Sep26th2007
I still am amazed at the amount of companies that I encounter that operate without any sort of business planning whatsoever. There are many types of business planning activities that a company should spend time on:
- Marketing plan: what do you sell and to whom do you market toward? This is rudimentary analysis and modeling that is a must…how can you expect long term value creation of you do not even know your market? I recommend the work of Geraldine Fennell as a primer for creating a good marketing plan (Fennell, Geraldine, and Greg M. Allenby (2003) “Market Definition: A Strategic Task,”Marketing Research, 15,2, 32-37.)
- Pricing analysis: what type of pricing strategy should you employ that addresses both tactical and strategic objectives? What are the economics of your product or service. There is a great article from back in the day entitled “Beyond the Many Faces of Price: An Integration of Pricing Strategies” by Gerard J. Tellis, Journal of Marketing, Vol. 50, No. 4 (Oct., 1986), pp. 146-160 (here is a link to the article on JSTOR.) Remember, pricing is both a financial and marketing function that is both tactical and strategic.
- Financial modeling: given a set of assumptions, how much capital will the business consume or create over an extended period of time? Every decision we make in life is based on risk and return…yet many in business do not take this process to a more structured level. I have seen more business models fail because they outgrow their capital base as opposed to bankruptcy or lack of sales.
Whenever the question of planning comes up, I almost always hear that it is postponed because of a lack of time to spend on it or inexperience in going through the process. Sometimes business leaders will point to a budget that they are held accountable to but rarely understand how it was prepared. I am personally not a fan of budgets as they are limiting and tend to be a waste of time. My position is to focus on rolling forecasts that are driven from the bottom up and sail accordingly (here is a link to a webcast from last year that talks more about implementing rolling forecasts.)
Sep25th2007
Hi All! You may or may not have noticed a new tab at the top of our blog leading to a new directory of startups in Houston. If not, you can also click here to get there. We are just getting started, so you may only notice a couple of companies at first, but stick around and you will see it grow to include a much longer list than you thought existed.
Also, since we are leveraging the ListPhile service to build this directory, there are several advantages. One, it allows for the import of multiple images; including logos, screenshots, and photos of company personnel (OK, maybe we’ll leave that one off). Two, it also allows for the inclusion of video (think demos and other promotional items). Finally, it also allows for input from the community. That includes everything from adding comments to submitting your company for inclusion in the list. So there, you don’t even have to wait for us to add your company, you can follow the link to our list (here) and add your company yourself (subject to moderation).
We hope that you find value in this and in some of the other directories that we will be adding soon. Do you have an idea for companies you would like to see listed or for any new types of lists? If so, leave your feedback in the comments section. Thanks!
Sep25th2007
A new research report from the Center for Venture Research at the University of New Hampshire shows some interesting trends in angel investing throughout the US:
- Angel investing is down 6% in the first half of 2007 compared to the first half of 2006;
- Whereas the amount of angel investment declined 2%, the number of angels investing in deals was up 8%;
- Another view of this same trend is that the average deal size declined 4% while the number of angels per deal was up 10%;
- Sectors seeing the largest deal flow were Healthcare/Life Science (22%), Software (14%), Biotech (10%), Electronics/Computer Equipment (10%), IT Services (10%), Retail (10%), Industrial/Energy (10%) with various high tech sectors filling in the remaining pieces;
- Seed and startup stage funding represented 42% of total angel investments while 48% represented post-seed investing;
- To demonstrate the risk that angel investors take, 61% of angel exits were from a sale of the business while 33% were from bankruptcies (remaining 6% from IPO);
- Blending an average 30-40% return on investment on those exits with the bankruptcies, the average yield that angel investors are seeing right now is about 19%, off from a high in the 2000 bubble of 23.3%.
So there are more angels doing fewer deals, more of which are post-seed funding opportunities generating a yield somewhere from 20-25%. To provide a basis for comparison on return, the S&P 500 5 year yield is around 11.4% right now (did the math myself so may be off a little).
What I get from all of this is an evolution of the angel investor market. Here are some things to consider:
- Private equity has been looking at the public markets to privatize companies as an investment vehicle. The credit market crunch is putting a crimp on this right now, however;
- Venture capital is seeking more mature deals to invest in in an effort to mitigate some risk inherent in venture investing. Just look at Austin Ventures‘ recent track record to see that they are clearly not doing venture investing;
- Given that shift by venture capital “up market”, an opportunity has been created for angel networks to organize and make more Series A investments which tend to be less risky than seed funding startups.
Where does that leave the startup markets? For some time there has been a capital gap for startups that is now being “exacerbated” by these angel investing trends. Just ask any startup entrepreneur to validate that assumption.
Perhaps this explains the increased visibility of so-called incubators around the globe. There is definitely an opportunity for firms to get into the seed funding business since the traditional sources seem to be vacating the space.
Sep22nd2007
Startup Weekend - Houston is next weekend. Are you excited? Several sponsors have already been lined up for the event:
Kurt and I will be blogging the time away throughout the event and will have some special guest bloggers as well. Get ready to get started!!!
Sep17th2007
“Because opening up the site just wasn’t enough, apparently: Facebook is branching into a new role as an investor. The company has announced a new program called FBFund to provide grants to developers who are interested in creating applications for the Facebook Platform. FBFund, with cash infused by Facebook investors Accel Partners and the Founders Fund, will start with $10 million and will provide $25,000-$250,000 grants to developers who apply for the program. The fund’s investment committee will consist of Facebook founder Mark Zuckerberg, vice president of product marketing and operations Charmath Palihapitaya, and board members Jim Breyer of Accel Partners and Peter Thiel of the Founders Fund.”
Check out the CNet piece by Caroline McCarthy here.
Sep17th2007
Join us for the next Houston OpenCoffee Club on Thursday, September 20th!
About : The Houston OpenCoffee Club encourages open and informal discussion and networking among entrepreneurs, technology enthusiasts, and investors to help grow startup companies in the Houston area.
At this month’s Houston OpenCoffee Club we are going to spice things up a bit and give all entrepreneurs an opportunity to record their 90 second elevator pitch on video. Afterwards, we will post the video here on the StartupHouston web site.
Thursday, September 20th, 2007
8:00AM - 10:00AM
The Coffee Groundz
2503 Bagby St
Houston, TX 77006
(713) 874-0082
Map
You can RSVP here: http://entrepreneur.meetup.com/1424/calendar/6356626/
You can find additional information on the Houston OpenCoffee Club on our Meetup page and on the StartupHouston blog. You can also find information about how OpenCoffee Club got started and what it is all about here and here.
Finally, make sure to also save the date for our other upcoming OpenCoffee Club meetups on Thursday, Oct. 18th, and on Thursday, Nov. 15th. You can see the latest event info here or on the StartupHouston Calendar.
Sep14th2007
Houston based life science startup, ThromboVision announced today the closing of a $4 million Series A round of financing from National Health Care Services and a group of private investors. The company plans on using the funds to build an infrastructure and fund clinical trials of their ThromboGuide product towards FDA approval. The system will help physicians individualize antiplatelet therapy that they use to prevent heart attacks, strokes and stent occlusions.
In conjunction with the closing of this round, the company also announced securing a $750,000 credit facility with Silicon Valley Bank.
Sep14th2007
If you’ve been to an OpenCoffee event recently you may have met Misty Khan and learned about her new sales contact management software, Huntress Pro. If you are a networking fiend like I am and are tied to Microsoft Outlook, you will appreciate this new release that addresses the shortcomings of Outlook.
I had a chance to speak to Misty about this new release…here are some excerpts from our chat:
Josh: When did you get the “entrepreneurial bug” that led you to start Advena Artemis?
Misty: Entrepreneurialism is pretty much in my blood. Growing up and watching my parents and other family members sweat payroll and deal with all the other less glamorous issues that business owners deal with, I swore I wasn’t going that route. But eventually it sucks you in! During my attempt at being a stay at home mom (after trying it myself I have the deepest respect and appreciation for women who stay home with their children) I got a lot of offers to come back to work either in sales or as a sales consultant. My husband suggested that instead of working for someone else where I would likely have to travel or at least face a daily commute, I start my own business and market the system that I had created in Outlook to help manage my prospects (the precursor to HuntressPro). That was about 4 years ago.
Josh: So tell me about Huntress Pro and the product launch.
Misty: HuntressPro is a Microsoft Outlook add-in that provides contact management functionality such as call lists, referral source tracking and sales activity reporting. I began creating HuntressPro when I was a sales person to help me remember who I needed to talk to each day and what I needed to talk with them about. Our HuntressLite product addresses that need specifically because for some of my clients that don’t necessarily have business development responsibility, but do a lot of networking, that is all they need. As my needs evolved for things like sales activity reporting and referral source tracking, I continued exploring ways to meet them in Microsoft Outlook; those solutions eventually became HuntressPro. We also have a HuntressPro plug in that creates a sales pipeline as well as win and loss reports that help pin point which referral sources are providing the best ROI and which investments will pay for themselves. We are launching our HuntressPro.com site with those three products, but we expect our offerings to increase as we convert more of the industry specific functionality we have developed for custom software clients into additional HuntressPro plug ins.
Continue reading ‘Interview with Misty Khan of HuntressPro’
Sep12th2007
I received an email from Marc Nathan over at the Houston Technology Center reminding me that the Rice Alliance is having their annual I.T. and Web 2.0 Venture Forum on Thursday, Nov. 8th.
Actually, as recently as last year it was known as just the I.T. Venture forum, but this year it appears that they have added Web 2.0 as an additional focus. I think it goes to show just how far Houston’s startup community has come along in the past few months that they have added Web 2.0 as part of the title.
Some other important notes:
- The deadline to apply is Friday, Sept. 21st. You can apply by emailing your 2-page non-confidential executive summary to tvforum@rice.edu
- There are three parts to the Forum:
- The Elevator Pitch - Up to 60 companies will be chosen to participate in this and if you do nothing else, I would sign up for the opportunity to do this one thing. This portion alone gives you the opportunity to give a 90-second elevator pitch to an audience of several hundred people, including many different VC companies, potential partners, and potential clients. It is great exposure all the way around and I encourage everyone who has a solid business plan and a good presentation to sign up.
- The Business Plan Presentation - 5 of the 60 companies will be chosen to give a 10 minute presentation of their business plan to a panel of VC companies and get their feedback. I’ve been to a couple of these in the past and the feedback I’ve heard given is always very insightful and relevant.
- The Showcase - Up to 40 companies will be selected to have a table presence, trade show style, in the showcase.
Here are some final thoughts from the Rice Alliance email: “All information technology and Web 2.0 companies that are seeking funding or planning to seek funding, seeking visibility with potential customers, and/or seeking other kinds of business support are encouraged to apply. Participation in any of the three categories provides tremendous opportunities to showcase your company to a large group of industry participants, investors, service providers, mentors and entrepreneurs. A number of companies that have presented at this event in the past have subsequently raised outside funding and/or acquired customers through this event. Attendance at past Information Technology Venture Forums has averaged over 375 participants.”
For some reason, the Rice Alliance does not have this event posted on their website yet, so if you want to see all of rest of the details, you can click here to download the pdf I made from the email.
Sep11th2007
Sorry I have been absent from posting lately but it has been a hectic couple of weeks. After the Labor Day weekend, I went up to Austin to visit a client at the Austin Game Developers Conference. That was very interesting to say the least. I let my inner geek shine while wearing my BarCamp Houston tee-shirt, which caught everyone’s eye. Gotta love the swag.
There are lots and lots of new games on the horizon, plenty of Flash and other casual game development along with the usual MMO and FPS stuff. The venture capital community was also buzzing aroung looking for the next big thing. Some really nice guys and some others that were a bit lost in the haze.
While I was in Austin, I had the chance to meet up with Bryan Menell of Austin Startup. Bryan is a very cool guy that shares the same vision that Kurt and I do in developing a stronger community for tech startups, only in the Austin area. He covers IT, web, software, energy, biotech and so much more. I added his site to the blogroll so check it out.
This week will also be a little lite for me for two reasons. The Jewish High Holidays start tomorrow night and I was diagnosed with Shingles this morning. I am trying to decide which will be less enjoyable for me: fasting in services all day wearing a suit and tie in 100 degree heat or the continual shooting headaches I currently have.
Kurt and I are working behind the scenes to make some interesting changes to the site so keep on coming by.
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