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Breakfast with startup champion Mike Edelhart

Mike Edelhart
Mike Edelhart
By Dennis Clemente

A tech meetup at 9 a.m. is a rare occurrence in New York but so is an opportunity to chat with an angel like Mike Edelhart, a current investor in 82 companies, a past investor in 11,000 startups but who is now focused on his “two-sided” company. Edelhart is the lead partner at Social Starts and CEO of Tomorrow Project, LLC, producers of the Pivot Conference in New York and other services for major brands.

At Cowork.rs last August 13, Edelhart was early, talking to his audience even before the talk was set to start. He was serious all the way as he shared his thoughts on many things tech, asking people every now and then to ask questions.

Yes, he has gray hair, but he clearly knows the youth market. Surveying the room, he asked, “What do millennials do these days?”

With some tentative responses here and there, he answered the question himself, telling us the sector most investors avoid but one he embraces. “They’re looking for news,” said the former executive editor of PC Mag.

He thinks one shouldn’t be hang up on demographics, though. “There is no such thing as a youth market. He added that it’s not true the youth don’t care about products they care about what goes into it. And what you also don’t hear these days from other investors: “Cool days for young people are off-internet days.”

Perhaps on account of his journalistic roots, Edelhart had this to say, “Startups with some emanating truth is worth looking into.” From his experience, he can tell, “‘This person’ is actually telling the truth. He actually believes in it.” But he also stressed how pitching cannot be a charm offensive. “You cannot BS your way. You have to put together a cohesive argument of your idea with your team.”

Edelhart didn’t elaborate as much which happens in a fireside chat as opposed to a structured interview. And to accommodate all the questions, he switched from one sector to another fast, talking as both an investor and observer in the tech community.

Clearly a very busy man, he announced that he made four new investments in the past week. Still, he was generous with his time. He answered as many questions as he could and talked with each attendee afterwards.

On investing in a startup: “I look at great teams”
On future of tech: “Our bodies will produce content,” referring to sports analytics
On healthcare: “We’re not getting into it. We’re getting into the analytics of it”
On foreign startups: “It doesn’t matter what country you’re coming from” (He has invested in a startup based in Slovenia.)
On markets, opportunities to avoid: “The college market is small.” “I would not go near the ad business”
On big data: Look into the shift in big economics, game economics, predictability
On being an investor: I spent my entire life doing what I wanted to do. I would stop sleeping if I can. Investing? It’s a lot of work.”

For Edelhart, tech revolutions are not defined by their beginnings but by their middles. He was a founder and managing director of First30 Services, a new company-creation consultancy. He also served as interim CEO at LiveDeal, Inc. a NASDAQ company that delivers classified and small business marketing services over the Internet. He has been an advisor to Deep Dyve, Inc., which has developed revolutionary technology for high end search, after serving as its initial CEO. He was chairman of the board of Olive Software, a Sequoia backed XML software developer, where he was CEO. He was also CEO at digital magazine distributor Zinio. Earlier in his career, he was a senior executive at Softbank and Ziff-Davis Publishing and the author of 22 books.

The meetup was organized by StartupOneStop and the New York Society Startup Society.

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ER Accelerator gives startup advice to 17 presenters on Pitch Night

By Dennis Clemente

New York’s tech startups are an interesting bunch. There are those in their advanced early stages who’ve had their Website or their app for a year or so and already have a solid structure or following in place. Then there’s New York Pitch Night which attracts even more new tech founders, earlier than most, say, those who have just launched their app. The group was designed that way. People attend and pitch for 60 seconds and an industry leader gives them startup advice from the ground up.

Last July 10, the pitch night proved to be much more interesting with Murat Aktihanoglu, founder and managing director of New York’s Entreprenus Roundation Accelerator, as its guest speaker. Folksy and friendly in his presentation, Aktihanoglu gave the 17 presenters and more than a hundred attendees invaluable advice on how to refine their ideas or get funded. He is also founder of Holoscape Inc.

“What is it like to go into business for yourself?” he asked the audience. “It’s like jumping from a plane without a parachute but making one while you’re going down.”

One after another, the 17 “pitchers” took to the stage to talk about their products or services in 60 seconds. Attendees are then asked to vote the pitch of the night.

Startoiletpaper.com clearly gives new meaning to place-based advertising where the Nuqaq app tells you about meetup-like events in your area. Jobsuitors, for its part, promise to match your personality with a job. Not an issue for the all-female Kookopa team who have shown its commitment to their business by quitting their jobs.

With over a hundred attendees hanging on his every word, Aktihanoglu addressed several basic issues, ranging from fundraising to pitching strategies. “Building relationships is the only way to raise funds, because investors back people, not deals. Just remember, you are pitching your personality.” To do this, he believes in getting warm introductions and keeping a database of investors.

Of course, you may not need to sell yourself as much if you approach friends and family, still comparatively easier but then he also knows you may have to deal with accelerators and angel investors when the time comes you will need to grow your business.

“Who knows what a convertible note means?” Aktihanoglu asked. That’s when you sell equity to a venture capitalist—not to be paid in cash; it’s a short-term raise for a startup to get, well, started. The typical terms: a 20 percent discount at a 6 percent interest for a cap of $2 million to $10 million.

Then there’s the price equity round wherein you sell a share of the company to an investor, usually with a lead and closing date. It’s for bigger fund-raisers of $500,000 and up. “Use this when you’re ready to expand,” he said. The typical terms for this are a pre-money valuation, preferred stock, a board seat, a lead investor with other participating investors.

The extensive business plan we have to come to know is passé to him. “Just give a one-page executive summary—with all the information a VC will need, plus both a pitch deck and email deck.”

Below are some more of Aktihanoglu’s startup tips:

What your pitch deck must have (in order): 1. Problem. 2. Your solution. 3. Business model/market size 4. Underlying magic/technology. 5. Marketing and sales strategy 6. Competition 7. Team. 8. Current status/milestones. 9. References

How to make your startup look good to a VC. “You have to emphasize your biggest assets, your team, previous successes, traction and technology. “Just don’t generalize and say we improve how business is done. Know your numbers: market size and growth. Show how big your company can get.”

In his ER Accelerator, he said he looks for the following when investing: a good team, 70 percent; market size, 20 percent and idea, 10 percent only “because ideas change all the time.”

3 big mistakes you can make while pitching. 1. When you don’t listen. 2. You refuse to acknowledge the competition. 3. You have implicit/explicit assumptions regarding the knowledge level of the audience.

Learn your risks. Identify and minimize your specific risks–product, market, technology, execution and timing risks. Understand how startups are valued. It’s key to know you have a scalable sales model.

Final thoughts. Understand how investors think; minimize their risks; raising money is just the beginning; pick an investor carefully, because there may be no divorce between an investor and a startup; look for a co-founder you’ve been with for a long time. And lastly, be humble and be open to advice.

The ER Accelerator reportedly offers 3 months of free office space, legal advice, workshops and accounting services with over 250 mentors. For more information on ER Accelerator, visit eranyc.com. For more information on the meetup Pitch Night, visit startuppitchnight.com or Pitchnight.tv