Dean Newton

The United States of Venture Capital - Where Money Goes

While start-ups in Silicon Valley, Boston and New York receive the bulk of venture capital, and the most media attention, the money is actually spread around the country further than you might think.

Using data from Dow Jones VentureSource and software from Tableau, we dumped onto a U.S. map the nearly 1,500 venture-capital funding deals — worth more than $14 billion — that took place in the first six months of the year.

Check out the map on the “Interactive Graphics” tab of this post (or click the picture). You’ll see that start-ups in 40 states were recipients of venture capital — even Hawaii.

Map here: http://blogs.wsj.com/venturecapital/2011/08/04/interactive-map-the-united-states-of-venture-capital/

www.deannewton.com

Americans and Texting - Some Shocking Usage Numbers from PEW

Several publications have reported that 31% of US adults prefer to be contacted via text message. In fact, this question was asked of cell phone owners who use text messaging, and 31% of these text messaging users prefer to be contacted via text when someone needs to reach them.

Some 83% of American adults own cell phones and three-quarters of them (73%) send and receive text messages. The Pew Research Center’s Internet & American Life Project asked those texters in a survey how they prefer to be contacted on their cell phone and 31% said they preferred texts to talking on the phone, while 53% said they preferred a voice call to a text message. Another 14% said the contact method they prefer depends on the situation.

Heavy text users are much more likely to prefer texting to talking. Some 55% of those who exchange more than 50 messages a day say they would rather get a text than a voice call.

Young adults are the most avid texters by a wide margin. Cell owners between the ages of 18 and 24 exchange an average of 109.5 messages on a normal day—that works out to more than 3,200 texts per month—and the typical or median cell owner in this age group sends or receives 50 messages per day (or 1500 messages per month).

more: http://pewinternet.org/Reports/2011/Cell-Phone-Texting-2011.aspx?src=prc-headline

www.deannewton.com

SlideShare the Latest Convert in the Coming HTML5 Revolution

SlideShare, the website for sharing PowerPoint presentations and other documents, has had a major makeover. The company has ditched Adobe Flash technology entirely, and rebuilt its website using the HTML5 markup language, SlideShare co-founder and CTO Jon Boutelle will announce at GigaOM’s Mobilize conference Tuesday.

This means that SlideShare is now viewable on every kind of mobile device, from iPads to iPhones to Android devices and beyond. Another perk is that the website is now 30 percent faster and its files take up 40 percent less space than they used to. Search engines can now read the content within SlideShare slides, meaning that presentations hosted there should start to get much higher page rankings on sites like Google. Text within documents can now be copied and pasted, as well.
The web as “the biggest app store of all”

SlideShare initially set out to build its mobile experience by making individual apps for the Apple store, the Android marketplace, and others, but quickly realized that in the long term such a strategy would not be sustainable. “If we committed to app stores in general, it would really end up fragmenting our engineering team and our engineering efforts,” Boutelle said in an interview Monday. “We were trying to find an alternative, and the answer is that HTML5 can work on all of these devices. Now the way we frame our thinking is that the web is the biggest app store of all.”

Screenshot of SlideShare's homepage on the iPad (click to enlarge)Starting Tuesday, SlideShare’s site will be displayed in HTML5 on both desktop and mobile devices, and all new documents added to the site will be rendered in HTML5. Over the next several weeks, the company will be porting its entire back catalog of five years’ worth of presentations to HTML5. SlideShare expects the conversion to finish by year’s end, Boutelle said.

A huge engineering project
Making the big switch has not been easy. SlideShare has 50 employees, the majority of whom are engineers, and all hands were on deck over the past six months to work on converting the site from Flash to HTML5. “This is the hardest thing we’ve ever done,” Boutelle said. But that difficulty should not be apparent to the average SlideShare user (the site receives 60 million unique visitors per month.) “The change is so structural that if we’ve done it right, people will just know that SlideShare is better, but they won’t know why.”

SlideShare is certainly not alone in doubling down on HTML5. Facebook’s new Timeline interface relies heavily on HTML5, and the company’s CTO Bret Taylor has said that the markup language will be a huge part of the company’s development efforts going forward. Apple has been one of HTML5′s biggest proponents, as has Google. But it’s shaping up to be even more interesting to watch how smaller companies like SlideShare adopt the platform for their own products.

More:  http://gigaom.com/2011/09/27/slideshare-html5/

www.deannewton.com

SlideShare the Latest Convert in the Coming HTML5 Revolution

SlideShare, the website for sharing PowerPoint presentations and other documents, has had a major makeover. The company has ditched Adobe Flash technology entirely, and rebuilt its website using the HTML5 markup language, SlideShare co-founder and CTO Jon Boutelle will announce at GigaOM’s Mobilize conference Tuesday.

This means that SlideShare is now viewable on every kind of mobile device, from iPads to iPhones to Android devices and beyond. Another perk is that the website is now 30 percent faster and its files take up 40 percent less space than they used to. Search engines can now read the content within SlideShare slides, meaning that presentations hosted there should start to get much higher page rankings on sites like Google. Text within documents can now be copied and pasted, as well.
The web as “the biggest app store of all”

SlideShare initially set out to build its mobile experience by making individual apps for the Apple store, the Android marketplace, and others, but quickly realized that in the long term such a strategy would not be sustainable. “If we committed to app stores in general, it would really end up fragmenting our engineering team and our engineering efforts,” Boutelle said in an interview Monday. “We were trying to find an alternative, and the answer is that HTML5 can work on all of these devices. Now the way we frame our thinking is that the web is the biggest app store of all.”

Screenshot of SlideShare's homepage on the iPad (click to enlarge)Starting Tuesday, SlideShare’s site will be displayed in HTML5 on both desktop and mobile devices, and all new documents added to the site will be rendered in HTML5. Over the next several weeks, the company will be porting its entire back catalog of five years’ worth of presentations to HTML5. SlideShare expects the conversion to finish by year’s end, Boutelle said.

A huge engineering project
Making the big switch has not been easy. SlideShare has 50 employees, the majority of whom are engineers, and all hands were on deck over the past six months to work on converting the site from Flash to HTML5. “This is the hardest thing we’ve ever done,” Boutelle said. But that difficulty should not be apparent to the average SlideShare user (the site receives 60 million unique visitors per month.) “The change is so structural that if we’ve done it right, people will just know that SlideShare is better, but they won’t know why.”

SlideShare is certainly not alone in doubling down on HTML5. Facebook’s new Timeline interface relies heavily on HTML5, and the company’s CTO Bret Taylor has said that the markup language will be a huge part of the company’s development efforts going forward. Apple has been one of HTML5′s biggest proponents, as has Google. But it’s shaping up to be even more interesting to watch how smaller companies like SlideShare adopt the platform for their own products.

More:  http://gigaom.com/2011/09/27/slideshare-html5/

www.deannewton.com

How To Avoid Seeming "Amateur" in Your VC Pitch

Venture capitalists and angels all have an internal switch that can flip in a meeting with an entrepreneur. Something gets said that marks the entrepreneur as simply too green to invest in....  Call it the amateur alarm.

What sorts of things can trigger it?

Larry Bohn, General Catalyst Partners
Saying they are completely unique, and that there is no competition. Groan.

Elon Boms, Launch Capital
1. Giving a large chunk of the company away to an advisor or a ghost co-founder / someone who adds zero value.2. Cold-calling our office line.3. Begging for meetings after we pass. Better is to ask why we passed, and what metrics we need to see to make an investment. Then following up when there is new news.4. Paying to pitch [at a conference or investor gathering.] I HATE those types of events.5. Hiring an investment banker for [help raising] a seed round.6. Not conveying expertise in their market.

Dina Routhier, Massachusetts Technology Development Corp.
I think the most common thing that pegs an entrepreneur as an amateur is when they come in and immediately start talking about their amazing new technology, and forget to start the discussion with, "What big problem in the market am I trying to solve?" If they don’t start with the problem, then I know they are green.
That, and coming in without any type of pitch deck, just to "talk" about their company.

Ajay Agarwal, Bain Capital Ventures
For early-stage entrepreneurs (as opposed to growth stage), here are some things off the top of my head:
- Using a banker to raise money or sending in something over the transom (cold e-mail). Good entrepreneurs can always find a warm intro to a VC.
- Overplaying your hand. Excessive gamesmanship:
Entrepreneur: "Firm XYZ is about to give me a term sheet." VC: "Have you presented to their partners yet?" Entrepreneur: "Not yet, but they say a term sheet is coming this week."- Good entrepreneurs are honest and transparent about the fact the process is competitive; but they never over-sell where the other firms are and they don't reveal who else is in the mix. Not sure why an entrepreneur would do this – only weakens their hand.
- Having random advisors participate in negotiate termsheet. Good entrepreneur negotiates everything directly (seeks advice behind the scenes)
- Name-dropping. This is the worst. Usually it's not true (e.g., You are not really good friends with Zuck) and even if it is true, it doesn't help your case with the VC.

Chris Sheehan, CommonAngels
Entrepreneurs shouldn't overly use buzzwords to describe the business. "We have a cloud-enabled, big data, social graph platform..."

Rob Day, Black Coral Capital
1. Revenue projections in the hundreds of millions in under 5 years.2. Refusing to describe even high-level conceptual info about the technology or solution.3. Not having heard of an obvious competitor.4.[Company's valuation expectations are] based upon a discounted cash flow analysis of a pre-revenue company.

Izhar Armony, Charles River Ventures
Too much focus on the deal dynamics ("I need a term sheet in 24 hours," "I am expecting a term sheet from this or that VC any day," "Also, this or that angel is in the deal"), and not enough focus on the product and how you're gonna build a big business.

Paul Maeder, Highland Capital Partners
- Projections labeled YR1 and YR2 instead of 2011 2012. If you aren't convinced of when it will happen, please don't ask me to join.- "These projections are conservative." They always are, but rarely enough. Nothing is easy.- "Finshed developing the product and gave ourselves a bonus becaus that was the hard part." Oh no it wasn't, dude. And products are never done.

Bill Warner, Co-Flow Investing
Sending out the message that they know everything, as opposed to having stuff to learn. The thing I'm most looking for is people who are thirsty to be learning.

More:http://www.boston.com/business/technology/innoeco/2011/09/what_can_an_entrepreneur_say_i.html

www.deannewton.com

Approach Large VC Seed Funding With Caution?

A few top tier VC funds have started making investments in the realm of angels/seed stage funds. When a VC fund makes a seed type investment, they are essentially purchasing a low cost option to participate in a full round if the startup shapes up well. Unlike an angel investor or a seed fund, a VC fund’s economics don’t work on a  $200 K investment; their economics work on making much larger investments in each of their portfolio firms. So how does this matter to a startup as long as they get the money, right? Maybe not, let me explain.

In most cases when a VC fund makes a seed investment, they contractually tie in an option to lead the next round, which is typically in the $2 to $5 mil range. If the fund exercises this option, the startup loses out on talking to other funds and discovering the best possible valuation and terms. If the fund does not to exercise the option, other funds will be very wary to investing in the startup. Their view will be that if the fund who did the seed round and has an inside view of the startup does not want invest, surely there must be something amiss.

A few VC funds who make seed investments mention that they do not tie in an option on the next round for precisely this reason. Nevertheless, with or without a specific option to invest, if the fund does not participate for whatever reason, other VC’s will wonder what’s going on. 
On the other hand when a startup takes money from an angel or seed stage fund, there is no expectation that they will participate in a follow on round. Their model is based on investing a small amount really early and guiding the startup through to a stage where they are ready for a VC fund to come in. 

More: http://www.pluggd.in/the-perils-of-taking-seed-money-from-vc-funds-297/?utm_source=feedblitz&utm_medium=FeedBlitzEmail&utm_campaign=Nightly_2011-09-21+22:30&utm_content=76563
www.deannewton.com

How Much Equity Should Advisors Get? Free Advice Start-Ups Should Read

It’s an age-old scenario: You’re building a company, you have a product idea, and you’ve got the framework laid out in your head, but you want some expert advice and guidance on how to take the next steps. So, you go out to find a veteran entrepreneur, ask her to be an advisor in your fledgling company … and then what?

This is where a lot of founders get stuck. Entrepreneurs want to compensate their mentors and advisors for the time they dedicate to helping their businesses grow, but they have no idea how much equity to offer. Not to mention, once the founder and advisor have nominally agreed to a relationship, law firms enter the mix and seed the new advisor with a mountain of paperwork — legal agreements, options agreements — documents stuffed with legalese and binding statements. Just this hassle alone is sometimes enough to scare an advisor away from the relationship, at which point both sides lose.

So, the Founder Institute has developed a solution to this long-standing pain in the ass that all startups experience. After speaking with dozens of founders, mentors, advisors, and startup teams, the startup accelerator and network is publicly releasing what it calls the “Founder Advisor Standard Template” (FAST), a free document designed to provide founders and advisors with a simple legal framework to formalize their relationship without all the legal chaos.

“We’ve been seeing at least one post per week on TheFunded concerning mentor compensation”, said Adeo Ressi, the founder of both Founder Institute and TheFunded.com (a site focused on revealing the inside truths of the Venture Capital world). Having to invent ad hoc terms to work together, negotiating terms, and throwing money into hiring lawyers can really hamstring the formation of productive founder-advisor relationships — something that can really make or break a startup in its early stages.

This is where FAST enters the picture, which Founder Institute has developed in conjunction with the Orrick Law Firm and Silicon Valley entrepreneurs, to standardize the process and remove the hassle, cost, and delay to the formation of these relationships. Now, with a few signatures and a couple of checkmarks, founders and advisors can decide (in minutes) how they want to work together, what to accomplish, and how much equity will be in play.

In an effort to standardize the process with FAST (and let everyone just get back to building great companies), Founder Institute and Orrick have denoted three “levels of company maturity” that have different implications for how to define the advisor-founder agreement: idea, startup, and growth. In addition, they qualify the terms with three “levels of engagement” that define how advisors will work with founders and have varying influence on how they are compensated: standard, strategic, or expert.

more here: http://techcrunch.com/2011/09/22/free-startup-docs-how-much-equity-should-advisors-get/

www.deannewton.com

America's Largest Creditor Is - Well - America

Many people — politicians and pundits alike — prattle on that China and, to a lesser extent Japan, own most of America's $14.3 trillion in government debt.

But there's one little problem with that conventional wisdom: it's just not true. While the Chinese, Japanese and plenty of other foreigners own substantial amounts, it's really Americans who hold most of America's debt.

Here's a quick and fascinating breakdown by total amount held and percentage of total U.S. debt, according to Business Insider:

 

• Hong Kong: $121.9 billion (0.9 percent)
• Caribbean banking centers: $148.3 (1 percent)
• Taiwan: $153.4 billion (1.1 percent)
• Brazil: $211.4 billion (1.5 percent)
• Oil exporting countries: $229.8 billion (1.6 percent)
• Mutual funds: $300.5 billion (2 percent)
• Commercial banks: $301.8 billion (2.1 percent)
• State, local and federal retirement funds: $320.9 billion (2.2 percent)
• Money market mutual funds: $337.7 billion (2.4 percent)
• United Kingdom: $346.5 billion (2.4 percent)
• Private pension funds: $504.7 billion (3.5 percent)
• State and local governments: $506.1 billion (3.5 percent)
• Japan: $912.4 billion (6.4 percent)
• U.S. households: $959.4 billion (6.6 percent)
• China: $1.16 trillion (8 percent)
• The U.S. Treasury: $1.63 trillion (11.3 percent)
• Social Security trust fund: $2.67 trillion (19 percent)

So America owes foreigners about $4.5 trillion in debt. But America owes America $9.8 trillion.

More: http://globalpublicsquare.blogs.cnn.com/2011/07/21/who-owns-america-hint-its-not-china/

www.deannewton.com

Are "Discovery" Social Networks Really the "Future"?

There’s a new concept for social networking services taking root, and it’s not about re-creating your offline social graph on the Web, like Facebook does today. It’s about discovering the people who are nearby you now – the ones you probably would like to meet.

This type of discovery mechanism is already being made possible by a number of services, including the checkin apps like Foursquare and Gowalla, the automated discovery of nearby folks via Sonar and Banjo, the group chatting in Yobongo, and the micro-networks that emerge through LoKast. All of these companies are playing with the idea of location-based social networks, attempting to connect you to others around you through varying means.

At this week’s TechCrunch Disrupt conference in San Francisco, even more services emerged to compete in this space, too.

The powerful capabilities of today’s mobile smartphones are allowing for a new kind of networking: social discovery services, not social networking services. Discovery services are focused primarily on highlighting the users within close proximity to you and connecting you to those who you might want to meet.

Facebook, meanwhile, aims to connect you to people you already know. “Discovery” on Facebook is limited to searching for names or networks (e.g., schools, workplaces) where the introductions themselves previously took place.

But there are ephemeral, ever-changing social networks that we participate in daily. These have been left largely untapped by Facebook: the people working out at the gym, shopping for groceries, playing basketball, taking their dog to the park, watching their children on the playground, and so on. They’re the networks you stumble into and out of every day, and they aren’t composed of your close friends, Facebook friends or otherwise.

More: http://techcrunch.com/2011/09/16/the-new-social-network-whos-nearby-not-who-you-know/

www.deannewton.com

Mobile Internet user to eclipse wireline users by 2015

It’s going to be a mobile Internet world and we’ll just live in it. That’s the conclusion of IDC, which is forecasting that mobile Internet users will grow by an annual compound rate of 16.6 percent through 2015, when they will pass PC and other wireline Internet users.

That’s not entirely surprising if you’ve been following along. Mary Meeker, the former Morgan Stanley Internet analyst and now Kleiner Perkins VC, forecast last year that the cross-over point would come around 2014. She said at the time that we were in the midst of a fifth computing cycle, following the mainframe computing eras of the 1950s and 60s, the mini-computers of the 1970s, the PCs of the 1980s, the desktop Internet era of the 1990s and now the mobile Internet age. Earlier this year, IDC noted that smartphone shipments in the fourth quarter last year topped 100 million units, pushing past PC sales.

IDC said the total number of Internet user will grow from 2 billion in 2010 to 2.7 billion in 2015, with 40 percent of the world’s population online. But as Internet penetration picks up, it will happen more on mobile devices than traditional PCs, something Apple founder Steve Jobs noted in dubbing this the post-PC era.  IDC said that as tablet use in particular picks up, it expects PC Internet usage to stagnate and then slowly decline.

http://gigaom.com/broadband/mobile-internet-user-to-eclipse-wireline-users-by-2015/

www.deannewton.com