The Power of “Social,” Venture Capital & Financial Engineering: How Tech Startups Are Challenging The Titans of Finance 
6:00 pm, Wednesday, 5/16/12, General Assembly

Co-sponsored by Harvard Asian American Alumni Alliance – New York, the Founders’ Circle, and Harvard Business School Alumni Angels of Greater New York

Hear from venture capitalist Matt Harris of Bain Capital Ventures and New York City Investment Fund’s Maria Gotsch.  They will be joined by two CEOs of venture-backed financial startups – Michael Giles of Roboinvest, a social investment platform where consumers can replicate trades of top investors, and Michael Cagney of SoFi, an innovative social finance platform and broker-dealer that taps university alumni and their capital to transform community lending.

Social networking is no longer about sharing vacation photos, gaming and poking.  Since 2008, venture capitalists have invested over $1.7 billion in over 200 financial technology startups.  The panel will discuss the business models of microfinance firms like Kiva, crowdfunding site Indiegogo, peer lending platforms like Lending Club and Prosper, online wealth advisor Wealthfront, and payday loan/alternative player BillFloat, and more….Read more about the event

Please Purchase Seats By Tuesday 12pm NOON, May 15; No tickets will be sold at the door.

RSVP ASAP: http://powerofsocial.eventbrite.com

I hope you can join me in Washington, DC, on Thursday, May 24, 2012, 5:30 PM To 8:30 PM for a talk and event sponsored by the HBS Club of Washington, DC.  RSVP required; No money can be taken at door

As I’ve previously blogged, I will soon publish the first formal study of best practices of VCs in improving portfolio company value. The objective of the research is to define a blueprint for how investors can help portfolio companies succeed through operational (non-financial) support, including but not limited to facilitating shared services, recruiting, knowledge sharing, and enhancing management skills.  I will discuss both my value-creation research and how ff Venture Capital addresses this challenge. You can see a preview of the presentation at http://goo.gl/K4dDc .

Angel Investing Background: This event will also be used to re-launch the angel investing activity of the HBS Club of Washington DC.  I’ll briefly discuss the history and growth of HBS Angels of NY, including the new Venture Capital Access Program (joint with the NAIC).   People who are interested in angel investing, and especially those interested in taking an active role in our group, are urged to come to this event and/or to contact Bob Kolodney, Coordinator of our Entrepreneurship RoundTable (BobkoLive(@)gmail.com), Sonny Bloom, President of the Club (bloom_sonny(@)hotmail.com), or Dante Disparte, Vice-President of the Club (ddisparte(@)hotmail.com).

RSVP required; No money can be taken at door

As part of this year’s conference, Discovery will be bringing 150 mentors together with 150 eager entrepreneurs in a timed event with the goal of achieving the next Guinness World Records Title in Canada as the World’s Largest Business Mentorship Event.   I’ll be participating in this event as a mentor. You can view the official announcement here.

If you plan to be in the Toronto area on May 14^th and 15^th, I encourage you to join me at the conference!

 Click here to register and use promo code DISCOVERY20 to receive a special discounted rate:

Discounted rates with promo code.

• Attendee- $540
• One booth plus 2 passes- $1160
• Student- $95

…………………..

Cool Facts: 

- OCE Discovery has been voted Canada’s Top Trade Show for the last 2 years.

- Startup Genome ranked Toronto 4th best startup ecosystem behind Silicon Valley, New York & London.

- The Ontario Government has committed $3 billion in funding over 8 years into its Innovation Agenda

- Canada was recently ranked #1 by Forbes magazine as the Best Country for Business .

Pioneering Program Launched by Harvard Business School Alumni Angels of New York and the National Association of Investment Companies

VCAP© Addresses the Gap between Venture Capital and Funding for Women and Diverse Entrepreneurs

NEW YORK, May 9, 2012 /PRNewswire/ — Harvard Business School Alumni Angels of Greater New York (HBSAANY) and The National Association of Investment Companies (NAIC) today announced the launch of the Venture Capital Access Program (“VCAP©”), a collaborative venture that provides women and diverse entrepreneurs nationwide with access to venture capital through accredited investors within the HBSAANY network.   VCAP©, the first program of its kind, bridges the gap between venture capitalists and angel investor networks and women and diverse entrepreneurs, many of whom have not traditionally had access to these sources of capital.

HBSAANY is comprised of New York City tri-state area Harvard alumni who are venture capitalists and other accredited investors investing in early-stage, private companies around the United States. The National Association of Investment Companies (NAIC) is the trade association representing women and diverse private equity and venture firms.  VCAP© will be operated through NAIC’s subsidiary, The Marathon Foundation, a business development network that supports entrepreneurial growth, access to capital and deal flow. HBSAANY’s investment in VCAP© was inspired in part by the Harvard Business School U.S. Competitiveness Project and its call for HBS alumni to help continue U.S. competitiveness.

“The Harvard Business School Alumni Angels of Greater New York is one of the most successful and active angel investor networks in the country,” said Ed Dandridge, President and Chief Executive Officer of NAIC.  “We are pleased to partner with them on VCAP©, which will provide women and diverse entrepreneurs with access to capital essential to innovation and job creation.”

“The $6 trillion annual diverse marketplace represents a significant and often overlooked investment opportunity,” said David Teten, Founder and Chairman of HBSAANY, and Partner at ff Venture Capital.  “Research has proven that investors who focus in less-contested sectors and who source proprietary investments get superior returns. VCAP© provides our members with a pipeline of unique opportunities.”

In addition to serving as a catalyst for job creation, women and diverse businesses, which are owned, operated and/or led by minorities, provide an important source of investment returns.  According to a study performed by the Kauffman Foundation and the Angel Capital Education Foundation, angel investments generate net annualized returns of approximately 27%, beating many traditional forms of investing.  Women-owned businesses, according to the Forte Foundation represent about 775,000 new startups per year.  According to the U.S. Department of Commerce & the Minority Business Development Agency, between 2002 and 2007, diverse-owned firms outpaced the growth of non-diverse firms in gross receipts and employment. During the same period, paid employment of diverse businesses grew by 24% compared to a decrease in employment of 1.1% for non-diverse firms.

The initial VCAP© pilot cycle commences today. The VCAP© program is national, and open to all entrepreneurs and private companies seeking investment capital.  There is no registration fee for members of the Marathon Foundation. For non-members of Marathon Foundation, a $500 registration fee is required to join the VCAP© program.  VCAP© applicants will be reviewed in a series of screenings conducted by the Marathon VCAP© selection committee, HBSAANY, and NAIC board members. VCAP© finalists will be announced Monday, June 18th and will present their business plans to HBSAANY angel investors at a Pitch Night in New York on Wednesday, June 27th.  VCAP© finalists will also be invited to present at Marathon’s 7th Annual DealMakers’ Summit July 23rd and 24th at the Ritz Carlton in Chicago. Entrepreneurs can apply through Marathon’s website at www.marathonfdn.org.

About Harvard Business School Alumni Angels of Greater New York
The Harvard Business School Alumni Angels of Greater New York (HBSAANY) is a nonprofit organization consisting of Harvardalumni in the greater New York area committed to investing in early-stage, private businesses and supporting the local start-up ecosystem.  The organization invests in companies led by both Harvard and non-Harvard alums across all industries.  HBSAANY members include venture capitalists, individual accredited investors, and other institutional investors.  HBSAANY currently invests at a pace of close to $2 million in 7-10 companies per year. For more information, visit:www.HBSAlumniAngels.com/NY  or on Twitter: @HBSAngelsNY.

About The National Association of Investment Companies
The National Association of Investment Companies (NAIC) is a 501(c)(6) trade association representing women and diverse alternative asset managers whose investment strategies focus on mid-market opportunities. Founded in 1970, NAIC firms invest in venture (early stage/later stage) and private equity (growth/buyout/mezzanine/distressed/secondary funds). NAIC firms generate significant returns for institutional investors and shareholders by investing in and transforming privately held businesses in global emerging markets as well as the $6 trillion annual women and diverse U.S. domestic market. For more information, visit: www.naicpe.com

About The Marathon Foundation
The Marathon Foundation (TMF) is a business development network dedicated to entrepreneurial growth, access to capital and deal flow.   Formerly the Marathon Club, TMF is an inclusive eco-system of entrepreneurs, corporate professionals, Fortune 500s, tech companies and consumer brands that leverage best practices and strategic relationships. TMF’s thought leadership programs focus on women and diverse small business creation and the associated job growth that will drive sustained U.S. economic growth. For more information, visit: www.marathonfdn.org

(Photo credit:  Untitled blue)

The Entrepreneurs Access to Capital Act helps to redress this.  It allows small businesses to raise $1 million, from a limit of 10% of income or $10,000 from individual investors, without registering their companies with the SEC.  Currently, entrepreneurs are prohibited from doing so under the Securities Act of 1933, which requires companies who wish to sell securities to register and provide extensive information about strategy, future plans, ownership, management, etc.  It was created before the Internet age to protect investors by promoting full disclosure of information.

For small businesses, registering a company is timely and costly in management fees, accounting fees, and legal fees. As an alternative, entrepreneurs have been using crowdfunding sites like Indiegogo, one of our portfolio companies, to raise money for their companies through online donations.

Currently, these Crowdfunding sites don’t give donors any equity in the companies. About a year ago, the Crowdfunding Campaign to Change Crowdfunding Law raised $1,321 (out of a $1,099 Goal) through Indiegogo’s campaign platform in order to fund a petition against the Securities Act. They hired the Sustainable Economies Law Center to write to the U.S. Securities and Exchange Commission and request they exempt securities offerings up to $100,000 with a limit of $100 per investor. This petition and the support it garnered from the public caught Capitol Hill’s eye.

The House of Representatives has since then overwhelmingly approved (407-17) the “Entrepreneur Access to Capital Act,” which amended the Securities Act by allowing the following:

Transactions involving the issuance of securities for which

    a) The aggregate annual amount raised through the issue of the securities is $5,000,000 or less; and

   b) Individual investments in the securities are limited to an aggregate annual amount equal to the lesser of-

                        i)$10,000; and

                        ii) 10 percent of the investor’s annual income

Although the act still needs to be passed in the Senate, it’s a promising start.

The recent Jumpstarting our Business Startups (JOBS) act also provided a boon to crowdfunding, by allowing non-credited investors to participate in funding rounds for a startup company.

With public support, the passage of this type of crowdfunding legislation would not only provide entrepreneurs with the money they need to fund innovation, it would also be easier for people to become angel investors.

For background, Indiegogo is an online platform for anybody to raise money for his or her campaign, whether it be an author’s novel, an entrepreneur’s invention, or a filmmaker’s documentary. Danae Ringelmann, Slava Rubin and Eric Schell co-founded Indiegogo in 2008 to enable anybody with a great idea to make that idea happen. The company has experienced extraordinary growth: in March 2011, it had funded around 20,000 campaigns in 159 countries. Today, it has helped raise millions of dollars for over 50,000 campaigns across 205 countries.

The platform allows anyone to tell their story by creating a campaign profile, which includes an image or video and written story. At Indiegogo, you set a funding goal and offer perks to contributors, while sharing the campaign with your network, engaging fans, tracking information about contributors, and collecting money.

One of our favorite stories is that of Jessica and Sean Haley, who desperately wanted a baby but whose insurance did not cover fertility treatment. Hours after they posted “Help the Haleys Have a Baby,” money started coming in, and they reached their goal of $8,050 including $423 from a complete stranger.

We love the added value Indiegogo creates for fundraisers. They enable campaigns to offer perks in exchange for contributions, which engage fans, build trust, and provide an opportunity for more people to get involved.  One campaign offered a free morning wake up call to anyone who donates over $25. Indiegogo also helps campaigns gain and measure traction using the “GoGo Factor,” which is tracked automatically and uses a custom algorithm to determine which campaigns get promoted on the homepage, on the site’s blog, or in media mentions. The factor takes into account funding, comments, shares and other campaign activity.

Online fund-raising has been popular for nonprofit groups and charity events for several years, but it is only recently beginning to spread to other sectors. Indiegogo allows anyone with any cause to fund for his or her campaign.

Slava Rubin, CEO of the company, has a few tips on how to maximize results:

• Set a two-month Deadline: The deadline for fundraising should be set for between 1-120 days, but the site sees best results on campaigns that are around 60 days long.
• Upload a video: Rubin says campaigns with videos raise 122% more money.
• Start now!

_____________________

* One last point: the 27% IRR calculation I referenced above is from the Kauffman Foundation for angel investors in groups.  Investing in startups is highly risky and we discourage it unless you can readily lose the capital you’re investing…because most of the time, you will lose that capital.

All of the crowdfunding sites suffer some selection bias, insofar as the best entrepreneurs will get capital directly from value-added VCs/highly knowledgeable angels, not from strangers on a crowdfunding site.  Crowdfunding sites can alleviate that systematic problem by becoming vehicles for value-added angels and great startups not just to connect, but to document, diligence, and execute their transaction.  Gust.com, Angel.co, and Second Market have all done this successfully, by being value-added on top of existing networks of investors and investees.

I’d be very cautious about investing in a startup on a website in the hopes of a financial return.  VCs do this as an industry, and average returns for the VC industry are mediocre at best.  However, if you are looking for rewards-based returns, e.g., getting your name in a movie, or being happy that you helped someone have a baby, then you can be very comfortable investing through crowdfunding sites such as Indiegogo.

Thanks to Raphaela Sapire and Joan Xie for help drafting this.

For a complete agenda as well as registration details, please visit: http://tslgt517.eventbrite.com/ .

Personal trainer Jake Koenig reached out to us to request to run a minimum viable product trial of his in-office fitness training service.  We’re always glad to help entrepreneurs, and we are a bit obsessed with making our fitness office even more effective, so more than half of our office volunteered to be beta clients.  We have a lot of people interested in fitness for geeks.  The feedback from our office was very positive, and we’re glad to work with Jake/other personal trainers inside our office (hallways, stairwell) or in a more conventional setting.  

Here are Jake’s learnings from the trial:

As a health and fitness coach aiming to convert offices to healthier, movement accessible spaces, ff Venture Capital was an exciting place visit.  Already equipped with electronically adjustable standing desks, balance pads, and stability balls, this was a perfect company for mid-day fitness training.

My entrepreneurial thesis was that many people want to improve their physical fitness,  but just can’t make the time.   Also, many people lack ready access to a gym.  An obvious potential solution is physical training in the office.

Ideally, every office would have a fully-equipped gym, or at least a fitness room.  However, that’s not realistic for most offices.

There are three main obstacles to exercising at an office that lacks a dedicated facility.  Even in ff’s modern, movement-oriented space, I still encountered all of them:

1) The sweat.  This is the most common objection I hear to working out in the office.  However, for many people, a heart pounding, sweat-dripping workout is not required to have a positive effect.  At ff, I gave a 20-minute workout to several employees that elevated their heart rate and fatigued their muscles, but didn’t require a change of clothes. Some chose to bring a change of clothes and engage in an intense workout.  I haven’t heard any complaints about their smell from coworkers yet.  Some wipes in the bathroom accomplish all the functionality of a shower, plus use fewer environmental resources.

2) Space.  Although the number of offices with gyms is growing, the vast majority of companies don’t have them.  But with minimal equipment, I gave a dynamic, fun, and customized workout to each member of the ff team in a small hallway.

3) Office distractions and the need for privacy.  Trying to talk on a conference call while your colleague lunges in a nearby cubicle is not optimal for either party.  We dealt with this at ff by using a hallway, but this may not be ideal.  Another option could be a dual-purpose conference room or a stairwell.

The addition of the following equipment would enhance ff’s space to encourage more workout breaks: Several workout mats, dumbbells from 5-15 Ibs, 2 medicine balls (8 and 15 pounds), a bosu ball, and 2 kettlebells- 8 and 12 lbs.  The above equipment is inexpensive and does not take up much space, yet a variety of workouts for all levels can be achieved with it.

If you have other suggestions, please add them below in the comments.  Thanks again to ff and to all my participants for your time and feedback.  I greatly appreciate your help in my pursuit to change the way we think about the office!

For more information on in-office fitness training, contact at jake(@)fityourspace.com

Photo courtesy Alan Cleaver

My mother and I met Daniella Norwood, the owner of ella j designs, and her husband Brian Bigda at a Lean Startup Machine weekend at which I was a judge.  She did a great job redesigning my mother’s site, DancetimePublications.com, so I hired her to do a redesign of Teten.com and TheVirtualHandshake.com.  I’d love your feedback on the site.   I definitely recommend hiring Danni for your WordPress needs.

Enter Danni:

David’s RFP included:

• upgrading Teten.com and TheVirtualHandshake.com to the latest version of WordPress,
• modernising the design of both sites,
• making both sites mobile and social-media friendly,
• changing the commenting system from DISQUS to Livefyre (ff Venture Capital portfolio company),
• migrating from AWeber to MailChimp, and
• fixing some existing errors.

A New Website Design

While I am “a creative type”, I am not a graphics designer. I prefer looking at the WordPress Codex than color palettes. Instead of spending hours upon hours searching through all the wonderful themes that are available, I decided to use the eleven40 theme from StudioPress.com because of its responsiveness and modern design for both sites. I have been using StudioPress for a long time and love the Genesis framework and the beautifully designed child themes. They also have great support in their forums and an active development community.

We changed the color scheme of teten.com to green, in order to match the color scheme of ffvc.com. Besides the color change, the biggest change to teten.com was the homepage layout and using it to feature the lastest blog posts.

New Website Functionality

The first thing I did was create a development site running the current version of WordPress (the original site was running 2.8) and import the xml file. Next was to set up the theme layout and create the main navigation. Once that was set, I added the plugins and configured the settings.

WordPress continues to improve and a lot has changed since the 2.8 version. Because of added functionality I was able to remove a lot of plugins such as Advanced Permalinks, Page Link To, and Plugin Manager. Since StudioPress has built in SEO, I was able to remove other plugins like SEO Title Tags and All In One SEO.

David wanted to focus on newsletter sign up and social media integration. In addition to the sign-up forms on the sidebar and footer, we added OptinSkin to the ends of the posts to integrate the signup with social media. This was my first time using OptinSkin and I really liked how easy it was to customize and the variety of options that are available.

Being mobile-friendly was also a main consideration and in addition to using a responsive theme, we also added WPtouchPro to the plugin mix since David had already purchased this. While WPtouch is a great plugin, the Pro version is worth it to really customize the user’s experience.

The Final Product, Two Redesigned Websites

The whole process was made easier since David had very detailed requirements. Some of the problems with the old site, such as inconsistent headers and problematic spacing, were easily fixed just by switching themes and upgrading WP.

We did run into some trouble with the content of the posts and pages. I was not able to copy the original database due to an error with the size of the database, so I used the xml file downloaded from the original site. I found this to be a good option especially since the old database was not UTF-8 encoded.

As a final touch, I introduced David to ManageWP, so he can more easily manage his WordPress sites. I just started using ManageWP and so far it has worked out really well. It is a great service with fantastic customer support.

I would love to hear any feedback.

Daniella Norwood

ella j designs

The NYC Startup Tour selects promising startups each month and brings developers into their offices for technical presentations and demos and a chance to mingle with the startup teams.

There are an overwhelming number of opportunities for developers in New York’s thriving startup community, and deciding where to apply can be a daunting decision. The tours give developers, especially those outside of the startup community, cultural insight and inside information on the technology roadmaps of the companies. This creates a low-pressure environment for developers to explore and learn about startups.

The developers on the tours come from a wide variety of backgrounds. A lot of the members come from financial institutions and large companies and don’t have much exposure to startups. Others range from students to senior developers. The developers attending are a combination of personal invitees from Jovena Whatmoor of Skillfer, the architect of the NYC Startup Tour, and those that register on the Meetup site. Different attendees are invited for each event, based upon general fit and expected interest in the participating startups.

During the tours, the startups are asked not to actively recruit, or even go over job openings. Instead they create a welcoming environment for two-way conversation. The presentations and demonstrations are followed by a Q&A session, and afterwards the group breaks for the visiting developers to talk directly with the hosting startup developers. This way, before considering applying for a job at the startup, the developers can determine if they have the technical skills, are a cultural fit and are excited by the technology and overall business model.

During their first two events, the Startup Tour visited ZocDoc, SquareSpace, ideeli and Skillshare. Anthony Calenda, CEO of SquareSpace, gave the second-ever private demo of the new 6.0 release, highlighting the beautiful UI and slick HTML5 features. Nick Ganju, CTO of ZocDoc gave insight into how they oversee scaling of their system. At ideeli, four different presenters from different levels of the web and devops teams presented. And at Skillshare, Malcolm Ong talked about his hands-on work building the product with a very small team.

Skillfer is now working with Foursquare, Yodle, 10gen, Thrillist, AppNexus, Conductor, Meetup, GetGlue and Boxee to plan tours for the summer.  To sign up for the next startup tour, visit skillfer.com .

- Do you have a great team but your product just isn’t working?
- Are you thinking of applying to Y Combinator without an idea?
- Does your team want to quit your day jobs and really kick-off a company?
- Would you like to have a salary from day one of your startup?

If the answer is yes to any of these, you should keep reading.

ff Venture Capital is creating a new, spin-off business from an existing company, and we need a team to take the reins.  Initially you will likely be working out of our co-working space on West 36th St., alongside our team and a few other portfolio companies, but will move out as the company grows.  Make no mistake, this will be your company: you will take complete control and will get an unusually high equity stake.

The Team:  We are looking for a team with a great pre-existing working relationship.  Although we are open to various configurations of 2-5 people, we envision a team built around: a CEO, reporting directly to the Board; a Product Manager to harden the vision; and an Engineer to make the magic.  Maybe you’ve gone through an accelerator together, or maybe you and your friends are working through an idea on nights and weekends.  No matter what the case, this is a great opportunity for a great team.  You should live in the New York tri-state area or be able to relocate and start working in a matter of weeks.

We strongly prefer a team that has a proven history working together for at least two years.  We will consider individual applicants (e.g., a CEO without a team) but prefer people who come with a team pre-assembled.

CEO: Ideally a successful serial entrepreneur who has taken a startup from Series A all the way to an exit.  However, we’ll consider first-time CEOs.  You must have 5 years experience directly managing a team.   You must have experience in a startup environment, e.g., launching a new business line or working for a fast-growth company.  You must have a strong product management pedigree.   Given the size of the company, we emphasize this is a hands-on, roll-up-your-sleeves role.  If you’re a hands-off manager, or if you plan to allocate more than 0.1% of your time to speaking at conferences, then you’re not a good fit for this job.  If your background is primarily strategy consulting or banking, please do not apply.

Product Manager: Experience building a consumer-facing product for ‘normals’, not the technorati.  Belief in the Edward Tufte school of communication.  Must have at least 3 years managerial experience.

Head of Engineering:  Strong experience with B2C businesses.

About ff Venture Capital ( http:/ffvc.com ) : We are one of the most active early-stage investors in New York.  Since 1999, our partners have made over 150 investments in over 55 companies.  Among our most successful seed investments that have reached maturity are Cornerstone OnDemand (which raised $137m in a March 2011 IPO, ticker CSOD) and Quigo Technologies (sold to AOL for a reported $340m in 2007).  We expect that initially you will likely work out of our unique “fitness office” at 36th and 6th ( http://ffvc.com/gym ).

How to Apply:
Send an email to Ryan Armbrust, ryan+foundingteam(@)ffvc.com, with the following information:
- detailed resumes of the entire team, including your online identity (personal website, LinkedIn, About.me, etc.)
- How long you each have worked together, and in what capacity
- How quickly you could start
- Compensation expectations.  The company is already funded and can readily pay market salaries.  However, if you have the financial flexibility to work for a below-market amount, we can be much more generous in equity.

(Photo credit: Wikipedia)