Saturday, March 26, 2011
Friday, March 25, 2011
Wednesday, March 23, 2011
Tuesday, March 22, 2011
The purpose of the series seed is for the company to figure out the product it is building, the market it is in, and the user base.
Series Seed: Figuring out the product and getting to user/product fit.
- Purpose: The purpose of the series seed is for the company to figure out the product it is building, the market it is in, and the user base. Typically, a seed round helps the company scale to a few employees past the founders and to build and launch an early product. As the product starts to get more and more users, a company will then raise a series A.
- Amounts: Typically the range is $250K-$2 million (median today of probably $750K to $1million). The high end of this range used to be more typically $1million, but we are in the inflationary period of a venture cycle, and this number may move up into the millions of dollars before we have a correction.
- Who invests: Angels, SuperAngels, and early stage VCs all invest in seed rounds.
So you managed to build a prototype, you’ve gotten some traction, and some credulous soul now wants to write you a check to bankroll your startup. How long will it last? Napoleon said that an army marches on its stomach. Well, a startup marches on its bank account, so kiss your startup dreams goodbye the day a zero stares back at you from your bank statement. But forewarned is forearmed: I’ve collected below some observations from our experiences during the past six months running a funded seed-stage startup.
Low demand + high development costs + time horizon measured in years for market maturation = Ugly Baby Project
One of the most crucial skills any successful entrepreneur can possess is the ability to know when their baby project is ugly. Not just visually, but the project as a whole. My goal with projects is to search out the high-impact ones. And that requires me to be very prolific. Ugly baby projects are projects that are interesting to the person but ultimately serves a very narrow niche with low revenue potential and requires a high, on-going maintenance cost. If you don’t know that your baby project is ugly, you will waste a lot of resources pursuing it, rather than moving onto a new project. It’s like quicksand for an entrepreneur. Avoid at all costs.
I’ve worked on numerous projects with many successes and a few failures. Here’s a quick story of the process I went through with one ugly baby over a 4-week period. I’ll also break it down into detail for the tech oriented.
Monday, March 21, 2011
I'll just come out and say it. For most people who lead ordinary lives without crisis, starting a startup is by far one of the hardest thing you can ever do. It is incredibly intense. One day, I woke up to our site being down for close to 4 hours. By hour 3, I was headed for the Golden Gate bridge ready to leap to sweet relief. Later that day, we forged a partnership with two record labels with incredible rosters and were all patting each other on the backs. And even later that night, Yuri Milner and Ron Conway showed up to YC and handed out checks for $150,000.
It's like being on a rollercoaster except that the lows feel like you just lost all of your investors' money, which in our case will leave us with no friends or family to speak of, and will have to go begging your old colleagues for a job. And the highs feel like someone just handed you $150,000 without even knowing what your company does, because they did. And in terms of lows, the site going down is only a 1 compared to some of the 2s and 3s we've had, which all felt like 10s or worse at the time.
I can only imagine that the road ahead makes these things pale in comparison. When our site went down, 100 people probably noticed. In the future, we obviously hope that number is in the millions. Everything will be amplified in the future. Fearing that your errors will lose your team their jobs will be worse when that team is 200 employees strong. Fearing that Google will enter your market will be worse the day they actually do. When millions of dollars have been put into your company, and more people rely on you, and more people have heard you say how you're going to be the team who changes an industry, failing sounds like the worst thing that could ever happen to you.
Everything about running a startup seems like life or death. And so you are at war. You are at war against the clock. You are at war against your competitors. You are at war with anything and everything that stands in your way. And that means that, most of all, you are at war with yourself.
In startups: It takes a special person to succeed. Yes, *special*, not charming, smart, persuasive, popular, or hansome, or pretty or sexy.
There’s an old joke about how to make a small fortune in angel investing: start with a large fortune and invest it in angel rounds.
I guess you could say the same thing about how to fail at an entrepreneurial venture: start a new company and then do everything that could be reasonably expected of you. And that’s how you fail.
The world is not set up to make your venture successful, and in fact almost everything conspires against you and your new company.
Because there is no natural constituency for the entrepreneurial venture, there is no way, reasonably, you can expect yours to survive. Customers aren’t clamoring for new vendors, employees aren’t looking to make half as much for their hard-earned skills at a firm that has a 50% chance of dying every day, and investors aren’t interested in taking risks or putting money into pipe dreams.
The conceit that a new venture has a shot of winning at all, under any circumstances, was unknown throughout history, is still laughable across the globe, and remains rare even here in the United States.
And that’s why it takes a special person to succeed. Notice I said “special”. Not charming, philanthropic, beloved, clever, popular, persuasive, capable or handsome.
Sunday, March 20, 2011
Saturday, March 19, 2011
Monday, March 7, 2011
- Haven't raised funding of $250,000 or more and haven't generated revenue of more than $250,000 in a single year.
- Have a live, usable public site or an accessible demo on their home page
- Have not already been in the TechStars program - this is not for TechStars companies or alumni companies
- Must be an internet, software, or hi-tech company
TechStars is organizing a Startup Madness competition for startups. And the criteria above, looks like a good criteria to consider an active, fundable early stage startup.