Pitching to Angel Investors: Have a solid go-to-market strategy

In your pitch presentation and business plan, it’s important to describe your sales and marketing strategy--or in other words, your go-to-market strategy.

In particular, what is your channel to the customer? Are you selling direct, indirect, through Original Equipment Manufacturers (OEMs) or channel partners? Are you franchising or granting licenses?

Entrepreneurs should also explain why that model was chosen over others and demonstrate how leads are generated and converted into buying customers.

Best regards,
Hall T.

Pitching to Angel Investors: Your Business Model and Financials

The business model describes how much revenue you make from each customer, along with how much it cost to acquire, sell, and support that customer and the profit left over. The investor wants to see the business model to understand the level of profitability and the scalability of the business.

Financials
The financials reflect in numbers what the previous sections described in words. They must be consistent. If you are showing a revenue growth rate of 100% per year and your business model indicates you need a sales person per $1M of revenue, then these numbers should come up in the income statement.'

For companies already in operation, it’s useful to show the past year and the coming four years. In other words a five year window is used. In addition to the income statement, there also needs to be a cash flow statement and a sales forecast that breaks out ASP (Average Selling Price) and unit growth. Investors want to see gross margins and net income to understand the profitability of the business.

Funds Sought and Use of Funds
It’s important to state how much funding you are seeking in this round. If you’ve received a previous round of funding it’s helpful to show what you accomplished with that funding. Achieving milestones demonstrates your ability to execute which is one of the key questions the investor will be asking. Also, for the funds sought in this round show how those funds will be used.

Finally, discuss the exit strategy. How will the investor get their money back? Will it be a merger and acquisition (the most common form today), an IPO, or some other method. This is how the investor can calculate an expected rate of return.

Investors often look for market validation. List the customers you have closed to demonstrate that customers will buy your product/service. If you don’t have any customers, it’s advisable to get a few of them signed up before you go out for fund raising. It’s also important to list customers in the pipeline with forecasted sales expected from each. Showing your customer’s results from using your product/service in the form of an ROI or even hours or dollars saved goes a long way to proving the value of your product/service.

Best regards,
Hall T.

Pitching to Angel Investors: Competition & Competitive Advantage

If you want an investor to stop listening to your pitch presentation or to stop
reading business plan, state how you don’t have any competition. You might be
surprised at how many entrepreneurs make this rookie mistake in their pitch
presentations--we hear it constantly, and it’s almost certain that you’ll lose
credibility instantly with investors.

I believe that entrepreneurs that say they have no competition are trying to convey a broad opportunity to exploit a market--the problem is that it has the opposite effect. The main reason is that the customer is solving the problem somehow now,even if indirectly in comparison to your solution. There’s always another company competing for the same dollar, and even worse, If the investor finds out about a competitor from someone other than the entrepreneur then it makes them look even more unprepared.

When researched thoroughly, the competitive analysis in your business plan
demonstrates to potential investors that you understand the strengths and weaknesses of your business. It also gives them a better picture into the market opportunity.

When doing research on the competition for you plan or pitch presentation, you should focus on answering the following questions:

1. Who is out there competing for the same dollars that you’re going after?
2. Are they directly or indirectly selling products, services, or substitutes that
compete?
3. What are their strengths and weaknesses in the market?
4. How are they currently positioned in the market.
5. What segments of the market do they operating in?
6. What is their go-to-market strategy and how does that differ from yours?
7. What threats do they pose that may impact your business?

In other words, perform a SWOT Analysis (Strengths, Weaknesses, Opportunities,
Threats) on each one of your competitors and compare them to your company.

When you go to present your findings in the business plan make sure you:

1. List the key competitors with their strengths/weaknesses in comparison with your
own.
2, Show specific competitive advantages of your solution.
3. Use numbers to make the comparison. The more numbers, the more solid your company
looks. Use numbers to show market share, your economic benefit, etc.

Pitching to Angel Investors: building a solid management team

The key to the management team is experience in the area of the new business. First time CEOs need to have substantial operating experience. In addition to the CEO most startups have two other executives on board. Depending on the business, they could be financial, operational, manufacturing, scientific, technical, or other. Again, industry-specific expertise needs to be highlighted. Startups without a full management team could create an “Advisory Board” staffed with non-paid volunteers who provide advice. Typically, they have substantial industry experience and can augment the management team.

Pitching to Angel Investors: Defining the Target Market
In an earlier post, we talked about framing a compelling customer problem for a potential investor--but to truly get their attention, your target market must be sizable. In other words, there needs to be a lot of customers with that problem that are ready to pay for your solution!

I usually break the “target market” category into three pieces: Available, Serviceable and Beachhead.

The Available Market is typically anyone who could potentially purchase the company’s product or service. Look for numbers in the billions to truly be compelling.

The Serviceable Market is the sub-segment that would most likely be a strong candidate to purchase the company’s product or service. This number is usually in the millions of dollars.

And finally, there’s the Beachhead market, which is the first set of customers the company will pursue. The company should list beachhead customers that are in the pipeline which shows market validation.

Conveying these three items in your business plan and pitch presentation will show an investor that the market cap is sizable, that there are may companies willing to buy your product, and you have a solid go-to-market strategy.

Best Regards,
Hall T.

Pitching To Angel Investors: Focus on the core product or service

Entrepreneurs are always excited about their marketplace solutions and want to talk about it to anyone that will listen. That enthusiasm is critical to start a business because that passion is the only thing that will truly carry them through the process (It’s certainly not the money--trust me!)

Sometimes, however, that enthusiasm causes entrepreneurs to lose focus about what they are conveying as part of their product offerings.

For example, you might have ancillary services or spinoff products that are part of the plan. But cluttering the business plan with numerous potential options for the company will appear diffuse and fragmented to an investor.

It’s better to focus on the core product or service. An investor looks for purpose and clarity of focus in start ups and even early stage companies

This also solves the problem for entrepreneurs who are concerned about protecting their intellectual property. You don’t have to describe the “secret sauce” behind their product--simply focus on the benefits the product or service offers.

At this early stage, there’s no need for a non-disclosure agreement, so put that away. Most investors won’t sign one at this stage anyway, and it will only turn them off. Only in later stages will the investor need to learn more about the IP, and they will be glad to sign it at the due diligence stage.

Best regards,
Hall T.

Pitching to Angel Investors: What problem do you solve?

Pitching to Angel Investors: What problem do you solve?

When seeking funding from an angel investor or other sources of venture capital, the first element they’re going to look for in the executive summary of your business plan or your pitch presentation is the solution to a customer problem. In other words, what problem does your product or service solve for the customer that is unique?

To ensure that you’re going to get the attention of an investor, make sure you address the following in your plan and pitch presentation:

1. Be Specific and comprehensive at the same time. It’s important to give enough detail so the investor understands what you’re doing without giving too much information about the inner workings of the application or service offering. In some cases, it is helpful to express the company’s product/service in a few words such as “We make radiation-hardened memories.” This helps the investor in on understand the company’s offering.

2. Develop an actual elevator pitch. You’ve got one minute to convey how compelling your offering is to an investor. Go! Can you do it?

3. Your problem should be large and compelling - the problem you’re solving should be large and compelling enough that people not only want a solution, but need one and are willing to pay for it.

4. Use numbers to describe the problem. The numbers you present can the problem more compelling to an investor. For example, how many people suffer from a disease or condition that you potentially solve? How much money is wasted on inefficient solutions or methods?

5. Talk about the business solution and not the technology. This is one of the biggest mistakes that entrepreneurs make over and over in their pitch presentations and in their business plans. In short, investors care less about your technology and more about how you’re going to make money. Focusing on that is paramount to getting follow up meetings--you can focus on the technology at the due diligence stage.

6. Tell a story. Talking about the problem you solve in a story format that’s easy to understand can help you present your case in the most understandable fashion.

Best Regards,
Hall T.

Irene Mwathi Talks about Minority Startup

Irene Mwathi Talks about Minority Startup

Where are you from originally?

I was born in Kenya. I came to the US, Washington DC for college and later moved to Austin in 2007.

What university did you go to?

University of Maryland for undergrad and Georgetown University for my MBA


What brought you to Austin?

I moved to Austin to expand my business in IT Consulting.


What is your group's mission?

Minority Start-Up mission is to develop minority entrepreneurs into successful enterprises by providing programs, advise, counseling and access to capital. Austin continues to be one of the most entrepreneurial cities in the country and M Start-Up seeks to help minority entrepreneurs tap into the various resources and opportunities with a focus on investment funding.


What need does it fulfill?

Minority Start-Up will bring both minority innovators/entrepreneurs and investors together. While minority owned businesses have grown at the a rate that surpasses the growth rate of all businesses combined by a rate of 6 to 1, and with revenues twice as high as the rest of the market place, minority entrepreneurs need to seek out investors and vice versa to sustain this level of growth. Today even with higher numbers of African American, Hispanic and Asian innovators, we don't see the level of investment funding as seen in the mainstream market place. M Start-Up aims to bridge this gap providing minority innovators access to investment capital and the Central Texas investment community new opportunities.


What exactly does it bring to startups?

Most start-ups are usually started with a passion to meet a specific need based on a vision/idea coupled with an ideal to make lots of money. However, innovators and especially minority innovators are not prepared to manage a business, build strategies for growth while avoiding risks and setting the path for investment funding. Most usually start looking for investment capital when all existing resources have been exhausted and with a limited or non-existent leadership team.

Minority Start-Up brings expertise, counseling and advice for every startup right from the start, to prepare them for sustainable success. We know where the resources are in our community, therefore we can create a critical path of success for minority entrepreneurs through coaching, helping them navigate the various service delivery organizations while holding them accountable and then presenting them to the financing mechanisms. The key element we seek to address is "What do entrepreneurs need during development to prepare for funding and what do they need to do post financing to reach milestones?"


What type of startup would benefit from your group?

African American, Hispanic, Native American, Asian American and Women Owned Businesses. We welcome any startup to reach out to us.

What was the most challenging aspect of starting up the initiative?

While there is a critical need for an organization that works with minority businesses and one that understands the challenges they face right here in Texas, the challenging aspect for us is convincing the startups that they need to start laying long term strategies right from the start consulting with people with the right expertise. The other challenge we face lies in getting funding and sponsorship to build the necessary programs that go beyond the basics of starting a business. Hiring senior management or qualified people is usually expensive for a startup, while consulting on an as needed basis cuts costs dramatically while providing much needed value. As an organization we hope to provide ongoing services at a lower rate and get ongoing support through various funding sources.


What advice do you have for entrepreneurs?

The current financial market makes it harder to get funding, but those who prepare and prove themselves will be better positioned to thrive and receive investment funding.


What Austin-based resource have you found to be the most helpful and why?

While we have worked with alternative funding sources throughout Austin to help entrepreneurs get funding, we find the Austin Entrepreneur Network a great resource for investment funding. They hold continuous funding forums and provide access to the Austin investment community where minority entrepreneurs can pitch ideas.

What about your upcoming conference?

Go Big or Stay Home - GO BOSH conference 2011, is an innovators, entrepreneurs and investors conference brought to you by Minority Start-Up Association of Texas, designed to facilitate knowledge sharing, relationship building and deal making amongst Central Texas Minority Businesses. The conference will be held on October 21st, 2011 at the Longhorn Stadium Event Center, Belmont Hall from 12.00pm - 9.00pm.

The conference is for anyone in need of inspiration, looking for tips for success or anyone who is wondering how to get an idea off the ground, develop it and commercialize it. Come network with other entrepreneurs and innovators and share your journey.

Thanks

Terry Hazell Talks about Entrepreneurs & Self Promotion

Entrepreneurs & Self promotion: don’t oversell, but don’t undermine either--by Terry Chase Hazell

Self-promotion is an important part of entrepreneurship. The fact is, many early employees, partners, and funders join a company based on an assessment of the entrepreneur. And yet many entrepreneurs—especially women – hate to talk about their own accomplishments. This can be a big mistake. As you develop your company summary or pitch, you should also develop a personal pitch that balances between overselling yourself and undermining your accomplishments.

In Texas State’s RampCorp program, one of the 16 “ramps” participants study to grow their business includes Self-Promotion. Women develop a professional biographical sketch, or “bio.” For entrepreneurs, the bio may be more important than the resume, because it’s used in many contexts—business plan, website, speaking engagements, LinkedIn profile – and for those seeking funding, your bio is summarized in your pitch.

Where to start? At RampCorp we’ve developed a tip sheet for women entrepreneurs (men need this too) that walks you through how to prepare your biographical sketch. You can download it at this link. RampCorp Biographical Sketch Tips

The Ramps Biographical Sketch Tip Sheet is organized into 5 sections:

1. Tips list for developing your sketch
2. Lists of words to use and words to avoid
3. Example sentences from and links to leading women’s bios & fill in the blank sentences
4. Biographical sketch checklist
5. Form to complete your own sketch

In addition to preparing your bio using the tip sheet, I also recommend the following resources:

• Book: How to Say it for Women, by Phyllis Mindell
• Slideshare: Caroline Cummings: Authentic Self Promotion for Women
• Blog: Carol Goman

If you complete your bio and would like us to review it, send it to us at www.txstate.edu/rampcorp/contactus . We’ll comment on the first 5 bios posted!

About the Author: Terry Chase Hazell is Director of Texas State RampCorp, a program to help women entrepreneurs start their first scalable venture. She is a member of the national advisory board for Springboard Enterprises, which has helped women raise $5 Billion in capital. She serves as part of the 17 member state committee that makes funding recommendations on regional applicants to the Texas Emerging Technology Fund. She is a charter member of the White House initiative StartUp America Partnership’s women’s high-growth entrepreneurship committee. Her specific expertise is biologics manufacturing, and she has founded two biotechnology-related spin-out companies from the University of Maryland.

About RampCorp: Texas State RampCorp is an incubation and training program for women entrepreneurs launching their first scalable business. Women who are or who want to be entrepreneurs receive coaching from experienced investors, executives, inventors, and other women entrepreneurs who have built scalable

Poll on Challenges Facing Small Businesses

The TxEN is interested in learning more about the challenges facing small businesses. We are working with the Financial Services Forum – a non-partisan financial and economic policy group representing the largest financial institutions operating in the United States to conduct a survey of small business owners.

We invite you to participate in this brief on-line survey. We hope you can take a moment to share your thoughts and opinions about the current business climate and obstacles and frustrations affecting companies like yours. Your feedback is very important to us.

This is NOT a sales solicitation, nor will it result in any attempt to sell you anything. This is a research project regarding business conditions and job creation, for which your cooperation is greatly appreciated.

Please note that any information shared will only be used for internal research purposes, and will be treated confidentially. Responses will be consolidated into an overall report, which will reflect categories of comments. The report will not identify the input of individual respondents.

The survey will close at 5 p.m. EST on Monday, September 26th.

To participate in the survey, please click on the link below or copy and paste it into your web browser:

http://masurveys.com/nrisurvey2

Please give us your input.

Best regards,
Hall T.

Terry Hazell Talks about RampCorp

Terry Hazell Talks about RampCorp

What is RampCorp?

RampCorp is training, coaching and networking program specifically designed for women who are or who want to be entrepreneurs. Over a period of 25 weeks, meeting one night per week, participants will learn the aspects of launching and growing a business, receive many hours of one-on-one coaching and increase their network dramatically. About half will start a company or change their company’s business model. See can see the list of companies at this link. . We provide some free resources, too.


Who is involved?

Many participants say the coaching is their favorite part. Great coaches like Robin Curle, Laura Bosworth, Laura Kilcrease, Kathy Lindauer and Mary Haskett make the program. Robin Curle has led several companies to multi-million dollar revenues and has been named a “galaxy of entrepreneurship”.

Mary Haskett has run several companies ranging from a skydiving school to a missile launch training SaaS company and her current company is named Top 50 startups by Kauffman Foundation. Laura Bosworth has led product launches and $100 Million programs at large companies. Laura Kilcrease, Investor in Residence, knows how to position companies for funding. Kathy Lindauer, Lawyer in Residence, shares legal topics and weekly legal tips.

Also, members can continue for a second 25 week session. New members benefit from learning from returning “2nd year” women slightly ahead in their entrepreneurial efforts.

Applications are open until late October. You can apply here.


What is your favorite part?

When a woman joins without a business idea, finds an idea, launches and then one night announces a major milestone. A few weeks ago CEO of a newly formed El Paso venture announced she had made her first sale. To me it was the home team winning the super bowl!


What will you include in your upcoming blog series?

I’ll be sharing some of the RampCorp resources and tips on self-promotion, scalable business models, technology transfer and getting ready for due diligence.

Best regards,
Hall T.

Charles Doty of BlueShift talks about Entrepreneurs Transitioning

“Real artists ship.” That statement is attributed to Steve Jobs circa 1983. The message, whether Steve really said it or not, still resonates at Apple.

A successful entrepreneur is first of all a competent risk taker and a visionary; someone who sees an opportunity that few if any others can see, and is willing to take on the task of developing that product or service and targeting it so that the market will embrace it. For now I will refer to that generic successful entrepreneur as Bob.

Bob started his company with a team of dedicated developers who believed in the company and themselves equally. Whatever the obstacles, they were committed to confronting and overcoming them. Work eighty hours a week – no problem. Solve a problem that has never been solved – they will do it. Find a way to do it twice as fast at half the price – you got it. People like this are required if a start-up is to have a chance of getting off the ground.

You know about the runway analogy. The capital investment is the runway and the company is the plane. The idea is that the company must build up enough speed to take off before they run out of runway. Once in the air they have to keep the engine running to stay aloft. Getting off the runway typically means producing revenue, and that means “shipping” i.e. delivering product. Producing revenue means continuing operations which, when successful, requires a markedly different management approach than start-up development.

This is a difficult transition for Bob. He has been a founder-driver of the company since its inception. He has made quick decisions that cut across organizational lines, and he has been the final arbiter in internal disputes. Up until the transition, he has been the one person that accounted for the company’s value: the investors and employees alike trusted him to drive the company to success. The risk is that Bob is unable to envision how the company will succeed after the transition, or he may fear failure because he does not feel that the company is ready. He may see runway extension, that is additional investment, as a recurring goal – in fact it may become his only goal. At some point, however, runway construction (additional investment) stops.

When it is time for the commercialization transition, it is probably time for Bob to bring some new people into the company. These new people will not necessarily be people who would have been valuable in the early stages, but they are likely to make the difference between success and failure during and after the transition. They will facilitate a competent organization that works with processes that drive continuous improvement as a way of achieving excellence. Bob’s role in the company should now change dramatically. The organization will change, and the tendency for Bob to make snap decisions and cut through organization lines to steer the company directly will become detrimental to success.

If Bob does not allow and enable the transition, what is probably the greatest achievement of his life may well end up in the weeds, much like an airplane that goes off the end of the runway before it achieves liftoff speed.

Charles Doty, of BlueShift Consulting

Austin Startup Week

Austin Startup Week happens this week. Modeled after the Boulder Startup Week in Colorado, the event highlights the startup community with events, pitches, meetups and more. Organized by Jacqueline Hughes, the event showcases co-working spaces, successful startups, soon to be successful startups, and other facets of the Austin startup community. Check out the site here for more details: http://www.atxstartupweek.com/

Charles Doty of Blueshift Consulting talks about Succession Management

Charles Doty of Blueshift Consulting talks about Succession Management

What can possibly happen? One of my business partners refers to the six D’s: death, disability, disagreement, divorce, disengagement, and disaccreditation.

When a key person in a small to mid-sized private company dies unexpectedly, his company may die with him. The value of the company is likely to decrease rapidly unless an effective Succession Management project is undertaken quickly.

Succession Management is a process developed to help companies get through the Succession Transition while maintaining the value of the business. A tremendous amount of value can be gained or lost during a Succession Transition, and many companies are underprepared to deal effectively with the crisis.

Each company is different, and often the problems are less related to the business itself and more to the relationships between individuals and groups who own the company, a roles and rules issue.

Assessment

The first priority for a Succession Manager is to understand the owners’ needs and objectives during the transition. The first phase of this effort may not take long, but the entire effort is an ongoing process that continues through the entire transition. Then the current status of the company should be determined with a report on financial status, business processes, personnel, and anything else that is important to understanding the value of the business.

Operations

It is vital to maintain the value of the company, continue to operate the business, and assure all involved that it will continue in the future. It may be that the end result will be replacing the missing person or sale of the business. Whatever the ultimate resolution, the future value of the company will be maximized by maintaining good relationships with personnel, supply chain partners, and customers.

Resolution

To see more about roles and rules and to find out how good outcomes are achieved, check our future posts.

Do Angel Investors Ever Have Down Rounds?

I met a new investor contact last week who happened to be a venture capitalist. At the start of the discussion he posed the question -- Do angel investors ever have down rounds? A “down round” is an investment of capital at a value below the previous fund raise. In thinking back over the last five years, I had to admit I hadn’t seen a down round in that time. In fact, I haven’t heard of anyone even suggesting such a thing.

There are several reasons for this. Previous investors don’t want to see any dilution. Entrepreneurs don’t want to admit they didn’t hit their milestones. Valuations at this stage are based on negotiations more than facts.

He went on to say that as a VC he sees quite a few deals coming to him that have $3M to $5M in revenue but their valuation is at $60M. $60M? After numerous angel rounds --all at increasing valuations they pushed the valuation out of the stratosphere.

So what can the VC do with this deal? Nothing. There’s no way they can fund it at that valuation. The entrepreneur operated under the false assumption that eventually the company would catch up to that valuation. But sadly, no.

My question to entrepreneurs is, “Do you really know what the value of your company is?”
“Do you know what it would take to raise the value of your company?”

Best regards,
Hall T.

Derek Singleton of Software Advice Talks about Choosing Accounting Software

Small businesses need to be vigilant in their accounting practices. A minor misstep can have major repercussions. Accounting software makes doing things like expense tracking, invoicing and billing, and maintaining a general ledger much more manageable. More importantly, most small business owners can manage their accounting needs with a simple software program.

However, choosing an accounting package for your business can be difficult. At Software Advice, I put together a list of my five favorite accounting solutions for small businesses: Sage Simply Accounting, NetSuite Financials, Sage Peachtree, CMS Professional 2011, and (naturally) QuickBooks.

One of the best ways to determine which system is right for your business is to look at a side-by-side table comparison. I built the one below to provide a snapshot of the functionality offered in each.


Beyond the functionality, each product has some features that makes the solution unique. Here's a quick rundown of three of the five systems included in the table.

QuickBooks
QuickBooks is Intuit's flagship product and is the most well-known small business accounting program out there. QuickBooks is available in five versions - Online, Pro, Mac, Premier, and Enterprise. The price tag will range from $12.95/mo. for Online to $600/user for the Enterprise version.

Sage Peachtree
Closely trailing QuickBooks is Peachtree. Over 3.2 million users in the US & Canada use this system. Like QuickBooks, Peachtree is offered in 5 versions - First, Pro, Complete, Premium, and Quantum. First and Pro support only one user and are good for mom and pop type operations. If you need more than that, look to other versions.

NetSuite
NetSuite is a web-based system that currently has 10,000 users. NetSuite packs in the most functionality of the five solutions. Because it's web-based, users can access it from anywhere that has an Internet connection which makes it cheap and easy to use.

So there's three of the five solutions featured in my guide to small business accounting software. To see more detailed reviews of CMS 2011 and Simply Accounting, visit my article at: Small Business Accounting Systems | 5 Affordable Solutions.

Are you Ready to Meet the Investor?

Recently I was contacted by an entrepreneur who wanted to raise funding for his startup. It was a compelling deal in a growing market space but it was also a fairly complex one with a great number of moving parts. So I decided to send it to the investors. I asked for the usual docs and information. When only the business plan arrived I pressed the request for more information --letters of intent, employer identification numbers, articles of incorporation, financial statements, references, etc. As it turned out they hadn’t event filed for a company entity. The letters of intent were still being written. The reference request sent them scrambling to find. There were no detailed financial statements.

Without key documents in hand to validate the business, there was no reason to pursue investors beyond an initial contact. If the investors are interested they will move into due diligence and will want to see all the documents related to the business including patent filings, contracts, and financial statements.

As a company moves into fund raising mode, I recommend the entrepreneur compile key documents into one place so there’s no delay in the followup process by gathering documents. And if you say you have a contract, you better have something that in writing to show it.

Best regards,
Hall T.

Open Angel Group Model -- The Benefits

I recently posted in the Austin Business Journal about the rise of the open angel group model. In our most recent Texas Entrepreneur Network Funding Forum in Austin on June 8th, I saw the benefits of such a model in action. From the event, five of the presenters received interest and three are in discussions to receive funding. The event brought over fifty people into the room --some were investors who expressed interest in the deals but most were entrepreneurs watching the pitches and listening to the panelists’ questions. This provides mentorship to those who are considering raising funding. In talking with several entrepreneurs afterwards some expressed interest in joining the next round (Sept, 2011) while others talked about the work they need to do in advance of pitching.

To be successful in the Funding Forum you need to have a:

--solid product with some differentiation
--clear and focused target market
--competent management team
--some proof that the product will sell

Also, investors interested in pursuing startup investing find the Funding Forum educational as one learns the most from listening to the questions the other investors ask.

Best regards,
Hall T.

Guest Blogger Brian Wulfe Talks about Top 5 Factors that Determine a Startup’s Internet Advertising Budget

Guest Blogger Brian Wulfe Talks about Top 5 Factors that Determine a Startup’s Internet Advertising Budget

At Effective Spend we work with startups and established businesses alike to improve the effectiveness of their internet advertising campaigns. A common question that we get from clients is “How much should we be spending?” Answering this question for startups in particular can be fairly complex and varies depending on several factors. Below are the top 5 factors that we find most important in determining the optimal internet advertising budget for a startup.

1. Business Plan:

Using revenues and profits to decide how much to spend on internet advertising is popular throughout many different business models. An established internet retailer might find that they can spend up to 10% of sales on advertising, above which ad spend starts eating into margins and below which the retailer starts to lose market share. Since sales can fluctuate during the initial stages of a startup’s business plan, tying advertising spend to a percentage of sales is difficult. Some startups, for example, might not plan on generating any sales or revenue during the first few phases of their business. In these cases it is beneficial to tie advertising budget to other important milestones within the business plan such as reaching a key number of subscribers or active users, as might be the case with some tech startups.
For example let’s say that your business model calls for generating at least 100K active users before you transition into the monetization phase. Once you are able to determine an active user’s acquisition cost per advertising channel, you can begin to get a rough idea of the total budget needed for that milestone. Additionally you should take into consideration that your acquisition cost for each additional subscriber or conversion will decrease over time as your advertising campaigns and website conversion processes become more efficient. We have seen many startups begin with an initial internet advertising budget that amounts to 25% - 30% of their total budget and as the marketing channels become more efficient and revenue rises we see their marketing budget as a percentage of total budget steadily decrease to 10around 10%.

2. Advertising Effectiveness:

Eventually the amount you spend on internet advertising should more than pay for itself. However, if you limit your budget with expectations that all ad dollars should bring in a profit, you might be slow to capture market share and see competitors react in a manner that prevents your startup’s growth and potential success. That is in no way to say that your budget should not be shaped by the effectiveness of your internet ad campaigns. In fact the allocation of your budget should entirely be shaped by its relative current and potential performance. There are many ways that you can measure the effectiveness of your internet advertising campaigns, but in all cases you should be concentrating on two things: the quality of visitors produced by your advertisements and how much those advertisements cost. By maximizing this quality-over-cost ratio and distributing budget accordingly, you will ensure that the effectiveness of your internet advertisements continues to improve over time. As your advertising ROI continues to increase, so should your budget.

3. Management Resources:

Having a qualified individual who is committed to managing and optimizing the online marketing program can make a large difference in determining the advertising budget. Some business plans go as far as to account for personnel, such as an advertising specialist, to be included in the marketing or advertising budget. Other startups chose to partner with a digital marketing agency or a more specialized search marketing agency, such as ours, Effective Spend . Although we do not find that there is a set minimum amount of ad spend at which a startup should start looking for an internal marketing specialist or agency, a good rule of thumb is for a startup to spend 18% to 20% of ad spend on resources (internal marketing specialist or marketing agency) to manage that ad spend. As the advertising budget increases and the growth rate of that budget starts to level off, a business can expect to spend less as a percentage of spend (14% to 15%) due to economies of scale. Generally we find that if a startup is planning on spending at least $2,000 per month, the additional savings or added revenue they will see with better campaign optimization justify the management expenses.

4. Consumer Purchase Behavior:

Despite the multitude of different advertising channels, companies still push more than 85% of their online marketing budget towards search engine advertising due to its efficient ability to match highly qualified consumers with the product or service for which they are in the market. Determining a startup’s internet advertising budget, therefore depends on its ability to advertise effectively through the search engines. Generally search engine advertising works best to convert searchers who already have an idea of what they want. Startup businesses that are able to determine when the searcher is in the market for their products or services by the keywords they use, stand the best chance at succeeding in search marketing. Conversely products or services that require a lot of education before the consumer understands the benefit are generally harder to advertise using paid search ads. Startup businesses, who have products and services with a simpler purchase cycle and who have a clear way to identify their target consumer, spend significantly more on internet advertising than those who do not. I have listed the following industries to give you an idea of the businesses that generally do well with search advertising: Retail, Education, Banking, Healthcare, Local Services, Software, and Travel. Conversely extremely high tech, Aerospace, and complex software businesses might not do as well due to the complex nature of their product offering.

5. Capacity:

Most startups have a point at which capacity constraints restrict their ability to increase sales. This issue is most obvious in the manufacturing industry, but is also seen in several other industries due to limited personnel, inventory, bandwidth, etc. Your internet advertising campaigns can serve to throttle sales velocity and help to prevent exceeding capacity. For example at Effective Spend we work with several day spas that deal with capacity issues on a regular basis. We have developed a tight communication process that allows us to incorporate information related to their projected capacity into the online marketing campaigns. When sales are within 80% or more of capacity for a particular service offering, we strategically reduce the marketing spend by 20 – 30% in that area, ensuring that they are not wasting ad spend on visitors who are not likely to convert. Alternatively we help to boost demand driven by the online campaigns when we see that there is a good deal of extra capacity.

Guest Blogger Samantha Snabes talks about the NASA Human Health and Performance Center (NHHPC)

As a former life sciences entrepreneur, I can sympathize with the difficulty of collaborating with government agencies.

Recognizing the need for new initiatives and the opportunity gained from aligning diverse skill sets with experts residing within multiple disciplines, the Johnson Space Center Space Life Sciences Director, Dr. Jeffrey Davis founded the NASA Human Health and Performance Center (NHHPC). Established in October 2010, the NHHPC is a global convener of 85+ member organizations from government agencies, industry, academia, and non-profits that support the advancement of human health and performance innovations. In short, it is a virtual forum aimed at connecting organizations interested in collaborating and advancing human health and performance on Earth and in space.

The member driven organization provides resources and knowledge sharing to foster projects relating to the Center’s themes: Education and Inspiration, Habitability and Human Factors, Research and Technology, Innovation, Performance, and Health. There is no fee or document to sign—the only requirement to be a member is having an interest in advancing the goals of the NHHPC, and a willingness to share information and consider collaborative projects to achieve these goals. Members have the opportunity to share contact information, participate in bi-annual workshops, monthly telecoms, and collaborate on a soon-to-launch member-restricted Wiki. These platforms provide a unique opportunity to facilitate idea sharing amongst established industry leaders as well as startups and academics.

As entrepreneurs, and more importantly, collaborative solution seekers, I invite you to learn more about the Center and explore the presentations from the inaugural January Workshop focused on collaborative strategies and best practices at this link:

http://www.nasa.gov/offices/NHHPC/index.html.

What Classic Literature Tells us about Modern Innovation

How to Create Products that Endure by Tyler Goodwin

Classic literature can tell us more about modern innovation than you might imagine. Seminal literary works, from Ovid’s Metamorphoses to Ginsberg’s Howl somehow manage to endure the test of time—a quality business leaders struggle to apply with predictability to new products in the marketplace. In this case, my goal is to understand the pattern of how literary innovations, in much the same way as product innovations, emerge from context, and how that concept can help you create strategic innovation opportunities with the endurance to stand the test of time.

To understand the historical pattern, we need not look further than the foreword of any perennial text. Successful literary innovators have one essential thing in common—the ability to capture the latent sentiment of their day, and thus free people to express themselves similarly within the new boundaries created. Followers subsequently echo these new sentiments and explore these new boundaries until others develop a latent desire to shift the conversation in a new direction. We have seen this with Howl, where Ginsberg captured and exploited society’s latent need for frank, even vile, self-expression. And, this effect is what seminal literary works have always achieved.

Further using both Howl and Metamorphoses as examples, let’s explore the product innovation implications that we can draw from this concept of capturing sentiment—specifically with regard to a company’s strategic position as an innovation leader or laggard. Click
Classic literature can tell us more about modern innovation than you might imagine. Seminal literary works, from Ovid’s Metamorphoses to Ginsberg’s Howl somehow manage to endure the test of time—a quality business leaders struggle to apply with predictability to new products in the marketplace. In this case, my goal is to understand the pattern of how literary innovations, in much the same way as product innovations, emerge from context, and how that concept can help you create strategic innovation opportunities with the endurance to stand the test of time.

To understand the historical pattern, we need not look further than the foreword of any perennial text. Successful literary innovators have one essential thing in common—the ability to capture the latent sentiment of their day, and thus free people to express themselves similarly within the new boundaries created. Followers subsequently echo these new sentiments and explore these new boundaries until others develop a latent desire to shift the conversation in a new direction. We have seen this with Howl, where Ginsberg captured and exploited society’s latent need for frank, even vile, self-expression. And, this effect is what seminal literary works have always achieved.

Further using both Howl and Metamorphoses as examples, let’s explore the product innovation implications that we can draw from this concept of capturing sentiment—specifically with regard to a company’s strategic position as an innovation leader or laggard. To read more go to this link:

http://tyleragoodwin.wordpress.com/2011/05/20/ovid-x-context-how-to-create-products-that-endure/

Guest blogger Liz Nutt writes about 10 Big Businesses That Started in a Garage

Guest blogger Liz Nutt writes about 10 Big Businesses That Started in a Garage

Every big business had to start out somewhere, right? Some have come from more humble beginnings than others, launching with no more than some basic equipment, a couple employees, a garage space and a big idea. Whether you’re a business or finance student hoping to follow your own path to entrepreneurial success or already working in your own garage on the next big thing, these stories of companies that rose from obscurity to be multi-million (or billion) dollar industries can be a big inspiration. They may very well help you finally realize your dream of getting out of that garage and onto bigger and better things.

1.Apple: Today, consumers will wait in line for hours just to get their hands on some of Apple’s latest products, but once upon a time this electronics giant was a mere blip on the technology industry’s radar. Back in 1976, Steve Jobs, Steve Wozniack and Ronald Wayne started a business out of a garage in Cupertino, CA, putting together one of the first prototypes of their personal computers. Over the next decades, the company would introduce several more models, including their Macintosh line in 1984, arguably what turned them from a struggling startup into a fully fledged business. Today, the company manufactures much more than computers, has almost 50,000 employees and brings in revenues of over 14 billion each year.

2.Google: Google might be a household name today, but back in 1998 the search engine giant was just starting out. Their corporate headquarters? A Menlo Park, CA garage. For the next five months, Google’s staff of three would work out of this garage, perfecting their search algorithm, indexing web pages, and raiding the refrigerator of their friend’s attached home. By the next year the company had outgrown the garage and eventually moved into what is today known as the Googleplex. To celebrate their 8th birthday, Google purchased the garage and intends to preserve it as a lasting legacy to the humble beginnings of their business.

3.Mattel: Mattel wasn’t always the toy maker we know it as today. When the Handler’s got their start in the 1940’s in a Southern California garage, they were making picture frames, not toys. Ruth Handler began taking the scraps of wood from those frames and making doll furniture, a side business which proved quite successful. Because of this, the entrepreneurs decided to change their focus to toys instead. In 1959, they introduced the first Barbie, and afterwards became a household name. Today they’re home to big names in the toy business like Fisher Price, Hot Wheels, American Girl and a number of board games.

4.HP: Back in 1939, Bill Hewlett and Dave Packard decided to establish their own electronics manufacturing company. Based out their garage in Palo Alto, CA, with an initial investment of only $538, the two helped establish the technology hub that would become Silicon Valley. When they started out, they made everything from high-tech electronics to agricultural products but by the 60’s were homing in on the tech market exclusively. Today, the company is an electronics giant, with some of the highest quality personal computing products on the market. They have opted to preserve the garage where they got their start, making it into a museum.

5.Amazon: In 1994, Jeff Bezos laid the foundations for what would be the online retailing giant Amazon in his garage, hoping to follow in the footsteps of fellow garage entrepreneurs HP. With a strong foundation, the company grew very quickly, and before long was in need of a much bigger space to house their operations. Today, there are few people who haven’t shopped with the online retailer, buying everything from food to televisions to electronic media. This small business had become one of the leading retailers in the world, with billions of dollars in sales each year.

6.Disney: While he would go on to build an animation and entertainment empire, Walt Disney’s first studio was a tiny, one car garage in Hollywood. There he worked on a variety of animation products, setting up a makeshift studio in the space, while he waited to see if his Alice in Wonderland pilot would be picked up by any major distributors. It was, and the company quickly moved out of the garage into a proper studio. These days, Disney is an entertainment giant for kids and adults alike with movies, theme parks and products around the world. That tiny garage was almost torn down, but the dedication of a few interested citizens helped to save it and interested visitors can go there today to see where it all began.

7.Microsoft: In 1975, Bill Gates and Paul Allen founded Microsoft, with just a few resources and an available garage space. Unlike Apple who developed both software and hardware, Microsoft homed in on the software market. Working with IBM, the company licensed their first OS for a mere $80,000. Later, they would go on to develop more sophisticated operating systems that would evolve into those we know as Windows today. The business would grow to be one of the most profitable and powerful in the world, dominating the personal computing market.

8.MagLite: Anthony Maglica started his dream of owning a business by working long hours to earn the money it would take to put a down payment on his first lathe. Working in a Los Angeles garage, he began to design and build precision parts for industry, aerospace and the military. By 1974, he was incorporated as Mag Instrument and the company was gaining a reputation for the quality of their products. In 1979, MagLite released their first flashlight, the product they are best known for today. It would help them to become a household name and secure their place in the market.

9.Yankee Candle Company: Unable to afford a present for his mother, young Michael Kittredge created his first scented candle from some melted crayons in his garage. Neighbors saw the candles and began purchasing them from him, eventually motivating the high school student to found a business with two high school friends. Kittredge sold the company in 1999 after a cancer scare, but it has gone on to even greater success and is now sold at many major retailers and a number of its own standalone stores.

10.Harley Davidson: It makes complete sense that a company selling vehicles would get its start in a garage or outbuilding, because that’s where those products eventually end up. Harley Davidson did just that, starting out in 1901 with a small business that built engines for bicycles. Of course, it wasn’t long before they started developing the motorcycles for which they are known, and in 1903 they had already released their first racing bike, constructed in a small wooden shed. Buoyed by the popularity and speed of their motorcycles, the company expands, constantly rethinking the best ways to build a bike. Today, they’re still known for producing some of the biggest, best motorcycles on the market and have become a household name.

Guest Blogger Derek Hall Talks about Deal of the Day Marketing

7 Things They Don’t Want You to Know About “Deal of the Day” Marketing

Businesses across the U.S. are rushing to jump on the emerging “Deal of the Day” bandwagon, driven at breakneck speed by companies like Groupon and LivingSocial, to name two of the bigger players. Undoubtedly, these arrangements drive short term spikes in business, but closer inspection reveals all is not what seems.

The crucial and often overlooked question for businesses looking to implement a “Deal of the Day” campaign for their organization is:

“Who wins at this coupon game…and at what cost?”

While working with small to medium sized businesses that are testing into this medium, I have observed several pitfalls and sand traps that can trip up even the savviest marketers.

The companies I work with bring in $500,000 to just under $10 million a year in revenue and are always looking to try new advertising ideas. Yet when it comes to social marketing, they have navigated into some unknown territory.

If your business is thinking of trying a Daily Deal concept, here are seven things you need to know before you do your deal:

1. You’re still paying for it. The average discount after a campaign (after adding in up-selling and cross-selling costs) is much larger than normal. It will lower your overall margins.

2. You don’t own the data. Daily deal companies typically keep the consumers’ data and don’t share it with the advertising businesses. Unless you have an efficient way to capture the consumer data when the certificate is used – you lose the chance to contact them in the future.

3. Think it will bring “loyal” customers? Forget it! Do your research. Recent studies conclude the national average for repeat customers from campaigns such as these is less than 20%.

4. Are you prepared for and avalanche of new customers? Expect an abnormal demand for your products and services in a short period of time. Unless the first impression is great, your business can develop a bad rap fast.

5. Keep caring for current customers. They could be casualties. They are the ones that have been loyal, and as they say, “Dance with the one that brung ya.” Unless they are receiving the same love and attention during this heightened demand – watch out!

6. Breakage – potential liability issues! “Breakage” is the term many use when a business can’t fulfill a promised coupon offer when a customer has paid for it in advance. Many government authorities are investigating complaints from consumers that can’t use the coupons. Businesses could end up holding the tab for all “unused” offers or have to put money into escrow.

7. Your company’s image and BRAND could be at risk! These campaigns can be very effective for new locations or brand new businesses with hardly any customers. BUT, if the business has an established brand – beware. Consumers are smart, and getting smarter about their choices, and they may sit on the sidelines until that ridiculously great teaser offer comes along again. These campaigns have also been used as “ATM Machines” for businesses that have struggled during the financial downturn, but in the long run overall profit margins can be severely compromised.

The top tier companies that promote these offers have a great business model and many investors can’t wait to become their shareholders. But in the long run do they have the “middleman” or their advertisers’ best interests at heart? Think hard before you Do a Deal.

Derek Hall is an entrepreneur and founder of DartzDeals based in Austin, TX. He also has over 21 years of experience in executive management in the technology industry. He has founded several very successful companies since 2005 to serve the advertising needs of local business owners. DartzDeals business model is based upon persistent advertising via smart phones, the web, personal branded apps and high end print for local businesses to use for client capture and retention. DartzDeals website is http://www.dartzdeals.com/.

IBM SmartCamp Calls for Entrepreneurs

On behalf of IBM, I would like to introduce you to a new program by IBM to help your company continue to grow and accelerate. Here is your chance to partner with IBM and receive access to world-class advisors plus a direct route to seed and venture capital.

SmartCamp is an exclusive event aimed at identifying early stage entrepreneurs who are developing business ventures that align with the IBM Smarter Planet vision.

SmartCamp winners take part in a three-month mentorship with IBM. The winner will be invited to attend the SmartCamp World Finals. A finalist will be chosen to receive a personal mentoring engagement from Dr. Robert Metcalfe - ethernet inventor from the University of Texas at Austin.

If that sounds like what your start-up needs, then apply to participate in SmartCamp Austin on May 17 & 18, 2011.

To learn more and apply for SmartCamp go to IBM SmartCamp by April 15th. For questions, please contact Jonathan Libby at jlibby@us.ibm.com or 408-829-3923.

SmartCamp is a part of the IBM Global Entrepreneur initiative, which helps you build your business around the smarter planet market opportunity. By leveraging the benefits of IBM Global Entrepreneur, you can gain access to no-charge IBM software, technical enablement resources, mentoring, greater credibility, and validation of your solution.

Best regards,
Hall T.

Chris Cornutt Talks about the Lone Star PHP Conference

Chris Cornutt Talks about the Lone Star PHP Conference


Where are you from originally?

Dallas, Tx


What university did you go to?

Abilene Christian University


What is your group’s mission?

The Lone Star PHP Conference seeks to bring some of the best PHP content and talent to the DFW area in a yearly event open to developers and non-developers alike.


What need does it fulfill?

The conference brings the format of the once-monthly DallasPHP meetings, a popular venue for learning and experiencing PHP, to a larger scale. Web professionals have to keep learning all the time to keep viable in their careers. Our event helps them by providing a wide range of sessions on topics ranging from the more technical to the “soft” topics.


What exactly does it bring to startups?

Like any other company, employees of startups have to keep broadening their horizons. This conference offers them an affordable way to do just that.


What type of startup would benefit from your group?

Any startup looking to learn more about not only the PHP language but about a wide range of surrounding technologies including web application deployment, Drupal, Windows Azure and unit testing your applications.


What was the most challenging aspect of starting up the initiative?

The planning has been the hardest part - going in I didn’t know quite what all was involved in setting up a conference, but I’ve found out quickly. I’ve been an attendee at several conferences and have friends that have helped to organize other, similar events and it’s been nice to have them to lean on. There’s so many small details you have to consider and it’s good to have a few people to ask questions when I need a few quick answers.


What advice do you have for entrepreneurs?

I keep coming back to it, but they shouldn’t forget to be constantly learning, whether it be a new technology or a concept that can help their product be the best it can be. If you’re not learning something new every day about the world you and your product exist in, you’re doing something wrong.


What Dallas-based resource have you found to be the most helpful and why?

The most helpful has been the DallasPHP user group. It’s where the event started from and it’s the group that’s providing a solid foundation for it. Quite a few of the speakers are former DallasPHP speakers (and some just may be future ones too).

The Fund Raising Funnel

I spent the earlier part of this spring at the World’s Best Technologies Show in Arlington which highlights technologies from university and government labs moving through the commercialization process. In the session on raising funding the panel provided an interesting perspective on the “funnel” used to describe the fund raising process as follows:

1. Self –fund –80% of the companies do this and it will let you start a company that can grow at 20% a year max.

2. Friends and Family – another source the can generate funding from an emotional investment as well as a financial one.

3. Strategic Partners – sell your product in its early stages (even if it doesn’t fully work) and charge an NRE (non-recurring engineering) fee for it.

4. Angel Groups – there are 300+ of them throughout the USA.

5. Individual investors – sign up the potential investor as a mentor first and then move to the investment stage.

6. Grants – check out grants.gov which lists all the grants the US government has to offer.

7. Early Stage Venture Capital – There are 75 firms in the US operating today. You can find them on PWC Money Tree

8. License/Royalties—you can generate cash for your startup by licensing the use of it to someone in exchange for a royalty stream. It takes $9M of funded research to create 1 license which will last on average for five years and generate $375K of cash to the licensee.

As an angel investor, one of the first questions put to the entrepreneur is what other sources of funding have your tried and in the future what will you consider. If you haven't put your own money into it, it will be difficult to convince others. If you're building a life science or cleantech product requiring a great deal of capital, then government funding is a must.

Best regards,
Hall T.

Take the Investor on the Journey With You-- AV Hours, Feb 22

I encourage startups to meet with investors well before they go out to raise funding to understand better the investors criteria and to build a relationship. Many investors want to see how well the entrepreneur executes on their plan so it's best to take the investor on the journey with you. By the time you go out to raise funding you should have 20 to 30 investors who you are keeping up to date on your progress.

One investor to consider is Austin Ventures. They have dedicated a portion of their fund to early stage, emerging technology companies. Last year they funded Spredfast.

The February 22nd "AV Entrepreneur Hours" event is coming up. To join you can email them at entrepreneurhours@austinventures.com, and give a brief description of your new project. Selected entrepreneurs will get a 20 minute time slot. By Friday the 18th, they will post or email the schedule for the meeting.

Best regards,
Hall T.

Bill Hulsey of Hulsey IP Law Talks about Patent Protection Internationally

Bill Hulsey of Hulsey IP Law Talks about Patent Protection Internationally

Where are you from originally?

I am originally from Memphis, Tennessee.

What university did you go to?

I attended Rhodes College to receive a degree in theoretical mathematics. Then, I joined the U.S. Navy to train in its Navy’s Nuclear Propulsion Program and then serve as a submarine officer in the construction and deployment of Fast Attack nuclear submarines. I later obtained a masters degree in economics from the University of Virginia, in Charlottesville, Virginia, where I focused on the economic factors causing entrepreneurial companies to aggregate in places like Austin, Palo Alto, and the Boston Route 128 Corridor. Finally, I received a law degree from the Vanderbilt School of Law in Nashville, Tennessee with the intention to serve entrepreneurial businesses. These days I find myself at many universities teaching IP and entrepreneurial classes.


What brought you to Austin?

I was an associate at the Baker & Botts law firm and
wanted to come down to Austin to start that firm’s IP practice and to serve entrepreneurial companies in Austin. That was back in 1993. Since then, I have continued to work here, starting my own firm in late 2002.


What is your passion and strength?

My passion is to help companies succeed in an IP-intensive and competitive marketplace. I believe that I and the other IP professionals in our firm have a special focus and ability to serve entrepreneurial and emerging growth companies. Our strong technical capabilities—all of us are first electrical, nuclear, biomedical engineers or physicists—give us the ability to communicate at technologically deep levels with your clients. I have a very strong passion and strength, I believe, in helping young engineers and law school graduates become practicing and highly competent IP professionals. All of this is about growth and development.


What need does it fulfill?

Well, I would say that my passion and strength in focusing on growth and development allow me to take a long view in the service of our clients as we participate in the ups and downs of their entrepreneurial efforts. It also allows me to take a long view with young professionals and to be proud of their many achievements as they prosper and grow.


What exactly do you bring to startups?

Over twenty-five years of working with startup companies and over thirty years of working with some of the most technologically complex technologies of the day. I also bring a deep desire to see our clients achieve their market objectives. I also bring a team of young and aspiring professionals committed to seeing their clients well served.


What type of startup would benefit from your strengths?

A startup seeking to commercialize a technology in one of the fields of energy technologies and applications, bioscience and biotechnologies, electronics devices and systems, environmental technologies and processes, software/Internet technologies and processes, or aerospace technologies. These are IP-intensive companies, generally, and are a good fit for our law practice. Over the years we have been of significant service to companies in these fields to develop IP assets and navigate IP situations as they enter, grow and mature in these markets.


What was the most challenging aspect of starting up a business?

I think that from a legal services point of view, startup companies have a need to protect two things. They need to protect their IP, but they also very frequently or generally need to protect their checkbook. Protecting their IP generally calls for obtaining patent filing dates as early as possible and as inexpensively as possible. But, they should plan for IP expenses to grow as the company grows and becomes more successful. This growth, however, should track or match the revenue that the company generates from selling its products and services and licensing its technology. Keeping this relationship between IP investment and company revenue in “right relation” is an ongoing challenge, but well worth the effort.


What advice do you have for entrepreneurs?

Use the domestic and international IP systems. These systems and the laws that support them are established and operated for their benefit. The state and national governments know that entrepreneurs power our national economy. They have made sure that the IP systems serve their needs. Because of this, entrepreneurs need to know what is in place for them and how to avail themselves of these business tools. Also, check out the U.S. Patent & Trademark Office tutorials, as well as those of the World IP Organization and the European Patent Office. These are on the respective websites and can be of immense benefit to company business and technical leaders.


What Austin-based resource have you found to be the most helpful and why?

I think that two resources in Austin are most valuable for entrepreneurs. They are different, but very tightly connected.
One is our amazing University of Texas. There is not enough time to discuss all that UT does to support entrepreneurs and business here in Austin. But, the IC2 Institute, TechLabs, the MSTC Program, ATI, and all of the technical and professional schools support the local, state, and national economies. This resource in the heart of Austin is great treasure.

The other resource is our excellent Austin Chamber of Commerce. The work of Mike Rollins, Susan Davenport, and Erika Sumner, as well as a large number of other Chamber staff and volunteers, make economic development in Austin the envy of the nation. You know, Austin was named the second most innovative city in the U.S. last year and frequently wins many other such awards or recognitions.

The University of Texas and The Greater Austin Chamber of Commerce play important roles in our being so recognized.

Craig Berlin of the Texas Motion Picture Alliance Gives an Update on the Film Industry in Texas

Craig Berlin of Texas Motion Picture Alliance Gives an Update on the Film Industry in Texas

The Texas Legislature convenes this year with a problem that is not unusual if you look around the country but it is unusual for Texas: a budget shortfall as high as $27 billion. Since Texas cannot deficit spend as the Federal government does, the winds of cutting spending are blowing through Austin with the same hurricane force we hear about Washington, D.C. With so much on the chopping block including every conceivable hurtful sacrifice from closing schools to cutting mental health programs to ending some kinds of aid to victims of child abuse, nothing is sacred. To almost anyone then, ending incentives for film, video and video game producers ought to be a no-brainer.

While conservative “fiscally responsible” think tanks certainly toot that horn and a number of other economic development funds are being targeted, since 2006 it has been the job of the Texas Motion Picture Alliance (http://www.txmpa.org) to educate and inform the public and the Legislature that decreasing funding for the Texas Moving Image Industry Incentive Program will have the opposite of its intended effect, costing the State hundreds of millions of dollars in business and tax revenue and sending jobs elsewhere.

Programs in other states are justifiably being cut not just due to the prevailing mentality but because overly generous and corrupt programs full of loopholes cost their states more money than they made. Seeing that, along with misinformation, has fueled a public and legislative appetite for cutting all programs back.

However, the facts have been largely overlooked or distorted and sometimes overshadowed by outright falsehoods. The truth is that Texas went from being the Third Coast to an afterthought when other states began offering incentives, and when places such as Louisiana went from $20 million in production in 2002 to $620 million four years later, the Texas production community knew something had to be done. The TXMPA was created in a near-panic to effect change and has worked closely with IATSE, the labor union for production crewpeople, to create a conservative but effective program which has brought in over $600 million in production spending since its inception and created thousands of jobs, resulting in tremendous trickle-down spending and tax revenue benefitting every man, woman and child in Texas. It is noteworthy as well that without the program, much of this business would have gone elsewhere. Prison Break, which stayed in Dallas for its third season (the second in Texas), did so primarily because of our new and improved incentive program.

The budget, economic development, incentives and the ancillary subjects are complicated but one thing is for certain: the Texas Moving Image Industry Incentive Program brought jobs and business BACK to Texas and prevented others from leaving – all with a closely scrutinized process that requires that producers come to Texas, spend money and provide documentation of that spending before they get one red cent back. If and when they are eligible they must do due diligence and their grants are structured in a way that benefits both the producers and the State. Our program was designed from the beginning to rely on Texas being a great place to produce on its own so we will never have to give away the farm. However, we do need the program to have adequate funding or once again, the industry will go elsewhere to work.

For more information on the importance of the program please visit our website at http://www.txmpa.org. If you would like to speak to a representative of the Board, please contact us or Hall Martin, who can put you in touch with someone. The TXMPA is a 100% volunteer non-profit organization and we are desperately in need of financial support to help preserve this program, which in turn generates hundreds of millions of dollars for Texas workers and other worthy government programs facing huge cuts. Please contact us to learn how you can help.

Craig Berlin is a graduate of the University of Texas at Austin with degrees in Plan II, the Liberal Arts Honors Program and Radio-TV-Film. He has operated audio-visual production and support company Take 5, Inc. dba/Pro-Tape since 1986 and is a founding Board Member and former treasurer of the TXMPA.

Bob Dipasquale of HumorQ Talks about His Startup

Bob Dipasquale of HumorQ Talks about His Startup

Where are you from originally?

I was the youngest of six children in my family and I was born in Buffalo, New York in 1960. It was a bit of a bumpy start since my dad died when I was three of heart disease, and my mom died when I was 10 from cancer. Soon afterwards, my brothers and I went to live with my oldest sister in Vermont. I continued to start my own family there until November 2006 when we moved to Round Rock. I’m guessing that’s the longest, saddest, and most complicated answer you’ve ever gotten for that question.


What university did you go to?

I guess I want to add to the short list of successful people that didn’t go. I worked as a co-op for IBM when I was in high school, and soon after graduating I got a job in their manufacturing area. I taught myself some software skills, and now after 32 years with them, I’m working remote as an application developer and release engineer for their semiconductor plant in Burlington Vermont. I’ve learned a lot more than software of course by being an IBMer.


What brought you to Austin?

A good Google Earth shot right about now would tell that story best. Winter is long and brutal there and my wife and I really enjoy warm weather. The sister that acted as my guardian ended up here and her grown children and families are here too. Housing, college for my teenage girls, and opportunity are big additional reasons that made Austin a great choice.


What is the idea behind your startup?

I’ve always had a side of me that enjoys writing comedy. One of the ways I enjoy exercising those muscles is to participate in caption contests. I really started to get disappointed though at some of the winners and finalists being selected, so I put on my application developer hat and built one myself. It uses a selection method I call crowd-sifting where members judge other members, and the best rise to the top. As I developed it, I realized we can provide feedback for every captioner, and actually put a reasonable metric on how funny someone is. So HumorQ.com does just that.


What need does it fulfill?

A lot of people would say they don’t need to put a number on how funny they are. There’s still a lot of people that say they don’t need to put a number on how smart they are either. But, there’s a large population of people that are curious and want to know. If we can create a widely accepted humorq, we’ve established a valuable metric for many industries involving creativity and humor.


What exactly does your product do?

HumorQ measures two things for a member, the popularity of their captions, and their ability to recognize popular captions when they are judging the captions of others. It uses an algorithm that calculates and maintains a humorq for each member which is a number between 1 and 200. I’ve built it such that your humorq requires maintenance. Just because you we’re funny last year, doesn’t mean you’re funny now.


Who is it for?

It’s for creative directors, advertising executives, script writers, greeting card writers, singles, bored housewives, and everyone with a handheld device and five minutes for a creative exercise.


What was the most challenging aspect of starting up a business?

I would use the word ‘is’ rather than ‘was’. I’ve built a working prototype, and a very modest membership base, but I’m finding the most challenging part to be building a team.


What is the next step for you and your startup?

Building a team is the obvious next step, and as I mentioned a significant challenge. I think there are probably many readers that see the merit and potential of this idea. At the same time, they see the captain of the ship with no degree, no startup experience, and oh yeah … no money, and their better judgment sends them in another direction. I need to find equity partners that can fill those significant voids. I need person(s) that are smart enough to know that most ideas are dead without the right team, but that there are some ideas that quite frankly don’t deserve to be dead. I’m ready to give up all but control in exchange for a team of people that can put this together with me and bring the capital needed to get going. Meet with me, and I’ll show you my business plan and that I have what it takes to grow this idea with the right teammates and vendors. So visit the web site http://www.humorq.com , and contact me (Bob DiPasquale) by email bob@humorq.com.


What advice do you have for entrepreneurs?

Simply said. Don’t give up.


What Austin-based resource have you found to be the most helpful and why?

I took the Startup Business Class offered by the Austin Entrepreneur Network. It was extremely eye opening, and I made some significant contacts there. It taught me about the many facets and levels of startups, and exposed me to a group of people all nurturing ideas at different steps along the journey. I’m very grateful for what that experience extended to me.

Best regards,
Hall T.

Terry Chase Hazell Talks about RampCorp

Terry Chase Hazell Talks about RampCorp


Where are you from originally?

I’m originally from Pottstown Pennsylvania, then home of Mrs. Smith’s pies. We used to throw plastic army men into the pumpkin trucks as they went under the climbing tree in the front of our house. I still look for those men in pumpkin pies. I moved to Maryland in High School and lived in Maryland until I moved to Georgetown Texas in 2008.


What university did you go to?

I went to the University of Maryland College Park (UMCP). I almost became a life-time Terp!

My internship in High School was with Martek Biosciences Corporation and they did work at the scale-up facility at UMCP. I went to UMCP as an undergrad, then managed their scale-up facility through graduate school, then started a spin-out company from UMCP, married a professor of UMCP (not one of mine!), moved my company into the incubator at UMCP, became a UMCP CCLS Board of visitor member, my kids went to the UMCP preschool, I spoke at commencement, I started a second company at UMCP….finally decided 20 years was enough and moved to Texas.


What brought you to Austin?

We wanted to relocate within Maryland, but I met some Texans at NIH and they told me of the “magical” entrepreneurial environment in Texas. I didn’t think “entrepreneurship” when I thought of Texas, so I visited to check it out. I loved Austin, but wanted to be a little bit out of town. My husband pointed at the map and said “check out this Georgetown”. I did and loved Georgetown’s mixture of small town feel but high-tech spirit. So we moved to Georgetown.


What is your group’s mission?

We aim to increase the number of women-led growth companies through-out Texas. Texas State RampCorp Austin provides training and coaching for women who are or who want to be running a scalable business.


What need does it fulfill?

Texas State RampCorp provides women with specialized coaching, and an access to network of men and women to learn knowledge and skills to more successfully scale their businesses. Also, we offer women the opportunity to gain support from other women building big businesses but starting small. Often women find themselves to be the only one in a group for scalable or technology entrepreneurship—we provide dozens of peers.


What exactly does it bring to startups?

Often our members have not started a business and they launch in the program. Start-ups that have already launched learn methods to lead, connect, fund and scale their business.

We teach 16 “Ramps” toward scaling your business. These Ramps include 8 knowledge and 8 skills that all entrepreneurs, especially women need to be successful. Check out our list of resources for one of our Ramps at http://www.mindmeister.com/74492521/the-ramps-scalable-business-model

We offer lots of one-on one coaching and access to our expanded networking. Check out the team of investors, inventors and entrepreneurs providing help… http://www.txstate.edu/rampcorp/team.html

We offer women “sponsorship”—meaning we get them connected with people and organizations they need to know and we advocate for them. Once such organization is Springboard Enterprises that has helped women raise $5 Billion.

See some of the quotes from women helped by our team…
http://www.txstate.edu/rampcorp/Team-info.html


What type of startup would benefit from your group?

We’re looking for startups led by a CEO with the determination to grow the company beyond her own labor, to serve a national or international market, to choose a scalable business model and to generate economic value for her and her company’s stakeholders.


What was the most challenging aspect of starting up the initiative?

The most challenging aspect of launching in Texas was finding a University brave enough to bet on training for women entrepreneurs to launch scalable and emerging technology ventures. It was also challenging to branch away from the ACTiVATE program. Although challenging, both items worked out great.
RampCorp is a program of Texas State University and I don’t think we could have found a better place to grow. Texas State funded the program and not only continues to support it, but has expanded all commercialization efforts. Texas State is agile, hungry for connection with companies and forward thinking. I may like the Bobcats better than my Terps now—but don’t tell.

I came to Texas with the idea to run the ACTiVATE program just like the University of Maryland Baltimore County program where I taught. I led the first expansion out of Maryland and used the name with permission from UMBC. I found we needed to make so many changes to fit Texas that what is now RampCorp didn’t fit the vision of the ACTiVATE program—so we branched away. ACTiVATE is a great program and continues in Texas and is now expanding in many other locations outside of Maryland.


What advice do you have for entrepreneurs?

For women, to realize that we do often think and learn differently and to seek entrepreneurship training and support to understand those differences, optimize differences that are strengths and improve where differences hurt competitiveness. At the same time, remember your network is your greatest asset and spend the time to build and maintain it.


What Austin-based resource have you found to be the most helpful and why?

Number 1 is certainly Texas State!

Coining Austin as the Human Capital is very apt. I found the people to be the best resource. Robin Curle, the “Galaxy of Entrepreneurship” has been a change agent, leading instructor and champion for our program. The Austin Chamber was immensely helpful and introduced me to resources, connected me and helped find a “home” for the training program. Terapio and Curt Bilby helped me get connected and provided some temporary employment as I transitioned. The entrepreneurship scene stewards group and Bijoy’s great map of entrepreneurship scene is a model for many cities. So I guess those Texans at NIH were right—“magical”.

Austin Venture's AV Hours -- A First Look

I encourage startups to meet with investors well before they go out to raise funding to understand better the investors criteria and to build a relationship. Many investors want to see how well the entrepreneur executes on their plan so it's best to take the investor on the journey with you. By the time you go out to raise funding you should have 20 to 30 investors who you are keeping up to date on your progress.

One investor to consider is Austin Ventures. They have dedicated a portion of their fund to early stage, emerging technology companies. Last year they funded Spredfast.

The February 22nd "AV Entrepreneur Hours" event is coming up. To join you can email them at entrepreneurhours@austinventures.com, and give a brief description of your new project. Selected entrepreneurs will get a 20 minute time slot. By Friday the 18th, they will post or email the schedule for the meeting.

Best regards,
Hall T.

Got Funded: A Rounds in Austin Start-ups!

Texchange Austin will hold its next event on Tues, Feb 8, from 6 to 8pm at the AT&T Center

Austin's high-tech entrepreneur CEOs will share their stories about the journey of their start-ups from concept to funding. They will share the positives of their rides, the "avoid this" list and hints and tips to get a start-up from idea to funding. They will share how their journeys as first time leaders/founders of start-ups put them at an advantage or disadvantage in the current funding climate. The "repeat offenders" aka "serial entrepreneurs will share how this time was different than in the past. The CEOs on the panel and the discussion leaders have raised their first institutional round of capital for their companies from Austin to California and beyond in the past year.

The Moderator: Kip McClanahan, Partner, Silverton Partners


The Panelists are:

Brian Magierski, CEO & Founder, Appconomy

Rick Orr, CEO, TabbedOut

Larry Warnock, CEO, Gazzang

To register Click here.