Friday, November 25, 2005

Back in the saddle -- Entrepreneur feedback wanted on new funding model

My apologies for going "radio-silent" (side note: I don't need to be told by the bloggers that I read that "posting will be light" so I didn't think you needed to be told ahead of time -- my thinking is that would just waste your time and you can survive just fine without my blog posts).

The combination of being super busy with client work while getting ready for a Kauain vacation was enough to keep my plate full but we (Altus Alliance) have been evaluating whether there's an evolution of our model that further addresses the apparent gap between typical angel funding and institutional funding. Though VCs sometimes get demonized, there are plenty of situations where their funding/value-add are the right mix but there are also plenty of situations where there isn't a fit for any number of reasons. The most common is the growing minimum size investment that most VCs have to put to work. Paul Graham outlines this in his "VC Squeeze" post along with other useful observations about the challenges VCs face. The short version is that most VC funds these days need to be at least $100M since their investors ("limited partners") don't want to invest less than $10M and don't want to own more than 10% of a fund. Given that VCs don't have unlimited resources, they can't do 50-400 $250k-2M investments or they'll be stretched way too thin. The resulting issue is that many companies don't need the size of investment that VCs want to make - particularly the kind highlighted at the Web 2.0 conference and discussed in the VC panel.

We believe that there is a new model that can address this gap/opportunity as a result of a budding alliance we have to a complementary firm that has done much of the heavy lifting to getting this innovative approach to this point. Since I buy into the notion that the Entrepreneur is our Customer, we're now at the point in the process where the concept is baked enough to get some feedback from entrepreneurs. We're reasonably confident of the receptivity that investors in this model and follow-on investors (if required) will have. It's all moot if it doesn't make sense from the entrepreneurs' standpoint. If you are an entrepreneur who'd be willing to provide us feedback, I'd love to chat with you and find out whether this thing has legs or not. If it does, I'll share more of the details on this blog. [My contact/email is posted on my blog]

For those of you interested in knowing more about Kauai, here's my quick take...
  • My first trip to Kauai. Having visited all the other big Hawaiian islands, I'd say Kauai is my favorite. If you read the profile on my blog, you know I'm an active guy so sitting on the beach isn't my idea of fun and though I enjoy the game, I don't consider golf to be exercise since it's free of adrenaline rushes and/or doesn't make my lungs burn. If/when I have limitless time, golf will come back into my mix but it takes too dang long for the payback at this point in my life.
  • In a word, it's beautiful. I've been fortunate to have visited 30+ countries on 5 continents and would say that Kauai has some of the most beautiful terrain I've seen anywhere.
  • The rain factor is overblown (note: I subscribe to the belief that there's no such thing as bad weather just bad clothes so take my comments in that spirit). There's virtually always some part of the island (and it's not that big) that is dry if that's what you are looking for.
  • Bring your hiking shoes. We were constrained by little kids and no one to look after them so our hiking was limited. We got a small taste and will come back for more when the kids are a bit older.

Bloggers & the PR cycle

Getting PR coverage for startup businesses is increasingly difficult. Steve Rubel shares words of wisdom on How Not to Pitch Bloggers. He also includes related links such as How to Pitch Bloggers and a concept borrowed from eBay applied into the News Curve covered in an article entitled How to Pitch Into The Long Tail News Curve. It can also be helpful to know how to find influential blogs that reach your target audience.

This relates to an earlier post of mine on how PR (not Ads) build brands. Wasting money on ads would be in my Top 10 list of how startups waste precious cash.

Wednesday, November 09, 2005

Electronic Medical Information heating up

As I noted in an earlier post, I bought into the notion that Fred Wilson had originally laid out about the opportunities in healthcare related information. Seattle-based Nexcura is one example of this phenomena and it wasn't lost on Thomson who recently acquired this profitable company.

Tuesday, November 08, 2005

Book recommendation: Life after the 30 second spot

I've been meaning to write a review of Joseph Jaffe's new book entitled Life After the 30-second spot but Dave Morgan beat me to the punch. His review is in iMedia's Book Club. Thanks for saving me time, Dave!

If I was in my old role of championing interactive advertising (e.g., on the board of the IAB, Chairman of the CMO council, etc.), I would encourage every online sales organization to have their sales people hand deliver the book to key decision makers at major brands and agencies. There aren't many better tools to shake up their thinking than this book.

Like his presentations, Joseph is always entertaining, thought-provoking and chock-a-block full of ideas that can be put into practice. Joseph was on fire in this book. He even presents his 10-step plan for members of the 30-secondaholics anonymous.

Joseph has been popping up all over sharing his insights related to his book.
He also has a fun spoof of the TV upfront here.

Sunday, November 06, 2005

RSS isn't the web anymore than the web is print

I hadn't really thought of it this way until Fred Wilson made his point. Just as the monetization vehicles (ad types, metrics, proof of efficacy, etc.) for the Web were limited 10 years ago when the commercial Web was in its early days, RSS is in the same boat. I'm not aware of any huge successes directly monetizing RSS but I'm certain that many entrepreneurs are feverishly trying to figure that out.

Saturday, November 05, 2005

The right fit with your investors

Scott Maxwell has a good set of criteria to judge the fit with a prospective VC. Worth a read if you are on the cusp of taking outside money.

Tuesday, November 01, 2005

BigCo fishing expeditions

Since most exits are acquisitions, not IPOs, one has to seriously consider overtures from BigCos. That said, some companies use fishing expeditions to learn more about your business with no serious intention of ever making a legitimate offer. Ed Sim lays out a set of questions you should ask BigCo as well as ask yourself that is a useful list. Having been on the BigCo side of this equation, I can tell you that the fishing expedition often isn't intentional. One set of people inside BigCo might be completely serious about their overtures but get blocked by some other person/team in BigCo. This is more likely to happen at BigCo if they don't have a structured process for acquisitions. Thus, one additional question I'd ask BigCo is "how does BigCo's acquisition process ensure that there is internal buy-in before getting into deep discussions with SmallCo?"