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Thursday, July 30, 2009

Venture finance deals for July 09

After a relatively slow month in June we saw that venture finance activity started picking up again in July. A few of the more interesting deals are listed below.

VentureBeat Reported that Twitter may not have figured out a way to make money from its business yet, but that is not stopping spinoffs of the microblogger. Twitter’s increasing popularity as way for business to communicate with its customers has translated into a $1 million fund-raising round for CoTweet, a start-up that helps companies manage their customer relations on Twitter in real time

Qik, a start-up that enables live video streaming from a cellphone onto the Internet, has landed $5.5 million in fresh funding. Quest Venture Partners and CampVentures led the round, according to VentureBeat

PaidContent reported thatAustin Ventures has provided an additional $20 million for Asset International, the business-to-business financial information provider.

peHUB reported that Quantcast, the Web analytics start-up, is seeking to raise about $50 million at a $300 million pre-money valuation.

VentureBeat reported that Facebook co-founder Dustin Moskovitz and a colleague, Justin Rosenstein, left the firm last year to start their own company focusing on collaborative business software and tools. They raised money from some of the same investors who backed the social networking site, .

Paltalk, the video-based social networking start-up, is buying back the 20 percent stake it sold to Softbank for $6 million in its second round of financing five years ago, reported.

VentureBeat reported that Aptana, a maker of open-source software for Web sites, has nabbed $7.8 million in a fresh round of financing. Rembrandt Venture Partners and Accel Partners provided the second-round funding, which the start-up plans to use towards Aptana Cloud, a free service that allows users to deploy and manage their web applications from a central location.

Generate topped up its $6 million first round with an additional $2 million, the online video firm’s chief, Jordan Levin, reported PaidContent. The add-on, completed last month, was led led by existing backers Fuse Capital and MK Capital.

VentureBeat also reported that Outspark, which runs a “virtual playground” for online gamers, said it closed an $8.3 million venture financing round led by Syncom Venture Partners, a new investor.

Bono is one of the co-founders of the investment firm Elevation Partners, which has put $435 million into Palm. But he has been appearing as a pitchman in a commercial for the BlackBerry. The New York Post reported.

San Francisco Chronicle reports that Blog network Sportsblogs has raised $7 million in a Series B round, The San Francisco Chronicle reported. The round was led by Comcast Corporation. The network, which is popularly known as SB Nation, was founded in 2003 by Markos Moulitsas, who previously started the political blog DailyKos. SB Nation is a network of 200 sports-related sites that draw 3.5 million unique visitors a month.

Networking site Ning has raised $15 million in a fifth round of venture funding that gives social networking start-up a hefty $750 million valuation. Lightspeed Venture Partners led the round, which brings Ning’s total funds raised to date to $119 million.

And finally

SlideRocket, a startup that helps users build online presentations, said it raised $5million in a second round of venture financing led by Azure Capital Partners. Hummer Winblad Venture Partners, the lead investor in its previous, $2 million round, also participated in the latest financing, the company said in a press release.

Tuesday, July 28, 2009

Tips when Presenting to VCs

Presenting your idea to a VC can be a nerve wrecking experience at the best of times so most businesses will take all the help they can get when it comes to the presentation. Once you have found the right VC firm, remember that VC's are also just people and most importantly looking for good investment opportunities. I was sitting in a presentation a few months ago when the speaker and also head of a large venture capital firm shared their frustrations of just not getting enough attractive opportunities to invest in. At time the figure mentioned was that around 75% of their available funds were never used due to a lack of investable projects. Remember that they need you as much as you need them.

A few further tips to take note of are:

1. VCs are pessimistic. Just understanding this before you go in and pitch is going to help you realize you’re talking to people who are skeptic about your idea before they even hear about it. You’re optimistic, but they see people lying about figures and numbers all the time, so they may expect it from you.

2. Keep your opinion out. Stick to statistics and facts, because your opinion doesn’t count for crap unless you’re really credible, plus the VCs can instantly make a case not to fund you based on even the smallest and most insignificant differences of opinion.

3. Have something that’s already established. 1 of the 5 finalists in the Cozad had a business that was established and making money. Guess who won the competition? Trying to ask a VC for money based on an idea that you have is like trying to ask a vegetarian to eat steak. If you’re not established, build a prototype.

4. Don’t claim outrageous financial projections. I’ve heard someone try and claim that a R20k investment would return R40 million very quickly. Those types of projections--without much credibility or factual data to back it up--are raising red flags to your potential investors.  The logic would also suggest that if this was the case, why not just go get a loan from a bank?

5. Prepare to be grilled. You’re going to be asked direct, no-nonsense questions. Rise to the challenge, but if you don’t know an answer, just say so. One student was asked “What are your top 2 compliments and top 2 complaints from your current customer?” His answer was a blank stare, followed by an “I’m not sure.” That student still won the contest.

6. 10/20/30. Plan on giving 10 slides in under 20 minutes with 30 point font. Please do this unless you absolutely plan on giving lunch and recess breaks to your audience.

7. Practice the presentation. At least 20 times out loud, is Kawasaki’s recommendation. Enough said. If you don’t practice, you’ll be nervous and you won’t be seen as confident.

8. Entertain if you’re good. Most VCs don’t mind being entertained in the process of being pitched. In my experience, VCs are very laid back and have a good sense of humor. Try and reciprocate that behavior, but this usually only works effectively with extroverted personality types.

9. Don’t come off as desperate (read: don’t care). If you’re over-enthusiastic about your idea, people may think you’re just desperate. Be calm, present your case, and answer the questions. VCs are everywhere, so if you don’t get this one, pack your bags and move on to the next. Many sales theories state that the best way to attract a sale is to not care if a prospect is interested or not (watch the scene of Vin Diesel in Boiler Room for a perfect example).  I like the analogy of VCs compared to women.  If you go on a date and act too interested, it’s a huge turn off.  Many girls are attracted to guys who are independent, think for themselves, do intriguing things in their life, and don’t seek approval.

10. Know the competition (and yes, they’re out there). One of the biggest questions you answer is “How are you different from XYZ Company?” If you don’t have a definitive answer, you won’t see a dime. VCs are very sophisticated people and know their industries. If you “don’t have competition,” you’re not looking hard enough.  I’ve seen VCs call a person out on this one too, and they usually already know the answers, they just want to see if you do.

Let us know if you need guidance or coaching in more specific areas of the process, whether it being the Pitch, the deal, the negotiations or anything else.