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Y Combinator: Accelerating Start Ups, Recursively

Over a decade ago, back in the day of the initial tech bubble, I ran an early precursor to Y Combinator. In a similar vein we took on board nascent start ups in batches, with little more than an idea, and actively worked with the entrepreneurs to progress to the point where they were able to attract further investment from us and other investors.

And so I’ve been watching very closely over the years as Paul Graham has tweaked the Y Combinator model. There have been two excellent touch points recently for those of you interested in what YC does, how they choose which startups to work with and their model for success:

1. A comprehensive article in Wired – Y Combinator Is Boot Camp for Startups; and

2. Charlie Rose interviewing PG at TechCrunch Disrupt – see below.

One of the most amazing points PG makes in the interview is that the total value of YC companies is now around $3 billion. This is off the back of YC having invested a total of around $5 million. Now that is excellent validation for the model!

 

Tags: Charlie Rose, Paul Graham, Techcrunch Disrupt, Y Combinator

Top Five Angel Insights From An Entrepreneur in Residence at AngelLoft

The following is a guest post from Pete Sanders, the CEO of BrixHQ and an Entrepreneur in Residence at AngelLoft:

In March we were privileged to be accepted into the AngelLoft  Entrepreneur in Residence program. In summary, AngelLoft’s mission is to provide angel investors and entrepreneurs with the ideal environment within which to have a meeting of the minds. The group is based in Sydney and is open, by invitation, to angel members and entrepreneur pitches from anywhere in the world.

We’re ecstatic to part of AngelLoft and the Entrepreneur in Residence program.

We attended our first Angel Loft dinner in late March and introduced ourselves and BrixHQ to the group which included a seriously impressive range of angels and other entrepreneurs.

The evening was a fantastic opportunity to meet the angels, understand their backgrounds and start to build a relationship with some of the angels, even if only for feedback at this early stage. The feedback and comments that we’ve received from a range of angels & VC’s that we’ve spoken to since the first dinner include the following;

* Who are you competitors?

* How are you different to your competitors?

* What’s your business model (i.e. how do you make money)?

* How are you currently funded? and so on.

There are always two sides to these conversations however and some of the key questions that we’ve sought to understand from the angels are;

*What types of businesses do you typically invest in?

* What are the key things you look for when you are considering investing in a business?

* Do you have any feedback or comments for us?

The first question is crucial, it is important to firstly qualify what sort of businesses the angels are interested in. Plus, if you are time poor and want to have a meaningful conversation and future relationship then it is best to get off on the right foot or you can be wasting everyones time.

From our experience the top 5 key things angels are looking to invest in are;

1. a solid business idea that is being executed on,

2. the business has to be scalable (i.e. how big can it become?),

3. revenue – the business has to be on the right trajectory with revenue and growth, it’s great to have a lot of customers but if you dont have revenue then you don’t have a business.

4. management team – who are they, what experience do they have and have they done this before.

5. how long can you keep funding yourself through current funding sources.

The great thing about angels is that they will have feedback and comments for you, it might just be that it’s not for them and they’ll explain why or give specific comments or advice or direction that can help to move your business forward.

There’s nothing new or different in these 5 points above, but all serve as a fantastic litmus test for any business which is in start up mode or looking to raise funding in the future.

Also know your business intimately, be able to speak at a high level about your vision and your market, but be prepared to dive deep into the detail when appropriate.

Tags: AngelLoft, BrixHQ

Kevin Rose, Evan Williams and the Rise and Rise of the Product Factory

Sarah Lacy has written a great post on Kevin Rose’s new company. The former Digg founder is setting up Milk, a closed innovation shop that, counter to the current Silicon Valley driven incubator-trend, will focus internally on developing up a small number of big hairy audacious game changing products that use the mobile Internet as their enabler.

Firstly, I’d like to congratulate Kevin – I believe he has hatched an awesome plan. Why? He isn’t reliant on bringing on board a steady flow of ‘quality’ entrepreneurs and then melding them to create winners, instead he is using his nous and that of a hand-picked team of coders, thinkers and innovators to quickly iterate ideas and test their viability, pivoting and repurposing when necessary, but always moving forward with a portfolio of potential winners.

Secondly, I’d like to highlight that Sarah has quite rightly picked up on the similarities between Kevin and Evan Williams.

A few years back, Evan and I were having a series of discussions (here, and here)  around product factories – I was infusing product factory magic into a major research lab in Australia and he had set up Obvious along similar lines.

Fast forward four years and his “side project”, Twitter, ended up subsuming everything else in the Obvious pipeline to the point where Obvious fell by the way side. Twitter achieved massive traction and in many respects has been a game changer.

In contrast, I managed to get a number of projects out of my factory – one of which, Open Kernel Labs, has achieved major traction with its virtualization software on 1.1 billion handsets around the world – and more to come. Although we both moved on from our respective organisations, Evan has come full circle recently and is again building up a product factory.

I look forward to seeing how both of them iterate on the product factory concept, how this influences a counter-incubator culture and what they both bring to market next.

Tags: Evan Williams, Kevin Rose, Milk, Obvious, Twitter

AngelLoft Launches Unique Program To Assist Entrepreneurs

At AngelLoft we’ve launched a unique Entrepreneur in Residence Program, which is designed to assist entrepreneurs in the growth of their new ventures and prepare them for securing funding.

The program extends both the range of involvement and the impact that AngelLoft’s angel investor members can have with entrepreneurs.

As I see it, the EiR Program exponentially increases AngelLoft’s value proposition as an angel investor group from being deal driven to now also assisting a select few entrepreneurs by acting as a mentor and sounding board for them.

Participants in the Entrepreneur in Residence Program get a seat at AngelLoft’s Dinners at which they can interact with the group’s high powered and highly experienced members. In addition, some of the group’s members also provide the Entrepreneurs in Residence with ongoing mentoring.

Once they are ready to secure funding, the entrepreneurs are guaranteed a much sought after pitch slot at an AngelLoft Dinner.

AngelLoft has appointed its first two Entrepreneurs in Residence – Sara Lucas, founder of EnrichMe, and Pete Sanders, founder of BrixHQ.

With solid blue chip experience in the finance sector, Sara saw a yawning gap between what smart women want from their money and how to get it. Some 89% of Australian women have no money plan in place. She set up EnrichMe to provide women with reliable money information and to empower them to make good choices.

Speaking on being chosen for the program, she said, “I’m thrilled to be accepted to this groundbreaking AngelLoft Program. This opportunity is unique in that it provides unfettered, yet structured access to a select group of angel investors who are themselves leaders in their field, committed to accelerating the sustainable growth of companies like EnrichMe.”

Pete has had experience in financial services software and has translated his passion for creating quality solutions that make life easier and more efficient for users into developing an agile project management system.

BrixHQ’s 1.0 version provides a flexible dashboard with wall, gantt chart, task and graph tabs. The product can be used by everyone who runs agile projects, be they software developers in a small team or marketers in a large enterprise team.

Sara and Pete will be attending their first AngelLoft Dinner on Tuesday, 29th March.

Tags: AngelLoft, BrixHQ, EnrichMe, Pete Sanders, Sara Lucas

AngelLoft: A Manifesto for Angel Investing

Angel investing continues to grow by leaps and bounds and with it the level of interest in the space.

After having launched AngelLoft in December last year I’ve constantly found myself explaining to people – both angel investors and entrepreneurs alike – what it is we do, how we operate and what differentiates us.

And so I decided it was high time to crystallise a manifesto that I, our current and prospective members and entrepreneurs could refer to.

Expect an exciting announcement from AngelLoft next week, and if you haven’t already – RSVP for the next dinner on the 29th!

 

 

 

The Entrepreneurs Code: Six Rules To Really Growing Your Business

Being an entrepreneur can be tough. You are faced with a myriad decisions a day and sometimes there doesn’t appear to be a right or wrong answer. Either way you’ve got to make choices, weigh up variables and do so at lightning speed.

Faced with such an environment, your best friend is a code that you can parse decisions against, a code that will not give you a clear answer, but will help lighten your load in deciding which path you should take.

I’ve taken my years of experience within the entrepreneurial environment and crystallised an Entrepreneurs Code that you can use.

THE ENTREPRENEURS CODE

1. Walk right: “honors and rewards fall to those who show good qualities in action”, Aristotle

2. Get stuff done: what you do defines you, not what you say

3. Aim high: there are no guarantees, only chances – take them

4. Be compassionate: create value with meaning

5. Plan ahead: “expect nothing, be prepared for everything”, Samurai saying

6. Act with force and speed: “proceed as though the limits of your abilities do no exist”, de Chardin.

I am sure you can expand on this code and I would indeed love to hear your thoughts on what to add.

TOP THREE MANTRAS:

Here are three key mantras for you as you conduct your entrepreneur’s journey and focus on your goal of building a high growth business:

1. Make momentum

2. Positive chaos is healthy

3. High viral co-efficients exponentialise growth.

Enjoy the journey!

Tags: Entrepreneurs Code

Lumigenix, Personal Genomics And Me

I first became interested in personal genomics and DNA profiling over a decade ago when conducting due diligence on a potential investee company. We did invest and I was Chairman of Genetraks during their early years. Sadly the company didn’t make it beyond its first few rounds of venture capital and it’s worth reading the fascinating account by their CEO, Roz Brandon on what transpired.

Fast forward twelve years – this morning I opened up my pack from Lumigenix, aptly labelled “discover yourself in a new light”, and took out their DNA Collection Kit. Thanks to Romain Bonjean, CEO at Lumigenix, genomics was about to get personal for me.

The entire process was simple, fast and intuitive and kudos to the team for focusing on getting this right. I activated my account, collected my DNA sample and wrapped it up in its packaging. Next stop – the Lumigenix labs…stay tuned for another post when I get my results back!

Tags: Genetraks, Lumigenix, Romain Bonjean, Roz Brandon

Asana: One Truth, Many Contexts – Revolutionizing Enterprise Software

I’ve spent many years in the wilderness that is Enterprise Software: from attempting to wake up SAP, to mistepping with Jive; from clucking over Bantam to writing Yammer’s first partnership agreement. In all these attempts to connect the corporate landscape I’ve always felt something was lacking. At first I attributed this to the fun, human factor, but even then I thought this wasn’t quite it.

Take a look at how so many people these days interact in their personal lives – for some, many in fact, Facebook is almost permanently open. They tap into the newsfeed in real time, sharing thoughts, conversing with friends and colleagues. Yet their work lives are seldom as enriched. They often have no clear picture of what is happening on their team, yet alone across their department or division, and as for the company proper – forget it.

And yet, finally, I believe my trek through the corporate desert may finally be bearing fruit. I believe I’ve seen the mother of all oases. Take a look through the lens of my telescope below and tell me – is this a mirage or has one of the co-founders of Facebook cracked it. Let me introduce you to your new best friend, both personal and corporate: your single source of truth – always open, always updated, always….ASANA:

Tags: Asana, Dustin Moskowitz

What’s It Take To Be The Quintessential Entrepreneur?

I’ve been working with entrepreneurs for almost two decades and see a constant stream of people knocking on my door. Many of them are looking for advice on how to hyper grow their business, how to source various resources – be that partners, staff or funding and on what choices to make given a myriad of options presenting themselves in quick succession – be that which channel to follow to market, what emerging technologies are disrupting their business model or how to respond to competitors.

TOP THREE ENTREPRENEURIAL CONSTANTS

I’ve noticed through my personal involvement  that while there are many fluid elements to being an entrepreneur, three things remain constant:

1. Entrepreneurs are ultimately hell bent on changing the world in some way. In many cases they are tackling a problem they’ve been confronted with and have formed a passion for creating a solution where one didn’t exist before;

2. Entrepreneurs have to deal with resource constraints. In the beginning they have an idea, no staff, usually no capital and no path to market. Somehow they find a way to work around these constraints and create an environment of abundance.

3. Entrepreneurs thrive on being immersed in a dynamic environment. Things are constantly changing in an increasingly fast paced world in which real time is often too slow – anticipating change and course correcting come naturally to entrepreneurs.

In my work I only have a finite amount of time I can dedicate to each entrepreneur I work with and so oftentimes I am faced with having to make choices about who I dedicate my time to. Over the years this has come down to a gut instinct and I have learned to trust this – ignoring it at my peril and the opportunity cost of working with other entrepreneurs.

In choosing which entrepreneurs to dedicate my energy to I look for how well they fit into the three entrepreneurial constants mentioned above. I do allow for the ability to grow and expand their entrepreneurial skill set, but ultimately the kernel of entrepreneurship needs to be very present.

The second generation Silicon Valley venture capitalist, Bill Draper, also has a set of constants he looks for in the entrepreneurs he works with. He discussed these in a recent interview with the International Business Times:

“I look for vision. I look for how much homework they’ve done on their idea, how closely they monitor the competition, how far they think ahead, and how much they know how the world works.

They also need to have energy, drive, and be sensitive to other people.”

Wise words from one of the legends of the space. Bill has recently published a book on his experiences titled The Startup Game: Inside the Partnership between Venture Capitalists and Entrepreneurs. Well worth a read.

Tags: William Draper

Competition: Shifting Focus To Achieve Real Commercialization Wins

Five years ago I was asked to be an adviser to a new business being incubated within the walls of the London Business School: the Global Security Challenge, an annual competition to find the world’s best security startup and provide it with funding and mentoring to accelerate its growth.

Fast forward to 2010. The Global Security Challenge (GSC) has proven that its competition model for funding innovation works. A total of $2.5 million has been awarded to winners and the collective group of finalists has attracted more than $80 million in funding.

GSC has now morphed into OmniCompete, an organisation that runs competitions across a wide range of sectors all over the world.

OmniCompete’s CEO, Simon Schneider, had an article published earlier this month in New Scientist in which he talks about how competitions can be a cost-effective way for solving large, global problems by boosting innovation.

He starts the article with the premise that the current systems for funding commercial science often do not create the kind of short-term wins required by government. And he goes on to urge us to find a model for attracting private investment that gives investors greater comfort “buying into science”.

I believe GSC has hit onto one part of the winning formula.

Another organisation that is leading the way is New Zealand’s Foundation for Research, Science & Technology. They have shifted focus and as a result they are starting to see a definite improvement in the quality of both research and its translation to market.

Over the last few years the FRST has changed its mindset from being a funder to being an investor and this has fundamentally changed the way they work.

As a funder, they were only able to support the best research proposals submitted to them – a substantially reactive model that brings with it a plethora of administration and administrative-style thinking.

As an investor, the FRST can actively help shape the direction of research proposals. And as they say, “This makes it more likely we can invest in research that will produce tangible benefits for New Zealand.”

This is the crux of what Simon, the GSC and the FRST have done in terms of shifting focus: they have empowered investors to actively help shape the direction of innovation.

I believe they are onto something significant here.

Tags: Foundation for Research, Global Security Challenge, Science & Technology, Simon Schneider