Last week was Demo Day for 500 Startups' fifth batch. A professionally produced event; it's challenging to give 31 companies a few minutes each to say something meaningful about who they are, what they are doing, and what money they'd like to raise. The Mountain View Microsoft campus space works well for presentations - was too crowded to actually meet and talk to people afterwards.
TechCrunch, VentureBeat and GigaOm all covered the material. The emphasis on non-US companies increases - to me, the most interesting was one of those, WhoAPI. They are making DNS information available to non-specialists, and offering availability monitoring.
List of companies
BabyList – A baby registry that works like Pinterest, allowing you to add anything on the web
Chewse – A marketplace for groups to easily order great food
Club W – A curated, personalized wine subscription service
CompStak – Creates transparency in commercial real estate by gathering information that is hard to find, difficult to compile, or currently unavailable
Cubie – A free messenger app for creating drawings and sharing them with friends
Cuponomia – A marketplace to search, discover, and share deals and online coupon codes in Brazil
Curious Hat – Builds mobile exploration tools for curious children
Dealflicks – Offers movie tickets and concessions for up to 60 percent off, like Priceline or Hotwire for movie theaters
Everbill – Provides an easy way to issue invoices and estimates
Femeninas – A fashion and beauty portal for women
GazeMetrix – Looks at videos and pictures and help brands measure their visibility
Hunie – A community that helps designers get constructive and honest critiques from fellow designers
Iconfinder – the world’s leading site for icons
iDreamBooks – A Rotten Tomatoes-like ratings site for books
Instamojo – A marketplace for selling your digital creations with just one click
Kickfolio – Helps brands promote their iPhone apps by embedding interactive iPhone app demos on any web page
LaunchGram – Aggregates news about products and launches coming soon in verticals such as movies, electronics, video games, and cars
Markerly – Increases publisher page views and engagement by providing next generation social sharing and discovery tools
Pick1 – Provides retargeting via automated market research
Privy – An automated digital ad agency that lets customers set a budget and promo, and automatically delivers customers
Qual Canal – Tracks conversations about TV shows in social media to deliver audience information to broadcasters, brands, and agencies
SupplyHog – Creating a better way to purchase building materials
Tealet – A marketplace that connects tea drinkers with tea growers
TouristEye – A travel planner application for the web and mobile devices
TradeBriefs – Empowers Indian professionals through industry expertise and jobs
Traity – Measures people’s reputation in worldwide 360 feedback to improve transactions between strangers
Translate Abroad – Building a suite of simple translation apps that use your smart phone camera to instantly translate text
UniPay – A mobile payment platform for Brazil
WalletKit – A SaaS platform to create, manage, and deliver digital passes to mobile wallets
Wideo – An online platform that will allow you to easily create, quickly edit, and share your own animated videos
WhoAPI – Delivers extensive information about domain data
Yesterday was demo day for the first class graduating from the Alchemist Accelerator.
Alchemist's focus is on startups monetizing by selling to enterprises.
Particularly worth attention
- SendTask demonstrated a nice task manager integrated into Gmail.
- Selligy have built a streamlined mobile toolset for sales people.
- Cambrian Genomics have a process for creating DNA at high volume and low cost.
- Xockets are building I/O accelerating hardware and software for commodity X86 servers.
Ravi Bellani and his team pulled together a well run event. As one of the mentors, it's been interesting to get to know the startups and help at a new accelerator. I've been working most closely with Xockets.
SendTask Next Gen Enterprise Task Management
SocialPandas Social Selling Platform - Find & Close Sales Deals Faster via Social Networks
Xockets Software-defined infrastructure platform for heterogenous computing
JyMob Platform to choose the best people for your jobs
Selligy A mobile service helping salespeople with their primary activity - sales meetings
Active Scaler Network-driven storage platform
ConnectBright Advocacy Marketing Platform
Cambrian Genomics DNA Laser Printer for Genome (Life) Synthesis
It's Twelfth Night, the last day of Christmas - all the decorations are packed, cards taken down, tree outside and chopped in pieces. Time for observations on the new year.
Cunning Systems and its portfolio companies are working on some of the big themes in Rackspace CTO John Engates' list :
Keen offers an analytics backend as a service to apps builders, to make it easier for them to analyse the data generated by the apps users.
Internet of Things
We've been working on a large scale systems architecture for embedded ARM based communications systems, using the cloud for back end data collection, processing, storage and presentation.
Hybrid Logic has a cloud platform for hosting service providers which is self-healing, auto scaling, and supports point-in-time restoration for disaster recovery across clouds.
SSD comes to the cloud
Expect to see new components in the storage hierarchy, in addition to SSD, in 2013.
Software as a service
Musemantik's Musicflow is improving online music creation tools.
Continuing on the theme of how to obtain funding and expertise from Silicon Valley investors (see earlier post on comparative advantage) from outside the Valley ...
My thesis, for which I get violent agreement from, for example, US Venture Partners, is that it ought to be much easier for UK companies to raise money from Silicon Valley angels and VCs. In particular, the whole process of building up an entrepreneurial mindset both in UK startups and investors would be accelerated if more UK companies followed in the well trodden path of Israeli startups, by re-incorporating in Delaware with an HQ in California once they have passed the initial proofs of traction. If they do this, they have the opportunity to be competitive in the world market, of growing at a rate which makes them an investable business, and growing their UK development teams faster.
One of the British companies with which I'm working asked "If we re-incorporate in the US, so that our headquarters are there, and we have a UK subsidiary, what does that do to EIS tax relief for our investors?" which turns out to be one of those questions which is much easier to ask than answer.
HMRC's Enterprise Investment Scheme tax relief (on both income and capital gains) rules are complex (much too complex, according to the UK Treasury Office of Tax Simplification (OTS)- calling Sir Humphrey Appleby). They are designed to help small companies raise equity finance by making it attractive for individuals to to buy their shares.
Finding an answer to the question took some digging and several exchanges with helpful lawyers. There isn't a set of standard terms, although the OTS has suggested that an electronic online clearance procedure would be useful.
It is possible to retain EIS status, and at least one company has done so. There are likely several more, but there's a general reluctance to talk about it, for fear of an ignorant backlash. (See, for example, Huddle Inc, featured in the 31 October 2012 Financial Times, which is a California corporation with a London office)
The basic requirement is that the UK company must be organized, or re-organized, so that the UK share holdings translate to their equivalent in the new US corporation, according to EIS "disposal relief:share exchanges" guidelines. The UK company (now a subsidiary of the US parent) should continue operations in the UK, from a "UK permanent establishment" as, again, defined by HMRC. HMRC will review in each case, in advance, if a company and a share issue qualifies.
Huddle’s national identity is an issue they must navigate carefully: they want to benefit from their status among London’s tech start-ups; but they also need to reassure security officials in Washington and to stay in touch with experienced investors in San Francisco. For a moment, the two fall silent. Then the squawkbox crackles: “If you cut us open, we’re British all through the middle,” Mr McLoughlin says. “But, given the type of businesses who may eventually acquire us or, given the type of customers we want to be working with, and given the money that we aim to raise that has always meant we have to have a strong US-based operation out here on the west coast.”
At the same time, Mr Mitchell says software developers are now easier to find and cheaper to hire in London than in San Francisco. “We get some of the best guys out of the banks.”
"One of the big opportunities in early stage investing is to be the API to venture capital and functional expertise for companies that aren’t already in the US. In other words, let’s use our experience with things like data, design and distribution to help foreign companies climb the learning curve faster than their peers — regardless of whether they’re targeting the US or foreign markets."
Edinburgh is, arguably, a better place to live than Boulder, Colorado. More moderate climate, much better art galleries, better transit times to more interesting cities, just as good outdoor exercise and sports activities .. etc. Yes, I'm biased. The mountains aren't so spectacular, but the castle and the fringe festivals compensate.
Edinburgh skyline - the Castle on the distant left
To make it still better, Edinburgh needs an accelerator.
There was a short burst of activity on the Global Scot LinkedIn group a couple of weeks ago, sparked by a talk from the Turing Festival in Edinburgh. Per my comment on the GlobalScot group, Edinburgh has a lot of the ingredients required to upgrade its capabilities to support startups, so as to be competitive with Boulder.
There are two things most conspicuously missing - a leader with international standing and local knowledge like David Cohen, who can apply the TechStars principles (which TechStars make available) to Edinburgh companies; and a VC firm with a public image, long term perspective, and portfolio approach like Foundry Group. The most important ingredient is the leader, and the team which builds around that person - if need be the funds can (and will) come from outside the city.
Having an entrepreneurial team running an annual startup accelerator program, and pulling together the experienced mentors who support it, with help from world class support companies, would improve the potential outcomes for Scottish technology startups.
Brad Feld recently published 'Startup Communities: Building an Entrepreneurial Ecosystem in Your City' which is well worth reading. Chapter 4, describing the different roles necessary to establish and maintain a startup community, is particularly relevant - Edinburgh has several different groups who want to think of themselves as leaders, but are really feeders. "Leaders of a startup community must be the entrepreneurs". They must be inclusive, actively involved, put the long term health of the community ahead of their own short term interests .. with "give before you get" as a guiding principal.
I'd be happy to help establish such an accelerator - part of my motivation for mentoring for the last TechStars Cloud program and for the Alchemist accelerator was to learn from experience what does and does not work.
"There is a role for grants from both government and private agencies but there is a real risk is that the startup team loses focus on revenue from paying customers and instead invests in getting better at competing for grants." Having seen this happening in Scotland, Sean Murphy is right. Not the effect intended by the government agency - they aren't even feeding, at this point, they are inhibiting failure (or pivots) which should happen.
Was setting out to write a post about how startups outside Silicon Valley could model the process of moving to the Valley as an outcome of comparative advantage, and was thoroughly sidetracked into reading Paul Krugman on how non economists don't, and usually don't want to, understand what economists mean by comparative advantage.
Anyway, "take Ricardo’s original comparative-advantage example, in which unit labor requirements look like this:
Britain 100 110
Portugal 90 80
Ricardo famously argued that in this case there can be mutual gains from trade. Suppose, for example, that cloth and wine exchange at a relative price of 1. Then Britain can get its wine more cheaply — 100 units of labor rather than 110 by producing cloth and trading, while Portugal can similarly get its cloth more cheaply by producing wine."
The same model can be applied to businesses - one shouldn't do for oneself what one can buy in, if the price at which one can buy it is less than the cost of doing it internally (including opportunity cost). Silicon Valley has a very clear comparative advantage in funding and developing businesses to sell into a global market. It makes sense for a business which has to compete globally (and almost every business does, once it gets beyond a certain size) to take advantage of the money and the skills associated with that money available in the Valley. This does not mean that you have to move the whole company here; it does mean that some of the people making up the company have to move, for a while. Some of the people who move will want to stay, but some of them will want to move back - when they do that, they bring with them a knowledge base and network of contacts which can be applied to another startup.
Worthwhile afternoon at the Microsoft Mountain View campus
Notable startups -
Chalkable, a platform for apps for schools
ToshL, worldwide financial management (from Estonia)
Monogram - personalized shopping platform for iPad
StoryPanda - kids stories on iPad
The most interesting people in terms of velocity and traction were Tokyo Otaku Mode - 6 million people like its anime content. Will be interesting to see them monetize. There were a surprising number of startups focused on clothing and helping people to dress better.
Dave McLure was neither so manic nor so rude as he's been reported. Anyone considering emulating his schtick (he's known for what Americans call, quaintly, "f-bombs") shouldn't - it doesn't scale up well.
Led by Jason Seats, with lots of help from Nicole Glaros, TechStars Cloud ran from January - April in San Antonio, Texas. Here's a first time mentor viewpoint.
The point of the Cloud variation on TechStars' usual model was to focus on infrastructure - companies building the underpinings of the ecosystem which supports consumer oriented apps, and companies building functionality for enterprises. It has the usual 13 week format. There was also an intent to bring startup companies at least temporarily to San Antonio to see if any of them wanted to stay put afterwards.
On the Riverwalk, where it meets E Pecan St. Techstars had office space in the Weston Centre opposite.
The sucessful applicants were companies building a mixture of tools for creating and manipulating APIs, for data analytics, for video editing, and for understanding your cloud spending. Cloudablity was the most advanced, having taken a seed round after its launch in June 2011 - some of the other groups had just formed companies in order to take initial $118,000 investment which is offerred to each succesful applicants.
In the second week of the accelerator, there's a sort of speed dating day, where mentors go through 30 - 45 minutes session with each of the companies whom they think are interesting and which have asked to see them. At the end of the 4th week companies pick which of the mentors they want to work with - mentors are expected to pick one company and focus on it. Cloudability picked me. I'd expected a team to form among the mentors, but mostly the companies dealt with one mentor at a time - they learned to pick and choose advice. Towards the end of the 13 weeks, more of the companies I'd met contacted me, so I ended up advising four of the eleven, mostly by email, with occasional conference calls. During the run up to and on the day of the final review I was in England, so missed going back to San Antonio to attend Demo Day in person. I did review the videos of the pitches: there was a huge improvement over the three months in both content and presentation style from all the companies.
At this point (July 2012) almost every company has additional finance in place, and a much better idea about their target market and prospective customers than they had in January. I learned a lot about how a good accelerator is run (this was the first TechStars Cloud, but it benefitted hugely from the about 15 programs which preceded it).
Now I'm mentoring at Alchemist, much closer to home in Menlo Park, and planning to mentor another Cloud next January.
Having been involved with assorted PR for small and large companies, here's a model I use for thinking about how and when to do what.
First, there is a lot of background noise, and if you go to the trouble of crafting a story about something you'd like strangers as well as your friends to read, then you need enough signal to stick out of the noise.
Expand this a little to a 3D surface metaphor, over which you and your audience is travelling in time. Events are hills - some of these are predictable, like trade shows and holidays, some are not, like weather events and acquisitions. Looking back, they perturb the landscape, with the size of the hill and the slope of its sides representing the volume and trend rate of the commentary about and around the event.
image from Matlab
Each of your audiences is starting from a different place on the surface, whether existing customers, prospects, existing employees, future candidates, existing and potential investors, or politicians. Tailoring your content, the distribution of that content, and the release timing is an effort to get your story to form a noticeable hill in the path of that audience. Each of those audiences will also look back in time (will search for relevant material); including the right terms improves your visibility from some future time looking back.
While planning for a release, remember to account for internal review time - to improve the quality, to check for legal issues, to include other parties mentioned or likely to be influenced by the release.
Lastly, proof read! People won't notice correct spelling and good grammar, but they will mark you down heavily for uncorrected mistakes.