Investor Updates – Email Template

If you have raised funding from investors, you should be providing at least quarterly updates, although I much prefer monthly updates.  Here is what I want to see from Founders:

  1. Specific metrics (revenue, number of customers, downloads, MAU, DAU, KPIs, churn %, etc)
  2. Cash position, how much do you have, what is your monthly burn and how much runway do you have left
  3. If your runway is close to 6 months, I wanted to undertand what your fundraising strategy is
  4. Product updates
  5. What is going well
  6. What is NOT going well (don’t bullshit, you need to be transparent)
  7. What do you need help with (what are the action items for your investors?)
  8. Current headcount
  9. New hires
  10. Open positions
  11. Press
  12. Other

Keep it succinct, you should be able to keep it to one page in length.

Tech Education in NYC

If you have been following the activity in NYC, you have a sense of the grassroots movement of fixing the problem of the lack of tech talent in the city but also globally.

The NYC community continues to impress me on how it has taken challenges head on and does its best to address them.  Similar to other active startup communities, there is a lack of quality engineering talent in NYC.

The following NYC based organizations are DOING something to fix this problem, many of them are focused globally, not just NYC.

General Assembly – a global network of campuses for technology, business and design.

Girls Who Code – a new organization working to educate, inspire and equip 13- to 17-year-old girls with the skills and resources to pursue opportunities in technology and engineering.

Codecademy – the easiest way to learn to code. It’s interactive, fun, and you can do it with your friends.

Flatiron School – school for passionate people who want to love what they do.  Students learn how to build awesome things with code.

SkillShare – a community marketplace for classes

Turing Fellows – matches top computer science students with outstanding summer internships at leading NYC Startups

hackNY – aims to federate the next generation of hackers for the New York innovation economy

Cornell / Technion Campus – educate the next generation of leaders who will advance technology, generate cutting-edge research that addresses critical issues

Academy For Software Education – a high school that provides innovative software engineering and computer science skills and knowledge

Enstitute – 2 year apprenticeship program for people who want to get into the startup sector

Startup Institue – an eight week program to train and place professionals in the startup sector

I genuinely believe that within the next five years, NYC can leapfrog both the Bay Area and Boston when it comes to having the best software engineers.

Last Day at SVB

As a background, I joined SVB upon graduating from Santa Clara University, my first month on the job was November 2001.  For those who recall, this was a terrible time for our country, we had the stock market collapse in March/April 2000 and was followed up by the tragic events of September 11, 2001.  The Bay Area economy was in terrible shape as the market downturn impacted tech companies, which was the main driver of local jobs.

Fortunately, SVB one of few companies that was actively hiring.  Ruth Ann Haro (RIP – a wonderful Woman & Mother & SVBer) took a chance on me and that was the beginning of my great experience here.  (See the picture on left of my first business card at SVB)

As I look back at my time at SVB, WE accomplished so many things:

  • We opened offices in four global markets: India, China, UK and Israel
  • We raised millions of dollars for various non-profits, mostly recently we raised $600K for Best Buddies; the amount time, energy and money that the employees/executives contribute to non-profits is really amazing, other companies should be as active
  • One non-profit in particular that we support, BUILD, caught my attention and I volunteered there for four years. I had the chance to positively impact young students and those students also made a positive impact on my life
  • Our stock price has gone up from ~$26 to ~$60
  • Loans / Deposits grew from $1.7B / $3.2B then to $7.2B / $17.4B now
  • We were ranked by Fortune as one of the best places to work
  • Most recently, I’m proud of what our NYC office has accomplished, becoming an integral part of the tech community and doubling the number of clients (startups & VC/PE firms) that we support

There were so many colleagues that were a pleasure to work with including nine managers that I had a chance to learn from.  What really got me out of bed though, was working with innovative startups and the investors that support them.  The startup community (globally) is a special one and I can’t see myself ever leaving this ecosystem.

Instagram vs Indeed

I had a brief twitter chat with two active people in the NYC tech ecosystem, but wanted to further clarify my perspective in a blog post.

As a prelude, this post is not a reflection as to which company is better or which specific community is better but an example of how two separate exits can have a distinct impact on their respective tech communities.

Both Instagram and Indeed ($1.1B) were amazing exits for the Founders and early investors. That being said, the Indeed exit is much better for a tech ecosystem than the Instagram exit. Here are a few reasons why.

  1. Instagram had a total of 13 employees at the time of the exit. Per LinkedIn, Indeed has 553 employees. Indeed has created a lot more jobs.
  2. Indeed will continue to operate, grow their business and hire more people. Instagram was essentially a defensive acquisition by Facebook. I’m sure the Instagram team will continue to improve the product but I wonder how much larger the team is going to be and if they are going to be run somewhat independent than other teams at Facebook.
  3. Instagram was a no-revenue based startup with the focus on growing users and figuring out a monetization later. Indeed was built with the mind set of generating revenue in their early days and according to their investor, USV, Indeed didn’t need VC funding to grow their business. The Instagram exit propagates the idea that you can just build an application without a revenue model and become successful. Many entrepreneurs are trying to replicate an Instagram but sadly 99% will fail.
  4. Per Crunchbase, Instagram raised $57.5M, Indeed raised $5M. The Indeed acquisition provides a great example of how you can scale your business without raising a lot of money. The mindset of minimizing how much you raise is positive. VC funding is critical for many startups but raising too much money can have very negative consequences and I don’t want to see other entrepreneurs have the idea that raising a lot of money is some sort of badge of honor.
  5. To my earlier point, Indeed has a lot more employees, as a result, a lot of experienced employees will have the ability and money to start their own companies. My guess is that Indeed employees will create more startups than the Instagram employees.

As a last point that is not as relevant to which is better exit for a tech community, Indeed took nearly eight years to build, scale and sale their company.  Instagram was built,  scaled and sold in two years.  Startup Founders need to understand that building a valuable company takes a lot of time, like an Indeed and not an Instagram.

[View the story “Instagram vs Indeed” on Storify]

One Trick Pony

I continue to have conversations with people who are not based in NYC and they are always surprised to hear that the NYC startup scene has startups in various sub-sectors.  When people think of NYC startups, they typically think of AdTech or Digital Media or Commerce.  As you can see below, there are many sub-sectors that NYC startups are gravitating to.

The list is not meant to be comprehensive as there are at least 1000 startups in NYC, wanted to provide enough examples of companies in their respective sub-sectors.

AdTech:  Appnexus, Collective, DoubleVerify, Indeed, Yodle, Yext, AdSafe

Digital Media: Buzzfeed, Comixology, Everyday Health, Tumblr, Say Media, Aereo

Commerce: Birchbox, Bonobos, Etsy, Fab, Gilt, Warby Parker, Ideeli

EdTech: 2tor, General Assembly, SkillShare, Codecademy, Knewton, Mindsnacks, Flat World Knowledge, Socratic Labs (accelerator)

FinTech: Kickstarter, BillGuard, Zipmark, CB Insights, Learnvest, SecondMarket, OnDeck Capital, FinTech Innovation Labs (accelerator)

Infrastructure: 10gen, Nodejitsu, Appfirst, Neverware, Datadog

Enterprise: SailThru, Enterproid, Lua,  FiftyOne, Movable Ink, FieldLens, Group Commerce, NYC Seed Start (accelerator)

Big Data: Bit.ly, Yipit, Chartbeat

Social: Buddy Media, Offerpop, Crowdtwist, 33Across, Thumb, Foursquare

Hardware: Boxee, Shapeways, Makerbot, Quirky, LittleBits

Health/Wellness: Fitocracy, Zeel, ZocDoc, DailyFeats, Force Therapeutics, BluePrint Health (accelerator), New York Digital Health Accelerator

Energy: Anellotech, Radiator Labs, Enertiv, NYC ACRE (accelerator)

Yahoo’s Next Steps

If you follow the tech news, you heard that Marissa Mayer just became CEO of Yahoo!

The big question is what happens next, which products/services become a priority and what direction does Mayer take Yahoo.

We need to understand how Yahoo describes their business currently, here are a few quotes from their 10-K, Yahoo is a “premier digital media company” and “Yahoo! Properties currently fall into three categories: Communications and Communities; Search and Marketplaces”

Image

Their revenue is generated from three areas: Display, Search and Other.  Display generates $2.1B or 43% of revenue.  Search generates $1.8B in revenue or 37% of revenue.  Other generates $970M in revenue or 20% of revenue. If you look at the revenue trends of these areas, search revenue is decreasing, other is decreasing but display is roughly consistent the last few years.  It is not a surprise that search revenue is decreasing, they have been losing marketshare for many years, Yahoo is in third place when it come to search engine traffic, behind Google and Microsoft.

A few thoughts and suggestions as to what happens next for Yahoo:

  1. There are 14,100 Full Time employees at Yahoo (per their 10-K).  That is a lot of employees and provides a great opportunity for Yahoo to reassess and identify their star players.  There will be some additional lay-offs
  2. They have $2.2B in cash and short-term investments.  Similar to what Facebook, Google and Twitter are doing, they can make some acqui-hires or small acquisitions ($100M or less), mainly to bring on new product people with specific skill sets
  3. Hire 20+ highly competent/skilled developers to engage the startup communities in areas such as Bay Area, LA, Seattle, Boulder, Austin, Boston, NYC, Durham, Tel-Aviv, London, Berlin, Shanghai etc.  These would be developer outreach professionals, helping spread the word about some of Yahoo’s APIs (current and future) and scouring the communities to identify developer talent
  4. Bring on a handful of professionals to engage the investor community, specifically to identify emerging startups that could be partnership opportunities and/or acquisition targets.  These people would work with accelerators such as Y Combinator, Techstars, 500 Startups, etc. and early stage funds such at SV Angel, Lerer Ventures, 500 Startups, First Round Capital, True Ventures, etc.
  5. Ad-tech is an evolving sector and there are always some new technologies being developed, there is an opportunity to make a few acquisitions in this space, especially since display is their main revenue stream
  6. They need to make a big push on mobile, they don’t seem to have any strategy in this area, this includes viewing content, communication and ecommerce
  7. ecommerce is big opportunity and they should become a player in this area.  There continues to be a trend of content and ecommerce being done in unison.  Yahoo can integrate ecommerce to existing content
  8. They have some interesting things on high-end content (video) and would like to see them focus more in this area.  I like what YouTube is doing with its premium channels, could see Yahoo doing something similar
  9. Become specialized in a few verticals within search where they can become the number one player
  10. Flickr is a property that needs some immediate attention.  Either enhance this area and focus on people profiles (such as Facebook) or sell it off it is not part of their core offering
  11. They need to figure out what they do with Alibaba.  There has been some bad blood between both companies but Mayer might be able to fix that relationship

Hiring a Summer Intern in NYC

There is an amazing paid internship opportunity for an undergraduate student in NYC.

The last three interns that I have hired are now working full-time at well known firms, specifically SV Angel, Andreessen Horowitz and LivePerson.

The ideal candidate who have this background:

  • Undergraduate student, either a current Junior or Senior, preferably a student with a business major
  • Student MUST be passionate about entrepreneurship/startup community
  • Student MUST be somewhat active in social media, Twitter/Tumblr/Blogging
  • Preferably a student from either NYU or Columbia
  • MUST be able to work at least 10 hours a week while in school, up to 40 hours per week during the summer
  • Previous work experience is a MUST
  • Start date is ASAP

Role:

  • Working with me and the early stage startup team at the Silicon Valley Bank NYC office
  • Attend various startup events
  • Work on various projects, typically ones that focus on VC funding data/trends
  • Update CRM system with client data
  • Full-time during the Summer, at least 10 hours/week while in school
  • Assuming there is an interest by both parties, the internship can lead to a full-time position upon graduation

If interested:

Please find a mutual connection and get an introduction, leverage LinkedIn, Twitter, etc.  With the introduction, please attach a resume AND a cover letter.

NYC Seed Syndicates

I wanted to understand who the most active seed investors are and which syndicates were the most prominent. For the purpose of this report, the search criteria were:

  • Startups based in NYC
  • First round of financing must have been between January 2010 and April 2012
  • Round size between $250K and $1.5M

The research yielded interesting results. The most active investors over the time period were SV Angel and Lerer Ventures, each with a total of 17 investments.  The other most active firms were RRE Ventures and Founder Collective with 15 while First Round Capital had 14.

The most active investment syndicate was SV Angel & Lerer Ventures with 9 co-investments. This is not a surprise as it was mentioned in May 2011, that the two firms would work together closely. Next was SV Angel & Founder Collective with a total of 7 co-investments followed by Lerer Ventures & Thrive Capital with 5.

When you see firms syndicating frequently, it could suggest that the firms know each other well and/or have similar investment themes; As an entrepreneur raising a seed round, knowing this information can be very helpful.

The two diagrams below help to illustrate the findings. The first is a venn diagram attempting to show some of the major investment connections while the second diagram gives a more complete view of the connections between the different firms. In each diagram, the total number of investments made by that firm is in parentheses next to their names.

All of data used for the diagrams below were from sources available to the public. The vast majority of the data was sourced from CB Insights (a NYC startup).  Some of the rounds of financing are not disclosed or file State documents, so these diagrams don’t represent 100% of all financings using the criteria mentioned above.

Thank you to our Intern, Jacob Laufer, for compiling the data and putting together the diagrams.

CEO Summit – April 27 – NYC

I’m really excited to announce the list of speakers that are going to be a part of the SVB CEO Summit on April 27th in NYC.  This is an invite-only event, reserved exclusively for Founders of bootstrapped and seed funded startups who are clients of SVB (Silicon Valley Bank).  As you know, many of the conferences in the tech ecosystem cost hundreds, if not, thousands of dollars to attend.  This is a unique event that is free and our clients will be able to connect with Founders who have exited at least one startup in the past.  If you are are a Founder of a startup that is a client of SVB and interested in attending, please send me an email (sgoldman at svb dot com), we have a few seats available.  The folks below are pretty awesome and looking forward to hearing insights about how they scaled their startups and understand what challenges they overcame.

  • Michael Barrett, CEO, AdMeld (acquired by Google)
  • Walt Doyle, GM, Where, a PayPal Service (acquired by PayPal)
  • Rick Fulop, Partner, North Bridge Venture Partners; Founder, A123 Systems (NASDAQ: AONE)
  • Jared Hecht, Co-Founder GroupMe (acquired by Skype)
  • Eric Hippeau, Partner, Lerer Ventures (former CEO of the Huffington Post, acquired by AOL)
  • Steve Papa, CEO, Endeca (acquired by Oracle)
  • Antonio Rodriguez, General Partner, Matrix Partners (Founder and CEO of Tabblo, acquired by HP)
  • Micah Rosenbloom, Chairman & CEO, Sample6 Technologies & Founder Partner, Founder Collective (Co-Founder Brontes Technologies, acquired by 3M)
  • Laurel Touby, Founder, Mediabistro.com (acquired by Jupiter Media)

Instagram vs Box

I was in the Bay Area yesterday, the big news was that Instagram was acquired by Facebook for $1B.  The same day, I went to visit the Box.com office.  While visiting the Box office, I couldn’t help but think how vastly different Box and Instagram are as companies.   This post is not about if one startup is better than the other, but it does put the Instagram acquisition into perspective.