FundingUtah: Speed pitching for Entrepreneurs
Filed under: Angel Investing, Events, Utah Entrepreneurship
Under the leadership of new CEO Brock Blake, FundingUtah.com is hosting its first ever speed pitching event
for angel investors and entrepreneurs. The event will be held in Provo
at the Marriott hotel. It will be limited to 50 angel investors and 10
entrepreneurs.
This event shows how FundingUniverse.com will become more than just an online matching service for angel investors and entrepreneurs. The company will roll out all kinds of services to help entrepreneurs succeed, including events like this one.
I keep telling my partners that Florida (with 26 investors and 176
entrepreneurs) is looking like a nice place to hold our next event. And
we definitely need more people signing up in Hawaii (only 2 investors
and 8 entrepreneurs), so I can start arguing for that location as well.
Angel Investors
There are now 421 angel investors on FundingUniverse.com and several more are joining every day. When I spoke at the NASVF
conference last week in Philadelphia I told the audience that I think
about 10% of our registered angels are members of organized angel
investor groups, but 90% are independent. I based my estimate on what I
know about the angel investors on the Utah site.
But this week we started asking every new angel investor which
organized angel group(s) they belong to, if any. So my 10% guess will
turn into a pretty good estimate soon.
Last time I checked we were signing up more than 4 angel investors each
day, about 40 entrepreneurs, and getting about 17 new business plans
submitted every day. If you annualize those numbers, you get more than
1,300 new investors, 14,000 entrepreneurs and 6,205 new business plans
per year. But our momentum is actually increasing, so I think we’ll
have substantially better numbers than that in the next twelve months.
I think we’ll get 20,000 to 30,000 new entrepreneurs and more than
10,000 business plans in the next year.
Our company key goal and metric is the national unemployment rate.
Since small businesses account for most job creation in the country,
and angel-backed ventures are often high-growth companies, we think
FundingUniverse.com will help create new jobs all over the country. We
are going to reduce it to 4% over the next five years.
Just kidding!
But wouldn’t it be nice if a web site could help change the economy in
a fundamental way. We really do hope to have a positive impact on local
economies, but that "key goal and metric" stuff is just silly–but hey,
I’m in a great mood this morning. I ran 5 miles this morning and get to
watch BYU beat New Mexico on TV tonight. (Admittedly, I’m an optimist.)
But here is a serious statistic:
One excellent presentation at the Philadelphia conference reported that
about 500,000 new businesses are formed each year in the U.S. About 1
in 10 of these new companies is funded by an angel investor (including
friends and family), but only 1 in 1000 is funded by venture capital.
Here is a link to an article that says 26,000 startups got angel funding in the first half of 2006.
If you are a first-time entrepreneur, you should really meet as many
angel investors as you can, because the chances of getting venture
capital for your first company are very, very, very slim.
One way to find organized angel groups in the United States is on the Angel Wiki, a collaborative site that is sponsored by FundingUniverse.com.
FundingUniverse.com
We are making serious progress with our FundingUniverse.com
business. Soon we’ll announce some new capital, new leadership, and
some significant partnerships that will help this company move forward.
I love how the internet can create so much visibility for a new
business idea. What used to take years in business formation now takes
months.
If you know any angel investors or VCs, please encourage them to signup for FundingUniverse.com (it’s free) and look at some of the 543 business plans that have been posted there in the last few months.
I’ll be on a panel at the National Association of Seed and Venture
Capital conference in Philadelphia next week, primarily to demonstrate
the new DealFlow Suite (TM) which we make available to organized angel
investor groups around the country.
It’s nice to start getting both traction and trajectory with this business.
Another Angel Group in Utah!
Filed under: Angel Investing, Utah Entrepreneurship
This morning’s paper mentioned a new angel group in Utah, the Olympus
Angels. The 15-member group led by Jim Ellsworth will provide “seed
capital and advice” to young entrepreneurs, according to Alan Hall.
Alan is the founder of Grow Utah Ventures, which now has spawned both
Top of Utah Angels and Olympus Angels. Both angel groups can be
contacted by visiting Grow Utah Ventures or calling 801-479-5525.
Whenever I discover a new angel group, I add them to AngelWiki.com. I hope you’ll do the same, until this becomes the leading resource and directory of angel investors in the world.
Finding Angels and VCs
Filed under: Angel Investing, Open Source, Venture Capital
I think LinkedIn.com is one of
the best ways to find angel investors in your area. With 3.5 million
members, including many investors, this is a great service and a great
way to get introduced through a mutual trusted acquaintance.
But in addition to LinkedIn.com, I have found value in owning a copy of
the 1998 Pratt’s Guide to Venture Capital Sources, a 600+ page hard
bound book that probably cost about $50. Of course, this edition is
almost useless since it is so out of date. There are probably more
current editions. Vfinance.com sells a current database of venture
firms on CD ROM for $299.
It’s much harder to find a directory of angel investors, and since they
are many times more likely than VCs to fund your startup company, it
can be frustrating if you are an entrepreneur looking for potential
angel funding.
Our solution? Let’s all work together to create a free open-access
directory of angel investors (both organized groups and individuals)
and venture capital firms around the world.
We are launching a directory of venture capital firms called VCWiki.com and a directory of angel investors called AngelWiki.com.
FundingUniverse.com will
appoint a part-time editor to manage the volunteers who want to
participate in building these community resources. We will use Wiki
technology so that anyone can easily add their own information to these
directories.
Sites like this have limited value at first. But over time, as people
contribute what they know, they can become invaluable sources of
information for entrepreneurs. We hope they will become useful to you.
FundingChina.com
Filed under: Angel Investing, International Business, My Organization, Venture Capital
So we decided to launch our first FundingUniverse.com
international web site, and thought we would start with China, since
there seems to be a little economic activity going on over there these
days. 
FundingChina.com is in
English for now, and it will be a matching service for entrepreneurs
with ideas and angel or VC investors who want to get involved in the
Chinese market. Later, hopefully, we’ll offer Chinese language versions
(although I hear there are over one hundred dialects.)
Money Looking for a Team
You always hear about how much venture capital is out there, and that
there is more capital than there are good ideas or good teams. Business
2.0, one of my favorite magazines, just interviewed 11 VCs to discover which idea they are most anxious to invest in right now,
if only they can find a team to execute on it. Someone emailed this
article to me and suggested that we could implement something like this
on FundingUniverse.com,
so that angel investors could list the ideas that they are hoping to be
able to fund. I love this idea, and we’re going to experiment with it
right away.
How to Have an Overnight Internet Success
My brother Curt, founder of Folio Corp, former CEO of MyFamily.com, and
current CEO of Agilix, a venture-backed company, is fond of saying
telling how his company was going to be an overnight success…after 10
years of hard work.
I believe that the single most important key to success in an online
venture is doing the little things day after day for years and years
until you magically reach the tipping point and everyone seems to have
heard of you. In other words, persistence is required for most
successful ventures.
The reason that I love daily metrics — keeping track of all the key
operating statistics in your company day after day — is that daily
metrics tell me if we are persisting in something that is hopeless, or
if we are persisting in something that is bound to reach the tipping
point and bring us the success that we hope for.
For example, when we launched Ancestry.com’s subscription service in
April 1997, we started getting 50 new subscribers per day. It took a
few months before we got to cash flow positive, and a few months to
convince investors that we could really pull this off, but Dan Taggart
(co-founder) and I knew that with 50 subs per day Ancestry.com was
going to be a huge success.
What were the daily things that we had to persist in before we reached
the tipping point and became the largest genealogy company in the world?
The most important thing we did was add at least one new genealogy
database every business day beginning in April 1997. We started with 55
premium databases. Now, eight years later, the company has thousands of
databases and probably more than 3 billion records.
The next most important thing was internet marketing. Every day we
collected email addresses from registered users, asking them if they
wanted to be notified of our new databases every day or every week. In
1998 and 1999 we did search engine marketing, buying keywords, building
banner ads, and measuring every day which ads brought us the most
visitors. We also launched our most important marketing channel of all
time–our affiliate marketing program–and we started recruiting new
affiliates every day.
By persisting day after day with the blocking and tackling of content
publishing and internet marketing, we built a great company. Today
MyFamily.com (the parent of Ancestry.com) operates as a very profitable
pre-IPO internet company–the largest genealogy company in the
world–with more than 1,000 employees.
There are so many success stories on the internet, so many companies
making millions; and in almost every case, if you dig deep enough,
you’ll find a small team of web developers and marketers and other key
employees in the company, who day after day, and year after year, have
been working hard, focusing on the little things that make a huge
different over time.
Today I’m watching several companies in our portfolio who are months or
years away from reaching the tipping point, and I’m trying to make sure
that the management are tracking the key metrics and that the employees
are focusing hard on doing the little things day after day after day
which over time will turn their company into a big success.
FundingUniverse.com is one
of those. Every day we are recruiting new investors to join our 50
state web sites, and every day we are getting dozens of entrepreneurs
to sign up, many of whom post their business plans online.
Just 30 days ago, I observed that we had 17 states that had at least
one registered angel investor and at least one posted business plan. Today we have reached this level in 28 states. 30 days ago we had only 4 states where we had at least 4 angel investors and 4 business plans. Now we have 7.
It doesn’t take a great deal of faith to project forward and say, if we
continue at this pace (not even accounting for the J-curve that happens
as sites get momentum and as word-of-mouth and PR coverage kicks in)
then we will have about 1,000 angel investors and about 8-9,000
entrepreneurs all across the country who are looking for funding.
The best question for us is not will we have enough traffic, it is,
what is the best way to monetize this traffic, in other words, what is
the best business model to pursue.
Currently, the service is free for investors and entrepreneurs. We sell
sponsorships to attorneys, accountants, office leasing companies and
insurance providers — people who provide services to entrepreneurs and
investors — in every state.
We can project a few million in revenue from this business model. But
perhaps there are other revenue streams (we are currently brainstorming
many) that we could create by selling products or services directly to
our users — premium services, for example.
But my point of this blog post is not to highlight FundingUniverse.com.
It’s the principle that success comes by doing small things over a long
period of time.
My point is this: use metrics, project forward, and if the thing is
promising, knuckle-down and focus on daily execution of the little
things that will turn your online company into a great success.
Don’t give up too soon. You could be walking away from a fortune.
VC Firms Increase Funding for Early Stage Startups
A report shows that early stage funding is increasing.
$1.3 billion in venture capital flowed into early stage companies in
the second quarter up from $830 million in the first quarter. I keep
hearing that VCs are doing more early stage deals, but this is the
first report I have seen that bears this out.
Still, the 750 companies funded by VCs are a tiny number compared to
probably 10-15,000 that are funded each quarter by angel investors
(including friends and family, doctors and dentists and first-time and
serial angels). That is why there is such a need for FundingUniverse.com to match local entrepreneurs with local angels.
According to Angel Investing (p. 146), a book published in 2000 by two Harvard
Business School professors, "In the United States, angels invest in
around 22 percent of the deals they seriously consider" while "venture
capitalists invest in only about 1-3 percent of proposals received."
Serious entrepreneurs should consider both avenues when trying to get a
company off the ground. But the odds are far greater than angels will
fund your company than that you will be one of the few who attract
professional venture capital — especially if you are a first-time
entrepreneur.
FundingUniverse.com Gaining Traction
Filed under: Angel Investing, Startup Capital, Venture Capital
FundingUtah.com got its 100th
angel investor yesterday. More than $75 million in funds are now
available from Utah angels who want to invest in Utah companies. And
370 entrepreneurs have registered, posting 92 business plans so far. New plans are posted every week.
The Utah Angels, Utah’s oldest
organized angel investing group, voted recently to use FundingUtah.com
as its source of deals. We have added functionality to allow their
members to make private comments on business plans. We also enable them
to choose which plans they want to have pitched at their monthly
meetings.
FundingArizona.com is
started to gain some traction, and this week we launched nearly 40 new
sites. A few entrepreneurs from different states are starting to
discover our individual state sites.
I went to Phoenix Wednesday for an MIT Enterprise Forum broadcast which
focused on angel investing in the U.S. James Geshwiler, the director of
the Angel Capital Association
and founder of CommonAngels was on the panel, along with other very
astute angel investors and academicians who cover venture and angel
investing.
One panelist indicated that more than 90% of angels invest within a
half day’s drive of where they live. This is the primary reason we have
taken a state by state approach for our angel matching service.
I think we are still having a hard time convincing people that 1) this
service is free for both angel investors and entrepreneurs and 2) that
online matching services can actually generate deal flow. One panelist
at the event Wednesday said online matching services don’t work.
Apparently the University of New Hampshire tried some kind of matching
service years ago, and later it was turned over the MIT Enterprise
Forum, and then it was abandoned because it “didn’t work.”
To me that is like saying the PDAs aren’t viable because the Newton
didn’t succeed, or that Tablet Computing is a bad idea because Go
failed.
Maybe the timing wasn’t right, or maybe the implementation was flawed.
Based on our FundingUtah.com success this year, we are convinced that
our matching service will succeed. In each state site, we need to
convince angels and entrepreneurs to sign up. And then, like eBay, when
there are enough buyers and sellers and a company dedicated to
improving the experience for both, magical things will happen.
Please spread the word in your state. You don’t want Utah to get all the increase in angel investment deal flow do you?
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