David Kirkpatrick

June 15, 2010

Facebook to IPO in 2012?

Filed under: Business, Technology — Tags: , , , , , , — David Kirkpatrick @ 12:55 pm

Maybe so.

From the link:

To be sure, Facebook has focused on increasing its membership, and it has been wildly successful on that score: the number of Facebook accounts is now nearing 500 million. So the sheer size of the Facebook audience is attractive to advertisers and app makers; and as a bonus, Facebook provides data tools to advertisers that help them make meaningful impressions on members of that audience.

But the company is deeply indebted to its venture capital backers, who, while already seeing dividends from Facebook’s current business, are looking forward to a big payday (investment plus return) at some visible point in the future. For now, Facebook’s investors are giving Zuckerberg and company plenty of time. People familiar with the situation say that you won’t see a Facebook IPO this year or next year, but you probably will see one in 2012.

June 2, 2009

Capital not key to ventures

Interesting business research on start-up capital and business success.

The release:

Study: Lack of capital not a ‘death sentence’ for start-ups

A new study from North Carolina State University is turning the conventional wisdom about technology start-up companies on its head, showing that ventures with moderate levels of undercapitalization can still be successful and that a great management team is not more important than a top-notch technology product when it comes to securing sufficient amounts of capital.

“Our research shows that undercapitalization is not a death sentence for start-up ventures,” says Dr. David Townsend, an assistant professor of management, innovation and entrepreneurship at NC State who co-authored the study. “There are things a venture can do to survive and succeed.” Basically, Townsend says, start-ups that fall short of their fund-raising goals can take steps to minimize their cash outflows in order to stay viable.

Undercapitalized ventures “need to engage in management strategies focused on reducing their costs. For example, outsourcing certain development tasks and accounting responsibilities or exchanging services with other companies – saying we’ll build your Web site in exchange for a year’s worth of accounting services, etc.,” Townsend says.

The study also found that there is little evidence to support the long-standing tenet that a great management team is the most important part of a venture company when it comes to securing investment in a start-up. The study shows that a venture with an “A,” or top notch, management team and an A technology is likely to meet its capitalization goal. But the researchers were surprised to find that the combination of a “B,” or less than ideal, management team with a B technology was also quite successful in meeting capitalization goals. Ventures that had an A management team but a B technology, or vice versa, were usually underfunded.

Townsend explains that B management teams with B technologies are probably more successful at meeting their capitalization goals because they are aware of their shortcomings, and modify their capitalization targets accordingly. For example, these B teams may minimize management salaries or restrict their marketing budgets.

Similarly, Townsend says the evidence implies that A management teams with B technologies, or vice versa, often fall short of their capitalization targets because they have not modified their fund-raising goals – and as a result investors don’t buy in at a sufficient level to fully fund the venture’s intended strategies.

 

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The study, “Resource Complementarities, Trade-Offs, and Undercapitalization in Technology-Based Ventures: An Empirical Analysis,” was co-authored by Townsend and Dr. Lowell W. Busenitz of the University of Oklahoma. The study will be presented June 5 at the Babson College Entrepreneurship Research Conference in Boston and at the Brown International Advanced Research Institutes in Providence, R.I., on June 18.

The research was supported by North Carolina State University, The University of Oklahoma, and i2E – a non-profit corporation focused on wealth creation by growing the technology-based entrepreneurial economy in Oklahoma.

April 17, 2009

Ten tips for angel dollars

Filed under: Business — Tags: , , — David Kirkpatrick @ 4:44 pm

Looking for venture capital investment? Here’s ten hints to get the money.

Tip number one from the link:

Show your passion
“The entrepreneur is the Pied Piper of a company,” says Chip Hazard, general partner at Boston-based Flybridge Capital Partners. “We want an articulate, passionate CEO who can excite others – employees, customers, business partners.”Flybridge joined the syndicate that backed Goby Technologies, a Boston-based search startup that provides comprehensive leisure and travel information in a single site – first with a seed round to build a prototype, then with a multimillion-dollar Series A round to fund longer-term operations.

April 8, 2009

VC blogging

Filed under: Business, Media — Tags: , , , — David Kirkpatrick @ 1:25 am

Here’s the entirety of a quick-hit post from Brad Feldat Technology Review on VC friends of his who’ve began blogging. I read VC blogs on occasion. They are interesting for a number of reasons, and they offer a lot of inside information for my privately-held clients looking for angel funds.

From the link:

My friends at Highway 12 Ventures have started a blog.  The gang at Highway 12 is based in Boise, ID and has built a very interesting portfolio throughout the Rocky Mountain region.  Plus they are great guys.

Fortunately they put Lijit on their blog for search so I didn’t have to badger them about into using it and it made it easy for me to add them to the brand spanking new Venture Capital Bloggers Network powered by Lijit.

February 25, 2009

Twitter raising $250M

Looks like Twitter it capitalizing on the exponential increase in publicity this year.

Find me on Twitter at http://twitter.com/davidkonline.

From the link in the intro sentence:

Twitter, which just recently turned down a half billion dollar acquisition offer from Facebook (albeit to be paid mostly with Facebook stock), is dipping back into the venture capital market, we’ve heard from a source with knowledge of the deal. They’ve signed a term sheet with at least one venture fund to raise a new round at a $250 million valuation. We are still gathering information on how much they’re raising and from whom.

It’s likely they’ll raise more than the $20 million in capital they’ve taken in over two previous rounds. Their last round, raised in June 2008, was a $15 million raise from new investors Spark Capital and Bezos Expeditions. Union Square Ventures and Digital Garage increased their previous investment.

Rumor is Twitter hit up more than a few venture firms to pitch the $250 million valuation, and got more than one “no.” But someone’s bit, perhaps encouraged by Twitter’s breakneck growth and the interest from Facebook. That means Twitter gets a new cash injection and time to figure out its business model at an even more leisurely pace.

Update: We’ve heard from two sources the venture firm that signed the term sheet is IVP.

(Hat tip — socialmediawiz)

February 18, 2009

Facebook on the brink?

Filed under: Business, Media, Technology — Tags: , , , , , — David Kirkpatrick @ 11:59 am

The flap over user content may be the tipping point for Facebook. MySpace had a similar problem, but no one really cared because it mostly hit gloomy kid’s bad poetry and indie band MP3s. Facebook is a player in the adult world — I get hit up once or twice a week to start a Facebook page — so these allegations carry a little more weight.

From the link:

Have Social Media/Web 2.0 Companies Gone Too Far To Obtain & Own Data?

Absolutely.  Here’s why – The data they collect is what is fueling and stabilizing their ridiculous valuations and the funding coming in which they rely on to survive due to their minimal revenue streams.  It’s this data “gold” that companies and VC’s DEPEND on and are in fact inesting in.  It’s not the UI, or the ability to poke a friend.  The maximum protection or “assurance” the Investment bankers, VC’s and Angels are investing in is the data & who owns it.

It’s that simple – Nothing else to it.

Conclusion:

Joining the groups emerging on Facebook isn’t going to change a thing, just as it didn’t when they changed the UI and everyone was in an uproar.  Zuck and the legal team are making moves to protect valuation.  In the grand scheme of the things 50 thousand or 1M peope joining a group won’t make a difference.  This I believe, will be the tipping point to create attrition to the already hairline cracks emerging in the Facebook empire.  They simply refuse to listen to their customers. We saw this with Beacon, their development requirements, the new UI and now the new TOS.  The valuation has dropped from a reported $15B to $4B in less than a year and this recent stunt may see more defection in their user base.  Although they own the content after a user leaves, if 20 or 30 Million strong decide the terms aren’t for them the cards will collapse on the empire and quickly.

February 12, 2009

MedTech Investing Conference — VC for medical devices

A release from today:

MedTech Investing Conference (8th Annual) May 6-7, 2009

Uniting Venture Capitalists to Identify Investment Opportunities in the Multi-Billion Dollar Medical Device Market

ST. LOUIS PARK, Minn. and MASSAPEQUA, N.Y., Feb. 12 /PRNewswire/ — The equity markets and the global economy have been turned upside down, leaving many young medical device companies and private equity investors to ponder how to ensure success in a down market.  For venture capitalists, the “New Economy” is having a severe impact on the viability of today’s medical device startups, as traditional portfolio company management tactics have to be adjusted to accommodate changing market conditions.  For the startup, raising capital in a stagnant market and having a longer time to exit is at the forefront of CEOs minds.

Building device companies in the current environment can only occur if the community as a whole gathers to address these issues with strategies to carry startups through this unstable period.  Presented by International Business Forum (IBF) and LifeScience Alley, the 8th Annual MedTech Investing Conference May 6-7th at the Graves 601 Hotel in Minneapolis, MN, provides a unique opportunity to facilitate deals, share information, and address concerns; as this is the premier event for medical device investors and entrepreneurs from around the nation.

2009 Risk Reduction Strategies for Medical Device Companies

The role that venture capitalists play in preserving success for young companies in a volatile market is critical, as limited cash flow and burn rates directly affect the performance.  How will today’s VCs continue to nurture and build emerging growth companies in a down economy?  The panel entitled “The Lightning Round” will highlight William Harrington of Three Arch Partners, Nathan Every of Frazier Healthcare Ventures, Richard Ferrari of De Novo Ventures, Peter McNerney of Thomas McNerney Partners, and Thomas D. Weldon of Accuitive Medical Venture Partners.  They will address a variety of candid questions surrounding the current investing landscape and issues relevant to portfolio management.  This panel is scheduled for 4:30pm on Wednesday, May 6th.  To learn more about the event and to register, visit the newly launched website www.medtechconference.com.

Event Sponsors & Exhibitors Include: Oppenheimer, Wolff & Donnelly LLP, PricewaterhouseCoopers, Dorsey & Whitney LLP, Capital Advisors Group, RBC Capital Markets, Minnetronix and RCRI, Inc.

About LifeScience Alley(TM)

LifeScience Alley(TM) is the largest trade association serving the life sciences in the Upper Midwest. It represents more than 600 member companies, organizations and institutions of all sizes that devote their efforts to the research, development and commercialization of the life sciences. LifeScience Alley acts as the industry’s central resource for fostering innovation, offering education and creating consensus. It offers members unique opportunities to network and collaborate and provides them with a strong, unified voice at the state and federal level. Members hail from all life science industry sectors, including medical device, pharmaceutical, biopharmaceutical, health care providers and insurers, agricultural and industrial biotechnology, and renewable energy.  For more information, visit: www.lifesciencealley.org

About IBF*International Business Forum, Inc.

IBF*International Business Forum, Inc. is a leading presenter of venture capital, technology innovation and private equity conferences in the United States. For 20 years, IBF has been presenting conferences which unite investors, emerging growth companies and corporations. IBF produces conferences on the following venture capital subjects: Venture Capital Investing, Early Stage Investing, Cleantech Investing, Corporate Venturing & Strategic Partnering, Biotech & Life Sciences Investing, Medical Devices and Healthcare Technologies Investing, Consumer Medicine, Tech Transfer Investing, and Nanotechnology Investing.  To see a full listing of IBF’s conferences please visit: www.IBFConferences.com

Source: International Business Forum, Inc.
   
Web Site:  http://www.ibfconferences.com/

September 23, 2008

Venture capitalists not concerned about green tech bubble

Filed under: Business, et.al., Science, Technology — Tags: , , , , , — David Kirkpatrick @ 10:07 am

I’ve blogged about VC funding and green technologies here, and this release from today on a KPMG study seems to bear out the idea that venture capital investment will continue to flow into the greentech space.

The release:

Venture Capital Community Not Worried About Greentech Investment Bubble, See Significant Increase in 2009 Funding, KPMG Study Finds

VCs hedging their bets across greentech sub-sectors, see Brazil and Israel as attractive targets; project crude oil prices to end year over $120 per barrel

NEW YORK, Sept. 23 /PRNewswire/ — The venture capital community is not worried about a greentech investment bubble, and expect investment in the greentech sector to significantly increase in 2009, according to a recent survey by the U.S. audit, tax and advisory firm KPMG LLP.

In polling 301 venture capitalists, corporate executives, entrepreneurs and bankers, KPMG found that 91 percent of respondents indicated they expect venture capital activity in the greentech sector to continue rising in 2009, compared to only 76 percent who indicated the same the previous year. In fact, some 50 percent of respondents say investment activity in greentech will increase by 20 percent or more over 2008 levels, while another 34 percent expect  investment levels to increase by 10-19 percent range.

According to the KPMG study, 67 percent of respondents say the focus on greentech is a sustainable investment cycle, not another investment bubble.

“There is no doubt that the greentech sector is very active with many companies receiving significant funding,” said Packy Kelly, KPMG partner based in Silicon Valley and co-leader of its venture capital practice. “Our data showed that investments are being made across all sub-sectors of the greentech space”

When asked which sub-sectors of greentech would receive the most investment over the next two years, the responses indicate that investments will be diversified.  Fifteen percent of respondents say energy storage (fuel cells, batteries, etc.) will see the most funding, followed by clean coal and wind with 14 percent each.  Alternative fuels and solar rounded out the top five with 11 percent and 10 percent respectively. Interestingly, when asked what will become the dominant clean-air energy source in the next 20 years, 39 percent of venture capitalists say solar, 27 percent say nuclear and 18 percent say wind.

Fifty-three percent of respondents to KPMG’s survey expect end of year crude oil prices to be higher than $120 per barrel – only 13 percent expect oil prices to drop below $100.  Moreover, 47 percent of respondents feel that oil prices won’t peak until after 2010, while 24 percent expect we will see the peak in this second half of 2008.  Fourteen percent think the peak will come in 2009.

With regard to where greentech investment will be spread geographically in the United States, 60 percent of respondents say it will be directed toward the West, followed by 14 percent for Southwest, 13 percent for Midwest, and nine and four percent for the Northeast and Southeast respectively.  Outside the U.S., and beyond China and India, venture capitalists expect greentech investment to be geographically diverse, but Brazil, selected by 28 percent of respondents, and Israel, 27 percent, are the clear areas of opportunity. Russia (11 percent) and South Korea (10 percent) were the only other countries to top double digit response rates.

“As with any good long-term investment strategy, diversification is essential,” said Brian Hughes, KPMG partner based in Philadelphia and co-leader of its venture capital practice. “With technology innovation taking place across the globe, venture capital investors are focused on capturing emerging-market opportunities.”

KPMG conducted the survey in partnership with AlwaysOn, the venture capital new media organization, in advance of the GoingGreen conference taking place in San Francisco on September 15-17.

KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International. KPMG International’s member firms have 123,000 professionals, including more than 7,100 partners, in 145 countries.

 
Source: KPMG LLP
 

Web site:  http://www.us.kpmg.com/

September 9, 2008

Venture capitalists putting money into green technologies

Cleantech companies saw VC investment grow by by 41% to over $960 million during Q2 2008.

From the link (the initial quote is from, Joseph Muscat, Ernst & Young’s Americas director of cleantech and venture capital.):

“I think what you’re seeing is sort of pent-up investments now in R&D,” he said of the company’s research, based on based on data from Dow Jones VentureSource.

Cleantech subsectors include alternative fuels, energy and electricity generation, energy storage, water, environment, industry-focused products and services and energy efficiency.

Clean Edge, an environmental research firm, said revenue in solar photovoltaics, wind, biofuels and fuel cells jumped 40 percent to $77.3 billion in 2007. The firm projects these four benchmark technologies will grow to $254.5 billion within a decade.

A February report from the McKinsey Global Institute said an additional annual investment of $170 billion between now and 2020 could not only cut greenhouse gas emissions in half, but also provide investors with an internal rate of return of about 17 percent.

New avenues to invest in such technology could help boost investments.

Firsthand Funds created its Firsthand Alternative Energy Fund in October to give regular investors interested in alternative energy a place to invest their money, said Kevin Landis, who manages the new energy fund.

“We see kind of a gap in there in that there’s lots of venture capital funds out there but there’s not many mutual funds for people like you and me to put money to work in this,” he said.

It’s not all photovoltaics, wind or biofuels that are attracting investments either, Landis said.

Building automation, advanced lighting and improved insulation are “the here and now technology,” he said.