For November 2012 we are noticing an interesting trend of product ready companies declining, while concept stage companies are rising. This trend is mostly led by a decrease in product ready internet web service companies in the US, Canada, Spain and the United Kingdom, and with an increase in concept stage companies in Spain, India, Brazil and the United States.
The top four US states with the highest concentration of new startups are still California, New York, Florida and Texas. However, during the last three months the fifth and sixth places have been a battleground between Pennsylvania, Georgia, and Washington. For November, Pennsylvania takes fifth place and Georgia claims sixth.
Although the concentration of startups by country remains fairly steady throughout the last three months, we have several notable changes to our top 25 countries. Portugal and Chile both came up four spots, rising to 13th and 14th on the list. Kenya had one of the largest increases, and jumped 13 spots to 22nd for the month of November.
Consider this (emphasis is mine):
Ads are the Internet’s tax on users who want free apps and websites. Allmost all free apps and services have ads. Ad-supported companies are akin to the government in the sense that they are both really good at finding ways to charge you without it seemingly coming out of your pocket. Many people’s taxes are taken automatically out of their payroll, so they don’t think of that money as being theirs to begin with. Similarly, we feel like everything that we don’t directly pay money for on the Internet is free, but that is simply not true.
That quote’s from Vibhu Norby, in Why We’re Pivoting from Mobile-first to Web-first. He goes on:
Unlike taxes, however, ad-based services target lower-income and lower-education audiences because that’s where they make all of their money … What’s the cost to the user? The cost is the loss of privacy, and future opportunities for the user that they’ve lost as a result. Those opportunities can cost tens or hundreds of thousands of dollars as well as future happiness.
Is this a business decision based on ground-level fundamental ethics? What’s good for people or bad for people? No, not exactly. It’s about chances of success:
We want to place our chips where we believe we have the best chance of succeeding based on our theories and data. For us, mobile is not that place, which is why our new product is going to be launching web-first in the next couple months, with mobile as a companion app. We are taking a big bet on the web and the Internet in general, as you’ll see by how it functions. We are also going revenue-first because we believe in privacy and we’re willing to trade a smaller, slower-growing audience for it. Our new product will cost you money, so you can be assured that it doesn’t cost you something else.
Vibhu’s post makes very good reading. Fundamentals: web vs. mobile, ad-supported vs. free.
ABC Shark Tank Angels via Elite Daily
Every new startup I know dreams of being funded early by one of the 318,000 active Angel investors in the USA alone. But many entrepreneurs don’t realize that Angels are also extremely discerning in the projects that they will invest in, rejecting approximately 97% of the proposals submitted to them, according to the California Investment Network.
Most of these investors are members of Angel groups that have a rigorous filtering and screening process, to select the top 3% and most fundable proposals. What is this daunting process, and what can you do to optimize your chances of surviving it? Over the past 10 years, I have had the opportunity to see how the process works, several times from the startup side, and more recently from the Angel perspective (as a member of an Angel group screening committee). Read more
There is no one thing (aside from integrity) that is an absolute, and what you need to have when fundraising for a startup will depend to some extent on how you are managing your funding process. A good list of just about everything you could possibly want to have in your arsenal is listed in the answer to What materials or software should I use to pitch a VC?
If you are going around personally to talk to potential high net worth investor to whom you have an introduction, you probably don’t need a video. On the other hand, if your initial contact with a potential investor is online, then (at least in the US, although I assume elsewhere as well) a video can be very helpful. In the context of an organized group of angel investors, it is even more important.
The reason for this is that despite all protestations to the contrary, angel investors to a large extent react on a somewhat intuitive basis, with their faith in the entrepreneur personally being one of the most important factors in their decision process. And whether it is true or not, most people will tell you that they believe they can tell much more about a person from watching them face to face, than they can purely from their writing.
So when reviewing 20, 50 or 100 submissions for funding during the screening process, I have found that it is incredibly helpful to be able to watch a quick (2-3 minute) video elevator pitch so that I can get an instant gut feel for the entrepreneur and the company. I’ll be looking for all those same clues that I’d be watching for during an in-person meeting.
*original post can be found on Quora @ : http://www.quora.com/David-S-Rose/answers *
Image via Facebook
It would be no fun if starting a business was simply plotting a straight line between your idea and success, with no challenges along the way. Zigging and zagging amongst the obstacles is the fun part of being an entrepreneur, and it’s what sets you apart from the average worker who knows exactly what he or she has to do every day to get paid. Relish it, or if it scares you, don’t try it.
That doesn’t mean that starting a business should be a random walk into the unknown. There are certain foundational elements that every entrepreneur must build on to succeed, as well as some critical tools we all need. I found these tried-and-true principles summarized very well in a recent book “The Zigzag Principle” by serial entrepreneur Rich Christiansen: Read more
What’s an advisor to a startup deal? Technically, advisor is one of those bucket terms that means anything and everything, depending on context. Those names and faces and backgrounds that turn up in pitches and business plans might be deep and important relationships, somebody with options or equity who is going to be helping for the long term; or meaningless fluff, somebody who agreed once to have his or her name appear, but really does nothing.
When advisors come up in a pitch, I immediately ask how advisors are compensated and what they really do.
And here’s how I feel about the answers I get:
- Free advisors are likely to be as valuable as free advice. Yes there are exceptions to that rule, like family and long-time business relationships, but most of the time no compensation means no thought, no effort, no real contribution. Everybody’s busy. I see way too many deals bragging about advisors who are just lending their name to the business plan, as a favor to a former student or friend of a friend. I don’t believe they’re going to make calls, dig into details to offer real advice, or get dirty. And it hurts the credibility of founders when they show off names that don’t really mean anything.
- Advisors with small equity shares are good, and advisors with options are as good or even better. These are people who probably will return calls, and make calls, and pitch in to help.
- Advisors with options or equity should be long-term people who will stay with the company from startup to exit. Equity is forever. Options can become equity. Nobody should ever be on the capital table for what they did once in the past. Everybody’s busy, but options motivate people to help.
- I dislike professionals as advisors. Attorneys and accountants, for example, are better as professional friends than as advisors with equity or options. Their business model values fees, not equity. So the advisee companies get the last quarter hour of the last day. And having a vendor own shares means fewer shares for the investors and management team. When a web designer is the advisor I wonder what that means down the road as the startup grows. Free web design forever? Why is the web designer not a regular team member. Why are they holding back?
- Advisors can have too much equity. There’s no exact rule but when an advisor who isn’t really working with the company regularly ought not to have even a whole percentage point of equity.
Advice is easy to get. Help, contributions, real discussions, digging into the details, making calls, returning calls, opening doors, and getting things done, that can be really valuable.
And on both sides, investor and startup, we need to figure out what advisor really means.
It depends on the quality of the idea. I’m a firm believer in Derek Sivers‘ calculus, which goes like this:
AWFUL IDEA = -$1
WEAK IDEA = $1
SO-SO IDEA = $5
GOOD IDEA = $10
GREAT IDEA = $15
BRILLIANT IDEA = $20
The real value, of course (as other answers here have noted), comes from executing on the idea. And to see how that calculation works, check out Derek’s classic, seminal article on the subject:
*original post can be found on Quora @ : http://www.quora.com/David-S-Rose/answers *