Roundup, Venture Capital, Innovation Economy
VCs Making Smaller Investments, V-Vehicle Restarting Under New CEO, Qualcomm Buys iSkoot, & More San Diego BizTech News
Bruce V. Bigelow 10/18/10
A common theme in last week’s technology news is how companies and entire industries continually remake their businesses, whether it’s the venture capital community, startup carmakers, or a San Diego company that specializes in data storage technology. Read on to see what I mean.
—As the venture capital survey data comes in from the three months that ended September 30, we’re seeing a nationwide rebound in first-time financings for startups. Data from CB Insights, the New York financial information firm, shows seed-stage deals increasing from 1 percent of the deals in the third quarter of 2009 to 11 percent of all deals during the third quarter.
—Venture capital surveys from CB Insights and the MoneyTree Report both show an increasing deal count, but a decline in the total amount of invested. In a year-over-year comparison, the MoneyTree Report showed a 7 percent decline in capital invested with a 9 percent increase in deal count during the third quarter, when venture firms invested $4.8 billion in 780 deals nationwide.
—V-Vehicle, the San Diego startup automaker, changed its name to Next Autoworks. The company, which has raised $87 million from investors that include Kleiner Perkins, Google Ventures, and T. Boone Pickens, also hired industry veteran Kathleen Ligocki as CEO.
—Overland Storage (NASDAQ: OVRL), the San Diego data storage technology specialist, acquired Sunnyvale, CA-based MaxiScale, which provides data protection and data management technologies. Financial terms were not disclosed.
—San Diego’s Qualcomm (NASDAQ: QCOM) acquired San Francisco-based mobile social networks software developer iSkoot Technologies. Financial terms were not disclosed.
—Biz Stone, a Twitter co-founder and the San Francisco-based company’s creative director, told The San Diego Union-Tribune last week that a new-and-improved version of the micro-blogging service should improve service worldwide. “It was re-architected to actually be snappier, faster – to deal with information faster,” said Stone, who was in San Diego to speak at the 2010 Tijuana Innovadora conference on innovation across the border.
—Predixion Software, based just across the Orange County line in Aliso Viejo, CA, said it had closed on $5 million in Series A financing, led by DFJ Frontier. Predixion, which specializes in low-cost, self-service in the cloud predictive analytics software, said it will use the funds to expand product development,increase sales and marketing initiatives, and expand its sales channel programs and strategic partnership activities.
Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call 858-202-0492
I wrote about two startups today that raised angel-sized financing rounds of around $1 million each: Hipmunk and Alphonso Labs. What caught my eye about both deals is this – neither had involvement from the so called “super angels” (except Hipmunk, which took an investment from SV Angel).
Hipmunk raised from traditional individual investors. Alphonso Labs raised money from venture capitalists.
Super Angels are investors who previously invested only their own money but at some point raised small funds and started investing third party money. That makes them indistinguishable from traditional venture funds in most respects.
Unlike angel investors, super angels have limited partners to answer to. And if returns aren’t competitive, those limited partners go elsewhere. Which is why we’re seeing so much stress emerge in the sector. Competition is fierce, and valuations are rising.
In fact, valuations are rising so quickly that a crucial psychological milestone has been reached – the $4 million pre money valuaiton. That was the primary reason that led to the formation of the AngelGate group, say multiple sources who attended those meetings.
For the first time this year the valuation on early stage deals started to average more than $4 million, say our sources. And that is the threshold where super angels’ valuation models start to break.
In a typical super angel round a company will raise $1 million on, say, a $4 million pre-money valuation. That gives investors 20% of the company, which is worth $5 million after the transaction is closed (the $4 million valuation plus the $1 million they just received)
Unlike old school venture capitalists, super angels are only counting on small exits of $15 million – $30 million. They need 7/10 or more of their companies to have these small exits to make any money. Any less and they won’t be able to raise new funds. Traditional VCs only count on 3-4 deals even returning capital. The rest are losses. But at least one of those ten deals is a huge home run, returning 10x the initial investment. Or more.
But with valuations rising, say investors we’ve spoken with, even 7 or 8 “wins” out of 10 won’t be enough to sustain the funds, given how small the acquisitions are. So exit valuations must increase, which is unlikely given the small number of buyers competing for deals, or valuations need to decline.
Some investors are just paying the higher valuations – Dave McClure is a notable example. Others are sitting on the sidelines and not investing much.
But all are griping.
The rising popularity of convertible notes, which are actually debt rounds that convert to equity later on, is increasing stress on the system. In some cases there aren’t any price protections for investors in those deals at all.
What happens next? Some of the super angel funds need to disappear, say Silicon Valley insiders. And maybe that’s for the best. The ones that are left standing will have an easier time making money down the road.
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Roundup, Venture Capital, Innovation Economy
VCs Making Smaller Investments, V-Vehicle Restarting Under New CEO, Qualcomm Buys iSkoot, & More San Diego BizTech News
Bruce V. Bigelow 10/18/10
A common theme in last week’s technology news is how companies and entire industries continually remake their businesses, whether it’s the venture capital community, startup carmakers, or a San Diego company that specializes in data storage technology. Read on to see what I mean.
—As the venture capital survey data comes in from the three months that ended September 30, we’re seeing a nationwide rebound in first-time financings for startups. Data from CB Insights, the New York financial information firm, shows seed-stage deals increasing from 1 percent of the deals in the third quarter of 2009 to 11 percent of all deals during the third quarter.
—Venture capital surveys from CB Insights and the MoneyTree Report both show an increasing deal count, but a decline in the total amount of invested. In a year-over-year comparison, the MoneyTree Report showed a 7 percent decline in capital invested with a 9 percent increase in deal count during the third quarter, when venture firms invested $4.8 billion in 780 deals nationwide.
—V-Vehicle, the San Diego startup automaker, changed its name to Next Autoworks. The company, which has raised $87 million from investors that include Kleiner Perkins, Google Ventures, and T. Boone Pickens, also hired industry veteran Kathleen Ligocki as CEO.
—Overland Storage (NASDAQ: OVRL), the San Diego data storage technology specialist, acquired Sunnyvale, CA-based MaxiScale, which provides data protection and data management technologies. Financial terms were not disclosed.
—San Diego’s Qualcomm (NASDAQ: QCOM) acquired San Francisco-based mobile social networks software developer iSkoot Technologies. Financial terms were not disclosed.
—Biz Stone, a Twitter co-founder and the San Francisco-based company’s creative director, told The San Diego Union-Tribune last week that a new-and-improved version of the micro-blogging service should improve service worldwide. “It was re-architected to actually be snappier, faster – to deal with information faster,” said Stone, who was in San Diego to speak at the 2010 Tijuana Innovadora conference on innovation across the border.
—Predixion Software, based just across the Orange County line in Aliso Viejo, CA, said it had closed on $5 million in Series A financing, led by DFJ Frontier. Predixion, which specializes in low-cost, self-service in the cloud predictive analytics software, said it will use the funds to expand product development,increase sales and marketing initiatives, and expand its sales channel programs and strategic partnership activities.
Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call 858-202-0492
I wrote about two startups today that raised angel-sized financing rounds of around $1 million each: Hipmunk and Alphonso Labs. What caught my eye about both deals is this – neither had involvement from the so called “super angels” (except Hipmunk, which took an investment from SV Angel).
Hipmunk raised from traditional individual investors. Alphonso Labs raised money from venture capitalists.
Super Angels are investors who previously invested only their own money but at some point raised small funds and started investing third party money. That makes them indistinguishable from traditional venture funds in most respects.
Unlike angel investors, super angels have limited partners to answer to. And if returns aren’t competitive, those limited partners go elsewhere. Which is why we’re seeing so much stress emerge in the sector. Competition is fierce, and valuations are rising.
In fact, valuations are rising so quickly that a crucial psychological milestone has been reached – the $4 million pre money valuaiton. That was the primary reason that led to the formation of the AngelGate group, say multiple sources who attended those meetings.
For the first time this year the valuation on early stage deals started to average more than $4 million, say our sources. And that is the threshold where super angels’ valuation models start to break.
In a typical super angel round a company will raise $1 million on, say, a $4 million pre-money valuation. That gives investors 20% of the company, which is worth $5 million after the transaction is closed (the $4 million valuation plus the $1 million they just received)
Unlike old school venture capitalists, super angels are only counting on small exits of $15 million – $30 million. They need 7/10 or more of their companies to have these small exits to make any money. Any less and they won’t be able to raise new funds. Traditional VCs only count on 3-4 deals even returning capital. The rest are losses. But at least one of those ten deals is a huge home run, returning 10x the initial investment. Or more.
But with valuations rising, say investors we’ve spoken with, even 7 or 8 “wins” out of 10 won’t be enough to sustain the funds, given how small the acquisitions are. So exit valuations must increase, which is unlikely given the small number of buyers competing for deals, or valuations need to decline.
Some investors are just paying the higher valuations – Dave McClure is a notable example. Others are sitting on the sidelines and not investing much.
But all are griping.
The rising popularity of convertible notes, which are actually debt rounds that convert to equity later on, is increasing stress on the system. In some cases there aren’t any price protections for investors in those deals at all.
What happens next? Some of the super angel funds need to disappear, say Silicon Valley insiders. And maybe that’s for the best. The ones that are left standing will have an easier time making money down the road.
bench craft company complaints
Small Business <b>News</b>: Social Media Secrets
Pssst. We've got something important to tell you about a new tool that can totally transform your business. In terms of upfront investment, there is no cost,
Fox <b>News</b> Crew Gets Scolded At Democratic Meeting (VIDEO)
A Fox News camera crew showed up unannounced at a Democratic meeting in Wisconsin Monday, prompting a confrontation that eventually forced the show's producer into a rather startling admission: he understands why Democrats are wary of ...
Shepard Smith Inks New Fox <b>News</b> Deal – Deadline.com
EXCLUSIVE: Fox News Channel's signature news anchor Shepard Smith has signed a new multi-year deal to continue as the channel's lead news anchor as well as anchor of FOX Report and Studio B. Smith's most recent pact with Fox News inked ...
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Small Business <b>News</b>: Social Media Secrets
Pssst. We've got something important to tell you about a new tool that can totally transform your business. In terms of upfront investment, there is no cost,
Fox <b>News</b> Crew Gets Scolded At Democratic Meeting (VIDEO)
A Fox News camera crew showed up unannounced at a Democratic meeting in Wisconsin Monday, prompting a confrontation that eventually forced the show's producer into a rather startling admission: he understands why Democrats are wary of ...
Shepard Smith Inks New Fox <b>News</b> Deal – Deadline.com
EXCLUSIVE: Fox News Channel's signature news anchor Shepard Smith has signed a new multi-year deal to continue as the channel's lead news anchor as well as anchor of FOX Report and Studio B. Smith's most recent pact with Fox News inked ...
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Small Business <b>News</b>: Social Media Secrets
Pssst. We've got something important to tell you about a new tool that can totally transform your business. In terms of upfront investment, there is no cost,
Fox <b>News</b> Crew Gets Scolded At Democratic Meeting (VIDEO)
A Fox News camera crew showed up unannounced at a Democratic meeting in Wisconsin Monday, prompting a confrontation that eventually forced the show's producer into a rather startling admission: he understands why Democrats are wary of ...
Shepard Smith Inks New Fox <b>News</b> Deal – Deadline.com
EXCLUSIVE: Fox News Channel's signature news anchor Shepard Smith has signed a new multi-year deal to continue as the channel's lead news anchor as well as anchor of FOX Report and Studio B. Smith's most recent pact with Fox News inked ...
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