Good morning, All,
Investors care about one thing. Wait: two. Ok, three: your market size, revenue model, and your team – not necessarily in that order. Still, at the end of the day, it still boils down to one thing: money, so we were right: investor care about one thing. And you need to look at your business the way they do. Seriously.
The Wall Street Journal noted that VC funding of consumer web and mobile companies is down 42% in this first nine months of 2012 (versus the first nine months of 2011). And the big falloff was not in seed but rather in follow-on rounds (VCs Still Chasing Web Companies, But With Less Cash: http://on.wsj.com/RaBjPX). What Has Changed (http://bit.ly/Tk5YXj)? That was the title of one of Fred Wilson’s recent blog posts, and he feels that the consumer internet has run its course; and that mobile and enterprise are the new focuses. Howard Lindzen chimed in as well and concluded that “a great product and brilliant use of the tools of the new social trade are still not enough in November 2011 to guarantee success” (The Stock Market, Venture Capital and Angel Investing…All Connected: http://bit.ly/RaHpQn). Actually, it never should have.
Web 1.0 was about getting eyeballs, and you’d think that investors would have learned something when the bubble burst. “I am more concerned about the angel investors and venture capitalists than I am the entrepreneurs in reading all these tea leaves, but as an entrepreneur it is your job to factor in their blindness or lack of expertise,” Lindzen also said. And therein lies the problem.
By the consumer internet, Wilson means companies like facebook/instagram, amazon, ebay, yahoogle. The usual suspects. Forest through the trees: during the last few years, when investors had the internet winds at their back, the facebooks, groupons, twitters and instagrams of the world took off quickly and huge fortune were created overnight. But this was ‘internet money,’ meaning riches begotten by a company without a sustainable business model to support it – web 1.0 revisited. It was basically living on fumes with a lot of money in the bank. Again. Investors had learned nothing. We personally spend less and less time on facebook, which is free, and more on linkedin, for which we pay. And which has been profitable since way before its IPO. It offers a value proposition. Amazon? Ebay? They’re real companies, who’ve always gotten their vig on each and every transaction. We know that it isn’t cool to ask companies who present at the New York Tech Meetup what their revenue model is. In fact, anyone from the audience who asks the question gets booed. Newsflash: it’s hard for companies who’ve gotten seed rounds to get to that next stage, because at some point, you need to show revenue. Sell something. Charge something. White label something. Change something. If people don’t want to pay for it – add something that would move them put down a charge card. Show that you have a business, because that’s what business is all about: again, the bottom line is still the bottom line.
What has changed? Nothing, really. Investors are still looking for their Next Big Cash Out, and companies based on Internet Money have a sell-by date.The consumer internet is far from over – it’s just that a few new screens have been added to deceive the clueless. It’s time to call a spade a spade, your startup a business and to depend on something other than investor money as a revenue model. No doubt that young companies and investors still need each other. But symbiotic relationships are far preferable to parasitic ones, which face it, seem to be far more common in our industry and has been for a very long time. Build a sustainable business and when you need the cash to grow it, the investors will come to you. Eyeballs are important, but more importantly, those eyeballs need to gravitate to their wallet pockets at some point: then you have a business. Then the money will come to you, whether you’re looking for it or not. And wouldn’t that be nice – for a change. Onward and forward.
The list of Startup Weekend Upcoming Events
The Awesome Foundation wants to give you $1000 for your best idea – almost anywhere in the world. We give micro-grants each month to projects that are inspiring, delightful, and elegant: in a word, Awesome. To apply in NYC: http://bit.ly/NWueRO For more information and the complete list of chapters all over the world: http://www.awesomefoundation.org/
ER Accelerator Winter Session, deadline November 30th. ERA one of the top accelerators in the country, if not the world. Get $40k in funding; free office space in the heart of NYC; access to 200+ amazing mentors (http://eranyc.com/mentors/ and yes, Yours Truly happens to be one of them). For more information: http://eranyc.com/ To apply: http://eranyc.com/apply/
DEADINE THIS WEEK The Europas, deadline November 30th. Here is a chance for you and your team to celebrate the best of European tech start ups as voted for by a panel of the most acclaimed investors, entrepreneurs and tech veterans, serving as a platform for these start-ups to access funding and recognition on a global scale. The Awards celebrate the most forward thinking, progressive and innovative tech companies across over 20 categories. This year the Europas take place in the Postbahnhof in Berlin on Tuesday 22nd January 2013. Tickets are available here. For more information and to apply, or nominate a company: http://theeuropas.com/
DEADINE THIS WEEK Take the HELM, deadline November 30th. The Take the HELM (Hire & Expand in Lower Manhattan) Competition will select up to 20 finalists that best meet the goals of the competition and seek to open an office in Lower Manhattan. Finalists will each receive a $10,000 cash grant, an opportunity to interview with the distinguished Take the HELM Selection Committee, and will participate in two days of exclusive business development programs in Lower Manhattan. Up to four Take the HELM winners will receive an additional $250,000. At least one $250,000 prize will be reserved for startup applicants. For more information and to apply: http://www.takethehelmnyc.com/
AWS Global Startup Challenge, deadline, December 5th. The Amazon Web Services (AWS) Global Start-Up Challenge is a way for promising start-ups to get noticed and compete for an opportunity to win some great rewards. This year’s challenge offers prizes such as $100K in combined cash and credits for multiple winners, VC introductions, PR support, and more. If your start-up is built using AWS, we want you to apply!
Meet Tier One Investors: Finalists will be flown to San Francisco where they will meet 1:1 with top VCs
More Winners, More Prizes: This year we will award winners in four categories, and award each of the four winners $50,000 in cash and $50,000 in AWS credits
Press and Attention for Your Start-Up: Past winners have been covered by top tech news outlets, and AWS offers other free promotion to top teams as part of the contest. For more information and to apply: http://bit.ly/OwE8ny
THE NEW ENGLAND VENTURE SUMMIT Call for Top Innovators, and it’s not too late to apply to present. http://bit.ly/OVZQBF. The New England Venture Summit provides an unparalleled opportunity for startups to meet, network and showcase their innovative investment opportunities to a leading group of investors. This exclusive venture summit will feature over 40 leading VCs on timely panel discussions; presentations by 50 cutting edge companies and high-level networking opportunities. It happens in Boston on December 5th. If you plan on attending, register now and save 50%: http://bit.ly/LjlttK
NEW DEMO Mobile: The Future Is In Your Hands. Scholarship deadline: January 17th. Standard deadline, February 15th. Apply to launch or pitch: http://bit.ly/QjQQvE
powered by Movable Ink
For you edification this week:
What Hasn’t Changed: The Internet Keeps Getting Bigger. “There is no better time than the present to build cheap & scalable software-based businesses that make money,” says Dave McClure in his rebuttal to Fred Wilson: http://bit.ly/UVfvmZ
And Now We’re At The Point Where Startups Are Running Out Of Cash. As we were saying, it seems the fiscal cliff for startups funded in the recent explosion of seed-stage deals has arrived. Which, according to BI, may be good news: http://read.bi/QjQi8Y
Silicon Valley, New York, Tel Aviv: Here’s the World’s Start-up Hubs A new report reveals that Silicon Valley outpaces all other start-up ecosystems but cities around the world are catching up: http://bit.ly/UH7D8r
How Do I Get In Touch With a VC? Some advice, from the horse’s mouth: http://bit.ly/QjR0mL
The Truth About How Startup Investors Keep Secrets from Their Entrepreneurs. As told by an anonymous angel: http://bit.ly/QjRl8P
Some Advice for Celebrities and Startups Seeking Their Endorsements. For the most part, Mark Suster’s advice is simple, “don’t bother:” http://bit.ly/QjRCIR. Oh, and be especially careful if you decide to tap Oprah to hawk your product – Oprah’s attempt to promote Microsoft Surface backfires: iPad used to send tweet (and guess who really needs an iPad – see I NEED HELP – ed.): http://tnw.co/QjRUj3
What you should know before you launch your product. The common refrain “We don’t know anything until we launch” is completely false. Here’s why: http://bit.ly/Pll8gU
The Two or Three Things You Need to Raise Capital: http://bit.ly/QjONre
Entrepreneurs, investors and a choir of angels. A must read, from an entrepreneur-turned-angel: http://bit.ly/V7Uawv
Real. Honest. Fear. How many times has a founder told that to a board or to his management team? Rarely, if ever. How often does a founder feel that way? Plenty. When you need help, ask for it. (And I really do need an iPad, ed.): http://bit.ly/SznYN7
Elevator Pitch/Member News
Hint, hint: Feel free to tell us what you’re working on, or if you’ve been featured in the press…Share, and we will, too!
That’s it from us this week. You might have notices that there are a lot of events this week, and with the Egg Nog circuit heating up, it’s just going to get more insane, so pace yourself – and always bring lots of business cards. And now, as always, help is on the way…