Tag Archives: High Tech Startup

What Startups Got Funded In May?

Startups That Got Funded In May from The Startup Garage

What Startups Got Funded In May?

May Monthly Startup Wrap-up.

Find Out Who Got Funded and What Type Of Deals Are Attracting Investment here:

May 1st Bookbub the bargain bin for ebooks, secured $3.8 million in it’s first round of funding.

May 3rd Waggl the startup survey app inspired by honeybees,
secured $1 millionin funding.

May 5th Automattic which runs WordPress.com, became a billion-dollar company, thanks to a new $160 millionin funding.

May 5th PearSports which acts like a human personal trainer, secured $5 millionin a second round of funding.

May 6th Allclasses an education startup, closed a $1.5 million dollar round of funding.

May 6th Flux a top-secret spinout from Google X, landed $8 millionin venture funding.

May 12th Adform an Ad-Tech Startup , that creates rich media display ads, raised $5.5 million in funding.

May 13th Bitpay a Bitcoin startup, secured $30 million, to provide business solutions for merchants.

May 14th FanTV a startup set to revolutionize cable, tuned into $8.3 million in funding.

May 15th Uber the app that delivers you sophisticated car service, raised a new round of funding estimated at $350 million .

May 19th Autopilot a marketing Automation Company, grabbed $7 milllon in new funding.

May 20th Sumologic a log management app, pulled in $30 million in funding.

May 20th Centrify a cloudbased I.D. service raises $42 million in funding.

May 21st LiveOakVenturePartners an early stage lead investors, secureed $109 milion in investment funding.

May 27th AverInfomatics a health care billing system startup, secured $8.5 million.

May 28th MessageBus a custom email platform, raised $4 million in funding.

 

May was a momentous month for the 16 startups listed above.
Uber, ranked supreme, securing the top $ investment of $350 million bringing the company’s validation to an estimated $3.5 billion.

 

From Education Startups to Cable TV Startups, a common theme remains amongst those that secured investment, they all provide innovative solutions to modern day inconveniences.

Whether you have a question about Startup Funding or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation

To read more on all success stories referenced above click here.

Is San Diego Poised To Be The Next Silicon Valley?

San Diego Next Silicon Valley? From The Startup Garage

Is San Diego Poised To Be The Next Silicon Valley?

Since the 1980’s Silicon Valley has dominated the startup scene, a place to call home to many of the world’s largest technology corporations, as well as thousands of small Startups.

San Diego, although only a few hundred miles from the Silicon Valley, it is a vastly different world, full of sun, surf, and laid-back dispositions.

However, that might all be about to change…

New Entrepreneurial Ecosystems

A conglomeration of a number of economic conditions and consumer trends has launched a new entrepreneurial ecosystem in the U.S, specifically in San Diego.

On March 2014 San Diego, was recognized as Forbes Best Places To Launch A Startup in 2014

Forbes prides itself on providing world business leaders with strategic insight and information, and is perhaps best known for its lists and rankings. This list is certainly worth paying attention to, especially as a startup entrepreneur.

How exactly did “America’s Finest City” for surfing and sun come out on top?

“San Diego managed to come on top for launching a startup because of its “heavy concentration in projected high growth industries, as well as a high likelihood of accepting credit cards and adopting social media. San Diego is home to the fifth-best rated business community in the country.” ~ Tom Post, Forbes Writer

As the 5th best rated business community, it’s San Diego’s unique combination of wireless, digital medicine, bioscience, action sports, and military contracting.

In the Startup world, where innovation means everything, diversity of interests and resources are key ingredients.

Kevin Faulconer, San Diego’s newly appointed mayor, among others is very optimistic for the city’s startup future;“We have great intellectual capital and great creative ideas. We are one of the most innovative cities in the country.”

Silicon Valley has shown the world how to build a vibrate, flourishing, startup ecosystem.

It now up to the entrepreneurial community with San Diego to actively build, demonstrate, and evolve a greater level of startup sophistication.

A great example of possibilities for the city is 3D Robotics, which based in San Diego. It is here that, former Wired Magazine editor in chief Chris Anderson’s drone manufacturing startup raised a $30 million Series B round of venture capital, as the company prepares to market its autonomous flying robots.

List of Notable SD Startups

Regardless of potential, it is fair to say San Diego is not going to surpass the Bay Area’s success over night. A thriving entrepreneurial ecosystem takes time to mature. There isn’t a mobile application to instantly fuel a community of startups into billion dollar tech giants.

2014 marks a tipping point for San Diego, a notable time of reshaping the technology startup scene both locally and globally.

San Diego is no longer simply a vacation destination. It is a destination for dynamic startup businesses, which are invested in assembling and transforming a community of entrepreneurs.

Our team at The Startup Garage are committed to serving our Startup Community of San Diego.

We are dedicated to helping make San Diego a better place to live, work, and play.


Whether you have a question about your startup or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

How Does the VC Funding Process Work?

How Does The Venture Capital Process Work from The Startup Garage

How Does the VC Funding Process Work?

Venture capital is ideal for early-stage tech companies that have already acquired some seed capital, but are too small for a public offering. By the time you approach venture capitalists, you will have a working product and business model, a user base and market validation, all of your patents and legal requirements in place, as well as past revenue, if not profit. The goal at this level of funding is scalability.

A venture capital firm is comprised of investors, analysts and industry experts with the purpose of operating on behalf of many individual investors. While each situation is different, the general pattern for approaching VCs is as follows:

 

The Introduction

An introduction is always the first step. This can happen in a variety of ways: by phone, email or in person. This depends on where and how you make contact with the VC.

 

The Pre-Meeting Workup

Once you have a meeting scheduled, you should send the VC firm your pitch deck, an executive summary or one-page business plan. You will be expected to show evidence of a model ready for rapid scaling. It’s not necessary to send your full business plan at this point.

 

What to Expect at the First Meeting

This will most likely take place with several representatives from the firm. The firm is responsible for the collective capital of all of its investors. The recipients of your pitch will be far more critical of your business model and past operations than at any of the rounds up to this point.

 

The Partners

Following your presentation, the VC firm will have a partners’ meeting. The firm’s board will meet to review new companies up for consideration.

 

Additional Information

If your project goes further than the first partner meeting, more detailed information will be requested. If you have not done so yet, this is the opportunity to send your full business plan and supporting financial information. You will want to demonstrate your competency, so keep it tidy and professional.

 

The Face to Face

Once the firm reviews your project, the other partners will want to meet you to feel comfortable about the investment. There are numerous factors in evaluation, however it will come down to your potential to provide them a profitable exit. Know the numbers they expect and demonstrate your confidence in achieving them.

 

Additional Firm Meetings and Validation

The partners of the VC firm will want to hold a closed meeting again to decide on how they want to proceed with your project. The VC firm will look seriously into your company, investigate your data and study the technology. At this point they may draw up a term sheet with their general guidelines.

 

Term Sheet

It’s in your best interest to have an attorney to look over your legal documents. Understand all of your obligations — VC is not only expensive in terms of equity. These negotiations may make or break your deal. Stay flexible, and be wary of dealings that don’t feel right. VCs end up owning about 15% — 20% of each portfolio company.1 So, make sure your buying the right new boss for your business.

 

Signing the Deal

While this IS an accomplishment, your work has only begun.

 

Bottom Line

These are very busy people, handling lots of money. Be as prepared and concise in your dealings as possible and try not to get down if your business is not chosen. Learn as much as possible in the process.

 


1 AVC.com
 

Whether you have a question about Venture Capital, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Building a High-Tech Startup Team

Building a Tech Startup Team from The Startup Garage

Building a High-Tech Startup Team

Aligning the Startup Team Strategy with the Capitalization Strategy

The single most important factor to raising capital for any tech startup is the management team.  This is true for early stage funding as well as venture capital funding.  A bonafide team is the assurance that the idea can be executed and that the business can scale when the time is right.  Furthermore, when faced with adversity only great teams can respond to competitors, markets, funding environments, staff departures, PR disasters and the like.

Importance of the startup team from The Startup Garage

When building the team, avoid these common myths and mistakes:

  • A team is not one person and investors rarely want to invest in one-man shows.  While some investors will be willing to help you build your team, they will not be willing to invest in your startup if you are not willing to distribute responsibility and bring on diversified expertise.
  • Never confuse the number of years worked with experience.  Credibility is based on accomplishments and relevant experience.  Furthermore, a startup works differently than a large corporation.  Try to build a team with startup experience as these individuals will be far more likely to understand the importance of flexibility, perseverance, collective success and team playing.
  • Have a diversified team.  One recipe for failure (business failure and capital raising failure) is building a lopsided team weighted to one function of the business.  Don’t hire people with skills and qualifications similar to yours.  If you have a technical background and you are focused on product development, consider a co-founder with a sales and marketing background that can focus on selling your world class product.
  • Hire based on functionality and avoid having too many C’s.  Rather, give titles such as VP of Engineering, Product/Technology, Sales, Marketing, Finance, etc.  This helps to better divide the work, make people accountable, and show investors just why each founder/hire is key to the organization.
  • Don’t make everyone a founder.  Be sure to leave plenty of equity for investors.  You will likely need to raise more rounds of capital than you originally anticipated.  Having too many co-founders will only lead to your eventual dilution.
  • Hiring the right people at the right time is key.  You shouldn’t hire a senior executive from an established company for an early stage startup.  On the flip side, when it comes time to scale the company, the founder and CEO may need to relinquish their CEO title and hire a CEO with the ability to drive efficiency, make incremental process improvements and expand on the established market presence.  Below are some tips for aligning the startup team with the capitalization strategy.

Early Stage

With little to no revenue, many early stage entrepreneurs turn to the Co-Founder model to build credibility for their startup when raising seed capital.  This is not a bad strategy when done correctly.  The reality is that over time most founders will have their differences.  While you should be prepared to give up a large portion of the company’s equity to a co-founder, it is important that one founder maintains a majority share and creative control.

Additionally, be sure your co-founder is well diversified from your skill sets and traits.  Investors understand that you wont have all the pieces to the puzzle at this early stage.  But, the more business functions that you can divide among the original team the better.

Seed to Series A

For most tech startups, the Series A round allows the team to expand by making some key hires.  Typically, these hires fall into 2 buckets: product development and sales.  The CEO of the company will be in charge of leading the company by making these key hires, product managing, driving sales and understanding the companies financial situation.  This leaves the CTO / Senior Architect to focus on product development and managing the recently hired engineers.  On that note, it is important for high-tech companies to keep tech development inhouse.

Series A to Series B

Series B capital signifies that the company is ready to scale.  Key hires at this stage should reflect this strategy.  First, hire an office manager that can double as an admin assistant thereby allowing founders to not get bogged down in minutiae and focus on growing the business.  Hire a VP of Finance that can increase profitability by monitoring operations, legal fees, HR expenses, office space and the like.  Hire a diversified base of sales reps.  While consultative reps are key to building new business with big accounts, relationship managers are key to retaining those accounts.

 

Whether you have a question about your management team or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Seed and Series A Technology Funding Report

Capital Raising Trend Report from The Startup Garage

Seed and Series A Technology Funding Report

Tech Seed and Series A Medians and Averages Show Little Change

Despite some notable early-stage Juiced and Jumbo Series A round investments in tech firms such as GitHub and Clinkle, the average and median Seed and Series A transactions are showing little change.

Juiced Series A deals typically range between $8M and $15M.  Companies raising this type of capital typically have substantial market traction and boast teams of 20+ professionals.  These deals resemble traditional Series B investments.

Jumbo Series A deals typically range between $15M and $60M.  Companies raising this type of capital typically have been bootstrapped for quite some time, boasting revenues of $10M+ and looking for institutional capital to grow fast with goal of reaching a not too long term IPO.

Average and Media Seed and Series A Deals

The average tech Seed deal has stayed consisted at $800K with the media at $50K as outlined in the graph below:

Average and Median Tech Seed Deal Size from The Startup Garage

 

The average tech Series A deal reaches $5.1M with the median at $3.35M as outlined in the graph below:

Average and median tech Series A deal size from The Startup Garage

 

 

Looking at these early-stage deals by sector we see that Internet Seed deal averages declined to $770K while medians increased slightly to $530K.  Meanwhile, mobile Seed deal averages grew to $830K with medians also increasing to $520K.

Average and median Internet Seen deal size from The Startup Garage

Average and median mobile Seed deal size from The Startup Garage

Within Series A, median deal sizes in the mobile sector are also growing faster than the internet sector:

Average and median Internet Series A deal size from The Startup Garage

Average and median mobile Series A deal size from The Startup Garage

All data and graphs thanks to CB Insights.

 

Whether you have a question about early-stage tech financing or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

7 Critical Steps for Attracting Venture Funding

7 Steps to Attracting Venture Capital from The Startup Garage

7 Critical Steps for Attracting Venture Funding

First and foremost, venture capital firms want to see an entrepreneur with passion and vision.  Unfortunately, this usually isn’t enough to get them opening their pocket books.  Some venture capital firms will have narrow criteria for the types of companies that they invest in while other will adopt a more broad portfolio and invest across many sectors.

In any case, nearly every venture capital firm is looking to see if you’ve made signification traction for each of the following critical steps.

 

1. Team

Investors may think that you have a great idea and that the market poses a significant opportunity, but if they have confidence in your team’s ability to seize the opportunity you will be dead in your tracks.  Your team is perhaps the single biggest factor that investors consider when they are evaluating the attractiveness of the investment.   Your management team does not have to be fully built out, but the founders must possess the credibility to launch the company and built a world-class team.
 

2. Stellar Idea

Every entrepreneur gets attached to their idea.  However, the reality is that very few start-ups present an idea that is actually unique.  What makes an idea compelling to an investor is 2 fold: 1) does the idea offer a solution to a big problem or opportunity, and 2) is the idea protected via intellectual property or some other barrier to entry.
 

3. Technology

Technology is similar to the stellar idea.  Your technology needs to be broad enough to to solve a problem for a large group of people but focused enough to solve a problem that is not currently being solved.  Similarly, good technology needs to be protected.  Patents alone are not enough; you need talent to assure investors that you will stay ahead of the game.
 

4. Market Opportunity

A good market opportunity is more than just a large market size.  It is a market that is not over crowded with competition.  It is a market with an opportunity that has yet to be exploited.  It’s a market that has a lot of potential for you to continually create value down the road.  Truly innovative companies discover ways to create big markets.
 

5. (Sustainable) Competitive Advantage

Most entrepreneurs understand the need to have strategic advantages (both product/service advantages as well as business strategy advantages), but what many fail to understand is that venture capitalists want to know just how sustainable that advantage is.  If your competitor can reverse engineer your idea, hire new personnel, implement a new sales/marketing strategy or lower their costs to match your price point then your competitive advantage is not very sustainable.  Sustainable competitive advantages are not easily copied and generally stem from one or more of the following: vendor relations, product sourcing advantages, prime location, unique products / services, customer loyalty, customer service reputation, or distribution channel advantages.
 

6. Credible Financial Projections

Every investor knows that your financial projections are dependent on assumptions and that those assumptions will undoubtedly change.  But, financial projections are extremely valuable in explaining the business to the investor – they show what drives your growth, how profitable you can be, and where the company can go over the next 3 to 5 years.  They also show your ability to turn a business concept into a realistic, attractive business model.

 

7. Proof of Concept

Lastly, we have proof of concept, or market validation.  Behind the management team, this is one of the other more influencing factors.  Venture capitalists want to know, are people buying this?  Have businesses signed letters of intent?  Is there evidence that your solution will be adopted by the masses?  The more credibility and market traction that you have, the more attractive your startup will be to venture capitalists.

 

Whether you have a question about raising capital or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

A Tech Company without a CTO is like a Bakery without a Chef

Chief Technology Officer from The Startup Garage

A Tech Company without a CTO is like a Bakery without a Chef

Every Tech Startup Needs a Chief Technical Officer

Many entrepreneurs of successful tech-based companies do not come from tech backgrounds.  However, the biggest mistake that a non-tech entrepreneur launching a tech business is to neglect bringing on a tech savvy co-founder on the management team.  This is like a bakery or restaurant launching without a chef.

 

In order to be a successful tech startup, the team must consist of a Chief Technical Officer (CTO) level member to help with the technology plan.  This is generally achieved in one of the following ways:

  • CTO Level Co-Founder (Equity)
  • CTO Level Board Member or dedicated Adviser (Free or Equity)
  • CTO Employee (Salary)
  • CTO Part Time Consultant (Paid hourly or by project)
  • Web Development Firm hired to do “Conceptualization Phase” – This usually includes thorough wire-framing (Paid per project)

Why is a CTO so Important?

Many entrepreneurs think they can bypass this team member by simply going to a web development firm and asking for a free proposal.  For simple projects lead by people comfortable with web and mobile tech this may work.  Generally, this strategy falls short.  Especially when the entrepreneur begins to seek capital from sophisticated investors.

Your web/mobile idea needs to be transformed into a working product/service.  A CTO is needed to develop a technology plan to make this happen.  Furthermore, your CTO will be able to hire a development team that can build out your idea in appropriate phases.  This team can be in-house, outsourced within the U.S. or outsourced internationally.  This is one of the decisions that you and your CTO will need to make up front in order to put your technology plan together.  This will allow you to estimate costs and timeline.

If you decide to outsource your development you will want to put together a good RFP with your CTO before approaching potential web development vendors. See the RFP Workbook below. If you plan on hiring a web firm you will just need to interview and get quotes from them for the conceptualization phase. If you plan on doing it inhouse your CTO and the founders should be able to put together system requirements, technical specs and system architecture for you and then build wireframes and MVP if applicable.

What’s in a Technology Plan Anyway?

A technology plan can consist of:

  • Technical Specs/High Level System Architecture (Web/Mobile, etc)
  • Development Plan (Timelines/Costs/Budgets)
  • Product Development Team
  • Wireframes

 

Whether you have a question about your technology plan or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Mergers and Acquisition Technology Report

Technology Report for Merger Acquisition from The Startup Garage

Mergers and Acquisition Technology Report

Rise and Fall

As the technology, media and telecom sector experience massive growth spurred by seemingly endless innovation across the web’s various digital platforms, traditional media is becoming increasingly obsolete.

The U.S. Information sector generated $1.26T in 2013 across 37 tech, media and telecom industries.  The industry is projected to increase 3.1% by 2018 despit steady declines in print media and publishing.  In fact, of these 37 industries, 14 are in the declining states of their life-cycles, which demonstrates the massive growth among the newer sectors of the industry.  The following graph provided by IbisWorld highlights the industry’s key statistics:

The U.S. Information sector generated $1.26T in 2013 across 37 tech, media and telecom industries.. TSG Enterprise. The Startup Garage

Fastest Growing Sectors

The six fastest growing sectors in the industry (as outlined in the graph below)  include internet publishing & broadcasting, search engines, operating systems & productivity software publishing, video game software publishing, and voice-over IP.  These industries have experienced strong demand growth over the past five years, especially strong before the recession, and are projected to continue to grow over the next five.

The U.S. Information sector generated $1.26T in 2013 across 37 tech, media and telecom industries.. TSG Enterprise. The Startup Garage

The Future of the Industry

By 2018 the industry is forecast to be worth $1.47 trillion spurred by continued innovation, expansion and M&As.


 

Whether you have a question about Mergers and Acquisitions, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Legal Tech VC Funding Beginning to Stagger

Legal Tech vs Funding Stagger from The Startup Garage

Legal Tech VC Funding Beginning to Stagger

Although the legal industry is massive ($300B), it is seeing a drop in funding by 16% year-over-year as investments are concentrated at the seed stage and exit activity is lukewarm. Funding to legal tech startups barely topped $100M across 30+ deals, with the largest deal representing 45% of total investments.

 

Deal Flow

Oddly enough, the industry actually experienced a 41% increase in deal activity despite the 16% decrease in actual funding as depicted in the graph below:

 

Although the legal industry is massive, it is seeing a drop in funding as investments are concentrated at the seed stage and exit activity is lukewarm.  The Startup Garage. TSG Enterprise.

Graph thanks to CB Insights.


 

Whether you have a question about Legal Tech VC Funding, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Cross-Border M&A: Focus on Tech Companies

Cross-Border M&A: Focus on Tech Companies from The Startup Garage

Cross-Border M&A: Focus on Tech Companies

In today’s increasingly globalized society, so too are M&As occurring cross borders.    The top acquirers of U.S. tech companies span Europe, Asia and Canada.  Over 2200 private tech companies were acquired across the glove in 2012.

Top Acquirers

A deeper dive into cross-border M&A activity of US technology firms in 2012 shows Canada and the UK were the top acquirers. India, Japan and Germany round out the top 5.

The Startup Garage. TSG Enterprise.  Top acquirers of U.S. tech companies span Europe, Asia and Canada.

 

Cross-Border Activity

Nearly 50% of these cross-border tech M&As occurred in the internet sector followed by software which represented nearly 20% of deals globally.

The Startup Garage. TSG Enterprise.  Top acquirers of U.S. tech companies span Europe, Asia and Canada.

 

Regional Distribution

Lastly, the majority of cross-border M&A deals (32%) consisted on companies based in California, followed by New York at 12%.

The Startup Garage. TSG Enterprise.  Top acquirers of U.S. tech companies span Europe, Asia and Canada.

*Data and graphs courtest of CB Insights.

 

Whether you have a question about Cross-Border M&A, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!