Saturday, December 1, 2012

Tim Rothwell of UMeTime Talks about His Startup

Tim Rothwell of UMeTime Talks about His Startup

Where are you from originally?

I was born in Richmond, Virginia and moved around to ½ dozen states before settling down in Westlake Village, CA, which is 45 min. north of Los Angeles.

What university did you go to?

San Diego State University to study Business Management and a semester at Stockholm University School of Business to study Business Entrepreneurship.

What brought you to Austin?

I’ve been coming to Austin for the past 3 years on and off. I have good friends that grew up in Austin and we would travel here every opportunity we could. (ACL, Halloween, UT Football games). This city began to grow on me, and I soon realized that I belong in Austin.  In search of a launch market for UMeTime, we quickly recognized that Austin would be the best market to launch the technology in a University-based setting … much different than our sister launch markets of Santa Monica and Venice Beach, California.

What is the idea behind your startup?

I moved up to Los Angeles following my studies with Brett Berman, who has been my best friend of 12 years and business partner in UMeTime. It’s quite funny how we came up with the concept of UMeTime. The very first bar that we went to was a hip place on Abbot Kinney in Venice Beach. We were shocked when our beers were $9 a piece, given that we were absolutely broke! Our solution at the time was to subscribe to all of the daily deal sites to receive all of the best offers from businesses in our local area. Within a few days we quickly realized that this was a mistake as our email inbox began to overflow with Brazilian Bikini Wax-type offers from “local” businesses that happened to be 45 minutes away. Out of curiosity, we began to research how participating merchants of these daily deal services were treated, and the types of customers who were redeeming the offers.

What need does it fulfill?

9 out of 10 businesses require marketing solutions that are targeted to deliver local, loyal and regular customers on terms that do not cannibalize their current profit margins. The market response of the early entries to the "discount" marketplace, including household names such as Groupon and Living Social, deliver distribution channels for deeply discounted offers BUT only on terms and conditions that the merchant cannot possibly sustain.
On the other end, UMeTime allows locals to see what’s happening around them right now, from businesses that they actually like. Everybody likes to support local business, they just don’t really know how to do it.

What exactly does your product do?

UMeTime is a tool that allows businesses to connect with local customers in real-time.  Business owners are in complete control of the technology, and can use it however and whenever they’d like … speed up their slow hours, fill empty chairs and tables, and sell a new product or service. UMeTime delivers local customers into the door, so the chances of them turning into a repeat customers is much greater. Plus, merchants can test the effectives of their campaigns with UMeTime’s Merchant Management Tool Suite, which provides real-time analytics and reports. Think of UMeTime as a marketing solution rather than a daily deal website.

UMeTime is also a free mobile application that connects consumers with local businesses and deals that are happening around them right now. With the “Blast Out” technology, users have the ability to receive notifications from all Food and Beverage merchants that are running specials at any given time in their immediate area. “My Tab” is a consumer’s personal filter tool to customize their “deal-feed” and choose individual merchants that they want to receive instant offers from. No more spam, no more distant offers, and no more Botox specials! Support local Austin businesses and connect like never before!

Who is it for?

UMeTime focuses on businesses with four primary offerings: Food and Beverage, Health and Beauty, Shopping, and Entertainment, this also includes the music venues.
The mobile application is meant for anyone who spends time downtown. UMeTime is a great way to experience new, local businesses that you otherwise don’t know about, while saving money and having fun at the same time.

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

I’ve found that the most challenging aspect of starting up a business is deciding to take that step forward with your concept. When the idea is first conceived, it is very fragile and vulnerable. Deciding to pursue your idea and launch a small business is a barrier that many do not break past.

What is the next step for you and your startup?

The next step for UMeTime is to launch the technology in Austin. We think were off to a good start. We have over 100 businesses on board who will be using the technology when we go live. Our goal is to integrate into the community, and become the “local app” for Austinites and local business. We are working to establish a strong presence at UT, as well as in the community. We’d like to create a very unique experience for our customers, one that they’d be happy to share with their friends and family.

What advice do you have for entrepreneurs?

Always be innovative and trust your gut! Never be afraid to make the tough decisions that will benefit your company in the long run.

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

UMeTime has turned to the resources provided by the Texas Entrepreneur Networks in regards to funding, building strategic partners, and identifying the various networking events throughout Austin. 

Sunday, November 25, 2012

Valuations Rising throughout the Country but not Texas

The Angel Capital Association surveys select angel groups throughout the country each year regarding valuations.  For those who are new to angel investing, valuation is the price the investor pays to take an equity stake in a company.  The higher the valuation of the company, the lower the percent ownership the angel investor receives.  You can see the current survey results here. The Baylor Angel Network is listed in the survey.  While their number is higher, it represents a limited number of deals and doesn't necessarily reflect valuations overall.

In short, the survey says valuations are going up in angel groups throughout the country.  During the last Angel Capital Association Summit which is the annual gathering of angel groups, I spoke with several group leaders about what they saw in valuations.  Most of the group talked about how valuations were going up.  Some attributed the lower starting point to the depressed stock markets from 2008 and as the stock market recovers so too would valuations.  Others pointed to the lack of other alternative investments.  There appears to be a definite move away from venture capital funds and private hedge funds.  In talking with investors, they are tired of paying the management fees and carry on what has turned out to be mediocre if not outright disappointing results. Many investors are opting to make investments directly into startups which is pushing up the price.  

Watching dealflow throughout the state of Texas, I haven't seen a strong increase in valuations, yet.  I say, "yet" because I predict the valuations of startups will rise in Texas.  It may be 2013 will be the year that valuations will take a step up.  While there are many deals seeking funding there are a limited number of deals that are attractive to investors.  So what is attractive to investors?  Deals that can pay out sooner in the form of revenue-sharing or dividends are quite attractive.  Fo entrepreneurs who have 40% gross margin or better  I now talk with them about paying back investors through cash flow.  This is called revenue based funding because the investor gets a piece of the revenue rather than equity.  Five years ago, if you offered this deal to investors they would have said no thank you, wanting to see a large return through the sale of the company. since then, buyouts have stretched from a 3 to 5 year window to closer to 9 to 11 years.  The average life of a company today from startup to exit is just under 12 years. This is why investors today find the revenue model much more attractive.  

If you are raising funding, consider a model in which you offer a share of the revenue rather than or in addition to equity.  You'll find an attentive audience with the investors.

Best regards,
Hall T.