If you float it, they will come.

That’s the lesson of Blueseed, a brave new utopia for startups that will be anchored in international waters, 12 miles off the coast of the San Francisco peninsula — aka Silicon Valley — sometime in the second half of 2013…

Blueseed is funded by Peter Thiel, the billionaire co-founder of PayPal and early investor in Facebook. Famous for his libertarian views, Thiel is eager to create more havens for startups that are free from all government regulation — indeed, from all laws…

As laughable as it may sound to some, startups are flocking to fulfill Thiel’s vision. Blueseed has released the details of a survey on its website, which shows 133 international startups willing and eager to get on board. A plurality are from the US, but there’s also a lot of interest from India, Australia, Canada, Europe and practically every other area of the world:

Deals with Chinese and Indian web firms are helping to fill the pockets of Silicon Valley venture capitalists (VCs) with ever greater wodges of cash, with one quarter of the top 100 VCs now investing in the region, according to Forbes’ Midas List 2012.

The US business magazine’s annual list of the best dealmakers in the tech and life science industries included China and India for the first time – in itself a recognition of the growing influence of the region.

According to Forbes, China and India now account for 17 per cent of the total venture capital invested.

While this is still some way from the size of the US market, which accounts for 70 per cent, it is definitely on the rise, thanks to Chinese firms such as social network Renren, online vid site Tudou, e-commerce firm DangDang and car site Bitauto.

Whether it’s revenue, users, funding, whatever — nowadays in tech, it seems like the numbers just keep getting bigger.

The latest example of this: New Enterprise Associates, the global venture capital firm with headquarters in Silicon Valley, is in the process of raising $2.56 billion for its 14th fund, “NEA 14,” according to regulatory documents filed today with the Securities and Exchange Commission. NEA has already closed on nearly $2.1 billion for the fund, and $487 million of the offering remains to be sold, the filing said.

If NEA closes on the full amount, it will have raised one of the largest — if not the largest — venture capital funds in history. As of now that title goes to Oak Investment Partners, which raised $2.56 billion in its twelfth fund back in 2006.

The exercise of drawing up target list of investors has been a depressing one, for the European venture landscape is starting to look extremely depleted.

We have three clearly dominant firms based out of London, in the form of Accel Partners, Balderton Capital and Index Ventures. We have regional champions like Northzone. But one struggles quickly to add new firms to the list of potential investors.

It's a tough market out there. Take France as an example. Whilst Philippe Collombel at Partech valiantly managed to close a fund on the back of a string of strong exits, he's the exception rather than the rule. Many bank-sponsored funds have been disbanded or scaled down. Funds like Banexi managed to raise but in dramatically scaled back fashion. A once dominant Sofinnova killed its tech team and is focused entirely on biotech, whilst old favorites like Innovacom are conspicuously absent. Others are struggling to raise new funds.

Ironically the best new initiatives end up relying on public money. The wonderful White Beat Yard / Passion Capital initiative is one such example. The EIF (European Investment Fund) is seen as the great white hope anchor investor you need to get. I use the word "ironic" because during the Great Internet Bubble the EIF stood behind a gazillion regional fund alternatives, most of which produced disastrous results.

From a policy standpoint governments realize of course that innovation is the key to their future, and it's naturally tempting to focus on the "equity gap". After all, spending money on funds is measurable and actionable (so many Euros invested, so many funds backed, so many startups created, so many jobs). You can understand the angst: an informed look at the barren field of venture capital makes for a scary outlook.

Yet I remain convinced of two things. Firstly, government entities are badly setup to deliver attractive returns on cash deployed. Ploughing money into venture capital is bad use of taxpayers' money, because the returns just aren't there. The job of government is not to keep venture capitalists in business. More fundamentally, the market may need to contract even further before battle hardened new managers emerge, teams that can raise the bar on the business of funding innovation in Europe. There is plenty of money out there waiting to be invested, and the test of market attractiveness, whilst harsh, is necessary to allow deserving managers to emerge, to allow the market to sustainably restructure itself.

Angel Investors

• Angels are individuals (or groups of individuals banding together) who invest their own money in a business.

• Angels generally invest less money than venture capitalists. If you are seeking $1 million or less (some will say $3 million or less), looking for an angel is probably a better bet.

• Angels are often entrepreneurs or “retired” entrepreneurs who have experience starting, running and growing businesses. More than a few are the “millionaire next door” type, rather than poeple who flash their wealth. Angels may also be professionals, such as doctors or attorneys. I actually knew an entrepreneur years ago who was funded by his dentist.

• The degree of involvement angels expect to have in your business varies. Some assume they’ll be actively involved, while others prefer a hands-off approach. In either case, you’ll very likely benefit from their advice and experience.

• Angels, of course, want to make money on their investments, and expect a high rate of return. However, in addition to looking at the numbers, they are more likely than VCs to be persuaded by your commitment to your business or the simple desire to help you succeed.

Venture Capitalists

• Venture capitalists are institutional investors. They manage other people’s money and invest it in business ventures. VCs are responsible to the clients whose money they’re managing.

• Because they are dealing with money from many investors, VCs generally make larger investments than angels. If you are looking for $3 million or more, getting this amount even from an angel group will be more difficult than getting it from a VC.

• VCs are in a better position to provide multiple rounds of funding as your company grows. If you know you’ll need more than one h VCs can be very valuable.

• VCs almost always want to put their own management team in place, and you will need to give up a greater degree of control than you might have to with an angel investor.

• In general, VCs think bigger than angels. If your business has the potential to scale huge and you can prove it, pitch VCs first.

• Passion? Desire? These things are great (and might help persuade angels), but VCs are all about facts. If you have prior experience launching similar businesses, if you’ve got a tested management team, if your numbers add up, then you’ve got a shot at convincing VCs.

What is Venture Capital?

Venture capital (VC) refers to investments made to fund a fledgling business. Generally, VC is used to aid start-up companies but it is also possible for a growing company to use VC. Typically, a VC firm will obtain money from cash-rich individuals, companies, pension funds, etc. to form a fund. Once the VC firm has accumulated a significant amount (say, $10 million), it will identify a few companies whose sector and business plans fit their investment profile. For example, in the 1990s, many software companies were helped by investments from VC firms. Those VC firms were partial to the tech world, while in today’s market, alternative energy firms may be the focus.

Usually, there are several rounds of seed funding and growth funding involved. Upon investment, a VC firm will get a certain number of shares in the venture that they could cash out at a later date. They may also get some say in the new company’s management decisions including the ability to have their representative as a member on the board of directors.

How does a VC Firm Profit

VC is made available to start-up ventures with the hope that their capital will yield a profit in the next few years. If the start-up company offers an IPO within a few years, then the VC firm can cash out by selling its shares. The same sale can also occur if the fledgling venture is sold to an established corporation (think mining companies). After cashing out, a VC firm will hope to have more cash on hand than they invested (started out with).

As may be ent, not all ventures chosen by a VC firm will become successful enough to offer an IPO or be acquired. There are bound to be companies that turn out to be damp squibs. Typically, if a VC firm selects 5 companies to invest their $10 million fund, then they only look for an overall net profit at the end of a certain period. Needless to say, VC firms are in a high potential, high risk line of business.

The Pros and Cons of VC

Pros. Evidently, the access to cash for initial expenses is very beneficial to fledgling businesses. Once personal funds and bank loans have been exhausted and the business still needs capital, VC firms are the saviors. For many start-up businesses, VC firms also offer networking benefits. The VC firm may have contacts in that specific industry or experts on its own payroll that a newcomer could tap.

Cons. One of the possible stumbling blocks is the degree of control given to a VC firm in return for its investment. The ability to have a say in management decisions may lead to discord between the business owners and the VC firm.

Make way for another VC firm in Europe: Today sees the launch of Connect Ventures, a new London based fund that will focus on seed and Series A stages in European tech companies. It’s kicking off with €16 million ($22 million), which will be dispersed in investments of between €250,000 and €1.25 million ($330k-$1.7m).

Led by co-founders Pietro Bezza and Bill Earner, Connect Ventures will be focused on early stage companies in the consumer web, digital media, e-commerce, entertainment and gaming sectors. The first recipient of money from the fund is the London-based private sales site SecretSales, which is getting a £300,000 ($487,000) investment on top of the £6.3 million ($10.2 million) round that it got in February from a consortium of investors that included Doughty Hanson, Pantech Ventures and others.

And another two investments are close to completing: for an e-commerce company in Berlin and another London startup, focused around mobile apps. “One has revenue worked into its business model already, while the other is a bigger play that won’t have revenue for a while,” Earner says.

A major goal of neuroscience has been to selectively control distinct groups of nerve cells (neurons) in the brain in order to uncover brain "circuits" that underlie animal and human behaviors.

Working in the Deisseroth laboratory in the departments of psychiatry and bioengineering at Stanford University, Dr. Deisseroth along with Boyden and Zhang developed methods of introducing light sensitive channels derived from lower organisms, such as algae and bacteria, into neurons.

Further, they optimized techniques to stimulate these channels in genetically distinct populations of neurons of living animals by using fiber optic technologies to deliver light from a laser directly into discrete brain regions. The development of these "optogenetic" techniques has sparked a revolution in neuroscience by allowing scientists to identify groups of neurons associated with particular behaviors and to determine how the activity of groups of neurons can influence brain functions.

Rainforest is a great book and a very interesting reading about the inner nature of innovation. It will not give you the recipe to build an innovation ecosystem, but the map so that anyone can build its own. I would strongly suggest the reading to all the many people, inside the government and out, which today are working on this topic in Italy. We have the ingredients (well one is very scarse, which is capital), we have a new cook – our new government – is very interested in this topic. Most importantly we have a newly fresh born generation of startups and innovators, which have emerged. It’s a first blossom, but it’s still too fragile and it could be killed just as fast as it was born by wrong governamental polices.

Now the thing to do is only to design and implement the Italian specific rainforest recipe. And watch out, because the wrong recipe and the wrong implementation will kill the newly born plants or will generate a long lasting raiforest in Italy.

SAN FRANCISCO: Marc Andreessen, the Netscape co-founder who went on to use his considerable wealth to finance scores of Silicon Valley startups, is regarded as one of the smartest technology investors. His victories have been spectacular: Skype, LinkedIn, and, one day Twitter, if all goes well.



The tale of his investment in Instagram, which was sold to Facebook for $1 billion, reveals a lot about how Silicon Valley works in a frothy era of me-too startups and overeager venture capitalists. His firm, Andreessen Horowitz, will make an enormous amount of money on Instagram, but it could have been much more. And in Silicon Valley, where everyone keeps track of those sorts of things, what it left on the table matters.


Systrom eventually agreed to meet with Andreessen and Horowitz, thinking that if he ever raised more money, perhaps they would lead the investment round. The partners took one look at Systrom's working prototype - then named Burbn - and insisted on investing $250,000.


Horowitz said in the months after that initial investment, he and Andreessen spoke occasionally with Systrom. But people close to the start-up say that they rarely spoke. Those months proved crucial: Systrom added a co-founder, Mike Krieger, and together, the two turned Burbn into what is now Instagram.

#1: Know that funding is a progression

Lavinsky advises that new companies start with small amounts of funding that can be steadily built upon as the business grows.

#2: Find the right sources of funding for now

According to Lavinsky, some forms of funding are much easier to raise than others. And also that different forms of funding are more relevant to a company, depending on their specific stage of development.

#3: Cultivate relationships early

“Even though you won’t get the $10 million venture capital check today, you can start forming relationships with venture capitalists who can write you a $10 million check tomorrow,” Lavinsky says.

#5: Always be a marketer

“In raising money, the best company doesn’t always win. Rather, the best marketers win. That is, the entrepreneurs that are best able to market their companies to lenders and investors are the ones who raise the money. In many cases, it’s the entrepreneur marketing themselves via networking, sending emails, making telephone calls, and getting and leveraging Advisors that secures the funding,” said Lavinsky.

Three things are paramount when technology companies go looking for an acquisition:

• People. Great ideas are easy to come by; great people are much harder to find. Even Silicon Valley has a tremendous shortage of great talent, engineers in particular. Companies always are looking for talent acquisition. When you have a terrific team, a team that works well together and is capable of building a company, that's an especially appealing target.

• Intellectual property, technology, inventions. If you have managed to create something new and develop it to a point where you have proven the concept, you'll be more interesting to another company.

This is especially true if you have good patent protection. Even without cutting-edge technology, if you've developed something impressive, an acquiring company may want to buy you to get to market sooner.

• Market. The desire to grab a new or bigger market drives many acquisitions. That was certainly part of the reason Facebook bought Instagram. But you don't have to have millions of customers to be attractive to an acquiring company.

Perhaps by owning you, an acquirer immediately expands geographically or is able to serve a new industry.

However, you must keep this in mind: If your guiding principle is “I want to be acquired,” it’s unlikely you will be a good target. Instead, focus on building a great company because the things you do to build a great company are the things that will get you acquired.

“…we've talked to some VCs who are really interested, but they tell us we are too early for them to finance our round. So we are raising a small seed round now to hit the milestones they want and then will raise our A round. Its often followed by, we just need $[insert here, but typically $100k - $500k] for [6] months to hit our milestones…”

So what's the problem with this pitch to an experienced angel investor? When I hear this, I'm thinking:

1. The way you have pitched it to me says you struck out with VCs so now are turning to angels as a backup strategy.

2. From your voice, tone, body language, it feels like you really want the VC money and angels are just a stepping-stone to get the VC round.

3. You are probably new to the process of raising money from VCs. You miss reading the buying signals, and are possibly confusing interest with a genuine desire to finance your startup. It's the job of a VC not to miss out on a potentially good deal, so the process can be full of we're interested signals rather than an outright no.

4. The likelihood of raising money from any of the VCs you are talking to is probably very low. Not impossible, just unlikely.

5. So not only is there high seed stage risk (product, market, team), there is very high financing risk on the deal. It's unlikely you will hit the milestones in the time frame you're thinking and the most likely outcome is that you need to approach your angel investors around the table for more money, which will set up a potentially challenging discussion and negotiation.

6. Even if the scenario plays out that short money leads to solid metrics, which then leads to a VC funding the next round, the way this has been pitched, it doesn't feel like there is the basis for a strong partnership.

txtr is one of the largest independent eBook platforms in Europe. The Berlin based startup began back in 2008, deciding, as one did back then, to bring out an eReading device called the “txtr reader”. I actually saw some of the early units

Com’è regolato il meccanismo?

• Le startup creano un profilo su un “funding portal” accreditato e cercano di rendersi attraenti per gli investitori
• Gli investitori si iscrivono e scelgono i progetti e le idee sui quali puntare
• Le imprese possono racimolare fino a 1 milione di $ nell’arco di un anno
• I cittadini possono investire fino al 5% del proprio reddito annuo se sotto i 100.000$ e fino al 10% se oltre i 100.000$, spalmati anche su aziende diverse
• I cittadini non possono rivendere i propri titoli sulla startup prima di 12 mesi (per proteggere l’impresa ed evitare meccanismi di speculazione)

E’ chiaro che se questa via è giusta per il mercato americano, a maggior ragione può esserlo per l’Italia, dove le idee non mancano, ma faticano ad essere trasformate in startup, e ancor di più a trovare gli investimenti necessari per crescere. Non mi dilungo oltre, dato che se ne parla già tantissimo nei blog di competenza. Lancio una semplice domanda, alla quale spero rispondano anche voci autorevoli in tema:

I could build Instagram in a week. How many times have you heard someone say "I could build [insert hot startup name here] in a week"? I hear it all the time. But, I have yet to see one of these delusional wizards actually do it.

From a technical point of view there isn't much difference between Instagram, Path, Oink, Hipster, or a bunch of other companies that all do essentially the same things. Mobile, social, photo apps that include comments and some type of friend/follow model. Why is one worth $1B and another shut down with no value? It isn't about the technology or how long it took to build.

First Mover Advantage is real. The first product on the market has a big advantage...if the product actually works. People get used to the product, get to like the user experience, and develop a user community culture. Users invite their friends and the viral growth cycle starts. Once the user community starts to grow virally they are not likely to switch to another product...even if it is better. A competing product with a few new features, or something that is faster or cheaper, isn't likely to steal away many users.

Design and user experience matters, especially with consumer products. Timing and luck play a big part in success. Technology can be replicated, timing and luck can't.

Il progetto Italia Startup è quindi strettamente legato all’iniziativa ministeriale, anche se è “ una piattaforma indipendente che nasce dall’aggregazione di soggetti privati già operativi nel campo dell’innovazione, del digitale e dell’imprenditoria”. L’obiettivo è creare insieme un sistema da zero, “perché se oggi tutti vanno a Berlino domani potrebbero restare qui” , ha spiegato Donadon. Il primo appuntamento sarà a maggio a Venezia per un raduno internazionale di acceleratori d’impresa. Passera durante l’evento ha sostenuto che occorre “costruire il futuro mentre si affronta l’immediato” e in questa direzione si muoverà anche Italia Startup, sul cui sito è presente un programma di interventi che la lobby propone:

▪    detassazione delle operazioni di investimento in Startup e/o di operazioni di fusioni e acquisizioni aventi come target startup italiane;
▪    deroga alle normative di Testo Unico Finanziario (TFU) e Bancario (TUB) e ai regolamenti di Banca d’Italia per mini-SGR che intendono esclusivamente gestire e/o già gestiscono fondi che investono in startup;
▪    deroga al TUF per permettere la raccolta di capitale attraverso crowdfunding fino a un massimo di 300 mila euro senza dover applicare la normativa sulla raccolta del risparmio ai sensi del TUF;
▪    creazione di un sistema di “Safe Harbor” in modo tale che per i primi tre anni dalla costituzione di una startup la stessa sia soggetta unicamente al codice civile, il codice penale e alcune leggi tassativamente indicate (es: leggi per la tutela della salute e della sicurezza, leggi ambientali…);
▪    annullamento, per i primi tre anni dalla costituzione della startup, di costi e adempimenti burocratici camerali (anche rivedendo il sistema di funzionamento e gimenti burocratici con semplici autocertificazioni (che dovranno essere soggette a controlli di verifica) da inviare alle CCIAA.

Quello su cui tutti sono d’accordo è che per sostenere le startup italiane occorrono interventi veloci, concreti e focalizzati. Senza perdere di vista il potenziale che le startup offrono alla crescita del Paese. Oggi il ministro dell’Istruzione Francesco Profumo ha lanciato il progetto di un markeplace di applicazioni per la didattica fondato su opendata e creative commons.

What is a Convertible Note?

A convertible note is short-term debt that converts into equity.  In the context of a seed financing, the debt typically automatically converts into shares of preferred stock upon the closing of a Series A round of financing. In other words, investors loan money to a startup as its first round of funding; and then rather than get their money back with interest, the investors receive shares of preferred stock as part of the startup’s initial preferred stock financing, based on the terms of the note.

Tech investment firm/startup accelerator 500 Startups is raising a new $50 million fund, according to a SEC regulator filing.

500 Startups is an early-stage seed fund and incubator program that’s become a brand name over the last few years. The group invests between $25,000 to $250,000 in primarily consumer & small-to-medium-size internet startups, as well as startups related web infrastructure services.

The group’s first fund was $15 million and included 257 companies, a handful of which were later acquired by major tech companies, including BackType, Versly, CardMunch, Rapportive, and others.

In an interview with VentureBeat, 500 startups founding partner Dave McClure said the new fund will seek out more startups in international markets, and could account for a fourth of all investments.

“I think the mentality of some Silicon Valley venture firms is to expect everything to come to them. We actually don’t. We get off our asses and go across the country and around the world,” McClure said, noting that he expects about half of all the groups investments to still come from the San Francisco area due to its obvious benefits.

The group also recently promoted Paul Singh and Christen O’Brien to partners and added two new venture partners: Bedy Yang, who will oversee investments in Brazil & Latin America and George Kellerman, who will oversee investments in Japan. Overall the new additions should help with the groups push to find more worthy startups in international markets.