Category Archives: Funding

All-women tech panel talk about customer acquisition and building successful corporate culture

Guest panelists at Orrick meetup at CBS Building
Guest panelists at Orrick meetup at CBS Building

By Dennis Clemente

At the Orrick Total Access meetup last April 30, Joy Marcus, CEO of Bloglovin & venture partner at Gotham Ventures, looked at the panel in admiration. Seeing all were women tech founders, she looked at them proudly before turning to the audience and acknowledging each one of them. She said she relishes the day when she doesn’t need to say the guest list consists of an all-women panel, just a panel.

At the Orrick law offices at the CBS Building that night were women. For the customer acquisition talk, the panelists were Tanya Menendez, co-founder, Maker’s Row; Carly Strife, co-Founder, BarkBox; Kathleen Utecht, angel investor & venture partner; and Danielle Weinblatt, co-founder & CEO, Take the Interview.

For the corporate culture talk after, panelists were Angela Lee, founder of 37 Angels, moderated Mona Bijoor, founder & CEO, of Joor; Kellee Khalil, founder & CEO of Lover.ly; Elissa Shevinsky, co-Founder & CEO, Glimpse Labs of Nina Sodhi, Founder & CEO of Nackina.

In the first talk, Menendez said understanding users is very important. “Do user interviews. Find out if users are obsessed with it (your product), then create products designed for them, making sure you have the right people onboard to tell your story that resonates with the audience, your community and among journalists.”

The other women agreed, but Weinblatt put it in her own way, saying she makes customers “adore us.” How? “Never underestimate the power of ‘polite persistence.’ Not everyone closes doors on your face. Do it over and over again.”

As an investor, Utecht’s comment was right up her alley, “The best way to acquire customers is (by getting into) partnerships.”

Strife, on the other hand, said word of mouth comprises 50 percent of her site’s monthly acquisition with referral as her “most successful channel.” “We pay them real money.”

In terms of measuring success with analytics, the women agreed that SEO, SEM and content creation are crucial, as well as A/B testing everything. Menendez said she should have focused on SEO from Day 1.

The next talk moderated by Angela Lee was tricky, as it tackled something not easy to quantify or measure: culture.

The panel suggested watching out for the following:
1. Ask yourself if you are experiencing something toxic and political?
2. Are you excited to come to work?
3. Are you excited about the product?
4. When something bad happens, who saves the day?
5. Can you bro it out with the guys?
6. Are people buying into the pain points you’re addressing?
7. Do you share the values of the staff and startup?

The panel also shared their hiring choices with Lee the moderator kicking it off. “I don’t do interviews. I ask people to do projects.”

Shevinsky said she finds people overlooked by the industry whereas Khalil said she prefers to test her hires with a 90-day contract.

But how do you become a successful startup? “It’s all about consistency. It’s a marathon,” Bijoor said.

VCs at Gotham Media Ventures talk about hot trends, funding issues

Gotham Media Ventures panel
Gotham Media Ventures panel
By Dennis Clemente

A typical New York meetup night usually hosts many startup presentations (seven or more most of the time) and not much about investors alone. At Gotham Media Ventures last April 8, it was refreshing to see no startups, just venture capitalists taking the limelight to talk about funding, trends and the challenges facing startups.

“Funding is hard. It stays hard,” said Scott Kumit, the candid founder and CEO of Keep, Swizzle as well as former CEO of About.com.

Kumit is giving us perspective and a better read of how funding now can be complex, easy in the first seed round, harder in the institutional round. The former is clearly easier, because with less money, there’s less risk. What makes the next stages hard, of course, is how you can ask for more money to scale your startup.

Jerry Spiegel, moderator and partner of Frankfurt Kumit Klien & Selz, got the same responses from the other panelists, Jason Klein, Merrill Brown, and Daniel Schultz.

“Institutional funding takes longer (these days). There will be a crunch,” said Klein, founder and CEO of Ongrid Ventures and board member of HBS Alumni Angels.

It’s common for investors to talk this way to keep things in check as they also talk about trends.

Klein sees geo-disruptive businesses and location-based technologies as the next hot trends. Think drones, although that may just be the obvious complimentary technology right now.

Brown, a venture partner at DFJ Frontier who is also the director of School of Communication and Media at Montclair State University, thinks there are still lots of money in a news platform. He was a media person back in the eighties.

For him, there will be more ways to do voice and data, citing box.com, messaging systems and platforms, and ad-supported media or ad tech.

“Stock prices look encouraging in ad tech. That means that news and TV will be disrupted.” It looks like the internet of things can pave the way for the disruption of communication channels. Think drones again.

Kumit agrees with Brown about content and ad tech, encouraging people to just go out there to do business. “Last year ad tech was nothing. So if you invent something, there is something for you.” BuzzFeed was cited.

Schultz, managing director and co-founder of Gotham Ventures, thinks the challenges are easy to overcome: “Anything you can think can be improved upon can be improved,” talking about the limitless possibilities out there. “We can improve quality of life on a global basis.” That includes home safety in a connected house.

Amazon was mentioned and it too can be disrupted, according to the VCs who think e-commerce is a multi-trillion dollar market. It’s just a matter of who is up to the challenge.

A question that has popped up lately is crowdfunding and almost always, VCs like to say they embrace it. Like Schultz. What’s not to like about it when customers fund a startup idea initially, half of the work for VCs (customer acceptance of a product or idea) is done. VCs can take the next logical step of scaling the business.

Kumit is averse to angels, though. His advice: “Take professional money over angel money. And take 3 or 4 times more money (that) you need.” Why? “Everything is twice as hard. You’ll work 18-hour days. Take more than you need,” he stressed.

The panelists also talked about big data and what you can do with massive amounts of data, but thinks the bitcoin craze is something else entirely. Only Klein seemed to be open about his skepticism over bitcoin—at least the technology behind it.

Infomous gets top nod from VCs at Innovator Evening event

By Dennis Clemente

At innovator evening, host Alan Brody will tell you his meetup is not a meetup, “it’s a crafted conference.” Brody means business. So does his esteemed panel of guests last April 2 at Dorsey & Whitney LLP near Grand Central Terminal.

Brody kicked off his conference with a two-hour workshop that asks (and answers) the question, “Are you Fundable?” followed by the presentation of six startups in front of some discerning, no-nonsense judges.

Alan Brody of ievening
Alan Brody of ievening

In order of their presentations were ColdSteel Laser, Infomous, Vidaao, Soshio, BeautyStat, Nonnatech and JetRyte with Infomous getting the top vote and the opportunity to present to Private Equity Forums on May 1. Visit privatequityforums.com

CEO Jerry Korten presented ColdSteel Laser as a startup medical device company that has developed a novel technology, one that remotely controls an endoscopic surgical laser. The technology is being licensed from Memorial Sloan Kettering Cancer Center. To date, ColdSteel Laser has raised $1.125 million and expects delivery of a functional platform in June this year.

How does it work? The technology allows a surgeon to visualize an operative field on a graphics tablet and, by tracing a stylus over the image, control a CO2 laser as it cuts tissue inside a patient, in real time.

The next presenter, Infomous, looks similar to a tag cloud, but founder and CEO Paolo Gaudiano shows us how trending topics pop up right from its “cloud.” It claim users can find quickly the information they care about, as it appears to get rid of the media noise all-too prevalent out there.

Vidaao’s Justin Park said his startup reduces the cost of creating videos by 25 to 30 percent. This is accomplished through an online marketplace—one that connects brands with more than 500 video creatives in 48 US and EU cities.

Soshio is into Chinese social media analytics using technology that analyzes content in native Chinese text, with a proprietary emotion analysis, for which it reportedly has an approved provisional patent application.

CEO Matt Grotenstein sees a big market, more than 600 million in China, in fact. With Facebook and Twitter blocked in China, he sees a more focused approach is required to address and understand the rapidly growing Chinese market.

BeautyStat led by Rob Robinson also sees potential in the beauty market amounting to $32.4 billion. The site is a search and discovery site that gives consumer alerts of beauty product deals, exclusive offers and ways to discover products.

“Consumers need unbiased info to help them make smarter purchases,” he said while also announcing the partnership it struck with Amazon last week.

Nonnatech presented remote behavioral monitoring using its connected aging devices.

The last presenter was Pillar Rock USA Corp, a nutraceutical company that specializes in the development and distribution of over-the-counter effervescent tablets that fit in water bottles. Its mission is to build high-quality effervescent nutraceutical niche products. Its flagship product is jetRyte, a patent-pending effervescent tablet that is a refreshing change from hard tablets and messy powders.

Guest Wazi Wazihullah, professor of entrepreneurship at Molloy College, also provided valuable insights and feedback.

Foreign startups present to media-owned VCs

Win Global Innovator

By Dennis Clemente

Last February 27, WIN (Worldwide Investor Network) hosted Global Innovator featuring five presenters—Hyperactivate, TripTease, Mommy Coach, $Social and 365Scores—to panelists that included media VCs at 1221 Avenue of the Americas.

What is interesting is how the panelists included two media VCs–Cyna Alderman, managing director of Daily News Innovation Lab and Scott Levine, managing director of Time Warner Ventures. The two other VCs were John Elton, partner of Greycroft Partners and Ross Goldstein, managing director of /gothamvc.com/”>Gotham Ventures. Goldstein was voted best judge of the night.

Hyperactivate offers a turnkey solution that amplifies your brand messages across multiple channels, while $Social figures out the how to monetize “celebrities” social media engagement.

Lastly, 365Scores chooses your favorite team and leagues for you to create a Sports Channel.
MommyCoach connects you to live experts for parenting advice. TripTease, on the other hand, relies on you to be the expert in sharing your travel stories online.

Hyperactivate’s March Fischman likes to point how his startup solves the accountability problem all marketers face when attempting to quantify ROI on any company’s social media investment with its “active management platform” or dashboard.

“Clients don’t know what success is,” said Fischman who thinks he can determine social media success for its business. To scale his business and add new features, he is seeking $3 million.

Triptease’s Charlie Osmond, a presenter at The Hatchery last February 20, says his startup is like a “digital postcard.” You upload or link a photo from a gallery and give your review. He also calls it “photo review” or “user-generated travel magazine.”

Osmond, who was at the Hatchery a week ago, won over the crowd again for his presentation skills, with one panel remarking how it helps to have a British accent, like what another VC said at The Hatchery meetup.

“Hotels love it (Triptease),” he said. “We are connecting inspiration and bookings.”
Osmond said he has signed up 10 hotels, integrating Triptease with the hotel management system in the process.

It may not be so unusual for Osmond to get such high marks from the previous panels he has pitched to as the global travel market is worth $750 billion, with the luxury and hip travel industry amounting to 475 billion. He is raising $1.5 million in mid-year.

Is offering classes and advice for moms a viable online business?

Christophe Garnier, CEO of Mommy Coach, likes to think there is room for him with 90 million moms in the world. It helps if you put a number around its worth: $7 billion.

The Frenchman claims to have 1,000 experts but to keep things under control, he narrowed down his expert mom experts to 250. “It’s like Airbnb (for moms),” he said. “We don’t have doctors but our experts have parenting licenses.”

Having raised $600,000, he is looking to raise $150,000 more to reach his target f $750,000 in convertible note. “I will use some of the funds for market development.”

$Social’s CEO and co-founder Gil Eyal drew chuckles when he said celebrities need our help. He offers a way for high-profile social media users to monetize their online presence. Guy Tamir is CTO and co-founder.

To monetize their idea, they are looking share revenue with celebrities initially before it sets the stage for major brand partnerships in the second phase of its business. Both of the founders are looking to raise $1 million.

For the sports enthusiasts, 365Scores offers your own Sports Channel. It reportedly gathers sports information from hundreds of sources. The site then analyzes and organizes the data according to user preference and delivers the data to users with real-time push notifications.

The presence of two media personalities in the panel shows how most media outlets these days are looking for collaborative opportunities with startups

As befits the meetup, Goldstein pointed out how its firm has 10 countries represented in its portfolio. Gotham Ventures focus on adtech and e-commerce, among others.

Levin is looking to invest in startups that afford financial return and strategic partnership with cutting-edge media platforms. “Series B is a sweet spot,” he said.

Travel is good, video advertising hard–VCs

By Dennis Clemente

How would you like to be a travel reviewer? Triptease does that. How would you like to use a productivity tool that helps you see what matters? There’s Seer. How would you like to connect with investor relations teams. Closir claims that it can close that deal for you, socially. Finally how would you like your advertising to work for you? GoChime it or nTangle it.

But is it that simple? Not exactly, as the presenters found out from the VCs who gave them feedback after their five-minute presentation last February 20 at the Hatchery at Chadbourne Park, Rockefeller Center building.

The meetup also included a critique of the presentation style of each pitcher from GK Training’s Victoria Dicce, now a staple of the meetups.

The TripTease app is a social travel magazine that relies on user-generated reviews. Talking about how they monetize the site, Chief Tease Charlie Osmond said, “Hotels pay us to email their guests.”

All the VCs invited to provide their feedback said they like the travel space: “There’s a lot of disruption going on there.” “It’s an attractive market.” However, they were also interested in knowing where the app can go in terms of conversion. “We will be raising seed next week,” Osmond assured.

The VCs were Sutian Dong of First Mark Capital; Jeff Neu of B2B Ventures and Itzik Ben-Bassat of Wix. A regular, Sachin Jafe of Klifer Capital did not make it to the meetup.

However, the app is only available on iPad.“We believe that the iPad is growing much faster than the smartphone,” Osmond said who also received the highest marks with his confident presentation style.

Ben-Bassat quipped, “It helps if you (Osmond) have a British accent.”

Pierre-Marc Diennet presented nTangle, an interactive video platform idea that embeds ads.
How does it work? It’s simple. A video creator uploads their video. They tag objects, people, and places in that video and then link those things to the wider internet. With each click, nTangle delivers linked information,” Diennet said.

nTangle reportedly stores each tagged object in a database and connects it to semantically categorized Open Knowledge sources. “Our long term plan is to automate the process.”

Diennet said nTangle has a 400-percent participation rate. “Clients can use this data to learn more about their audiences, about their videos, and more about the conversations they inspire.”

The VCs think video advertising is a hard, competitive space. “Hosting will be an additional cost. It’s a tough squeeze. Look at your revenue model.”

Next presenter, GoChime founder Austin Evarts asked the audience in his presentation, “What is the percentage of unopened email?”

Putting it at 80 percent, Evarts said using GoChime to go with your email strategy will increase your reach 2 to 3 times more. “We sync data to Facebook campaigns.”

GoChime is direct marketing for social which, Evarts said, has experienced a 60 percent growth. “We are raising $500,000 in convertible notes.”

VCs did not provide feedback, saying only that it was a solid presentation.

A social and productivity platform, Closir was the last to present. It is focused on bringing companies and the investment community closer together using technology, according to Ratsko Illic.

“We want to capture at least 10 percent of the market,” he added. Competitors include Bloomberg.

Offered at $5,000 a year, Neu said sometimes too cheap is too cheap. Other comments from VCs pointed out how the “field is complicated” and “how hard it is to disrupt Bloomberg.”

“We did it because we strongly believe the existing tools and “one-size-fits” all platforms are no longer sufficient to meet the needs of today’s investors and companies alike,” Illic said.

Best New York tech meetups of 2013

By Dennis Clemente

Let me introduce the best New York tech meetups of 2013, my extremely biased assessement of the best New York City had to offer from its startups, investors and tech meetup groups last year. I do hope you can give me some leeway in terms of my choices. After all, I was in more than a hundred tech startup meetups, fairs and other similar events.

It’s also what I could call the 2013 Reimagine Tech Awards or how I spent my night life attending one meetup after another. All in all, I wrote, mentioned and talked to more than 650 startups and investors (angel and otherwise) from these meetups–the ones who make it possible for many of these startups to get funding, of course.

I also logged in some hours talking to lawyers—those who offered their services and those who threw in the towel to join startups. It’s interesting to point out how so many of these so-called secure jobs are not just secure anymore.

So many professions are being disrupted. Jobs are scarce, as operations are being automated. And those who can’t get into entry-level jobs find themselves—what else?—transformed as entrepreneurs, which can be a good thing, if your startup makes it.

Different people from different parts of the world were in the meetups—either to pitch and present, lurk or watch closely. How are these startups doing now? We’ll just have to wait and see how they emerge a year or so from now.

Here are some of the best I’ve seen last year in New York’s tech meetups, not counting those pricey trade fairs I can’t afford to go to, although I managed to make it New York Tech Day and NYC Big Apps with Mayor Bloomberg in attendance.

BEST MEETUP GROUP. Hatchery’s Are You Serious meetup. You want honest-to-goodness feedback on your startup, business model and presentation style? You’ll get it here. Guest panel of investors from venture-backed firms are regulars and are familiar with the five-year long structure of the meetup. Host Yao Hui Huang runs a tight ship.

BEST MEETUP TALK: Steve Blank at Startup Grind. The native New Yorker who made his name as a Silicon Valley giant was entertaining and engaging to listen to. Runner-up: Joe Meyer, former CEO of Hopstop now with Apple, gave us valuable startup advice in a talk that lasted more than two hours—the longest by any one speaker last year.

BEST VC TALK: Fred Wilson. You can divide VCs into two categories. Those who don’t crack open a smile but are very helpful and those who smile but are not really helpful. Wilson managed to be both accommodating and helpful, but he certainly had more bite to his talk, giving a no-holds-barred opinion on NY and its tech startups. The other VCs were just too guarded, most likely because they get wooed all the time but hats off to Shai Goldman of 500 Startups, Adam Quinton of Lucas Point Ventures and Charlie O’Donnell of Brooklyn Bridge Ventures for their amazing fireside chats.

BEST ANGEL INVESTOR TALK: John Ason. Last year, there were so many of them who taught us so many things about how to get funding, but Ason was very candid and generous with his time. He didn’t have the stage for himself, but as part of a panel, he stood out. He’s also very approachable.

BEST MEETUP MODERATORS: Helman and Horn. It’s a tie between Michael Helman of Startup Nation and Jeremy Horn of The Product Group. Helman, host of Startup Nation and co-founder of WILLiFEST and Crowdzu, is a great interviewer with just the right pace and structure to his gentle grilling. Horn, on the other hand, is able to make nearly all 400 of his attendees speak up.

BEST MEETUP TALK SHOW: Startup Grind. Hats off to StartupGrind’s Brian Park for having the most important people in the tech world open up about what it takes to succeed as a startup—or in the world in general. Guests have included Steve Blank, Gary Vaynerchuck and Chet Kanojia.

Best venue. Skirball Theater, NY Tech Meetup's home.
Best venue. Skirball Theater, NY Tech Meetup’s home.

BEST VENUE. NYU Skirball Theater, home of NY Tech Meetup. With its cavernous 700-seating capacity, it’s even bigger than most Broadway stages with balconies and boxes, and huge after-presentation mixer on another floor. Runner-up: Queens Tech Meetup is on the top floor overlooking Manhattan’s skyline.

BEST AUDIENCE. Startup Grind’s. It won me over for having the most engaged audience. Others have the most number of attendees for their venue but with Startup Grind, no matter where it holds its next meetup, the audience just keeps on coming.

BEST TIP OR QUOTABLE QUOTE. It’s a tie between John Ason and Shai Goldman. When pitching to Ason, you need to do the following, in order: “Entertain. Engage. Inform.” Goldman had this to say, “All startup teams need 3Hs—hustler, hipster, hacker.” Runner-up: Mike Bloomberg, on not joining 2013 NYC Big Apps contest: “I didn’t join because it would be unfair to everyone here.”

BEST STARTUP. It’s hard to determine this from more than 600 startups I wrote or talked about last year. Besides, what would the criteria be for that? Instead, I have the BEST STARTUP PITCH OR PRESENTATION: The Lux Animals team and Dennis Crowley of Foursquare. The Lux team came in full force at the Microsoft Building to talk in detail about the many facets of its gaming business and advertising work. On the other hand, Dennis Crowley of Foursquare proved to be an engaging storyteller about his beginnings and his success now.

One final award goes to the MOST GRATEFUL STARTUP, because they took the time to say thank you for my write-up even with just a Tweet. It’s a tie between Lux Animals and Warby Parker. They thanked and tweeted me profusely for the blog write-ups. Thanks, guys.

If you can make it to Fred Wilson’s ear, can you make it anywhere?

By Dennis Clemente

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If you can make it to Fred Wilson’s ear, you can make it anywhere.

That’s what people like to think when they see the Union Square Venture principal, the man who has helped build, if not backed up startups like Foursquare, Kickstarter, Twitter, Tumblr and Zynga.

Observing how people swarm to him like bees after each talk cues you into how he has become a rock star in the New York tech startup scene. It was like this at the Columbia Engineering’s demo night last December 13 at Time Warner Center. Columbia Engineering dean Mary C. Boyce moderated the discussion.

One attendee followed Wilson’s every move, dragging me along with him. I met Fred Wilson before, so I was not as excited as he was. But I understand. I just feel bad for other guests when he’s around; this time, Tech and the City author Alessandro Piol and Shutterstock founder Jon Oringer.

Wilson minces no words. There’s no hesitancy, even when he replies to a most pointed question. Some may call it candidness where others may see rebelliousness, even recklessness. I think he has answered these questions before and he just decided to peel the layers of half-truths to tell you what it’s really like out there.

This perspective may come from seeing failed startups. The failure rate, as most publications will tell you, is about 75 percent. For those in the industry, it’s 90 percent.

Wilson said he embraces failure, but he is quick to qualify it. He doesn’t mean lifelong failure but failure that toughens you up, because in the fickle tech world, even the most successful ones fail. So he is suggesting that as long “as you learn the tough lessons of failure,” he is willing to overlook it and take a chance on you. “Making a mistake should not be a Scarlet letter, as long as you realize the mistake.”

But to rewind a bit from the talk he gave along with Piol and Oringer, the Columbia Engineering’s talk was centered on New York’s beginnings in the tech scene and perspective on critical opportunities and roadblocks facing innovators and startups in the future.

Where Oringer credited outgoing Mayor Bloomberg for the thriving tech scene, Wilson was quick to counter that it was Google and the hundreds of engineers it brought to the city that was the catalyst for New York’s emergence as the Silicon Valley of the East.

“Bloomberg was friendly, but it (the tech scene) would have happened even without Bloomberg.”

“The biggest thing that happened in New York was when Google’s software and engineering team came to New York. Google is a gift to New York,” he added. Ex-Googlers these days have their own startups in New York.

Still, Oringer pointed out how multilingual New York also made it easier for startups to take their products or business model on a global scale.

Tech and the City author Piol was more specific, saying the turning point was 2008 when the financial meltdown made many people switch to the tech startup scene.
Wilson wrote the foreword in Piol’s book.

At the time New York-born and -raised Jon Oringer was already running Shutterstock. Today, the stock photo company is earning $200 million.

Wilson answered more questions.

Asked how low-income countries with software development capabilities can compete against the United States, Wilson said, “There’s no culture of entrepreneurship in those low-income countries, because there is no capital.”

Asked about 3D printing’s future in New York, he said the city has the talent for it but stopped short of predicting New York is going to be the center of 3D printing.

After the talk, people were led to the startup demos of students and alumni of Columbia University in an open reception. The startups were Urban Compass, Trek Medics, eBrevia, KeyMe, and Meal Logger

Urban Compass offers a technology platform that enables customers to manage their entire apartment search in one place. It has a team of agents for good measure.

Since August 2012, Trek Medics’ dedicated full-time staff has been working to complete beta-testing for their SMS-based emergency dispatching software, Beacon, with efforts currently focused on the southern coast of Haiti. Beacon addresses response gap by allowing community paramedics to quickly locate, treat, and transport emergency victims from the scene to the hospital.

Another startup, eBrevia was created to assist corporate attorneys, in-house counsel and business executives perform tasks more efficiently.

KeyMe is a cloud-based “keychain” that stores key’s cutting instructions, while Meal Logger is a photo food journal designed to empower people to improve their lifestyle.

What does Wilson look for in a startup founder? “You have to be charismatic,” he said, adding that it’s an important quality to have if you are asking people to fund you.

“I like someone who has a vision who can “get to an opportunity from ‘0 to 60’.”

And if you’re a founder, he said the first five people in a startup is the most critical.

But if having Fred Wilson’s ear is going to help you, well, it depends on what you have to offer him, of course.

Dennis Clemente with Fred Wilson back in November
Dennis Clemente with Fred Wilson back in November

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.”

Do due diligence because there’s no divorcing investors

Adam Quinton
Adam Quinton

By Dennis Clemente

You’ve heard it before and angel investor Adam Quinton is going to repeat yet again for you. You won’t be able to get rid of investors once they’re in. It’s like marriage but without divorce. This is why it’s important to choose the right investor.

“You should be thinking ‘due diligencing’ the investor as much as they are ‘due diligencing’ you,” said Quinton, CEO of Lucas Point Ventures at The Hatchery meetup last October 18. Quinton has invested in at least eight companies.

Quinton likes to limn his thoughts philosophically. “Due diligence, you can do it mechanically or do with deep thought.”

On how relationship is like with an investor: “If an investor invested $250,000 that would mean you’ll need to be intimate with them compared to someone who invested only $10,000. But if the former gives you pain, it’s not worth it. Go with an investor who is going to be your friend for a long time.”

On the most important way for startups to get funded: “Traction is the new IP (intellectual property.) In the conventional sense, he is really talking about the non-existence of IP and how investors give more weight to your startup’s traction. “(IP) It’s not going to help you in the short term.”

For startups looking to get noticed, Quinton said it won’t hurt to feed investors updates about your company’s progress and that includes people you just hired. “There’s nothing that keeps people more interested than traction. (You can probably do that) once every six weeks through emails or newsletters (to investors). Don’t overdo it or risk being annoying.”

Why is this important? For Quinton, “I may say no now, but I may say yes next time.”

Quality over quantity as a startup’s cache: “Some people are divided between these two distinctions. I’ve tended to go for quality. I look at the characteristics of the founders. With quantity, you’ll be bogged down by analytics. Six months from now, (you’ll have to study new data yet again).”

His thoughts on this pertain to how analytics keep shifting and therefore not always reliable, but he gave some fair share of warning: “Just be prepared when you raise money.”

As for fundraising, Quinton was generous with his tips:
• Be prepared. Document everything.
• Assign those who will take care of the startup information—and who will have ownership of specific tasks
• Don’t advocate people spending time on a business plan
• Have market analysis and market strategy. Have a go-to marketing plan
• Have you financials, especially in summary form
• Include a spreadsheet analysis on your pitch deck

Who to hire in your startup? “Get people who can make quick decisions,” he said.

ON how you can make a quick good impression? “Most of the decisions investors make are highly emotional. You got to be super-organized and super-focused. You get things done. Due diligence is part of due diligence. You can do half-ass fundraising or full-on fundraising.”

On equity and convertible notes, he has this to say: “I’ve done both equity and notes. I know people who will not invest in a convertible note. because someone had a bad experience. People who like control usually don’t like convertible notes. I’m ok with notes.”

“What you want is not somebody always with money, but those who know terms that make sense. And if you’ve got the lead investor, then you’re on your way,” he stressed.

Some cautionary words: “Ninety percent of the time angel investors say no. If you’re early, you may prejudice yourself, if they don’t know you.”

What are red flags for investors? “A disorganized startup, issues on a startup’s individuals or team. (Those with) unpaid debts: If you have any history like that, assume it will be found out.”

Goldman: 3Hs all startups need in a team–hustler, hipster, hacker

Shai Goldman
Shai Goldman

By Dennis Clemente

What do you need to be a successful startup these days? Venture partner Shai Goldman of 500 Startups, a global seed stage VC firm, boils it down to three types of people. You need a hustler (salesperson), hipster (creative designer), and hacker (engineer) in your startup team.

Goldman was speaking at the Friday fireside chat The Hatchery at the American Management Association building near Times Square. “A hustler must know how to acquire a customer. “More and more we’re looking for a sales/distribution/customer acquisition person. We also ask if you can make, say, $10 million in revenue.”

How do they decide on which startup to invest in? Goldman said it varies by quarter.
“For mobile apps, you should at least have 5 million downloads to get Series A funding.”

“We usually invest about $I00,000 to $150,000 syndicating with other VC firms,” he said. 500 Startups is known to invest about $250,000 in early seed stage companies with about 600 investments made on a global scale, 150 of them in New York, including the 3-D company based in New York, Makerbot.

Beyond the team, what does it take to get funding? Like Goldman and most VCs and accelerators will tell you, “You need a (good) product and traction, lots of traction.” Even if you’re from abroad, he still thinks you can get funded if your product has traction. “The founders don’t have to be in the United States,” he added.

Some things he doesn’t mind overlooking is when a market size is hard to define—and that means the share economy. In this case, he “looks at revenue opportunity than market size.”

Goldman is not too concerned about the rising number of crowdfunding sites. “It doesn’t really affect VCs because those fundraisers coming from, say, Kickstarter, will need to raise another round of funding (as they grow).”

How do you market your startup these days? Goldman is a big fan of email marketing. “Email is a great tool for (targeting) new and existing customers. You can easily find or buy email listings online. Then focus on the content, frequency, ad exchanges and call to action messages in your email.

Here are more suggestions:
• Use LiveIntent
• Buy ad placements in somebody’s email content
• Tap Pinterest, Facebook, Linkedin
• Try different channels to see what works for your customer base.
• And what not to do: “If you all do is Twitter, that’s a red flag for us.”

Goldman provided some tips for startups not to repeat common mistakes:
• Optimize for SEO on landing pages. “Lots of startups fail to drive people to the landing pages (of their websites).”
• If you’re in the fashion space, you must use Instagram. And don’t forget to add caption to those photos.
• Make use of Vine or follow example of ipsy.com with its how-to YouTube videos

One has to be careful about how to use and manage seed money. Goldman said the worst you can do is have a poor forecast. You have to manage capital well in, say, 9 to 18 months that you need while trying to gain traction. If you have capital that lasts up to 24 months while trying to gain traction, that’s the best way you reduce your failure rate.

Goldman hinted at the following trends 500 Startups and everyone else is watching:
• Online companies building brick-and-mortar shops
• Shopping trackers; technology in retail stores
• Bay Area investors exploring the New York food space
• Enterprise mobility and e-commerce
• Latin America with opportunities in the middle-class market

500 Startups’ early-stage companies with up to $250K in funding are included in their startup accelerator program, and unique events like SmashSummit, UnSexy, and GeeksOnaPlane. With hundreds of experienced startup mentors around the world, a creative work space in the heart of Silicon Valley, and a vibrant community of startup founders. Their investment team and mentor network has operation experience at companies including PayPal, Google, YouTube, Yahoo, AOL, Zynga, LinkedIn, Twitter, Apple, and Facebook. It has 30 employees of different nationalities.

The meetup was hosted by Yao Hui Huang.