funding – Page 4 – ɔimoɈɒ

YCombinator receives additional funding

TechCrunch reports that Ycombinator, the really-early-seed-capital guys, have received some additional funding ($2 million) from Sequoia. Ycombinator only invests small amounts ($5,000 + $5,000/founder) in exchange for around 6% of equity and has invested in around 118 startups since their foundation in 2005. Some of their startups have been acquired (Reddit, Omnisio, Zenter, ClickPass, Auctomatic) … Continue reading “YCombinator receives additional funding”

TechCrunch reports that Ycombinator, the really-early-seed-capital guys, have received some additional funding ($2 million) from Sequoia.

Ycombinator only invests small amounts ($5,000 + $5,000/founder) in exchange for around 6% of equity and has invested in around 118 startups since their foundation in 2005. Some of their startups have been acquired (Reddit, Omnisio, Zenter, ClickPass, Auctomatic) and others are doing well (Scribd, Loopt, Dropbox).

It’s obviously not just about the money which probably provides a conservative 2-3 months of free development time – they get mentoring and polish from the Ycombinator principals who had previously invested all their own money – and are honed to pitch at later stage VCs and angel investors.

I was saying recently that development time for ideas really depends on the amount of time the creators can dedicate to it and the initial idea that you might get 3 months sold work into something can work wonders. This is one of the funding gaps we have – we have very little in this really early stage where you can make a huge difference with minimal outlay.

This additional funding from Sequoia means that YCombinator will be able to leverage a better cash flow and increase the number of investments from 40 per year to 60 per year – which should see them secure for another couple of years. Spreading the investment like that is the safest way to invest – as it only takes one success to make up for a large number of duds. That’s not to say that startups who don’t make it big through YCombinator are duds – it’s just one more piece of the puzzle.

I spoke with a friend recently about what I’d do if I had Â£100K to invest – I’d pretty much do a YCombinator style investment plan. We have the entrepreneurs, techies and dreamers here in Northern Ireland. We just don’t have the funding.

The first 100%

A lot has been written about the funding gap for startup companies. The idea that the first 50% is hard to get if you’re a startup remains true but it comes back doubly when you realise that you have to fund it 100% out of your own pocket and then go through a vouching and … Continue reading “The first 100%”

A lot has been written about the funding gap for startup companies. The idea that the first 50% is hard to get if you’re a startup remains true but it comes back doubly when you realise that you have to fund it 100% out of your own pocket and then go through a vouching and receipting scheme to claim back a maximum of 50% (and they’ll do their best to give you less, down to 30% is the aim).

Also, unless you have forecast that you’ll spend this money in this way, with an 18 month forecast expected, you can’t claim it. So any trade shows or new projects just can’t be counted. Therefore it’s not possible to be agile with your funding and there’s no way a startup can properly bootstrap while waiting for months for this kind of funding. The small number of investors (angels or venture capital) in the technology sector and especially the digital content sector just leaves it wide open.

Add to that the deMinimis rules (no company/entity can receive more than â‚¬200 000 in 3 years) means that support is extremely limited – despite the fact that the governments are throwing millions of pounds of taxpayer money at banks which have proved their inability to effectively manage a business.

At the Innovation Accelerator last week, Enterprise Ireland got a lot of cat-calling because of the convoluted processes they have in place an the poor amounts, percentages, schedules and timing of monies received once they are finally released. This is not an isolated case – this is going to be the case with every public funding source. It doesn’t matter if the adverts are saying otherwise, the reality is that private businesses need to be able to look after themselves.

The only stimulation you’ll get in the industry is with private money. You can’t expect the Public Sector to lead here – the public sector has no place in leading the private sector – they’ve no direct experience, they have layers and layers of red tape to qualify (which we the taxpayers have demanded they put in) and they are naturally risk-averse. It isn’t a great way to promote the digital content sector in any country any more than having a big party with free beer is a great way to create business networking opportunities.

I’m frustrated because it seems every time I get some progress, something else steps in the way. I’m done with it. Buy new laces, it’s Bootstrapping all the way.

BizSpark Innovation Accelerator

I left Bangor this morning at 6 am and after picking up some lost souls in Belfast, made my way south to the BizSpark Innovation Accelerator being held in the Radisson SAS Royal Hotel in Dublin. The talks have been useful to me – though the panel on “Building an Innovation Economy” fell into the … Continue reading “BizSpark Innovation Accelerator”

I left Bangor this morning at 6 am and after picking up some lost souls in Belfast, made my way south to the BizSpark Innovation Accelerator being held in the Radisson SAS Royal Hotel in Dublin.

The talks have been useful to me – though the panel on “Building an Innovation Economy” fell into the usual tricks of complaining about the local state aid agency (for those of us in the North, it’s InvestNI, for those of us in the South, it’s Enterprise Ireland, for Scotland it’s Scottish Enterprise). The percentages, the amounts, the timing, the bureaucracy and the lead time for funding were discussed at length and generally no-one said anything positive. Of course people want larger percentages of money with lower requirements for match funding, with larger amounts available at specified times with less red tape and less lead time for due diligence.

Of course people want these things.

I want a Moon Pony with a built-in toaster.

Open Source Funding?

Mark Cuban is an American billionaire entrepreneur, ranking 407th on Forbes’ “World’s Richest People” list. He owns the Dallas Mavericks and is chairman of HDNet (a HDTV Cable network). He’s been involved in some of the biggest names in eCommerce – Broadcast.com, Weblogs, Grokster, IceRocket… ..his latest idea is Open Source Funding. “Rather than trying … Continue reading “Open Source Funding?”

..his latest idea is Open Source Funding.

“Rather than trying to be a Venture Capitalist, I was looking for an idea that hopefully could inspire people to create businesses that could quickly become self funding. Businesses that just needed a jump start to get the ball rolling and create jobs. Im a big believer that entrepreneurs will lead us out of this mess. I just needed a way to help.
…
I will invest money in businesses presented here on this blog. No minimum, no maximum, but a very specific set of rules. Here they are:

1. It can be an existing business or a start up.
2. It can not be a business that generates any revenue from advertising. Why ? Because I want this to be a business where you sell something and get paid for it. Thats the only way to get and stay profitable in such a short period of time.
3. It MUST BE CASH FLOW BREAK EVEN within 60 days
4. It must be profitable within 90 days.
5. Funding will be on a monthly basis. If you dont make your numbers, the funding stops
6. You must demonstrate as part of your plan that you sell your product or service for more than what it costs you to produce, fully encumbered
7. Everyone must work. The organization is completely flat. There are no employees reporting to managers. There is the founder/owners and everyone else
8. You must post your business plan here, or you can post it on slideshare.com , scribd.com or google docs, all completely public for anyone to see and/or download
9. I make no promises that if your business is profitable, that I will invest more money. Once you get the initial funding you are on your own
10. I will make no promises that I will be available to offer help. If I want to , I will. If not, I wont.
11. If you do get money, it goes into a bank that I specify, and I have the ability to watch the funds flow and the opportunity to require that I cosign any outflows.
12. In your business plan , make sure to specify how much equity I will receive or how I will get a return on my money.
13. No multi-level marketing programs”

His blog post has attracted over a thousand comments so far but, nomatter what you think of the scheme, there are some parts of his rules which seem obvious.

It can’t depend on advertising for revenue
This is obvious. Companies are not making money on advertising – the smaller companies are drying up in the baking heat of the recession and larger companies are only just weathering the situation. Newspapers, wholly dependent on advertising for their revenue (and being vastly outpaced by online models of news distribution) are struggling if not already dead.

It must be cash flow break even in 60 days. It must be profitable within 90 days. If you dont make your numbers, the funding stops
This effectively mean you have to be selling your product within 30 days and you’ve gotta make some money from that initial sale. Companies are going to want to get NET30 after all. You have to be profit focussed and you have to exceed your business plan sales numbers.

In your business plan , make sure to specify how much equity I will receive or how I will get a return on my money.
This is the question that will give most entrepreneurs the heebie-jeebies. When you’ve worked your ass off on some project, the idea of giving part of it away it very tough to stomach. But if you don’t then there’s the question of how quickly you can pay him back (and at what return).

There’s nothing new here. This is something that Business Angels and Venture Capitalists have been doing for years. The difference is in the cachet that Mark Cuban may bring and the fact that this offer is being posted on his blog and not just an invitation on a VC web site. This idea isn’t really Open Source – it’s just taking the elevator pitch and putting it into some blog comments.

You can talk to VCs. They’re human. And some of them will be at the Digital Media Forum’s Innovation Accelerator which is an all-day event on the 24th of February in Dublin.

The Creative Industries Innovation Fund

I attended the Creative Industries Innovation Fund breakfast briefing with Kate Keys (Sectoral Business Development Manager at the Arts Council) this morning at The Presidents Club in Belfast. It was hosted by The Creative Entrepreneurs Club, a networking group funded by Belfast City Council. The CIIF provides access to funding for many who would not … Continue reading “The Creative Industries Innovation Fund”

The CIIF provides access to funding for many who would not normally be able to access funding. For one thing, it covers:

services
content
events
originals

– a lot of which cannot be covered by InvestNI’s funding charter due to the type of work (content, services, events) or the expectations (forecasting of Â£100K revenues). The CIIF is therefore an important part of the framework – and for this reason, existing INI clients may not be eligible. This has to be taken with a pinch of reason – someone who attended the Start A Business programme 7 years ago is an INI client but would not be restricted from applying for this grant but someone who is in receipt of an InvestNI grant in the last three years may not be eligible – in all cases, talking to your client executive is important (and even dragging him or her to the discussion with the Arts Council might be useful).

The subject of ‘not being eligible’ drew some fire from the crowd but there are very good reasons for it.

This fund is for people and companies who cannot normally avail of InvestNI funding for whatever reason. InvestNI cannot normally invest in content creation or fund the running of an event highlighting creative work – this attempts to cover that.
EC Regulations regulate the amount of support that a company can receive in three fiscal years to â‚¬200 000. There’s a detailed page at the Department for Business, Enterprise and Regulatory Reform which explains this fully.
There’s degrees of interpretation here. Again, if you received the Â£400 marketing grant as a startup, you may indeed be eligible. If your company is a new startup based around a “Collaborative Special Purpose Vehicle” then it may be fine even if some of the collaborators were previous recipients.

There are two calls remaining for CIIF applications. One started on the 5th January and ends on the 5th February. The last call starts on the 7th September and ends on the 8th October. Applications will take approximately 8 weeks to process and feedback will be given if your application is unsuccessful – the guidance was to speak to them first, apply in the first call and if unsuccessful, obtain the feedback ad re-apply for the second calls.

The judging panel for these applications will have input from the Arts Council, InvestNI, the Department of Employment and Learning, The Department of Enterprise, Trade and Industry and the Department of Culture, Arts and Learning.

The CIIF is a part of the funding ecosystem of the Northern Ireland marketplace. It fits around the funding available from InvestNI, NIScreen, the Arts Council and other funding bodies.

I found it incredibly encouraging to be in a room which had run out of seating, where I was sitting beside an award-winning clothes designer and someone from an award-winning design and branding company. There were a few familiar faces as well – all keen to find out how their next great project can be turned into a reality.

60% of the fund will be going to fund 143 individual projects over the next two-and-a-bit years to March 2011. The remaining 40% will be distributed to Sectoral Bodies ( councils, universities, sector leads ) to run projects which will help focus on the themes of innovation, creativity, collaboration and entrepreneurship. The Arts Council are urging individuals to apply early and apply often. The demand received for this fund will help indicate a further and/or extended funding requirement for the future.

Moving ideas to implementation and beyond…

I’ve just penned a long post over at the DigitalCircle blog about taking ideas to the next stage. I’ve covered this before here and here. The post is focussing on some of the initiatives which are out there in the province for doing just that. Again, I’d mentioned this before here and here. I find … Continue reading “Moving ideas to implementation and beyond…”

I’ve just penned a long post over at the DigitalCircle blog about taking ideas to the next stage. I’ve covered this before here and here.

The post is focussing on some of the initiatives which are out there in the province for doing just that. Again, I’d mentioned this before here and here.

I find it both amusing and exciting that there is increased opportunity for people to get their ideas realised. It’s like an XFactor for ideas rather than singers which, on the face of it, might be a better model than a Dragon’s Den (which let’s face it, both are getting very tired). It also smacks of Cambrian House which espoused crowd-sourcing as it’s primary model of innovation and market research. (The problem being that crowds tend to be stupid rather than smart). So while it failed, it wasn’t necessarily all bad.

This all shows that there is a market for helping people with vision get stuff done. And isn’t that what venture capital is meant to be all about. We have a poor VC network in Northern Ireland in terms of both quality and quantity. The very best tend to be entrenched in businesses they understand very well and that, for all the frustration it might cause post-Web 2.0 entrepreneurs is perfectly reasonable as it would be folly to expect an investor to put money into a venture they didn’t understand. That said – unless we start to see VCs with a little experience in the tech world, we’re not going to be able to change things.

On top of the schemes I mention on the DC blog, there’s something else planned for next summer which, at the moment, is still in stealth mode (insofar as not very much has been done for it but there’s energy, ideas and time).

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