Good morning, All,
We’ve heard it ad nauseam: the VC model is broken. There is certainly no shortage of posts on the subject. At TechCrunch Disrupt, Fred Wilson called the VCs sheep, saying they all wait, then jump into a deal together, usually when it’s too late. Most VCs, said Fred, are not forward looking. Question: do they really know the industry?
Investors are usually:
1. Entrepreneurs who made good
2. Entrepreneurs who got lucky (right company at the right time – early hires as opposed to key players: we know a junior project manager who went to a startup. It was her second job out of school; eighteen months later, the company was acquired and she was a multimillionaire before her 25th birthday)
3. Investors who invested well or again, were in the right place at the right time.
4. Those born with lucky sperm; no experience required.
Investing is about what you know and/or whom you know. Most firms hire young associates who do much of the legwork. They’re the boots on the ground, who are looking at newco’s and who are they really? They’re usually newly-minted MBAs from the top schools who (usually) have no entrepreneurial experience; little or no industry experience; and little or no real world experience. They’re probably in their first apartments and don’t even know the first thing about organizing/cleaning them (getmaid.com, and you’re welcome). Yet they are the gatekeepers, so is it any wonder? Still, these young associates do have their place in the zeitgeist.
What missing are missing are talent scouts, to take a page from professional sports, where the concept has been working forever. People who follow the industry. Who really do go to the networking event, pitch events, mingle with founders, and who know the DNA of the industry, of founders – known or as-yet-undiscovered – and who are even aware of your as-yet-unknown competitors. Think reporters (case in point: MG Siegler). Recruiters (not the johnny-come-latelies who can’t find a job: the lifers who know who’s real and who has failed upwards – we always know the story; we check the references you never gave us).
Therein lies the disconnect.
We were at a networking event recently, seated next to an investor who asked our pick of the company most likely to. We told him, and our pick happened to be in a vertical with which he was very familiar. He disagreed, pointing out the company’s Achilles Heel. In our opinion, that so-called Achilles Heel was the very pain point the company was addressing, and their differentiator. He was surprised at our naiveté. We knew the company’s CTO and marketing director – and told him as much: our money was on this unknown team. Two weeks later, the company announced that they’d raised funding (that investor was not in on the round) – a multimillion dollar seed round from well-known investors. A few days later, we ran into that same investor again. He informed us that he was now planning on hiring a young associate, and once this person was chosen, would we bring him/her with us to events and point out potential investments to him/her? Seriously???
We used to organize summer houses in the Hamptons. Multiple adults under one roof who somehow had to survive the sixteen weeks of summer together, hopefully without incident. All share houses have rules. We had one: Don’t be a jerk. We felt that that pretty much covered it, until an early member insisted that we needed at least one more rule – that one was insufficient – and we complied.
Rule #1: Don’t be a jerk
Rule #2: See Rule #1.
To that investor we say (and he was not the first to ask us to provide this service, free of charge): Do you not understand where the model is broken? You need the young associate – and the more experienced talent scout. Happy to oblige, but expertise is worth something: don’t be a jerk. In case that is unclear to you, see Rule #1. Onward and forward.
The list of Startup Weekend Upcoming Events
NEW Digital Catalyst Fund Summer Boot Camp, starts in June; companies are accepted on a rolling basis. No technical cofounder required and you’ll spend the summer in Bucharest – the Paris of Eastern Europe! Apply here. Applications are now being accepted for Digital Catalyst Fund’s 10-week Summer Boot Camp. This one-of-its-kind accelerator is seeking entrepreneurs with early stage ideas that can impact the new media/digital marketing space. Accepted entrepreneurs will be provided with up to $20,000 cash and cash equivalent services, as well as $30,000 in technical development resources. You’ll be living (in a converted mansion; chef included) and working with our technical teams in Bucharest, Romania. We’ll also provide mentors and a Demo Day, back here in NYC. For the informational webinar happening this week, go here. https://angel.co/digital-catalyst-fund Also for more information, there is a story on them in AlleyWatch.
New York Venture Summit: Apply to present/early bird registration ends May 22. The 13th annual New York Venture Summit, presented by youngStartup Ventures, is the premier industry gathering connecting venture capitalists, corporate VCs, angel investors, technology transfer professionals, senior executives of early stage and emerging growth companies, university researchers, incubators and premier service providers. Whether you are an investor seeking access to new early stage deals, or a CEO or Founder of a new venture looking for funding, visibility and growth, New York Venture Summit is one event you won’t want to miss. To be considered for one of the Top Innovator slots, please e-mail firstname.lastname@example.org for an application.
LaunchHouse Accelerator Accepting Applications, Cleveland, Ohio, and all are welcome to apply. Deadline unknown. Program starts in August. For more information, see below under ‘I Can Help.’ To apply, go here. Also, just for your information, they do encourage people from anywwhere to apply – and even provide housing!
Fourth BigApps Competition, deadline June 7th. $150k in prizes, and there’s a NYC BigApps 2013 Expo and Hackathon Weekend at eBay’s New York offices the weekend of April 6th. More information about the BigApps competition is on the NYCBigApps website.
Blueprint Health Accelerator, deadline June 8th. They just had their demo day, and getting ready for the next session. The foundation of the program is a community of over 150 healthcare entrepreneurs, investors and industry executives that are committed to helping you build and grow your business. It’s the largest network of mentors with healthcare expertise of any accelerator, which can provide you with warm introductions and the strategic and tactile advice you need. Plus $20,000 in cash, over $50,000 in perks, office space at our SoHo office, and a community that is dedicated to seeing you succeed.
Matchpoint | East, June 30th. This is an exclusive opportunity for selected health technology entrepreneurs and large stakeholders to meet in designated 15-20 minute meetings. Meetings are arranged based on selected criteria by industry leaders and investors, leading to high-yield discussions with innovative companies! During these meetings, innovators have the opportunity to demo their innovations with potential partners and investors. Hundreds of applications are reviewed by our team and host companies to select companies to participate in exclusive round table discussions and demos. Traditionally, over 500+ applications are reviewed to identify 10-15 innovative companies per host sponsor. Apply here.
Take the H.E.L.M., deadline July 15th. To encourage the continued growth of Lower Manhattan, Take the HELM will award four $250,000 cash grants and four $50,000 cash grants to companies seeking to open an office or expand in Lower Manhattan.
Global Apps To Empower, deadline July 26th. We invite you to think out of the box and create apps that inform, educate and empower women everywhere. Compete for $10,000 in prizes. Have your app pre-loaded onto thousands of devices for global distribution on the Ubislate series of tablet and at the BluWorld portal. Receive up to 20 tablets for user testing and app development. Receive global recognition from partners and sponsors including publication of your app deployment story.
For you edification this week:
Donald Trump gets into crowdfunding. With Learning Annex founder Bill Zanker. As for FundAnything’s business model, expect the commissions to be just the start, according to the article. The site is called FundAnything.com. We like Alan Brody’s take on it: Trump Puts the Clown in Crowdfunding.
Pitching and Why You Want to Stop Your Audience From Thinking. Research has consistently proven that people make decisions based on emotions, and then justify them with fact. Although we may like to think of ourselves as rational, cognitive human beings first and foremost, research data says otherwise. Newsflash: we’re not rational.
How VCs think: Is your startup a feature, a product or a business? Written by SOS member (and VC) Eugenia Koo.
11 Tips for Women Pitching Investors for the First Time. What’s the one thing (or 11) you need to know.
Why Online Video Just Took One More Big Step to Legitimacy. Our industry just took one big step towards legitimacy with the hiring of renowned media exec Ynon Kreiz to run Maker Studios. The industry finally has one of their own at the helm of the largest YouTube network.
If you have a Klout Score of 55 or higher, you can gain access to American Airlines’ Admirals Club. You don’t even have to be an American Airlines passenger to be eligible for this perk. Although, the link on the klout blog didn’t take you to aa, when last we checked.
How is Bloomberg’s snooping different from News Corp.’s phone hacks? Bloomberg reporters have been using Bloomberg terminals to snoop on customers. For the record, these customers pay roughly $20,000 a year per terminal. Oh, and next time you’re up at Bloomberg for a meeting or a panel discussion, stay off the wifi – each person who enters the building gets their own unique code and her/her every keystroke is being monitored.
How You Get Hacked at Starbucks; Here’s a look at what to keep your eyes peeled for when cozying into a coffee shop near you. Hmmm, maybe today’s newsletter should be the beware-of-your privacy edition.
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!
Congratulations to DreamIt Venture’s latest class of entrepreneurs. The startups participating in the summer session was just announced. Full list is here.
Justworks.com launched today, and congrats to co-founder Iris Ramos. The site automates your HR, and if you’re a small company – which a lot of you are –Justworks steps in right at the get-go, creating a cost-effective HR and payroll platform which new companies can build on. Beyond its employee database, the company ensures that a startup’s people are paid, its state and federal taxes are filed and it’s fully covered with all mandatory employer insurance. Following companies from their inception to growth, Justworks strips out fees and helps startups launch compliantly and legally – literally in a matter of minutes.
There’s an Angel Hack Pre-Hackathon NYC Workshop, May 22nd (drinks included) to allow people to get a head start on the competition. This is the ideal place to meet teammates, learn tools, and get prepared for the big weekend ahead.
Join AngelHack and Animoto for a fun night of hacking. The fiesta goes from 7-9pm. Come armed with questions for our partners, we’ll come armed with beers and pizza. Looking for a Co-founder? You’re in luck! Check out CoFoundersLab and build your dream team before you hack. And don’t forget to register for Angel Hack with your 50% SOS discount code: hack50.
For your amusement this week: CNN Anchors Pretend They’re Not Having A Satellite Interview In The Same Parking Lot. Ok, Reddit might get it wrong at times, but guess no one’s perfect. That’s it from us, and now, as always, help is on the way…