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Are Startups Creating Fewer Jobs?

Published: 4/21/2014 12:27:43 PM, comments: 0


There's an interesting piece just out by Samuel Rines at The National Interest, where he utilizes U.S. government figures show that startups are creating fewer jobs per capita than previously.

America's Startup Problem

Deriving his figures from data from the Bureau of Labor Statistics, the punch line is compelling: "During the 90s, newly birthed businesses came with six new jobs. By 2007, they came with four." That comes out to a reduction of 33% in new job creation from this critical source of economic growth.

Unfortunately for the reader, Rines doesn't offer any insight as to why this is the case. My own take is that it may be a function of the shift to more services and technology-oriented new businesses being formed.

As software "eats the world", service companies can accomplish more business activity with fewer employees, relying on technology has a force-multiplier of their efforts.

Rines sees the trend continuing. I foresee that labor-intensive manufacturing and construction oriented industries will continue to dwindle in significance during the coming years as the US proceeds along its services-focused economic path.

If so, an even greater number of startups will need to be created to help the economy return to robust growth.

Equity Crowdfunding Primer

Published: 4/15/2014 8:39:27 AM, comments: 0



As part of VentureDeal's expansive coverage of technology startup company financing deals, we track the nascent equity crowdfunding industry in North America.

Equity crowdfunding portals are those that directly facilitate equity investments in startup companies, contrasted with other crowdfunding portals which enable end users to pre-purchase upcoming products, such as Kickstarter. These portals perform due diligence on startups as well as certify investors as accredited according to SEC guidelines.

Current Status

The industry received a big boost recently when the SEC finalized regulations regarding general solicitation to accredited investors and proposed rules (PDF) about soliciting to unaccredited investors (quick summary of proposed rules). Crowdfunding portals are anxiously awaiting final rule promulgation to allow issuer startup companies to generally solicit to all classifications of investors.

Equity crowdfunding portals in North America that are generating significant volume are relatively few, as the industry is still in its infancy. Below is a listing of the top technology equity crowdfunding entities that VentureDeal tracks, in rough order according to volume:

AngelList - AL operates a crowdfunding portal that provides both private and public fundraising options for technology startups in major cities in the United States.

RockThePost - RTP is based in New York City and has raised nearly $24 million in crowdfunding financing via its online portal.

MicroVentures - MV has been raising financing for startups for several years and also operates as a broker-dealer.

SeedInvest - advised by the main proponents of crowdfunding legislation, SeedInvest has a strict vetting process for startups that it chooses to promote.

WeFunder - founded in Boston, MA, the portal enables individuals to invest as little as $1,000 per deal and includes a variety of technology and consumer-oriented startup companies.

Fundable - The portal provides the options for startups to raise either equity or "rewards" based financing and includes a variety of technology and consumer startup investing opportunities.

FundersClub - This San Francisco-based site describes itself as an "online venture capital firm" and does not perform "equity crowdfunding" per se, but does aggregate investors online for technology startups.

Crowdfunder.com - Based in Venice, CA - Crowdfunder.com has developed a portal to invest not only in technology startups, but also social enterprises and film & entertainment ventures.

Polliwog - focused on healthcare startups, Polliwog enables investment in individual life science companies or via its publicly-registered funds with a minimum investment of $5,000.

The above-listed sites generally include the same types of information on each deal, such as company description and outlook, deal terms, documents and disclosures and the ability to communicate directly with startup principals.

A number of service providers have emerged to help portals and issuer startups with the various requirements promulgated by the SEC, such as escrowing of investment funds, due diligence, bad actor research, financial statement certification, etc.

To date, industry-wide statistics on aggregate funding amounts have been impossible to obtain, no doubt in small part due to the "private" nature of many of the fundraising campaigns. Additionally, there are no aggregate numbers on investment successes, if any, that can be translated into rates of return on equity.

Crowdfunding, if it is to remain a viable option for entrepreneurs and investors alike, must communicate its results to the market. For the industry to grow over the long-term, it will have to demonstrate that investors are receiving an adequate return for their risky, illiquid investments. Otherwise it risks investor suspicion and fatigue.


Additional Resources

Industry Associations - National Crowdfunding AssociationCFIRA

Crowdfunding News - Crowdfund Insider, Crowdfund Beat

Crowdfunding Sites - Wikipedia Comparison

The JOBS Act - An Act, Janury 3, 2012

Crowdfund Investing - Crowdfund Investing for Dummies

The Next (Internet) Thing

Published: 4/8/2014 9:41:27 AM, comments: 0

Successful Internet investor Fred Wilson of Union Square Ventures tipped his hand on where he sees the next Internet revolution happening.

It's the "blockchain".  As in, the Bitcoin blockchain.

In a new blog post, he describes the current investment downturn in mobile as indicative of a typical investment cycle.

More importantly, he mentions:

"And our 2014 fund will be built during the blockchain cycle."

Bitcoin is not just about financial technologies.  The real innovation is the blockchain, which VCs believe may be the foundation for the secure, low cost transfer of digital goods, potentially opening up new business models, industries and unlocking efficiencies in the digital realm.

Stay tuned for more disruption.

We're in the blockchain cycle now...

$15 Million for a Private Chef Marketplace?

Published: 3/31/2014 10:07:47 AM, comments: 0

I know, food is hot these days.  Marketplaces are even hotter for venture capital investors.

So put the two together and what you have now is Kitchensurfing getting $15 million at a rumored $40 million valuation for its marketplace for private chefs.

They have some top tier investors, such as Union Square Ventures, so that says at least something about their model.

But I really wonder if they will be able to continue their growth past the "chasm"?

The "chasm" refers to market adoption between the early adopters (who appear to be adopting the service, or at least trying it out) and the wider consumer market.

I don't see it happening.
 
In a world that is struggling economically, even the richest industrialized nation, the United States has 47 million people on food stamps and 57% of the population (in a recent poll) believes we're still in a recession.

We will soon find out just how small of a niche these marketplaces will be able to service and still justify their investment and valuations.

Count me skeptical about a private chef marketplace.

Venture Capital This Week | March 20

Published: 3/20/2014 8:56:58 AM, comments: 0


FEMALE FOUNDERS ONLY CONFERENCE

Startup accelerator Y Combinator held a female founders conference and posted presentation videos.

     YC: Female Founders Conference



WRITING ABOUT STARTUPS

VC Brad Feld publishes a short piece by fellow startup writer Eliot Peper.

     FeldThoughts: The Heart of the Start




SHOULD YOU USE THE CARROT AND THE STICK?

Internet VC Nic Brisbourne talks about the pros and cons of management by incentive.

     The Equity Kicker: The Perils of Carrot and Stick Management




SEC USEFUL TO STARTUPS

Tech Attorney Alexander Davie discusses the proposed rules for "Reg A+".

     Strictly Business: The SEC's Reg A+ Changes Might Be Useful




EUROPEAN PRIVATE EQUITY NUMBERS

PitchBook has a new report on investment trends in the European private equity market.

     PitchBook: 2014 European PE Breakdown




HEALTHCARE HEAVY HITTER INTERVIEW

The Journal interviews successful healthcare investor Bryan Roberts.

     Wall Street Journal: Billion Dollar Healthcare VC




VENTURE CAPITAL CRITICISM OF SEATTLE

Seattle area VC Greg Gottesman has a satirical piece on a recent Seattle City Council decision.

     Stark Raving VC: Cap All Forms of Innovation



BILLIONAIRE RAGS ON SILICON VALLEY

Mark Cuban writes a few choice words about Silicon Valley.

     Blog Maverick: Back to the Future Arbitrage

Venture Capital This Week | Mar 13

Published: 3/13/2014 9:05:57 AM, comments: 0


Venture capital database VentureDeal is pleased to bring you the best
venture capital stories, blog posts and other online venture capital
information from around the Internet:



UNREGULATED CROWDFUNDING AND BITCOIN

Successful VC Fred Wilson shares his thoughts on the confluence of Bitcoin and startup crowdfunding.
         
         AVC: Unregulated Crowdfunding




VENTURE CAPITAL TERM SHEETS: ANTI-DILUTION

Technology attorney Casey Riggs has the latest in his series on venture capital term sheets
        
         Strictly Business: Anti-Dilution Provisions




M&A MARKET UPDATE

Mergers & Acquisitions advisor Marlin & Associates has published their latest market report:
         
         Marlin & Associates: March 2014 Market Update (PDF)



CROWDFUNDING SCHOOL OF HARD KNOCKS

Here's a tale of how not to handle a crowdfunding windfall.
         
         WSJ Online: Too Successful at Crowdfunding




DYNAMIC PRICING IN ACTION

Uber VC Bill Gurley shares his thoughts on why Uber must price dynamically
         
         Above the Crowd: A Deeper Look




LOS ANGELES TECH SCENE RISING

Long time LA VC Mark Suster cheerleads for the home team.
         
         Both Sides of the Table: LA Tech's Epic Month




FUNNY OR DIE - VC INTERVIEW

Fortune's Dan Primack has a short talk with VC Mark Kvamme on his investment in the online media site.
         
         Fortune Term Sheet: The Future of Funny or Die




MORE ON THE BUBBLE QUESTION

A basic primer on bubble issues and valuations for Internet companies.
         
         AVC: Are We in a Bubble?

Venture Capital This Week | Feb 27

Published: 2/27/2014 8:54:26 AM, comments: 0

It's always an interesting week in venture capital. Discover the best stories, blog posts and other information inside the VC ecosystem in the US and in hotspots around the world. Onward dear reader…

AN INVESTOR PRESENTATION THAT RAISED $2 MILLION

Ooomf entrepreneur Mikael Cho shares his tips on creating a successful investor presentation.

             TNW: How We Built Our Investor Presentation

 

THE STARTUP COMPETITIVE LANDSCAPE

A former Wall Street investment banker talks about talking about your competitors.

             AlleyWatch: Analyzing the Competitive Landscape

 

THE LATEST HEALTHCARE TRENDS

VC Todd Hixon provides a few takeaways from a recent healthcare banker conference.

             NAV Blog: Insights from an Exclusive Conference

 

HEDGE FUNDS IN VENTURE CAPITAL LAND

Why are hedge funds doing more venture capital investing?

             TechCrunch: Hedge Fund Rising

 

VCs DISH ON THE WHATSAPP ACQUISITION

The Journal asked a few VCs their opinion on the recent Facebook/WhatsApp deal.

             WSJ Online: 5 Questions for VCs

 

CYBER SECURITY INVESTING

Kleiner Perkins' Ted Schlein gives his opinions on the cybercrime defense market.

             WSJ Online: The Cybercrime Arms Race

 

ACCELERATORS HELPING STARTUPS?

Second Century Ventures asked the question of whether accelerators really help startups.

             VentureBeat: Accelerators Helping Startups - A Look at the Data

 

A WOMAN IN VENTURE CAPITAL

Fairhaven Capital's Rudina Seseri in a Q & A talks about discrimination and robotics.

             Boston Business Journal: Venture Capital Q&A

 

CANADA'S 2013 VENTURE CAPITAL RESULTS

The CVCA has published its 2013 venture capital report.

             Canadian Private Equity: VC Investments Highest since 2007

Venture Capital This Week - Feb 20

Published: 2/20/2014 8:39:34 AM, comments: 0

It's always an interesting week in venture capital. Discover the best stories, blog posts and other information inside the VC ecosystem in the US and in hotspots around the world. Onward dear reader…


CROWDFUNDING COMES TO FRANCE

French startups will be able to raise up to €1 million on crowdfunding sites, according to the French government.

             TechCrunch: French Startups and Crowdfunding

 

BIG DATA VC THOUGHTS

VCs are tired of hearing "big-data" in investment pitches.

             VentureBeat: What Big Data VCs Really Want

 

INVESTING IN A FRIEND'S STARTUP?

Here are some questions you should ask before investing.

             ReadWrite: 12 Questions to Ask

 

VCs DISHING ON BIG ECONOMIC ISSUES

Jon Evans interviewed a few VCs for their thoughts on income inequality and unemployment.

            TechCrunch: VCs on Our Uncertain Future

 

ANATOMY OF A DOWN ROUND

An unpleasant startup financing scenario is explored.

            TechCocktail: How You Get Slaughtered in a Down Round

 

LIFE SCIENCES FUNDING DECLINES

PwC says that 2013 life sciences funding declined vs. 2012.

            PE Hub: VC Funding in Life Sciences Declines in 2013

 

SEATTLE IS GREAT FOR CLOUDS

Seattle, WA is host to some of the top cloud companies in tech.

            GeekWire: Seattle Is The Cloud Capital of the World

 

FACEBOOK DROPS LARGE COIN

Facebook agreed to acquire venture-backed messaging startup WhatsApp for $19 billion.

            TechCrunch: Why Facebook Purchased WhatsApp

 

FENWICK & WEST VENTURE SURVEY

Technology law firm Fenwick & West has published their latest Silicon Valley VC survey.

            Fenwick & West: Silicon Valley Venture Survey - Q4 2013 (PDF)

 

IT PAYS TO EXPLORE YOUR OPTIONS

A CEO gives some tips on considering your exit strategies.

            TNW Blog: Thinking of Exiting Your Business?

 

Venture Capital This Week - Feb 13

Published: 2/13/2014 9:05:54 AM, comments: 0

It's always an interesting week in venture capital. Discover the best stories, blog posts and other information inside the VC ecosystem in the US and in hotspots around the world. Onward dear reader…


THE IMPORTANCE OF HUMAN BRANDS AND MOBILE

Nic Brisbourne of DFJ Esprit says that human brands and strong mobile presences have driven success at today's hot startups.

             The Equity Kicker: Human Brands and Strong on Mobile

 

BOARD MEETING NIRVANA

VC Brad Feld has been to a lot of board meetings and talks about his ideal meeting.

            FeldThoughts: My Ideal Board Meeting

 

CROWDFUNDING FOR THE BIG GUYS

There's no reason why big startups can't use crowdfunding campaigns.

             PandoDaily: Crowdfunding Isn't Just for Baby Companies

 

HOW DO YOU SIZE A MARKET?

This post talks about different approaches to coming up with market sizes.

            OpenView Blog: 8 Approaches to Market Sizing

 

DUBLIN IRELAND ON THE COMEBACK

VC Mark Suster shares his thoughts on a recent trip to a major conference in Dublin, Ireland.

            Both Sides of the Table : Dublin's Resurgence

 

SAVING CROWDFUNDING FROM THE SEC

Two crowdfunding proponents give their prescription for regulation.

            VentureBeat: How to Save Crowdfunding Before It's DOA

 

KEEPING OUT OF JAIL

Top VC Ben Horowitz writes about the time he made the right business and accounting decisions.

            Ben's Blog: Why I Did Not Go to Jail

 

TERM SHEET SERIES

Technology attorney Casey Riggs continues his series on venture capital term sheet negotiation.

            Strictly Business: Voting Rights and Protective Provisions

 

WASHINGTON STATE CROWDFUNDING LAW

Technology attorney Joe Wallin explains why he supports a state-level crowdfunding law.

            GeekWire: Making It Easier For Startups

 

VENTURE CAPITAL CONFLICTS OF INTEREST

Experienced Internet VC Fred Wilson talks about the perception of conflict.

            A VC: The Perception of Conflict Is Conflict

 

Venture Capital This Week - Feb 6

Published: 2/6/2014 8:05:42 AM, comments: 0

It's always an interesting week in venture capital. Discover the best stories, blog posts and other information inside the VC ecosystem in the US and in hotspots around the world. Onward dear reader…


BUBBLES AND BUBBLES

Successful Internet VC Bill Gurley shares his thoughts on Silicon Valley "bubble" talk.

     Above the Crowd: On Bubbles

 

TERM SHEET NEGOTIATION - PART 5

Technology attorney Casey Riggs continues his series on venture capital term sheet negotiation.

    Strictly Business: Conversion Rights

 

INVESTOR LIMITATIONS

The Foundry Group is running up against some investor limitations for its innovative investment program.

     FeldThoughts: The 99 Investor Problem

 

GOING TO CANADA?

Canada is now on the investment radar for smart VCs.

            VentureBeat: VCs to Canada in 2014

 

ACCELERATOR VC COMBINATION

Austin, Texas area VC firms are teaming up with a local accelerator program.

            Xconomy: Capital Factory and VC Firms Launch Funding Match

 

HEALTH IT BUBBLE?

This long time VC says to beware of the health IT bubble.

            WSJ Online: Not Enough 'Actual Business Plans'

 

BRIGHT NEWS AHEAD

Prominent VC Marc Andreessen shares his thoughts on the future of the news business.

            GigaOm: Optimistic about the Future

 

INFORMAL ENTREPRENEURS

Jeff Bussgang wonders if entrepreneurs are becoming too informal.

            Seeing Both Sides: Informal Thinking

 

CROWDFUNDING PROGNOSTICATIONS

Crowdfunding researcher Dr. Richard Swart provides a presentation on future trends.

            Crowdfund Insider: Crowdfund Global Expo Presentation

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Don Jones
CEO, VentureDeal

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