Hatchery fundraising pitches are back with investor, presentation feedback

By Dennis Clemente

The exciting Hatchery meetup startup presentations are back after laying low for a few months with its Friday speaker series, the intimate fireside chat with venture capitalists, other types of investors and some notable startups. For those who haven’t heard of Hatchery, it’s Shark Tank exclusively for tech startups. No, there’s no fundraising that happens on the spot, although this blogger certainly wished something like that could happen in the future. Still, many companies value the experience as they improve on their pitches and presentations—and their ultimate goal of getting funded.

With the startup presentations, the Hatchery has also moved from its American Management Association building back to Chadbourne & Park’s offices at The Rockefeller Plaza last November 13 where Fantrotter, Pijon, Shopbeam and The Dating Ring pitched to a panel of investors consisting of Sachin Jade of Klifer Capital; Angela Lee of 37 Angels; Bill Reinisch of Paladin Capital Group and Vincent Tang of Canrock Ventures.

The startup founders used their Executive Summaries and some relevant data in their five-minute presentations followed by honest-to-goodness feedback from the investors and, in a twist to its programming, the first critique of a presenter’s presentations offered by GK Training & Communications. Host Yao Hui Huang introduced it as a new segment in her meetup.

Georgie Bernadete, head of strategy for Shopbeam, clearly knows its affiliate business model as she presented how Shopbeam is making publishers’ sites more interesting. Imagine buying a product or item directly from a publisher’s site instantly, without the need to go to another site, a brand’s site in this case. Think about it. There are 31 million bloggers in the United States with 528 million daily page views, and Shopbeam thinks it has success on its hands.

Launched in October this year, Shopbeam offers a revenue share per sale. “We negotiate 12 to 25 percent revenue share with brand partners. We split it 70/30 with publishers. We’re looking to raise $1.5 million (to grow).”

In explaining the technology being in-house with an embeddable Javascript, the investors’ feedback stressed reviewing indirect competitors and the chance of raising more money if it can wait to dig and present more solid data.

The next presenter Rob Caucci, CEO of Pijon, pitched his subscription-based curated monthly care package loaded with non-perishable products for college-age kids. Pijon takes care of giving the packages for parents who reportedly spend $38 billion in keeping their kids well-stocked with snacks, beauty or personal products and accessories. Pijon offers subscription starting at $25 a month.

Launched August this year, Caucci is raising $650,000. He defended his focus on going directly to the schools and their organizations and not through other marketing or distribution means.

In presenting Fantrotter as the ticket + travel meet search engine for fans, one investor called for a rewrite of its description. But from the name itself, it should be easy to create another tagline that shows how it works – as a site that lets fans check the schedule of any performer, and conveniently compare the best prices for tickets, flights, hotels and car rentals.

The investors probed why the startup took all of 9 months to figure out the technology, how it could offer a cheaper ticket on the site, and how it could go for the community aspect of its business. “Play the social game of community first, (because it is) not sure what problem it is solving yet.”
Fantrotter is seeking $200,000 to crunch more data across event cities and dates in this market reportedly worth $3.3 billion.

The last presenter, The Dating Ring, is for people who hate online dating, as it offers group dating in the 500,000 -single market that is New York City. CEO Lauren Kay said her team screens and curates the group dates, as they match them based on in-person traits. Getting data after each date is important for them now as it aims to raise $500,000.

“We have 1,600 profiles completed, $4,500 revenue in our second month,” she said of this $2.1billion industry, an industry most investors are allergic to. “We offer $10 to join, $10 to date. We have 40 % percent signup, 60 percent paying daters with a churn rate under 5 percent and 2 dates a month.”

Investors asked what the secret sauce is because what prevents other three women (the composition of The Dating Ring team) from doing the same thing. “We are trying figure out what makes this special. There’s no money in this. There’s no data to make this work.”

At the end of the presentations, GK Training suggested the following to the presenters:
• Calm energy is good but give a more personal presentation
• Reduce upward inflection as it entertains doubts
• Breathe and pause; the latter corrects and gets rid of the vocal fillers “ums,” “ahs,” “sort-ofs”
• Reduce un-purposeful shuffling, especially physical expressions without a purpose
• Speed (in presenting) can be your enemy: Throw a tennis ball up in the air. Pause, breathe

Good to know all these tips because most people judge people on the non-verbals. If you want to present at Hatchery, email pitch@hatchery.vc a Powerpoint and executive summary. Visit http://www.hatchery.vc/

Startups, web shops: Marketing remains a challenge where technology is now the easy part

By Dennis Clemente

“The challenge among startups these days is no longer the technology, it’s the distribution,” said Amit Klein, founder of Startup Giraffe, who was one of three other speakers at the General Assembly talk on the Do’s and Don’ts of Outsourcing last November 11. The other panelists were Duncan Shaw, managing director of Mojo Tech and Ben Schippers, co-founder of Happy Fun Corp.

Klein was talking about how distribution, as part of marketing, is the challenge and how technology, surprising as it may be for some, is the easy part to tackle. “It becomes a problem when a product is launched, but nobody uses it.”

He added, “Most startups that fail are those who can’t get people to use it. It is certainly important to have a plan then on how to get people to use your product.”

For that matter, how can customers even begin to make sense of what they want, especially when you’re looking to outsource work? Here are some tips and observations from these web and app development shops:

1. Know how to tell your startup idea as a story. Talk about the experience you want as if you’re going to be the end user.
2. Listen. Too often, shops experience customers who pay them but don’t listen.
3. Admit to limitations. A customer should know if he or she is not a developer, but still know how a site should work inside and out.
4. You don’t need a CTO as co-founder when you can hire and afford a development shop, especially if you’re outsourcing your project.
5. Know the fee structure you like. Happy Fun offers fixed rates; Mojotech charges per week/month; Startup Giraffe offers a 7-week turnaround on a fixed rate. Mojotech says its fee structure makes them conscious that “the meter is running.”
6. Provide something as basic as a sketch in a document or a wireframe.
7. The right development shop has to know its customers really well, because shops are going to hold your hand in the first 6 weeks, your “craziest” time.
8. The right customer knows what to look first in a shop first: the portfolio
9. Learn as you go along instead of having your product fully made (hint: it’s never really finished).
10. The shop should be flexible. Startup Giraffe does six iterations of wireframes
11. Bugs are a natural process in QA testing and it happens to the best web development shops.
12. Send sample sites for development shop to work on
13. Come up with a minimum value product because you can always customize later when you grow the business.

Klein has a five-man team in New York whereas Shippers admitted to having developers in both the United States and India.

How to reduce constant customization and still satisfy your clients

mpp global

By Dennis Clemente

Being a slave to client demands for constant customization beset MPP Global Solutions. To the rescue is the Product Group, the meetup group that utilizes the wisdom of its nearly 400 attendees at the Viacom building in Times Square.

The meetup presents an hour of free-wheeling discussion on an issue before host Jeremy Horn introduces the featured company. Last November 7, MPP Global Solutions turned to the group to find a way to unshackle themselves from clients used to getting customized solutions.

MPP Global Solutions works directly with publishers and media organizations to provide advanced eCommerce solutions integrated with multiple payment types such as credit and debit card, direct debit and mobile billing, as well as payment methods such as pre and post-pay micropayments, subscriptions and real time payment channels, including the web, mobile and connected-TV.

Media and entertainment companies are able to unlock the value in both their digital and physical assets and charge for access, products, subscriptions, and downloads using services like MPP’s.

The crowd puts their minds together to suggest some solutions.

Since MPP’s APIs can be done in 10 different ways, the group suggested splitting the license with big companies and its mom-and-pop shops. “There are just too many choices, so much customization. You just need enough to protect your legacy system. Having a plug and play solution will help.”

MPP claims to have level 1 PCI-compliant platforms that enable clients to deploy any number of revenue generating business models and gain a greater ROI. It’s called content monetization.

Among its more than 100 clients, UK’s Daily Mail is reportedly getting 15,000 new subscribers a day. Publishers are able to monetize with MPP’s pay wall system.

For more than a decade now, MPP has provided customer relationship management, payment and eCommerce solutions to the media and entertainment sectors in Europe, but it is confronted with another challenge. The United States is a tough barrier to entry.

“Publications here are fragmented, but the market is big enough,” said Meghan Wright, VP Publishing and Media.
At the meetup, each of the attendees is encouraged to provide his or her own insights on a given topic. Last week, it was about how to maintain good communication across continents.

The product managers at the meetup believe in the following:
• Don’t do email. Use Skype, so you can see people’s faces and their reactions
• Earning badges and points encourage more cooperation
• Have a daily scrum standup in the morning
• Use open-source product management tools like Podio
• Shame people into transparency

The latter point was certainly brought to the table, literally the “large Thanksgiving table” as Horn likes to call it, not only because of how nearly a hundred people can fit in there (on top of the chairs surrounding it) but also how people are more encouraged to speak their minds in this setup.

The attendees also provided additional market research information and resources using Google Ad, Knodes and Touchstone Research, to name a few.

New mobile apps disrupting shopping, credit card payments, translation services

By Dennis Clemente

Five mobile app startups, Canopy Apps, CardFlight, Pickie, Viewfinder and Visiware presented their apps to 80 attendees at the NY Mobile Forum last November 4 at the AOL offices. Three startups, CardFlight, Pickie and Viewfinder, have received million-dollar funding in the past year or so.

Developers may like the fact that CardFlight can create a branded app and take in-person credit card payments within iOS and Android apps.

How does it work? It allows developers to use CardFlight’s encrypted mag stripe reader and SDK/API, so they can securely accept card present payments in their apps with support for virtually any payment processor or merchant account.

The company received $1.6 million in funding mainly from ff Venture Capital, with other investments coming from Payment Ventures Apostolos Apostolakis, Entrepreneurs Roundtable Accelerator, Plug & Play Ventures, and Great Oaks Venture Capital.

Elie Toubiana, senior sofware engineer and Natalio Tango, business development manager, presented the open platform for mobile payment. “We provide the hardware. You add a few lines of code. We support your processor,” Toubiana said.

New York-based Pickie presented next with its iPad shopping app that also features content from its own editorial team. It’s a personalized catalog with a magazine feel.

How does it work? The app scans Pinterest and Twitter for product recommendations on personal car or fashion. It then allows you to click to go to a retailer’s site and buy an item without leaving the app.

Co-founder Sonia Sahney Nagar said women are its core audience but it is also targeting businesses looking for a white label solution. “We’re looking for 3 to 6 partners.”

Viewfinder presented next with ex-Googler and co-founder Spencer Kimball showing how the photo organization utility has a built in private social network functionality.

The app shows how users can quickly share photos with friends who can then comment on the items as well as search through its photo collection.

In demonstrating the app, the Viewfinder dial or jump scroll got most of the people’s attention. You can use dial to see location and date. You can sort through photos “Google-like,” in the sense that it locates photos easily, from what we saw. But it will certainly need to scale faster in a crowded category.

Another ex-Googler came by way of Jerrit Tan of Canopy Apps who came with Justin Mazzocchi, previously from plentyoffish.com. Raj Jhaveri, not present, completes this young team looking to replace archaic phones used in hospital translation services.

Tan showed how his app contains pre-translated phrases and if that doesn’t work, there’s a way to call a telephone interpreter right from the app. “It’s a high tech way of integration to a low-cost solution.”

Tan said the idea came from his parents who are not well-versed in English. Also upon studying the market, he learned that the United States spends $5 billion a year in translation services. “We have signed up Mt. Sinai Hospital.”

Next up was Harris Larney of Visiware, a provider of second screen and gaming solutions and technologies since 1995 in Europe with a global reach that reportedly extends across 70 countries and 30 operators.

Not exactly a startup but new in the United States, Visiware’s products include its PlayAlong™ platform, which allows TV producers and networks to launch social applications such as games and interactions synched with major broadcast programs.

With Visiware, he said millions of TV viewers can simultaneously participate during a TV show via the web, their iPhone, iPad or even through Facebook. Its clients include NFL, ESPN and Disney.

The NY Mobile Forum is hosted by Amanda Moskowitz.

Funding your startup with legal, tax and accounting in place

photo (4)

By Dennis Clemente

New York is packed with tech startup meetups every year, with great speakers and panelists as guests, but StartupNation NYC probably may just have the best moderator, Michael Helman, himself a co-founder of both WILLiFEST and Crowdzu who, along with Stella McGovern, organized this meetup.

In launching its inaugural meetup last October 29, Helman has done what has so far been impossible in a meetup: Put a diverse and important set of panelists together and make each one of them open up and speak clearly, as we not seen much in any meetup this year. Let’s hope it’s not just beginner’s luck.

The panelists consisted of Matthew Zucker of Kelly Drye & Warren LLP, a corporate attorney who represents startup and emerging growth companies; Kobla Asamoah of St. Nicks Alliance, a small business advisor based in Brooklyn; Amy Gaven, a trademark and copyright attorney; Alex Chou, a business development consultant and tax planner; John Ason, an active New York angel investor; and Albert Chcoury, financial advisor of New York Life Insurance Company.

The six panelists talked about a wide range of issues– the importance of a correct corporate structure, preparing initial funding and procedures in compliance with state/federal requirements, shareholder agreements, how to look for/approach investors, valuation, monies to be raised, funding rounds, how to put together an effective business plan or deck and what needs to be included, how to protect your intellectual property, and accounting needs.

From the 2-hour talk, here are some great takeaways:

Choose Delaware or wait for New York in 2014. Incorporate here because it is a comfort level for investors. The laws are efficient and flexible. There are no state and income taxes. Or by 2014, choose New York in designated tax-free areas for 10 years.

Business plans. Doing one is a good exercise, even if not all investors require one. An angel investor may only need an executive summary but an accountant may require a business plan. Have a pitch deck ready anytime.

Executive summary. Ason, who has had 40 investments, said it must be “explained in one page accurately.” It must talk about market size and why it exists. It must be esthetically pleasing. “I receive over 3,000 a year. I spend 10 minutes on one.”

Equity to initial employees. Stock options are good. It doesn’t cost you anything now. Anyway, you can buy shares later.

Legal talk. How important is a trademark? It’s your brand. It’s your identifier. Conduct a trademark search. Know how strong your trademark is. Consider patents and copyright as it applies. Outsourcing? Have a work-for-hire agreement in place.

Make sure IP is owned by company, if there are more founders in the organization. So if the founder leaves the company in a year and there is no shareholding agreement, company keeps ownership. Still, a buyout is ok.
Investment from family and friends. If launching shortly, pay off the loan. If launching much later, give them equity. If you get funding from a seed investor, consider that they might have stronger ideas compared to your family.

Difference between angel investors and VCs. Ason has funded someone who pitched an idea written in a napkin and to someone in 28 minutes—all early stages only. Most VCs will only only invest in post-prototypes. They won’t look at you if you are below $10 million in earnings. VCs are all about expansion capital.

Team composition is most important in a startup. Investors prefer a team who may have a mediocre idea rather than a mediocre team with a great idea.

Exit strategy. No one will reportedly want you if you don’t have an exit strategy. Look to exit within five to 7 years. Ason said he looks to get 10 times return on his investment, because 30 percent of startups he invest in fold up.

Qualities of a good founder(s). Can they execute? Can they make decisions in 30 minutes with data or minimal data? Make sure to be sociable, too

How do startups gets noticed? Ason’s advice: Entertain, impress and inform, and in that order. He can bring in other angels if he decides to be a passive investor, as he prefers nowadays. He doesn’t believe in valuations; it’s all “completely made up.”