lessons from my life as an entrepreneur." I found this to be a fascinating presentation and recommend it to entrepreneurs. Here's the link: http://www.businessinsider.com/bill-gross-lessons-2011-12?op=1
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