Category Archives: Funding

What to do when you run out of startup money

Dane Atkinson
Dane Atkinson

By Dennis Clemente

What to do when you run out of startup money?

Find ways to pivot, according to Dane Atkinson, CEO of SumAll and lawyer Randolph Adler, Jr., the special guests last October 4 at The Hatchery meetup at the American Management Association building near Times Square.

“If you want to save your startup, give your problems some distance. If your story is not working, take the weekend off, step back, come back to face your demons and challenges, or pivot,” Atkinson said.

Every CEO makes mistakes. Atkinson was never more empathic than the relationship between CEOs and employees where the problems may actually lie. “People who work for you are your employees. Ask them to do work and that they have serious obligations to adhere to.”

“Ask for help. Your customers are an amazing lifeline. 9 out of 10 people will help you,” he added.

If all else fails, Atkinson suggested how it is easier to start a new concept. (Don’t) feel like you’re giving up on yourself. Even if you have failed, they (VCs) can still fund you next time.

Adler, for his part, thinks being honest about yourself is key. “If you’re running out of money, shut it down. If you have debt, (realize) there are angel investors who may want to ‘collaterize debt.”

Atkinson and Adler just hope the experience serves as a learning lesson when you pivot or start another idea.

In the casual fireside talk, Atkinson said, “VCs (venture capitalists) are predicated on compression of time. So work your a—off if you’re a startup.”

Randolph Adler
Randolph Adler

All investors want something that can change the world.

Taking off from there, Adler said VCs have bosses who want ROI. So in the beginning you’ll have to put yourself in the shoes of the VC and ask some tough questions, “If you are a VC, would you invest in your company?”

Adler called also for some perspective. ”We see the success story but not the others who have failed. You may need a gut check.”

As Atkinson talked about how much VCs fund startups, Adler told the audience what could be the most insightful tip in their talk. “What do these figures tell us? Nobody knows the value of a company or how much one is worth.”

It may also be the reason why, when a startup fails, it is still a surprise for some people. “Consider VCs not as a guiding force but as part of the environment,” Atkinson concluded.

If you want to get funded in your next idea, Atkinson hopes it’s not a lifestyle business. “No investor will touch a lifestyle business.”

Atkinson is a co-founder of SumAll. Previously he has served as CEO Squarespace and CEO Sensenet. He’s a serial entrepreneur having founded 6 startups over the course of his career, achieving five exits. He also is an advisor/ investor and board member to a dozen more companies.

Adler is managing partner and co-founder of RK Adler LLP. Adler represents technology, new media, fashion and other similarly situated startup, ventured-based, emerging companies at all stages of development.

The meetup was hosted by Yao Hui Huang.

Tales from startup founders who became venture capitalists

By Dennis Clemente

Do you think everyone in New York’s tech scene wants to have his own startup? Not everyone, it turns out.

Charlie O’Donnell of Brooklyn Bridge Ventures Arie Abecassis of DreamIt Ventures and Brian Watson of Union Square Ventures spoke about their decision to be venture capitalists at Capital City’s meetup last October 3 at General Assemb.ly offices in midtown Manhattan.

charlieodonnell
Charlie O’Donnell

O’Donnell recalled a question about his ambivlance sometime back, “Why would anyone choose to be a venture capitalist when you don’t do anything?” Punctuating humor in his answers, O’ Donnell said, “When you’re a VC everybody likes you whereas when you’re an entrepreneur, you try everybody to like you.”

Being a VC works for O’Donnell who was also candid enough to say, “I have a (limited) attention span.” Whether he was kidding or not didn’t matter, because if there’s anything anyone needs to know about some of these VCs is that they genuinely like to help people succeed in the same way teachers prefer to teach instead of working for corporations. O’Donnell used to teach at Fordham and more recently, at NYU-Poly. Business Insider also named him on the 100 Most Influential People in NY Tech.

O’Donnell admits to failing one time in his own startup. “I founded a startup, spent $150,000 and (when it failed), I had to do a tax write-off. I wasn’t good at it,” he admitted.

That opened up his eyes to what he knew he could do best, “I like the idea of being an investor more. I am more comfortable with myself that I am not the one building. I am supporting the one building. That’s the role I like more, because it fits my personality.”

brian watson
Brian Watson

Watson acknowledges how the “best investors are past operators,” if by operator he means startup founders, on top of them having a bird eye’s view of technology.

Abecassis said he likes hanging around people smarter than me. But he is also riding on the emergence of startups in New York. “There is a democratization of investments now. We are really in interesting times.” He also likes the nuances of being a VC, although he does have a startup called appstori.com.

But having talked about being VCs, what does it take to be a startup? Where other responses to this question in other talks generate only motherhood statements, O’Donnell told us a story about a guy named Raul Gutierrez, tinybop founder.

arie abecassis
Arie Abecassis

“Here’s this 40-something guy, former entertainment guy, who knows storytelling storyboards. He knows how to recruit his design team. He looked at every app in the iTunes store, and meticulously studied them. He knows about branding for kids and it comes off when you talk to him. That’s what convinced me. “

Watson said a startup founder who has empathy and who is not only in it for the money and has data to back up (his claims). “Having empathy will also show in the product.”

Below are some more tips from the three guest speakers on how to talk to VCs:

O’ Donnell: Be very clear with your expectations. To do this, ask yourself, “Why me? Why are you the right person for this business?” It has something to do with your background that gives you insights when talking to a VC.

Watson: Think of choosing a VC as you would treat online dating. Get to know them. See how they interact with their family. If you rush it, you’ll have problems. Do an investment thesis, because you’ll need to fit some criteria.

Abecassis: Have leadership ability. You’ll need to communicate through conviction. Also be prepared with due diligence, knowing your market and having proof points.

The meetup was hosted by Suits to Silicon Alley and moderated by Sam Hysell of Fueled Collective.

Nick Churls talks about Betaworks’ syndication of seed investments, his startup checklist

nick churls

By Dennis Clemente

At Hatchery’s Friday speaker series last September 27, Nick Churls, seed investor at Betaworks, did something no one else does here. He faced us in front of the room, removed the high chair and picked a chair that was eye level with 10 of us in the audience, as if we were friends he was talking to. It helped us hear him clearly, as he talked about what Betaworks is up to these days.

Churls announced that Betaworks is syndicating seed investments. With the lifting of the ban on general solicitation effective September 23 through the JOBS Act, Churls said the new funding environment will be positive for startups and how they approach raising capital. Betaworks is excited to partner with AngelList.

“We’re beginning to syndicate seed investments for reasons both philosophical and structural. We believe it’s consistent with our open architecture at betaworks and it gives us an additional advantage as seed-stage angel investors.”

As a new form of startup financing, Betaworks thinks this is innovative and disruptive. “Investing shouldn’t just be for rich people but for everyone,” Churls said, as he pointed how “venture capitalists don’t like crowdfunding, (because) their work is being disrupted.”

In adapting to the new investment climate, Churls also stressed how Betaworks doesn’t want to be insulated (from what’s happening out there),” he said, suggesting how betaworks realizes the changing methods in investing and how they are also evolving to help startups better. “We look forward to building an ecosystem or network (that can help) companies and founders.”

Betaworks has invested in, if not acquired, the most recognizable brands, including bit.ly, dots, digg, instapaper (four months ago) and tapestry with $30 million in capital to invest in startups from scratch. “We manage companies forever,” he said.

To connect with his audience interested in jumping into the startup world, Churls switched to talk about early seed stage investing. “As an investor, I like early seed stage. It’s the most fun. We’re ready to invest $100,000 per company. But if we make some noise about it, we can get much more money.”

What is his checklist in terms of who Betaworks invests in? “We invest in startups with huge traction. I look a lot for a person who is incredibly captivating? I want to know why is this person doing it? What sort of life circumstances led him to his idea/startup. He has to some uniqueness and reason for doing his startup.”

He added how this person “must be able to be able to have a product that solves people’s lives, and (a product that) people (will) love.”

Citing Facebook’s success, he directed the question to his audience, “Are people using your product every day? Is your product part of people’s daily lives? How many people are obsessed with your product?”

Churls thinks highly of engagement with data and metrics to back up any product’s effectiveness. We want to know how many visit you every day and every month, because we are data and metrics driven company. We test products maniacally. We have 10 people we can (trust) who test products.”

Churls spends most of his time in seed investing to make more money, so out of that capital, we can invest more. We like consumer-focused products like bit.ly.”

He also recalls how Betaworks first marketed dots, a game about connecting, and how they used Facebook. “Facebook is the best mobile ad platform for now,” he said, “Facebook ads have been phenomenally effective.”

The company came to the decision of seed investment syndication when they asked themselves the following questions:

• How can we offer great companies the most efficient access to capital?
• Does the existing seed-stage financing system work the way it could? And what will the seed-stage angel/ fund look like 6 months, 2 years, 10 years from now?
• Could users be more helpful to early-stage companies than venture investors are?
• Should early-stage Internet investment opportunities be limited to LPs and wealthy individuals?
• What would happen if we gradually opened up our investment doors to the world?

Churls used to work at HappyFunCorp, lived in China, and briefly traded commercial jet engines at Lehman Brothers. He is Yale graduate who has also studied at the Hong Kong University of Science and Technology.

Value or vibe, what is a startup culture and what does it take to build one?

By Dennis Clemente

A pingpong table does not a startup culture make, as six distinguished panelists can attest to at the meetup, “How to build a startup culture” last September 17 at the Orrick offices at CBS building.

The panelists were Dane Atkinson, CEO, SumAll; Wiley Cerilli, former CEO of SinglePlatform, Current VP of Constant Contact; Mark Peter Davis, managing partner, Interplay Ventures; Allyson Downey, co-founder & CEO, weeSpringZain Jaffer, CEO, Vungle; and Joaquin Roca, consultant & COO, Venwise.

How do you build the culture you want throughout the life of your company?

For Roa, it’s about “knowing your culture is connected to your business strategy and how you must all be together in knowing how to win your market.” He insisted on having “core values that rarely change” right from the start. For Downey, an ideal startup culture is about having “some radical transparency.”

Cerilli, who probably has more staff than all the panelists with more than 120, agrees. “Hire people brutally honest with you and have a no-a–hole policy.”

Creating and preserving your startup culture requires some honest assessments. Cerilli likes to give leeway when it comes to off-hours camaraderie.

“As you get bigger, not everyone likes going out for drinks. People have different ways of celebrating,” he said, in response to how some startups think: “You must work together if you look at someone and think you can drink with him.”

As for how people choose a startup culture, Jaffer, who has about 40 staffers, responded to how people sense it, intuitively. “Culture is about unspoken things.”

When it comes to hiring people, Cerilli said he doesn’t do interviews anymore but at one point in time, he said a person who often said “I” instead of “we” and those who mentioned their previous bosses (in an unflattering light most likely) are big no-nos.

For Davis, it’s crucial that he gets people who think in terms of being a partner than just an employee. “If you feel you can’t deliver bad news, that’s a boss-employee relationship, not a boss-partner relationship.”

In terms of talent, Jaffer said he likes “hiring people smarter than me” whereas Atkinson puts a high premium on “trust” and, borrowing from Cerilli’s management style, having a push-up drop-down policy for those who think they’re getting “pudgy.”

“We ask if a someone had a bad day for three successive days,” Atkinson said. This way they can respond accordingly and do their best to help.

For Roa, diversity is the most important thing. “Ask yourself what you are missing in your team, because oftentimes we like people who like us. And if we’re white and we only have white men, that’s not good. A diverse team sees things wholistically.”

In Downey’s case where she and her husband are co-founders, they try to be honest about what the other half can’t do—and that includes knowing how to balance work-life balance and a virtual workforce. “If you can’t do (the latter), you’re doing it wrong.”

But how do they communicate culture? For Davis, he likes to “drop the F bomb” and see how his interviewee reacts. “It’s all about show and tell.”

Jaffer went for a more measured approach. “We do anonymous surveys,” especially for those exiting the company, because they’re more honest. Cerilli likes how people communicate Wow moments on a wall at his company’s office.

But how do they handle a problematic employee?

Davis said you don’t want to be last person to find out if there’s a problematic employee, because it can affect your bottom line. He said he has given someone another change, but when things didn’t change, he went by “addition by subtraction,” as he noticed the company and staff became more productive. “We just had to let this person go.”

Jaffer likes to ask himself, “I ask “Is it my fault? Did I give this person an opportunity to succeed. If we didn’t, everybody is accountable. You have to give this person a chance.”

The meetup was hosted by David Concannon, a partner at Orrick.

Distinguishing relationship and partnership between VCs and startups

By Dennis Clemente

If you can find a “relationship machine” in your company, you’re all set. Thatcher Bell, managing partner at Gotham Ventures, was special guest in the Friday summer series of The Hatchery last September 13 and he was talking about the importance of relationships, especially partnerships.

“When it comes to partnerships, the general rule of thumb is for you to have some value to exchange and develop it as early as you can,” he said whose work at Gotham Ventures involves helping early startups get seed stage funding.

Bell said Gotham Ventures focuses only on funding New York City startups who know how big the market opportunity is and how much money is to be made. He added that the team composition of the startup team and their backgrounds is important.

Startups they have worked for include “indigenous” sectors such as: digital and social media, e-commerce, advertising, financial technology, enterprise software and security. Other areas it is watching closely are health and wellness and education.
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In terms of funding, Bell said you have a choice of Seed A ($20 million) or Series A ($2 to S7 million) funding. Gotham Ventures has reportedly we led investments in Seed and Series A financing, and participated and/or led follow-on rounds, between VCs and startups.

Still, Gotham Ventures almost always invest alongside other top investors. By working closely with entrepreneurs to select syndicate partners, it ensures that the Boards of portfolio companies are compatible, capable of continued financial support when needed, and strategically and tactically helpful.

Asked how he sees the VC model in New York growing. Bell said seed stage investing has been growing since 2009, because of so many investment opportunities out there, especially with the increasing number of amazingly cheap minimum value products.
Depending on products, there’s a new startup coming out weekly

Bell went poetic when said there is a case to be made for letting thousands of flowers bloom and watering all of them. And when it comes to marketing your startup, he gave one piece of cautionary advice: Yes, you can market it somewhere else first if you want to, but realize the danger of not being able to go back to your marketplace.

Bell has spent more than a dozen years in the startup community as a venture capitalist and operator. He focuses on investments in software companies in both consumer and business markets across a variety of industries.

Gotham Ventures is part of the DFJ Network, the largest venture capital network in the world. Their portfolio includes companies such as Yipit, Sailthru, Totsy, Altruik, SinglePlatform, and IZEA. Thatcher works closely with Gotham portfolio companies Sailthru, ADstruc, LendKey, EXPO, Verterra, and Widetronix. He also led the firm’s successful investment in SinglePlatform, which was acquired by Constant Contact (NASDAQ: CTCT).

In addition, Thatcher serves on the Board of Directors of the NY Tech MeetUp, co-chairs the New York chapter of Wharton Private Equity Partners, co-founded Penn Digital, and is a strong supporter of Cornell Tech, Cornell’s new graduate school of applied technology in New York City.

Prior to joining Gotham Ventures, Thatcher Bell was a Senior Analyst at North Hill Ventures, the venture capital affiliate of Capital One Financial, where he was a deal team member for the firm’s investments in DealerTrack (NASDAQ: TRAK), Higher One (NYSE: ONE), and Compete (acquired by TNS).

Prior to North Hill, Thatcher held business and corporate development roles at enterprise software vendor OpenPages (acquired by IBM) and SharkTank, an online marketplace connecting lawyers and potential clients. Thatcher began his career as a consultant at Ernst & Young (now Cap Gemini Ernst & Young).

The meetup was hosted again by Hatchery’s Yao Hui Huang.

Should startups cash in early or stay on?

By Dennis Clemente

So if you’re a startup, would you rather cash in early or stay on for the traditional 7-years long cycle to profits before cashing out? Which one makes more sense?

For those who are thinking of a quick exit, lawyer Roman Fichman had the following to say after hearing from a five-man roundtable panel of executives from a cross-section of verticals who spoke about how they pick founders, define startups, prepare for acquisitions and exits, and predict the hot trends.

• Founders get cash quickly
• Because there aren’t too many investors at that point, founders get a larger percentage which translates to higher dollars per year of work, in contrast to having continued on a longer path and collected investors along the way
• They get an exit notch on their belt which is important if they intend to start up a new company
• Bird is on hand versus who knows what the market is going to be like in 7+ years?
• Smaller deals can be done quicker and cheaper
• Founder relations haven’t had the time to sour yet, i.e., one can remain friends with fellow founders

Either way, it should encourage anyone to start a, well, startup if you’re not there yet and for those in there, to think how you can stay long enough to learn more, as we did with the panel of speakers consisting of Anand Sanwal, CEO/co-founder of CB Insights; Barry Silbert, founder and CEO of SecondMarket; Ben Boissevain, founder of Bois Capital, Ed Zimmerman, venture lawyer and tech chair of Lowenstein Sandler and Wiley Cerilli, VP of Constant Contact. They all made for an interesting mix of proselytizing speakers, pragmatic ones and even slightly controversial ones.

“I want people to leave their safe jobs,” said Ed Zimmerman last September 11 at the Enterprise Tech Meetup at the Midtown office of Lowenstein Sandler where he is the tech chair.

The point Zimmerman was trying to make was how our jobs don’t guarantee us a golden parachute but which is possible in the tech world. “Can you get a $200 million exit strategy from you jobs?”

But if you did listen to him, how would he go about choosing you? For Zimmerman, it’s all about charisma and what he thinks is almost impossible to find. “Unfortunately, technical talent and charisma don’t always come in one package,” he said. This makes a technical co-founder vital in a startup.

Zimmerman represents start-ups and growth companies in raising money, selling the company or cashing out, and depending on market conditions, considering public offering.

Zimmerman has angel invested in more than 30 companies and invested as an LP in several venture funds. One of his VC clients called the companies Ed likes to help “tinkertoy internet companies” (as opposed to heavy core tech and drug discovery companies) and that suits Ed fine. Digital media, e-commerce, social media, fin tech, SaaS, cloud/virtualization, enterprise software and adtech are, apparently, all tinkertoys. Ed also founded First Growth Venture Network for startups which doesn’t charge or take equity, GrabArborVC, AngelVine VC, and the charity HoopAPaluza.

Once you have a startup in place, Cerilli said you will need to find out where you in your startup phase and in the process figure out, “Are you in the family, tribe or organization?” phase. Cerilli clearly knows what he is talking about, having been in two startups, Single Platform which was acquired for $100 million in 2012, and Seamless Web.

In front of all these VCs and executives, the obvious question is, how do you know when you need to raise money? “The time to raise capital is when you have a perfect storm of an idea,” Zimmerman said. “You have a great idea? Get enough money to survive till seed (funding) stage.”

Boissevain added how important it is to “get funded right away” and iterate like a “rocket ship before big companies” catch up on you.

And once you get the funding, Silbert said it’s important to stay focused.

How do you know if your company is doing well early? Sanwal said if startups can hit the milestone, good. If it pivots all the time, there’s a problem. Silbert cautioned, though, how companies do a lot of zigzagging and should always be aware of not “misinterpreting it.”

In terms of recruiting talent, Zimmerman said he keeps a wish list of founders and tech talents, even if I don’t have a business in mind yet. Having done a lot recruiting, Sanwal said he always felt pressure when hiring. “We hire the wrong person and recruiters are just useless.”

The meetup was moderated by Deirdre Bolton, an anchor on Bloomberg Television and host of the alternative assets show “MoneyMoves,” airing weekdays at 1 p.m. ET, across Bloomberg’s digital platforms, including Bloomberg Television and Bloomberg.com.

The Enterprise Tech Meetup, the only community-run network of support for technology startups driving innovation in the enterprise, brings together large corporations, entrepreneurs, investors and others to help grow the next generation of influential startups in NYC.

Networking group expands to business pitches with crowdfunding platform

By Dennis Clemente

Last July 17, the New York Entrepreneurs and Startup Network, a kibitzing version of the tech world, joined the format of most tech startup events in the city and opened the floor to business pitches, giving Pitch Night competition in its format of 60-second presentations 60 floors above the Empire State Building.

The meetup’s format went beyond networking this time, as organizers Nick Tang and Cedric Wong said they know the significance of raising funds these days. So as Tang asked 15 or so presenters to fall in line and make their pitches, he gave this reminder, “We grow as fast as our resources.”

The presenters were a mixed bunch—many in the non-tech variety, a few in the service industry and some who actually presented in Pitch Night a week ago, like Bluwired which pitched how it can run analytics with sensors placed in a physical item, say, a piece of clothing. How much does bluwired need in funding? A cool $4 million—the highest this blogger has heard since January.

fundingcomm

The non-tech businesses included a guy who pitched neckties for wintertime followed by a woman who promoted a soon to be launched trade-your-closet site. What you don’t hear often is an online magazine idea, especially one for film enthusiasts called Next Breakout Hit, presented by a guy in his sixties.

The beauty of the tech startup world is that it’s not judgmental. You could be the oldest guy in the room like the last presenter, a man in his 80s perhaps who called for better ways to understand technology.

After the hour-long pitches, Alex Binkley, a Harvard and Boston University educated corporate lawyer, took the stage to talk about Raising Capital with Funding Community, a crowdfunding platform for small business loans.

Individuals make loans to support small businesses in their community and are repaid principal and interest every month. These supporters also receive “rewards” like store discounts from the borrowers they have supported.

How does it work? Small businesses apply to Funding Community for a loan. Funding Community then asks the community which small businesses it should support. Individuals show their support by making an interest-bearing loan to Funding Community so it can make a similar loan to the small business.

To sign up, create a profile by giving information about your business and the loan you are looking. Having a reward system is important and the site gives a discount and other perks that is supposed to turn lenders from passionate supporters into champions of your business. Will it support your cash flow in the process? That remains to be seen. Next step is to encourage customers, family and friends to support your loan.

How does the loan mechanism work? Individuals lend $25-$1,000 each to support your loan. Once it is fully funded Funding Community deposits the money directly to your account and automatically withdraw your payments each month.

At present, the company can only lend to businesses in New York State. But why should you borrow money from Funding Community?
By borrowing money on Funding Community you will reportedly receive better rates and access to capital than from traditional lenders. You will also have the ability to turn each and every lender into a customer and champion of your business.

The rewards system considered:
• 10% off any product during the term of the loan
• Buy one, get one free during the term of the loan
• One free product when the loan funds

What about interest rates? Your interest rate will depend on your company’s operations and type, as well as the credit score of your owners and/or personal guarantors.

“Because our primary purpose is to support small business growth we strive to offer lower rates than you could receive from a bank,” Binkley said.
Launched last May 2013, Funding Community currently has a 21-day time limit on all loan campaigns, so get your ideas kickstarted, er, funded, whether you’re choosing established crowdfunding sites or new ones like Funding Community, which has lower interest rates. For more information, visit or email alex@fundingcommunity.com

Is crowdfunding right for you? Tales from the trenches

By Dennis Clemente

Is crowdfunding right for you? For some people, the thought of sharing their business idea online to get funding is like giving it away but not unless your idea gets funded faster. Maybe you’re not comfortable with the idea of getting in front of a camera, but there’s a way to overcome that, too.

At the meetup “In the Trenches: Best Practices for Crowdfunding” at a Microsoft office last June 4, the panel of speakers came from gamers who went through crowdfunding and lived to tell the tale. They were Melissa Marie Fassetta of FPS Russia, Joshua DeBonis of Meriweather and Mark McCorkle of Luna Nova.

There was no hesitation on Fassetta’s part. She said she went to Kickstarter right way with her idea. That proved to be a good move, as she helped raise $55,000 to fund FPS Russia: The Game http://www.kickstarter.com/projects/fpsrussia/fps-russia-the-game-0, coordinating with the popular YouTube channel http://www.youtube.com/user/FPSRussia. Fassetta is a game development and social media project manager for a digital creative agency in NYC.

She has also been involved in a Kickstarter project that was not funded, and is happy to share her experience in what works (and what doesn’t) in running a successful Kickstarter campaign. “Set a lower money level. We set it at $51,000. We got $55,000.”

Reaching that amount is not as easy. “Kickstarter is powerful but you can’t just rely on it. Have writers or bloggers write about you,” she said with others nodding in agreement. DeBonis ran a successful Kickstarter for a computer role-playing game about the Lewis and Clark Expedition called Meriwether http://www.kickstarter.com/projects/meriwether/meriwether-an-american-epic.

“We talked about our game using Google Hangout and did cross-promotions with others seeking funds on Kickstarter,” DeBonis said, who is particularly interested in exploring ways to integrate history and music with games, the procedural generation of game content, and games that provide a deep experience. DeBonis raised $35,000, still way less than the cost of the game but it’s a good start. As of press time, he has raised over $44,000.

It helps if you have the credentials for people to believe in you. DeBonis is an award-winning game designer and the Director of Sortasoft LLC, an independent studio based in Brooklyn, NY. He has taught game design and development at Parsons The New School for Design, is co-founder and organizer of the New York Board Game Designers playtest group, and recently co-founded the experimental collective Brooklyn Game Ensemble.

Over the past year, McCorkle has been working on various browser and cross-platform technologies, finally settling on a framework that will allow his game, “Luna Nova,” to reach as many platforms and players as possible.

The purpose of building the game is not just to entertain, but also to give McCorkle and the other creative people on his team a venue to communicate a rich sci-fi story. Kickstarter will allow him to get his indie game into people’s hands by winter of 2013.

Since this is McCorkle’s second Kickstarter campaign, he gives one great tip about how to use your Facebook log-in. “Create a Facebook page specific to your crowdfunding campaign, so when you need people to promote or collaborate with you, it’s easier.”

“This is my second Kickstarter project,” the animated McCorkle said. He started his game geek life writing small games on his Atari 800XL. After years of being a game consumer and building infrastructure for everything from ISPs to travel companies, he worked with a small team to develop a browser-based MMO.

The panel was moderated by Emma Larkins who works for a tech startup called Knodes that helps people build communities around their projects. She’s passionate about the crowdfunding industry, and recently Kickstarted her first science fiction novel, Mechalarum http://www.kickstarter.com/projects/emmalarkins/mechalarum-a-science-fiction-novel.

For people to consider funding your idea, handing out rewards or incentives is also important, but
what’s even more important is to know how to handle it without making it a bigger headache than your idea.

The panel said a physical item/reward can be problematic. It can be a pain to ship a thousand items plus you have to deal with customs. They also advised that you make sure you know where you are shipping your item—domestically or internationally.

As a crowdfunding site, not everybody gave Kickstarter a resounding endorsement. The panel offered some suggestions (and misgivings) on how the site has still room for improvement:

• Writing and editing fields could be improved (no copy-paste option)
• Fortunately, there is a preview mode now
• No interaction during and after posting with Kickstarter
• When the campaign ends, you can’t edit your posting anymore
• It has no data unlike Indiegogo, so you don’t know who’s clicking on your posting
• Indiegogo has no transaction fees
• You don’t need approval on Indiegogo

The more important benefit of crowdfunding is building a rich community of people who want you to succeed. But is crowdfunding for everyone? The panel was unanimous in saying some ideas “just have no audience,” with McCorkle adding that “if you failed the first time, it’s harder the second time.”

To raise your level of success, the panel was unanimous in saying that having a well-scripted video is essential. In the beginning, they admitted to trying an off-the-cuff, impromptu video to appear authentic, but it didn’t work.

Still, the question remains: Is there a full-proof way of getting your idea funded? You’ll learn from first-hand experience.

Early stage startups present their companies under the scrutiny, guidance of VCs

By Dennis Clemente

Where startups in New York go by the numbers of introducing new products or services to a curious, relaxed audience, the startups that present at the Hatchery events face perhaps what no other meetups offer—the scrutiny of venture capitalists (VCs). In both cases last May 22 at Chadbourne & Parke, LLP, the audience saw how the pitching process works and how VCs give feedback to early stage startups.

With some having not much presence online being in the early stage of their business, the VCs dissected their business model, assessed their presentation skills, asked financial questions and most important, gave essential tips.

The presenters were Bespoke Social Media, Pretty In My Pocket, Sentometer, and Unbound. The VCs were Peg Jackson of Gridley & Co, Warren Haber of Exoventure, Josh Bruno of Bain Capital and Bill Reinisch of Paladin Capital.

Pretty In My Pocket (PRIMP) and Unbound are aimed at the female market—the former offers perks in primping, the latter gives you orgasm in a box.

PRIMP CEO and Founder Caroline vin Sickle said the idea came to her when she went to a popular pharmacy store and couldn’t open the beauty products. “We’ve all made lots of “oops” purchases over the years.”

Raising $1.5 million in funding, PRIMP is a mobile shopping solution for beauty products during in-store shopping experiences. With a quick mobile bar-code scan, its selection engine provides product look-ups, social recommendations, and location-based incentives.

“Our goal is to help women find the products they need at the most critical time—in the aisle. We help them choose products based on preferences and personal beauty needs,” she said of the $50 million beauty industry.

Raising $500,000 in capital, Unbound is looking at subscription and affiliate sales in what the three female founders think is going to be a $25 billion erotic products industry in the foreseeable future.

The founders call themselves Greer, “product goddess,” Sarah Jayne, “content czar,” and Katie, “minister of design” and one of them handed out a free box worth $60 to the only female VC in the panel, Peg who smiled mischievously as she accepted the gift.

What’s in the box? They contain “several tested and adored products, inspiring erotica, thoughtful guidance and extra swag.”

The other presenters were tame in comparison.

Bespoke Social Media Atelier is going the Pinterest route but with privacy in mind. “Ours is a tool for creatives to curate, organize and present content that is kept private or shared with small groups,” said Michele Spiezia, founder and CEO.

Bespoke has two main elements: the Inspiration Stream and Inspiration Books. Users can add their social media streams (Twitter, Facebook, Instagram, Tumblr) and any RSS feeds they follow to their Inspiration Stream for a real-time, visual flow of content. Content can then be saved to Inspiration Books, which users can share with friends or keep private.

Spiezia said Bespoke recently partnered with Evernote, but she is still seeking $750,000 in funding, as she also estimates profit to come in by 2014.

Sentometer, for its part, is a tool for measuring and monitoring conversations in the social media universe.

Founder Mike Kelly has set up appointments with ad agencies to offer his social media tool. He likes to think of it as “taking the pulse” of a topic and letting people know when it speeds up. “We have the social aspect in cruise control.”

Some of the feedback from VCs included these gems:
• It doesn’t mean you can start a company you should
• Biggest variable is not time, it’s the market
• If you are not #1 or #2 you will not be able to stay around. Figure out how you can be #1 in the market. No one wants #3
• Credibility (when first presenting) is very important
• Have a backup Powerpoint slide (if you need to show more)
• Make sure you understand your market

Organized by Yao-Hui Huang, the Hatchery helps build communities of entrepreneurs and investors.