#startups

CipherCloud - Review of the Best Software Startups

ciphercloud-software-startup

As of 2015, CipherCloud has around five years and $80 million in investments under its belt, and even the internal team couldn't provide a specific reason for attracting $50 million in Series B funding in an investment round in 2014. We're not surprised this startup has been successful so far–it punches most of the buttons on the Angel Kings investment checklist, including strong people, product, and timing.

The founder behind CipherCloud is Pravin Kothar. Kothar has plenty of experience in the technology and security space, and he's also got a history of launching successful startups. He was the founding Vice President of Engineering for ArcSight, which launched in 2000 and was acquired by Hewlett–Packard in 2010. Kothar was also involved with startup Agiliance, which garnered $24 million in investments from 2005 to 2015 and boasted an impressive growth rate of 4,909 percent from 2007 to 2010.

An experienced and established founder is one that investors can get behind, but he also needs a marketable product. CipherCloud entered the market at a time when cloud–computing itself was becoming a mainstream service, but users were still anxious about security concerns. With security an ever growing concern–and cloud computing an ever growing requirement among global organizations looking for cost–savings and efficiencies–CipherCloud's service is positioned to meet demands and psychological needs for an enormous market. No company wants to feel vulnerable to hackers, particularly those in sensitive niches. In fact, CipherCloud's first four years netted them 3 million users–including top banks, healthcare organizations, and government agencies.

CipherCloud doesn't offer a new solution; many companies in the second decade of the 21st century are bringing cloud security solutions to market. What CipherCloud does offer is out–of–the–box solutions that integrate with some of the biggest cloud software solutions on the market. The company offers security for Salesforce.com, Office 365, and Box, among others. Like Apttus, this smart startup used the tailcoats of larger organizations to get up to speed. Now that it's caught the eye of investors, CipherCloud intends to develop additional products and move into new markets.


Want to get information on angel investing and venture capital?  Get information from the venture capital expert on startups.  And find out if you qualify as an accredited investor HERE.

Ross-Blankenship-expert-investor

Ross Blankenship is the "expert on venture capital and angel investing" for startups and investments for venture deals. He is also a proven entrepreneur, and the Founder and CEO of AngelKings.com. Ross Blankenship has successfully founded several companies and now manages a Venture Capital fund focused on early stage, high growth startups in sectors such as mobile, cybersecurity, cloud computing and biotechnology. Learn more about Ross Blankenship, and how to become a successful, early investor at http://AngelKings.com.


Indeed.com - The Best Lean Startups in America

INDEED.com

In Kings Over Aces, we discuss the importance of investing in established, experienced people, which describes the cofounders behind the site, Indeed. Paul Forster and Rony Kahn already founded, ran, and sold a company before they began to bootstrap Indeed. It's not surprising that they didn't bootstrap for an extensive amount.  After a beta release of the popular job listing site, the company raised $5 million in funding, which a Union Square Ventures (USV) representative said investors had to convince the cofounders to take.

According to that same USV associate, by the time the investment came, Kahn and Forster had launched the Indeed service and were on the way to success. Forster said a major principle of Indeed was to run efficiently and to remain laser focused on building the product over time. By 2012, that focus had paid off. Indeed generated around $150 million a year and had 550 employees. It was also poised for either a successful IPO or an acquisition. In the end, the company–which was valued at over $750 million–sold for an undisclosed amount. Guesses at the time were that the acquisition price ranged between $750 million and $1 billion.


Want to get information on angel investing and venture capital?  Get information from the venture capital expert on startups.  And find out if you qualify as an accredited investor HERE.

Ross-Blankenship-expert-investor

Ross Blankenship is the "expert on venture capital and angel investing" for startups and investments for venture deals. He is also a proven entrepreneur, and the Founder and CEO of AngelKings.com. Ross Blankenship has made more investments in venture capital before the age of 30 than most venture capitalists have made in a lifetime. As a venture capital expert on startup funding, Ross Blankenship continues to advise media outlets on upcoming SEC rules, been a mentor for startups, and helped accredited investors make investments in the highest ranked startups. Ross Blankenship has successfully founded several companies and now manages a Venture Capital fund focused on early stage, high growth startups in sectors such as mobile, cybersecurity, cloud computing and biotechnology. Learn more about Ross Blankenship, and how to become a successful, early investor at http://AngelKings.com.


Review of the Most Successful Lean Startups - Carbonmade

Carbonmade

Carbonmade is a portfolio app that lets creative professionals show their stuff online. The product began as an in–house tool for the startup, which spent its time concentrating on a different product while the portfolio app grew quietly among an audience of friends, friends of friends, and friends of those friends.

The startup was founded by Dave Gorum, Jason Nelson, and Spencer Fry. From the beginning, the three knew they wouldn't seek investors right away due to their experience with previous startups. During the course of founding the company, Gorum developed a product for displaying his own creative work–he and others liked the app so much, they shared it with friends, which is where the growth story began.

In 2007, the three used the app to launch Carbonmade, offering a $12 per month plan for users. The team intended to create a suite of apps aimed at the creative audience, but within a year they realized several things:

·      They had a viable product consumers were demanding

·      They liked working on the product

·      The community surrounding Carbonmade was passionate about the brand

The trio made a decision to drop the other product in development and concentrate on making Carbonmade–the thing customers wanted–better. As of 2015, the company offers three portfolio packages ranging from $6 to $24 per month, and consumers pay for over 880,000 portfolios.

Carbonmade illustrates the validated learning premise from Lean Startup.  By reevaluating its goals and interests - as well as listening to what the customers were saying - Carbomade turned its attention to a proven product.  The result?  Millions in revenue every month.


Would you like to invest in startups and become a venture capitalist? The VC expert is ready to help you start invest in top startups. See how you can by becoming a qualified member here.

Ross Blankenship is an expert on startup funding,  angel investing and venture capital.

Ross Blankenship is also the Founder and CEO of AngelKings.com.  Angel Kings is an investing platform that provides accredited angel investors the opportunity to invest in top startups and companies in sectors like cyber security, biotech, mobile, data and financial services.  Angel Kings provides both venture capital funds for startup investing as well as private equity funding for early and middle-stage investments. 


Total Addressable Market: Startup Market Size and Why It Matters

How much is the magic market share number? It depends on how much the investment ask is: you don't need a $20 billion market share to make a profit; niche companies often succeed with much small shares–they just succeed on a smaller scale.

In this section, we'll cover some basic ways you, as the angel investor, can estimate the addressable market share. We'll also talk about how to drill down in a startup's pitch deck, what to look for when the startup talks market share, and how to protect yourself against poor investments with regard to market.

 

Back-of-the-Napkin Considerations

 

You can do some back-of-the-napkin math to estimate a startup's future share of the market. The more you know about the industry or product type in question, the more accurate your math is likely to be, which is one reason many angel investors choose to operate in fields with which they have experience.

For a solid estimate of total addressable market (TAM), you'll need five pieces of information.

1.  The Total Population of Potential Users

This may be a geographical consideration: There are 100,000 people in the city where a restaurant wants to launch. More likely, this is a more abstract number, since the majority of angel investors are opting for opportunities in Internet, software, e–commerce and other virtual spaces. A total possible population for a mobile app launching in the United States, for example, might be up to 182 million people in 2015, according to Statista's numbers on smartphone users in the nation. The site also forecasts smartphone user population to grow to 220 million in 2018.

2.  Definition of the Market Segment and Estimated Percent of Target Customers

Your product limits the percent of your market segment. Angel investors should ask: Who is this product for? Who is likely to want, need, and purchase this product? Are people already buying similar products, and if so, who are those people?

Consider an app that acts as a virtual storybook for babies. The obvious market for such an app would be new parents with smartphones. There are a total of 318 million people in the US; if 182 million have smartphones, then approximately 57 percent of the population has a smartphone. There are around 4 million babies born each year—applying some dirty math, we can assume that 57 percent, or around 2.28 million, of those babies have at least one parent with a smartphone. That's the target audience for our app.

This back-of-the-napkin math is rough: the population numbers used to arrive at the above percentages counted young children and older individuals, which are less likely to own smartphones. Child–bearing parents are more likely to own the devices, which means the target audience could be as high as 3 million. For ease of estimation, let's assume 2.5 million. Out of 182 million smartphone users, that's approximately 1.4 percent.

3.  How Many of the Products Will Be Purchased At A Time?

If a company is selling software through licenses, businesses can purchase multiple instances of the product. Someone with a hot new cupcake recipe is going to sell in multiples as well; our baby app, however, is most likely to sell once to each user. 

4.  How Often Will The Product Be Purchased?

Does the product lend itself to repeat purchase? Is it a commodity or necessity that will be used up, so consumers must refill or restock? At first glance, a software product is going to be purchased once for each user, but what about new versions and upgrades? Are those free, or monetized?

5.  What is the Intended Selling Price of the Product?

We'll look at two possibilities with our baby app example. First, the startup may charge for its app.  Given app store prices, and depending on how much functionality the startup is going to provide in its app, price might range from 99 cents to $7.99. For the example, assume the startup charges $2.99.

The other possibility is that that startup offers the app free to users, but plans to monetize it through ads, in–app purchases, or professional relationships. In this case, the angel investor needs to see the startup's projections on how much per user the app might generate. For our example, let's assume the startup estimates $5 in revenue per user, per year. 


Possible Market Share Formula

The basic market share formula multiplies all of the data points above. So, for our baby app, basing market share solely on the purchase price of $2.99, maximum market share would be:

182 million smartphone users * 1.4 percent target audience * 1 purchase at a time * 1 purchase (no repeats) * $2.99

The maximum potential market share would be approximately $7,618,520 per year.

 

Drilling down: the Startup's deck

 

That $7.6 million market share number for our imaginary baby app is unrealistic–but some startups are optimistic enough to publish such numbers in their pitch deck. No matter how great the product and timing is, you aren't going to get 100 percent to buy–in from your potential market–and remember, the math we did to get to $7.6 million was all estimates and quick Internet statistics searches. You have to assume the numbers are off a bit.

Startups tend to make sweeping statements about market targets in their pitch deck. They might state, "We're targeting 1 percent of a $20 billion market by 2022." As the angel investor, you have to do your own math, as shown above, to vet the total market claim, and then you have to evaluate whether you think the startup is on point with their target. How likely is the 1 percent goal? At Angel Kings, we like to see startups that provide more specific market definitions, even if that reduces opportunities to $500 million instead of $20 billion. 

 

Is The Startup's Plan Backed By Data?

Startups with specific market definitions have some data to back up claims; as the angel investor, you should vet that data against your own research or knowledge of the market. The statistics we used to create our assumptions for the baby app market share are an example of data that anyone can vet. Startups should source such information, but a quick online search turns up information too.  You should also download the app yourself, try it out, and see if people would care enough to pay for it.

It's harder to tack down the percent of potential market a startup hopes to obtain. Ask how the startup came up with that percent. Did they conduct market surveys? Are they basing the data on comparable products? The startup launching our imaginary baby app might have polled 500 new mothers and mothers–to–be to find out if they would be interested in purchasing an app, and then applied that data to the overall market to determine that 20 percent of possible consumers would make a purchase.

Despite how much data the startup presents, you as the angel investor have to make a judgment call. Do you buy in to the market assumptions the startup makes? Do you think they are probably too optimistic? Even if the startup's assumptions are too optimistic, does the market share potential you see make the investment worthy?

 

tomorrow's market, not today's

 

As an investor, you are worried more about tomorrow's market than today's market. Understanding today's market lets you make evaluations of future market potential. In some industries, you can also use benchmarks, expert guidance on industry trends, and forecasts to estimate future market behavior. With our baby app example, an investor might use the estimated smartphone user growth from several statistical sites to gauge how much the potential market will grow. 

 

primary demand versus secondary demand

 

Numbers and data are important, but investors must also understand the difference between primary and secondary demands. Primary demand references the market size for a specific product or product category–baby apps, cupcakes, virtual hard drives, and point–of–sale software, for example.

Secondary demand refers to the size of the market for a brand.

When dealing with early–stage startups in most industries, angel investors are concerned with primary demand because fledgling startups often tout a single product idea. While concentrating on primary demand, keep secondary demand in mind as it plays a role in growth potential. What are the brand goals and plans for the startup? Will the startup pull its audience through branding more so than product, and does the startup plan to branch out with products that could capture greater shares of the market in the future?

In a few niche industries, secondary demand is the primary evaluation point. This might be true when evaluating biotech or social startups, for example, where audience buy–in to an idea is much more important than the product itself. 


Setting Limitations As An Angel Investor

 

You know the saying about going to the grocery store hungry or without a list? Chances are, you walk out spending more than you wanted and with items you don’t need. As an angel investor, enter evaluation phases with limitations in mind to avoid getting caught up with the people and idea and failing to see the potential market pitfalls.

Some angel investors won't consider a startup that doesn't have a potential minimum market share of $500 million or more. Others won't invest in a company where growth projections can't be reasonably estimated at 10 percent a year or more.  You shouldn’t set targets and ranges like this.

Even more important than arbitrary limitations is your own awareness of earning potential. No investment is 100 percent safe, but by calculating market share, the angel investor has a better understanding of the type of returns that can be expected if the startup is successful.


Want to get information on angel investing and venture capital? Get information from the venture capital expert on startups. And find out if you qualify as an accredited investor, http://AngelKings.com/angel-investing-101

           

Meet The Most Successful Lean Startups

Previously, we discussed the 5 lean startup principles to bootstrap your startups.  Let's recap what those are:

  • Entrepreneurs are everywhere.
  • Entrepreneurship is management.
  • Validated learning.
  • Innovation accounting.
  • Build-Measure-Learn.

So let's meet the startups who've managed to use these principles successfully, starting with:

Aardvark

Aardvark was founded by Max Ventilla, Nathan Stoll, Damon Horowitz and Rob Spiro in 2007.  It's a question-and-answer search engine that allows users to connect with each other and provide technical support and recommendations to other users.  Users connect submitted their queries via the Aardvark website, email, instant messaging or other social networks.  Similar to Pinterest, they tested their product by having beta users for their first release, and having those beta users invite new users.  They publicly released Aardvark in March 2009.

Google acquired Aardvark for $50 million on 2//11/2010 because the product was highly successful at querying users for subjective information and graphing the results.  


Get a copy of our official guide to venture capital and angel investing by becoming a member of Angel Kings.  Learn from the angel investing and venture capital expert, Ross Blankenship.

Lean Startup: 5 Principles to Boostrap Your Startup To Success

New entrepreneurs often buy in to the corporate mantra that cash is king, but many companies over the years have made it on determination, intelligence, strong designs, and a bit of luck. For angel investors, these companies can be a great investment, because buy–in is very small in the beginning. Founders who are willing to bootstrap have a different idea of budget, and they can often get more done with less funding. If the startup succeeds, then investors might even see a generous return on a relatively small cost.

In our article on the hottest software startups, we talk about Apttus, a successful software company that bootstrapped its way through seven years before seeking traditional investor funding. In such a case, investors have an even greater advantage: the startup is generally further along with its research, plans, and products. It might even have products on the market, providing investors with solid data on which to make a decision. Even then, investment asks may be lower than with non–bootstrapped companies.

Eric Ries and the Lean Startup

Bootstrapping isn't a new concept; entrepreneurs have been using their last dimes to launch companies for centuries. Funding a small endeavor on little more than your own sweat and what cash you can scrape together is a risky strategy, though, and most angel investors are likely familiar with statistics about how many of these small businesses fail each year.

Planning and methodology brings a bit more stability to the bootstrapping risk, and one of the more successful methods today is Lean Startup, which was pioneered by Eric Ries. Ries, like many founders featured in our book, began in the technology field. After graduating, he worked for a Silicon Valley company that would fail within a few years. In 2004, Ries cofounded IMVU, a social network company, through which he met investor and mentor Steve Blank.

Blank invested in IMVU, but he required that Ries and his cofounder audit a class he taught on entrepreneurship. Through that relationship and class, Ries would learn about Blank's beliefs on customer development–a strategy he used to quickly deploy IMVU products and later to create the foundation of his lean startup method. Reis's efficient approach to the startup meant that the product launched within six months. By 2011, the company was generating revenue of $40 million with an equal number of users. At that time, Ries had moved on to other things, however, remaining simply a board observer with the company.

Ries's early successes and failures put him in a position to advise other startups, which he did independently and as part of the team at a venture capital firm. He also used his experience, and what he learned from working with other startups, to create his philosophy of Lean Startup.

The 5 Principles of Lean Startup

  1. Entrepreneurs are everywhere.
  2. Entrepreneurship is management.
  3. Validated learning.
  4. Innovation accounting.
  5. Build–Measure–Learn.

Let’s examine the concept behind each step and how it applies to the lean startup. 

1.  Entrepreneurs Are Everywhere

The stereotypical view of an entrepreneur veers between the brilliant college student and the driven scientist, but in reality, entrepreneurs are everywhere and come from all walks of life. By definition, an entrepreneur is a person who organizes and operates a business, sometimes – but not always –– taking on high levels of risk to do so. Entrepreneurs are not restricted to technology startups or cutting–edge biotech.

The importance of this point cannot be overlooked, even though it sounds simple. Opportunities for startups abound in every industry and in every region. When you are looking to fund a startup, you don’t have to be confined to a narrow range of opportunities. Find a sector that intrigues you and focus your attention on startups in that sector.

2.  Entrepreneurship Is Management

Going back to the definition of entrepreneur, we see that a core concept is operating a business. The definition does not include brilliant ideas or wild spending habits or even a degree of coolness. It’s about management, which means harnessing available resources to meet goals or at least to provide the best possible outcome under given circumstances.

Management is about discipline and creating processes that help the organization reach its goals.

To make a startup successful, the entrepreneur needs to impose processes and disciplines on the organization. Management is about making good decisions faster even when based on limited information; it’s about getting the best from a team. Sometimes a manager is a coach and sometimes a manager is a dictator or a friend – or a naysayer. A manager manages, and gets things done. 

This is a fundamentally different view of entrepreneurs, who often exhibit diva–like tendencies and go off on expensive ego trips leaving reality behind. Investing in a lean startup means your cash won’t be wasted on some of the excesses and errors committed by entrepreneurs such as leaders at Pets.com, WebVan, Den.com, Boo.com or Flooz.  These companies all failed.

3.  Validated Learning

Using lean startup principles, companies continually test their vision with the only people who can validate it – potential customers. Most startups take the “Nike” approach. They just do it, working diligently to bring a product or idea to fruition and then springing it as a completed product with no time, resources or room for changes or improvements. Many entrepreneurs are disappointed by this approach when the expected sound of trumpets heralding their vision fails to materialize and instead, all they hear is a resounding thud as the doomed product hits the trash.

The MVP, “Minimally Viable Product,” idea strives to find the product that has the fewest features and requires the least effort to create that will still have appeal to a broad enough market to sustain the company’s goals. The minimally viable product feature set does not spring directly from the entrepreneur’s mind, nor will it ever happen in a vacuum unless it’s a fluke of the universe.

Enlisting early adopters is fundamental to this process. The startup needs the feedback from users to measure the product’s viability. By the time the product is ready for full–scale distribution, it has a built–in user base and a history of solving real customer needs.

4.  Innovation Accounting

Startups have sometimes felt that they were immune to the realities of business that exist in established industries, but startups need to be even more conscious of the mundane metrics. The entrepreneur’s role is to define the process and provide the roadmap including specific milestones and priorities. This is more than project management and far more than standard accounting. It is a new kind of accounting that measures startups on their business imperatives. It’s a fascinating topic that Ries explores in detail in his book, “The Lean Startup.

5.  Build–Measure–Learn

Creating an innovation process is key to the MVP concept and the entire lean startup idea. It involves the product learning cycle: Build–Measure–Learn. The process starts with early prototypes that are shown and tested with multiple customers. Customers provide their feedback on what they like, didn’t like, or what they need to have added before they would be willing to buy the product. The startup measures the product’s current features for acceptability to its target market. The development team takes this learning, adds features that fulfill the identified need and repeats the process until they have come up with a design that meets the need without adding unnecessary cost, extended development cycles or unwanted features.

With Lean Startup, you will eliminate or at least reduce uncertainty in the startup process. Your team will be able to work smarter, not harder as you answer the fundamental question: Should this product be built? Most entrepreneurs ask “What can I build?” or How can I build it?” The lean startup works on the premise that you shouldn’t build a product unless there is a sustainable business to be built. Like the original idea for lean manufacturing, it eliminates waste:

·      Wasted time.

·      Wasted effort.

·      Wasted resources.


Want to get information on angel investing and venture capital? Get information from the venture capital expert on startups. And find out if you qualify as an accredited investor, http://AngelKings.com/angel-investing-101

Startup Burn Rate vs. Startup Profit and Loss

Don't Burn All Your Money

The gross burn rate is the amount that is being spent every month. The net burn rate is the amount of loss. Both are of equal importance. One of the reasons that net burn is such a valuable number to investors is that it provides some idea of how long the business can continue to operate, assuming it doesn't increase its net burn. As such, the net burn can be a way to determine how many more months a startup can stay in business, based on the cash it has in the bank. A company with one million dollars in the bank might sound promising, but if its net burn is $250,000, it can only stay afloat for four more months unless drastic changes are made. So that scenario does not sound like a good investment at all.

The net burn rate can help current investors measure and determine their level of risk, and can also give them an idea of how quickly they will need their teams to focus on fundraising. New investors will also be interested in the net burn of a startup, because they will want to know how quickly they need to raise cash, and how much cash they will be asked to invest.

While it's important that startups keep their net burn as low (or at least as realistic for their company and industry) as possible, having a very low net burn actually can work against them if they're looking to raise a significant amount of money. To illustrate this point, a startup with a net burn of $150,000 wouldn't appear to need to raise millions of dollars right away, and asking for that kind of money might put investors off. Prospective investors could wonder why the company would need that level of capital. So simply seeing if investors will fork over large sums of money isn't a good practice for startups, and can lead to their being overcapitalized.

Here are some tips and questions for you to consider when reviewing a company’s net and gross burn rates:

1.  Is the company responsible with money? 

Make sure that company founders who are seeking your capital investment articulate why their company needs it.  If the company’s net burn rate is low, why are they seeking a high–dollar investment? Are there other expenses that are not being disclosed?  Be wary of companies who respond with the idea that “more money is always better”.  These companies tend to develop a bad habit of unnecessary spending. 

The burn rate of any startup should be similar to the burn rates of the competition, but the size of the company and its operating expenses will dictate the overall burn rate.  It’s always best to invest in companies that have 10% month–to–month growth and at least 18 months of burn rate, as these companies have proven to be more viable in the long run. 

2.  who makes up for most of the company’s revenue?

Make sure that the company’s revenue is not reliant on a few customer accounts, and there is a varied distribution on where the company makes money.  This provides a safety net for investors since market fluctuations cannot be easily foreseen and can happen quickly. Having a wide array of customers allows a company to survive any revenue losses due to unpredictable market fluctuations.  SaaS companies are ideal for investors because their biggest customer may account for <5% of their revenue, and their revenue is ongoing and recurring. 

3.  Is the company spending on growth and development?

Pay attention to where the company does spend its money.  A company may have a high gross burn rate due to growth and development expenses.  It is a calculated risk that provides investors with longer–term rewards if the company raises the value of its product and broadens its customer base.  Stay away from companies that have low burn rates in a stagnating market since these companies will provide little return of investment. 

Startup Investing 101: Where should you invest?

If you had an opportunity to invest in the next Facebook, how would you?  We’ve got the answer. 

We want companies who will maintain their success against their competition because they know how to adjust their product or service to fit the needs of the market; they know how to spend their money responsibly; and they know that even when they reach profitability, there still won’t be enough time in the day to get everything done.   We look at four core values:

1.     People

2.     Product

3.     Execution

4.     Timing

* * *

PEOPLE  

Behind every great company is a founder who discovered a better solution to an everyday problem, and who is so dedicated, even obsessed, with delivering her better solution to everyone that she has no choice but to commit everything to the success of her company.  Behind every great company is a founder who knows the value of every dollar that comes in and every dollar that goes out of her company.  We want a founder who knows how to balance being pragmatic and passionate.  She won’t underestimate the value of her company, but she also pays attention whether there is an actual need for her product or service.  We don’t want a founder who is so in love with her company that she fails to pay attention to what the market actually needs.  Founders need to be focused, but they need to be flexible with their products, as well.  At Angel Kings, we also know that founders who are hyper–focused on profit and the marketability of their products only hire people of the same mindset.  Therefore, a driven founder, who is supported by an equally motivated and driven team, has a better chance in leading her company on a positive trajectory.  As an investor, look for founders who are obsessed with winning, but not blinded by illusion. 

PRODUCT

Companies that have withstood the test of time are quite simple in concept.  As we mentioned before, the best companies are the ones that provide solutions for everyday problems.  Some companies may even address the same everyday problem, but take different approaches to appeal to consumers.  Take Apple and Microsoft.  They address the same problem of providing people with a platform that connects them to the Internet, while providing an electronic interface for people to do their daily administrative or creative tasks.  They address the problem of communication and convenience.   

But if we look back at the development of these two giants, which existed before there was Facebook or Google, we can see that Microsoft and Apple products have evolved to fit the needs of their market—both in style and functionality.  At Angel Kings, we invest in companies that have the potential to evolve with the constantly changing market.  We first recognize the problem that the company is trying to solve with its product.  Then, we put ourselves five, 10, even 20 years down the road, and ask ourselves if this company can develop its product to fit the needs of people later on.  It requires more foresight and creativity to ask those types of questions, but they are important in assessing the longevity prospects of a company.  To illustrate, a company that sells protective cases for cellphones may become obsolete 10 years from now if cellphones are replaced by wearable technology, such as Google Glass. 

EXECUTION

Execution is closely tied with the people of the company.  Simply put, we want to invest in the founder who has the vision for the company, and who has an organized, realistic execution plan to launch and market the company.  A founder who does not have an execution plan on how to make her company profitable by a certain time is a founder who will not be financially responsible with her investor’s money.  To quote Robert Herjavec from ABC’s Shark Tank:

“A goal without a timeline is just a dream.”

Let’s face it.  Startups are expensive.  As investors, we don’t have time to invest in dreams.  We need founders who know exactly what they will do with the money we provide.  Will they use the money to meet the demand of their purchase orders?  Will it be used toward a better marketing campaign via Google Adwords?  Will it be used to lower the cost of the technology they’re using?

If the founder in whom you’re investing does not have the answer to execution questions, that’s a big red flag.  Execution plans are a necessity for a founder to show that she has the commitment, the preparedness and the follow–through to make sure her company succeeds.

TIMING

Timing is all about waiting for the right time to hit the market with the company’s product. There must be urgency for a better solution among consumers. This urgency emerges from previous products’ failures to address the needs of consumers.  Make sure that the company in which you’ll invest has a proof of concept and has gone through several iterations to meet the market’s needs.  Sometimes, this may mean that the company will wait for competitors to launch products first, then wait and see how the market will react. 

 

 

Venture Capital Firms: All about VC investing

Investors aren’t born overnight.  They don’t come out of the womb with the ability to identify successful startups.  They might want you to think they do, but they don’t.  Some may have the good fortune to have an ample cash flow to invest.  But the knowledge that would allow them to pick the right companies in which to invest isn’t something learned by intuition. Intuition is expensive.  What you need is both strategy and focus to win so you can become one of the incredibly successful angel investors mentioned in this book.

Most people—you may be one of them—are intimidated by the idea that investing is exclusive to “those people” like Peter Thiel or other Silicon Valley tycoons.  “Those people” work in tall buildings made of glass.  “Those people” wear three colors when it comes to clothing: blue, black and gray.  “Those people” look sharp with their shiny, polished shoes, and they walk around with a portfolio in one hand and a cup of coffee in the other.  “Those people” talk only to people who look similar to them.  They use words like “return of investment,” “financials” and “valuation” as easily as you might use the words “ice cream,” “coffee” and “sleep.”   They always know when to invest and when to walk away.  They also seem to know about the up–and–coming startup companies that are going to explode in the market.  But they never share that knowledge. 

At Angel Kings, we know when to invest in a company, not because we have prophetic powers, but because we do our due diligence to find out everything about that company–from the founder to the financials. We look for companies that provide better solutions for everyday problems, not iterations of other companies’ successes.  It’s easier to follow the pack of VC’s who invest at the next biggest startup, but it’s wiser to take a closer look at startups that are providing simpler and better solutions for problems of everyday people.  Our main goal is to reduce your risk—for which there’s plenty in the current startup–investing environment—and help you make calculated, wiser decisions about where to place your money.  


ross-blankenship.jpg

Ross Blankenship is an expert on startup funding, angel investing and venture capital.

Ross Blankenship is also the Founder and CEO of AngelKings.com.  Angel Kings is an investing platform that provides accredited angel investors the opportunity to invest in top startups and companies in sectors like cybersecurity, biotech, mobile, data and financial services.  Angel Kings provides both venture capital funds for startup investing as well as private equity funding for early and middle-stage investments.  


The JOBS Act and Startup Investing

Since the passage of the JOBS Act in 2012, there has never been a better time to invest in startups.  The doors are opening wider for investors to be a part of the new startup boom, and the conversations between investors and startups have never been so loud and public.   The risk and potential reward have always been great.  But those investors who keep their eyes open and listen can turn the risk and reward in their favor.  

Startup and angel investing is the new frontier for you to make maximum investment returns on your money. The closed-door process of venture capital has changed over the recent years that you are now allowed to invest in a startup during the seed level and get access before it becomes an IPO.  You also have the fortunate opportunity of positively impacting society.        

Here are examples of two successful angel investors for you to consider.  In August 2004, Peter Thiel wrote a $500,000 check for an angel investment in Facebook, giving him a 10.2% stake in the company. By the end of the company’s lockout period in August 2012, Thiel had pocketed $1 billion in cash, or thousands of times return on his initial investment.  

Ronald Wayne co–founded Apple with Steve Jobs and Steve Wozniak. He received a 10% stake in Apple, which he sold for $800 two weeks later in April 1976. His 10% stake would have been worth more than $70 billion today.

Investing in Angel Kings puts you, the investor, in the best position to write a check, invest in the next Facebook and earn returns like Thiel.

We’ll show you how to find top startups like Thiel did, and how not to sell your stake too early, like Wayne did.  With our help, you won’t need the experience of having started your own company or become a founder to know what works and what doesn’t:  we’ve already been there.  

If you'd like to learn more about startup investing or want to see if you're an accredited investor, apply at:

http://angelkings.com/invest-with-venture-capital

Angel Kings are the angel investing and venture capital experts.