Silicon Valley’s dirty little secret is that the startup boom is mostly a disguised jobs fair that directly benefits the big corporations. Occasionally, an innovative startup makes it past this stage but it has to be so bad that no one wants it — not even for its team. It’s from among those ugly ducklings that the swans of the new age emerge: FB, Goog, Twitter, Yahoo! and others — no one wanted them at first, then they couldn’t get enough of them.
The Pig Passing Through The Python
Bryce Roberts reports on two related and converging trends: the slow-down of investment into non-premier early-stage VC companies, and the number of early-stage companies shopping themselves around to prominent start-ups. Early stage capital is drying up, and that means a rafter of early stage companies won’t have adequate capital to lift off.
Tumblr Investment Values Start-Up at $800 Million - Spencer Ante
Tumblr is about to raise a serious round with a serious valuation:
The New York-based company is poised to raise $75 million to $100 million in venture capital, an investment that will value the company at $800 million.
I profess ignorance and I use that as a tool. I can assess market attractiveness. I can assess the management team. We then make absolutely no assumption as to what’s going to work because if you do, you lock yourself into a strategy that you haven’t [yet] proven. You tend to be internally led rather than market led. This is where the risk may seem inconsiderate because you’re willfully declaring ignorance about the market you’re addressing.
bijan sabet: Inside rounds
Historically it’s always been a weak signal when a VC backed startup needs to raise money from the inside investors, aka as the inside round. But I never understood why. If the current investors love the company, they should keep investing as the company grows. Why do they need outside validation?
Tech investments in N.Y. top Mass. - Boston.com
New data shows what we have been seeing at a grassroots level: NYC is surpassing Boston at the second largest tech scene in the US, especially when you discount the biotech area:
The data being released today by New York investment research firm CB Insights show that New York has had 261 technology deals over the last six quarters, versus 250 for Massachusetts. New York tech companies received investments worth a combined $1.6 billion. Massachusetts companies got $1.4 billion in the same period. Both are behind California’s Silicon Valley, which has a firm grip on the number one position by a wide margin.
New York’s growth is fueled by the kind of technology start-ups that venture capitalists currently find attractive: digital media and advertising companies, which build on Manhattan’s base of older-technology firms in the same fields.
“There’s no disputing that New York is on fire now. It’s a very hot market,’’ said Michael A. Gree ley, general partner at Flybridge Capital Partners in Boston and past chairman of the New England Venture Capital Association. “Massachusetts investors now have a new respect for Manhattan.’’
The first indication that New York was challenging Massachusetts came at the beginning of this year, as the venture capital industry was starting to process investment data from 2010. On the eve of releasing last year’s venture capital investment numbers, CB Insights posted a preview of a “trend that caught our eye.’’
In the area of Internet technology, “N.Y. is starting to credibly close the gap between itself and its northern brother, Massachusetts,’’ the firm stated.
Massachusetts still beats New York by a significant margin in total venture funds invested, CB Insights acknowledged. New York has very few life sciences start-ups, for example. That sector generally demands significant investments from venture capitalists. Life sciences start-ups in Massachusetts attract millions of dollars in investment every quarter.
But in hot investment sectors such as the Internet, mobile technology, and social media, New York really had caught up to Massachusetts.
“Sentiment is very bullish in New York right now,’’ said Anand Sanwal, cofounder of CB Insights, “so we thought it was worth noting.’’
New York and New England: Tech partnerships already happening - Mass High Tech Business News
Interesting piece that makes an attempt to link Boston-to-NYC together in a tech corridor, analogous to Silicon Valley. I don’t think it works, perhaps because there are a bunch of states involved that don’t really work together on texch policy, taxation, etc.
And even though I am from Boston originally, I sort of threw up in my mouth at this characterization:
Still, there is a growing trend in the New York-New England corridor of taking advantage of what each city has to offer, and that means basically that the Greater Boston area has the brains and New York has the bodies – not in the sense of dumb bodies, but the trained content creators and media workers needed to produce product at a commercial scale.
“In Boston here, we crank out a gajillion engineers from really good institutions,” Pescatello said. And Ohanian pointed out that New York dominates in media creation. “Most of the media produced in the United States comes from a pretty small radius around mid-town New York,” he said.
Pescatello also pointed out another difference between the cities is in venture capital. “The VC sector in Boston is bigger and stronger in Boston than in New York,” he said.
Accel Partners Joins The Migration To NYC
More proof that the NYC start-up scene is a real hotbed: Accel Partners are opening a NYC office.
Silicon Valley Migrates! Accel Partners Opens Up A New York Office
Partner Theresia Ranzetta explains the motivations behing the move, “We had a critical mass of companies exhibiting early stage growth and saw an increasing number of interesting opportunities, we thought now would be a good time for Accel to have an outpost in New York.”
Welcome.
Three Reasons Why Venture Capitalists Are Investing in New York Startups - Digits - WSJ
A lot of strange characterizations of NYC v SF start-up cultures, but the numbers don’t lie: NYC is getting an increasing slice of the VC pie.
third-quarter investment in New York rose 22 percent over the last year to $335 million. More than 60 percent of those deals were early or seed stage investments, which came from the city’s active Angel community and a new generation of VC firms like Betaworks and Union Square Ventures.
Foundry Group Adopts Twitpitch Approach To VC Pitches
[Update 17 September 2010: Brad Feld twittered me to let me know this story is about the Foundry Group’s April Fools Day post, so they have not switched over to Twitter for candidate pitches, it seems.]
If an entrepreneur cannot explain their opportunity in 140 characters or less, how focused can they be? I was recently visiting the Foundry Group website and noticed this post from March, that I had totally missed.
Apparently the VC firm has dropped email as a way to start discussions with candidate companies: They want to be twitpitched:
Foundry Group Moves to Twitter Platform for Deal EvaluationWhile we are fans of investing in companies in the email ecosystem with our thematic investing approach, we have come to the realization that email is not the most efficient form of communication for evaluating potential investment opportunities.
We are blessed to have a large number of entrepreneurs who are interested in us as potential partners and the volume of email we receive can sometimes overwhelm us, so we began the investigation for a more streamlined approach. We hired consultants from McKinsey & Company last summer and after 9 months of working with us to learn how we operate, it was obvious that Twitter was the right choice.
The benefits of Twitter versus other platforms were clear. First, everyone is on Twitter, so there is no chance that an entrepreneur wouldn’t be able to reach us. Second, this will greatly reduce the number of spreadsheets and financial projections that we would feel obligated to read. We realize that financial projects are just that – projections and therefore are never accurate. We’ve decided to stop pretending that they make sense. Third, and perhaps most importantly, if an entrepreneur cannot explain their opportunity in 140 characters or less, how focused can they be?
Besides, with the amount of board meetings that we attend, verbosity is not a wanted characteristic.
Speaking of board meetings, we have begun the process of streamlining board meetings with McKinsey, as well. We’re hoping to devise a similar approach using Skype to eliminate the need for face-to-face meetings and travel.
So, if you are an entrepreneur and want to work with us, Tweet us! One thing to note: PLEASE do not send us twitter links or multiple tweets per company. This is just as bad as email and really destroys the spirit of what we are trying to do here.
We look forward to hearing from you:
@bfeld @ryan_mcintyre @jasonmendelson @sether
I also applaud their statement about financial statement as being myths. Yay!
Social anthropologist, clairvoyant, postfuturist.
