Tag: investment

Formulas for successful crowdfunding

Crowd funding is proving to be a great way to raise funds for projects, but it isn’t without its risks

Pebble have achieved the biggest Kickstarter fund raising in the service’s history with a $14 million fundraising for its latest smartwatch.

Over at competing crowdfunding service Indiegogo Flow Hives, a Tasmanian beekeeping invention, has raised nearly five million dollars for its innovative beehives that put honey on tap.

Crowdfunding is fast becoming the way for smaller manufacturers to secure preorders from the market and secure scarce capital for the business.

Pebble and Flow follow the success of Ninja Blocks who have had two successful crowdfunding ventures and their CEO Daniel Friedman spoke to Decoding The New Economy last year about raising money for hardware projects.


Not every hardware crowdfunding project works out well though as Mark Pesce described in relating his experience with the failed Moore’s Cloud fundraising. Mark said he’d “rather eat a bullet” than engage in another crowdsourcing campaign given the pressures upon manufacturers to deliver.


As Moore’s Cloud shows there are risks and complexities in looking to the crowd to raise project capital. Even a successful campaign faces potential problems in completing the project and delivering a product that meets the expectations of those who’ve contributed.

Crowdfunding has opened a new way for artists and entrepreneurs to raise funds for their projects, like all tools though it does have it’s risks and isn’t for everyone.

 

Similar posts:

  • No Related Posts

Why being a unicorn could be a bad thing

Most businesses don’t need big VC type investors to help them grow

Andrew Wilkinson doesn’t want to be a unicorn. In Why I want to be In-N-Out Burger, not McDonalds, Wilkinson describes how he’d rather his business is a sleek racehorse rather than a beautiful, mythical creature.

One of the misunderstandings in the current startup mania is the motivation of founders and proprietors; many haven’t gone into business with the aim of flipping the company to a rich sugar daddy for a billion dollars.

In his great presentation “Fuck You, Pay Me” – essential viewing for anyone starting a business – San Francisco designer Mike Montiero describes “We wanted to pick and choose the clients we were gonna work with and we wanted to be responsible for what we’re putting out in the world.”

For businesses like Montiero’s and Wilkinson, having a venture capital investor looking over their shoulder would be as bad as working for a corporation; ceding control of your work is exactly the reason they started their businesses in the first place.

While the Silicon Valley venture capital model is valid for high growth businesses that need capital to scale quickly, most ventures don’t need those sort of large cash injections early in their development – for many, a million dollar cheque from a VC could prove to be a disaster.

There’s myriad reasons why someone starts a venture and all of them pre-date the current startup mania, it’s why every business is different in its own way.

Similar posts:

Building the next Internet of Things network

Investment in French networking startup Sigfox shows the need for the IoT to develop new networks.

Earlier this week we looked at Cisco’s claim that Low Power Wide Area (LPWA) networks will handle much of the world’s mobile data traffic by the end of the decade.

French company SIGFOX showed how investors are looking at the opportunity in these systems with a $115 million funding round two days ago.

What’s particularly notable about SIGFOX’s investors is how many of them are telcos themselves with Spain’s Telefonica, Japan’s NTT DoCoMo and South Korean SK Telecom being key shareholders.

Along with the telcos, who SIGFOX hopes will help them expand their footprint outside Spain, France, the UK and the Netherlands, there’s also a collection of industrial companies including Air Liquide and infrastructure giant SDF Suez.

That a diverse range of companies are moving into the LPWA market shows how important the stakes are for providers in securing a position in the the technologies that will define the Internet of Things as industries brace themselves for the massive rollout of connected devices.

Similar posts:

  • No Related Posts

Ending the era of the IT manager

Is it now the turn of the CIO to go the way of the tea lady

Once every workplace had a tea lady; usually a happy friendly woman who cheefully dispensed tea, buscuits and office gossip around an organisation.

During the 1980s the company tea lady vanished as companies cut costs and changing workplaces made the role redundant, is it now the turn of the CIO to go the way of the tea lady?

Yesterday research company company Frost and Sullivan hosted in a lunch in Sydney outlining their views on the growth of cloud computing based upon their 2014 State Of The Cloud report.

The report itself had few surprises with a forecast of the cloud market growing 30% each year over the next five years, a statistic that won’t surprise many watching how users are moving away from desktop applications.

Shifting procurement

One of the key trends though is how cloud services change the procurement process and lock IT managers and Chief Information Officers out of decision making. As the report says;

Half of all organisations feel that the decision making process is shifting from that of the CIO and IT department to the individual business unit for implementation or updates of cloud applications such as HR, payroll, collaboration and conferencing.

While the report puts a positive spin on what it describes as the “evolving role of IT within organisations”, Mark Dougan – Frost & Sullivan’s Managing Director for Australia and New Zealand – mentioned that often the decision to adopt a cloud service were made by executive management and then the CIO was told to implement the technology.

This illustrates how CIOs’ already tenuous grip on being a senior management role has slipped. With the rise of cloud services, it’s become easier for executives to make choices without considering the technological consequences.

Probably the business that best illustrates this shift has been Salesforce where many corporations find they have dozens of subscriptions being charged to sales managers’ credit cards, much to the chagrin of company accountants and IT managers.  Salesforce and similar businesses have driven the trend so far that many consulting firms predict marketing departments will control more technology spending than IT managers in the near future.

That shift predates the coining of the word ‘cloud’, the term “port 80 and a credit card” was used to describe the Salesforce model of sales people signing up to what was then described as Software As A Service (SaaS) earlier in the century.

Does IT matter?

In 2003, writer Nicholas Carr predicted IT as a discipline would cease to matter within most organisations as technology became ubiquitous and taken for granted, just as electric power and railways did in the nineteenth and twentieth centuries.

The electricity and railway industries remain huge employers and are essential to modern business but most for most companies the products are taken for granted – few companies have a Chief Electricity Officer sitting on their executive team despite power being an essential service.

For those IT managers hoping for a senior c-level position or even a seat on the board, the move to the cloud is terrible news. Rather than getting the corner office, the CIO could be heading the way of the tea lady.

Similar posts:

  • No Related Posts

Can the tech industry’s unicorns escape extinction?

How will Silicon Valley’s billion dollar startups survive their valuations?

“Today we have herds of unicorns,” Fortune Magazine quotes Jason Green, a partner at venture capital firm Emergence Capital Partners, in its story about startups that have achieved billion dollar capitalisations.

When the ‘unicorn’ label was coined by Aileen Lee in November 2013 it was to highlight the rarity of the beasts – on 39 existed at the time.

Today, just on a year later, there are eighty unicorns and the growth doesn’t seem to be slowing as more companies are raising funds or looking at trade sales or IPOs that will value their business at over a billion dollars.

Betting on the unicorns

Some of the business on the Fortune 80 unicorns list – like Elon Musk’s SpaceX and medical testing venture Theranos – are big, brave bets on future technologies which could prove incredibly profitable if successful. These are to today’s market was Google was at the turn of the Century.

Others, such as Xiaomi, Meituan and Flipkart, are betting on massive growth in emerging markets which China’s AliBaba has shown to be huge opportunity.

Some are already profitable and showing great potential to deliver the multibillion dollar valuations; companies like data analytics firm Palantir, developer tools vendor Atlassian and Uber are in this camp.

Many though are platform based, transaction plays that hope to clip the tickets on fields such as rental accommodation, payment systems and e-commerce. Some will be insanely successful but most have a distinct whiff of irrational exuberance about them.

Frothy exuberance

Driving that irrational exuberance is the money tsunami which has overwhelmed the financial sector since the Global Financial Crisis. As Quantitive Easing has fattened the banks’ and corporate America’s coffers, managers have sought to get their lazy dollars doing some work and the startup sector is an attractive, and sexy, place.

That influx of money has in turn has driven a spiral; as companies like Facebook have found themselves cashed up, they’ve bought more companies – Instagram and WhatsApp are the best examples of this – which in turn has increased valuations and expectations across the board.

Some of the risks in this current mania are obvious, but the question of survival when your business is valued so high becomes a pressing issue as Twitter have found with the company flailing around looking for a revenue stream to justify its fifty billion dollar valuation.

Probably the best, or worst example, of struggling to justify massive valuations is found in one of the original unicorns; Google and its YouTube division.

Monetizing YouTube

Right now YouTube is trying to screw musicians with onerous terms in return for, in the case of most artists, will be a pittance. It’s necessary for YouTube to do this so the service can capture as much value as possible to justify the rates of return demanded from its management, particularly as it’s appearing the online display advertising market is beginning to plateau.

That dash to generate revenue may become more common when investor finance starts to dry up; faced with the need to generate cashflow and satisfy the needs of impatient investors who’ve been denied a profitable exit, many of today’s unicorns could find themselves in a difficult position in a tighter VC climate.

Unicorns were once mythical creatures; now they’re real, at least in Silicon Valley, they’re going to have to learn how to fight for survival.

Similar posts:

Daily links – the future of Google, Silicon Valley’s name and how startups die

The future of Goodle,,how the name ‘Silicon Valley’ came about, why solar power is getting cheaper and how some startups die.

On many measures Google are in trouble, but one analyst thinks we’re panicking and his view is the lead of today’s links of the day. We also look at how the name ‘Silicon Valley’ came about, why solar power is getting cheaper and how some startups die.

Does Google’s future lie in R&D?

“Google is down but it’s not out” is the warning of this analyst’s report on the company’s earnings and strategy. Interestingly Google outspends Apple by $4bn a year on research and development, but both of them are dwarfed by Microsoft’s spending, which indicates R&D investment doesn’t guarantee success.

The origins of the name ‘Silicon Valley’

Last Sunday marked the 44th anniversary of the first time the label ‘Silicon Valley’ appeared in print. The US Computer History Museum looks at how the name came about and no-one will be surprised it was a marketing person who coined it.

Why does solar power keep getting cheaper

A few years ago putting solar cells on a building was expensive, now in many parts of the world the price of PV panels is becoming competitive with mains power. Vox Magazine looks at the factors driving the price drops and finds that economies of scale are now the main factor affecting the falling cost of installed solar power systems.

RIP Urbanspoon

One of the earliest food review platforms was Urbanspoon which was founded on the basis it would only grow as a bootstrapped company. In 2009 the founders sold out to a larger company who have now sold it onto an Indian business who is going to shut the name down.

Startups who’ve fallen off the map

Business Insider lists 17 formerly hot businesses who’ve fallen out of the public view this year, while some of them haven’t disappeared, it’s a list that reminds us that most new businesses, particularly tech startups, fail.

Similar posts:

  • No Related Posts

Where will the next Silicon Valley come from?

As US research and development spending declines, where will the next Silicon Valley be?

In the development of any global industrial hub, there’s always a series of factors that attracted talent, capital and resources to that location. It’s true whether we’re talking about fifteen century Venice or the English Midlands of the eighteen century.

Silicon Valley is today’s equivalent of those historical powerhouses and what drove California’s Bay Area to be the technological centre of the world was the massive government research spending of World War II, the Cold War and the Space Race.

Which means declining research and development spending by the United States is going to hurt the region’s position in the medium to long term, a warning made by Fareed Zakaria in The Washington Post.

So the question is ‘if Silicon Valley and the US are in decline, which will be hub of the next business and technology revolutions?’

 

 

Similar posts: