Category Archives: Investors & Personalities

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

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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.

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.