Seattle startup raises $1.3 million to encrypt the cloud
Kory Gill’s “a-ha” moment came in the form of a lightning bolt that struck his Seattle home and fried his computers. In the aftermath, his wife’s main concern was whether their digitally stored family photos had survived the blast.
“What more of a sign do you need to go start this company?” Gill recalled his wife asking him, who used the scare to leave a 20-year career at Microsoft (MSFT.O) and launch his own online backup company.
Three years later (Reuters first interviewed Gill in 2009), Gill and co-founder Marius Nita – a former Microsoft colleague – are seeing some traction with Newline Software Inc, having launched the first version of their online storage product, Exact, into the market in August.
Gill told Reuters they have just closed their latest financing round – Newline’s third – to bring their total funding to $1.3 million. The money, raised from friends and family, will be spent on improving the product, growing the brand and building a new software platform that will allow Newline to encrypt every piece of data stored online, or in “the cloud,” said Gill.
The platform called OPTIC (Online Privacy Technology In the Cloud) is an application programming interface (API) that Gill hopes will give Newline a competitive advantage over much larger rivals such as Carbonite and Mozy.
“There are a lot of online backup products out there so we needed a way to differentiate ourselves,” said Gill, referring to OPTIC as an “index to encrypt data in the cloud.”
Newline is really two different companies: an online data storage service (Exact) where users store files and a software program (OPTIC) that is able to protect and archive sensitive data stored anywhere on the Web.
Twilio raises second microfund from angels McClure, Conway
– Alastair Goldfisher is a contributor for PE Hub, a Thomson Reuters publication. He was also part of the judging panel at the Twilio Conference with Paul Singh of 500 Startups and Manu Kumar of K9 Ventures. This article originally appeared here. –
This week at the Twilio Conference in San Francisco, 500 Startups founder Dave McClure announced the launch of a second Twilio MicroFund of $250,000 to invest in companies that are based on Twilio’s Connect platform.
McClure and Ron Conway of SV Angel will each invest $125,000 in the fund. McClure will manage the investments, with Twilio serving as an advisor.
Twilio, a 500 Startup’s portfolio company, provides cloud-based telephony services. The San Francisco-based company, which is hosting a two-day conference, has raised more than $15 million in venture funding from 500 Startups, Bessemer Venture Partners, Union Square Ventures, Lowercase Capital and numerous angel investors.
The first Twilio MicroFund of $250,000 was supported entirely by McClure and launched in late 2010. It has funded 10 companies to date: Callyo, FastCall411, KnockKnock, Magnolia Prime, Order Mapper, Proven, Qwipd, Textaurant, Voicendo and Volta.
Twilio co-founder and CEO Jeff Lawson told me that the idea for the fund came from a McClure tweet, which he posted not long after backing Twilio initially in 2009. In the tweet, McClure said he had invested in his fourth startup based on the company’s platform.
“Dave was already investing in Twilio companies, so we decided to formalize the process,” Lawson said.
Why venture capitalists invest in pigs, not chickens
– Jeff Bussgang is a former entrepreneur and partner at Flybridge Capital Partners. This article originally appeared on his blog Seeing Both Sides. The views expressed are his own. –
There is an old parable about the concept of commitment when it comes to breakfast. The story goes that when looking at a plate of the traditional fare of ham and eggs, it’s obvious that the chicken is an interested party, but the pig is truly committed.
When I tell this story to entrepreneurs, my point is usually to contrast the approach venture capitalists have to startups as compared to entrepreneurs. The VC is an interested party, but at the end of the day, if their startups live or die, they typically still have their job, their office and their portfolio of other investments. The entrepreneur, on the other hand, is the pig – truly committed to the outcome, with no fallback.
But lately I’ve been thinking about the parable of the pig and the chicken in the context of the characteristics that make a great entrepreneur – and the kind of entrepreneur that we VCs in general, and my firm Flybridge Capital in particular, like to back. In short, we like to back pigs – entrepreneurs who are truly and completely committed to the outcome of their venture, have a lot of stake, and no fallback.
How do we discern the difference between the two entrepreneurial archetypes? It’s usually relatively easy, but sometimes subtle. Here are a few of the top characteristics we see in entrepreneurs who appear to be exhibiting behavior that suggests they’re more like “chickens” when it comes to their startup:
1) Prefer to wait to start their venture only after they receive funding (“We are ready to go, as soon as you give us your money.” …um, does that mean you won’t start the company if I don’t give you my money?).
2) Don’t quit their day jobs before receiving funding. (“This has been a side project for a year, and I can’t wait to focus on it full-time” … um, if you can’t wait – why are you waiting?)
Why governments don’t get startups
– Steve Blank is a serial entrepreneur. He teaches at Stanford University, U.C. Berkeley’s Haas Business School and at Columbia. He is the author of “The Four Steps to the Epiphany” and “Not All Those Who Wander Are Lost”. This article originally appeared here. The views expressed are his own. –
Not understanding and agreeing what “Entrepreneur” and “Startup” mean can sink an entire country’s entrepreneurial ecosystem.
I’m getting ready to go overseas to teach, and I’ve spent the last week reviewing several countries’ ambitious attempts to kick-start entrepreneurship. After poring through stacks of reports, white papers and position papers, I’ve come to a couple of conclusions.
1) They sure killed a ton of trees
2) With one noticeable exception, governmental entrepreneurship policies and initiatives appear to be less than optimal, with capital deployed inefficiently (read “They would have done better throwing the money in the street.”) Why? Because they haven’t defined the basics:
What’s a startup? Who’s an entrepreneur? How do the ecosystems differ for each one? What’s the role of public versus private funding?
Six Types of Startups – Pick One
The entrepreneur’s equivalent of “10,000 hours”
– Mark Suster is a former serial entrepreneur and a partner at Los Angeles-based GRP Partners. This article originally appeared on his blog “Both Sides of the Table”. The views expressed are his own. –
50 coffee meetings. It should stick in your head as a metaphor for networking. For getting outside of your comfort zone. For starting relationships today that won’t pay off for a year. It’s the entrepreneur’s equivalent of “10,000 hours.”
Anybody who has spent any time with me in person will be tired of this advice because I give it so frequently. It’s a piece of actionable advice that if you put into practice starting next week, will start paying dividends in the near future. There’s a direct correlation to your future success.
5 meetings/week = 250/year.
Imagine the human progress you could make with 250 short, relationship-focused meetings.
Here’s why it’s critical:
1. Recruiting. Are you looking for great engineers? Talented brand sales people? A smart young marketing exec? If you wait until you need to fill somebody in a roll, you’re losing valuable time as an entrepreneur. You should always have a steady stream of “friend of the firm” hanging around your company. You invite them to cocktail parties. You send them update emails. You don’t have a budget for them – not yet. But when you do, you’re ready to go.
How much money do I need for my startup?
– Tim Berry is the president and founder of Palo Alto Software. This post originally appeared on his blog, “Planning, Startups, Stories”. The views expressed are his own. –
It’s an obvious question. And if you’re looking for startup investors you’d better be able to answer it well, and quickly too. No wandering eyes. No doubt. If you’re doing a pitch, have a slide for it. And be specific.
I liked this from Ben Yoskovitz’s Instigator Blog on Use of Funds:
… most descriptions of “use of funds” are incredibly generic and standard, typically involving the following: hire key personnel, product development, sales & marketing. Hhhm…the phrase, “No s!@# Sherlock…” comes to mind.
And on the other hand, there’s this about that, from Perfecting Your Pitch, by Guy Kawasaki’s Garage.com Ventures:
It should be clear from your financials what your capital requirements will be. On this slide you should outline how you plan to take in funding — how big each round will be, and the timing of each — and map the funding against your key near-term and medium-term milestones. You should also include your key achievements to date. These milestones should tie to the key metrics in your financial projections, and they should provide a clear, crisp picture of your product introduction and market expansion roadmap. In essence, this is your operating plan for the funds you are raising. Do not spend time presenting a “use of funds” table. Investors want to see measures of accomplishment, not measures of activity.
So go figure. There are two opposite points of view from two good sources.
The coming brick wall in venture capital
– Mark Suster is a former serial entrepreneur and a partner at Los Angeles-based venture capital firm GRP Partners. This article originally appeared on Suster’s blog “Both Sides of the Table”. The views expressed are his own. –
This is the final part of a three-part series on the major changes in the structure of the software and the venture capital industries. Read Part One and Part Two.
Or the Cliff Note’s version:
- Open source and cloud computing (led by Amazon) drove down tech startup costs by 90 percent
- The result was a massive increase in startups and a whole group of new funding sources: both angels and “micro VCs”
- With more competition in early-stage many VCs are investing smaller amounts at earlier stages. Some are going later stage to not miss out on hot deals. I call this “stage drift.”
- The opportunities for tech startups today are more immense than they’ve ever been with billions of people now connected to the Internet nearly all the time.
But …
Downsizing Venture Capital
The venture capital business itself is going through an even more fundamental change than just the entry of a new category at the earliest stage. The industry is shrinking back to a mid-90′s level in terms of both dollars and numbers of firms.
Flipboard founder on venture capitalists: “Take their money”
– Connie Loizos is a contributor to PE Hub, a Thomson Reuters publication. This story originally appeared here. The views expressed are her own. –
Many entrepreneurs privately disparage venture capitalists as egoistic, autocratic, and increasingly unnecessary. Not serial entrepreneur Mike McCue. He believes in VC.
Case in point: McCue’s newest startup, Flipboard, a 20-month-old iPad application that transforms social media feeds into an elegant, print-like magazine. Though the Palo Alto, California-based company has yet to develop a business model — McCue is contemplating running full-page ads and allowing publishers to charge subscriptions to their Flipboard-rendered content — Flipboard has already raised $60 million in venture capital from Kleiner Perkins, Index Ventures, and others.
One can certainly see what some of the excitement is about. Thanks to the work of company’s 40-odd employees, Flipboard is a slick product. Nevertheless, when I asked McCue earlier this week if he knows how many people use the application on a daily basis, he answered, “Yes, I do,” laughed politely, then offered some metrics that Flipboard prefers disclosing, including that the app has been downloaded 2.8 million times, and that every month, people “flip” between 400 million and 500 million pages.
The numbers suggest some meaningful engagement, but McCue’s confidence in his ability to turn Flipboard into a billion-dollar company seems closely bound to his track record with his investors.
McCue and Index Ventures’ Danny Rimer speak each other’s unspoken language fluently. Two times in the past, Rimer has pulled out his pen and written McCue his first check with nary more than a cursory description of McCue’s plans for the money. “It’s great to have people who believe in you,” said McCue.
Meanwhile, McCue is so tight with Kleiner Perkins that when he was appointed to Twitter’s board last December, many assumed his role was to serve as Kleiner’s inside man. (Late last year, Kleiner led a $200 million Twitter round but couldn’t take a seat on the company’s board because of conflicting investments.)
Angels vs VCs on business pitches
– Tim Berry is the president and founder of Palo Alto Software. This post originally appeared on his blog, “Planning, Startups, Stories“. The views expressed are his own. –
Recently I caught Business Insider’s “Five VCs Explain What They REALLY Think About Your Pitches“. It’s a great post, gathering points together from discussions with several high-end venture capitalists. If you’re looking at venture capital, read it.
Part of what they said reminded me that angel investors and VCs have a lot in common. For example, these important points:
- Keep it short
- Avoid buzzwords
- Answer questions quickly without getting defensive
- Be a good storyteller
- Know the people you’re pitching
- Don’t forget the financial info
I’m pretty sure all of the investors in my local angel investor group would agree with every one of those. I particularly like the three about answering questions, telling stories, and not to forget the financial info. Those three are critical.
Some of the other points, however, remind me of the differences between VCs and angels. For example, the VCs say introductions matter:
The person introducing the entrepreneur is a big deal — if (the VC quoted) doesn’t trust the referral, he won’t even take the meeting.
Is Airbnb growing too fast?
– Connie Loizos is a contributor to PE Hub, a Thomson Reuters publication. This story originally appeared here. The views expressed are her own. –
Airbnb is on a tear. Three years after the San Francisco-based company began inviting real people to list for rent their homes and apartments, castles and houseboats, users have booked 1.9 million nights in more than 184 countries; bookings are growing an astonishing 40 percent month over month; and roughly 1,000 new properties are entered into its system each day.
The company is growing so fast, in fact, that it’s reportedly raising $100 million at a whopping $1 billion valuation — a mighty addition to the $8 million in capital it has previously raised from Sequoia Capital, Greylock Partners, and numerous individuals.
Unfortunately for Airbnb, all the hype has captured the attention of the Samwer brothers, who’ve famously created a number of successful clones. Indeed, just two weeks after rumors of Airbnb’s massive fund-raise surfaced, the Samwers’ months-old European clone, Wimdu, announced it raised $90 million.
Considering that the majority of Airbnb’s business comes from Europe, one might consider the development troubling. But Brian Chesky, Airbnb’s 28-year-old CEO and co-founder, said he doesn’t think that it “changes things much. We were always expecting some competition. We just have to grow as quickly as possible.”
The question is: how fast is too fast? For example, Chesky talks about the challenges of building what he anticipates will fast become a thousand-person organization. Airbnb has already absorbed employees through one startup, Accoleo, for which it paid an undisclosed amount. And while Chesky said he “can’t confirm (Airbnb’s) rumored ($100 million) financing,” he added that “we’re open to other acquisitions.”
Yet hiring the right people is “inherently very complex,” said Chesky — even before folding entire companies into Airbnb, which now employs 130 people in San Francisco and Hamburg and has begun training people in “batches” of 15. “The product, the Web platform – you develop a playbook that allows (the business) to scale itself,” he said. “But when you’re hiring two or three people a day, keeping the culture and ensuring that people are aligned is complicated.”
