ARPA-E Spurring Innovation and Funding

February 5th, 2010

Xconomy reported that 1366 Technologies Wrapped Up $5.2M

1366 Technologies, a Lexington, MA-based company developing more efficient photovoltaic panels, has raised a $5.2 million Series B round from North Bridge Venture Partners and Polaris Venture Partners, says company president Frank van Mierlo. An SEC filing puts the total offering amount for the round at $6.2 million, but van Mierlo says the round closed at $5.2 million, with $5 million coming from the venture firms and the remainder coming from investments by 1366 management. He says investors were spurred by funding 1366 received from the U.S. Department of Energy Advanced Projects Research Agency – Energy (ARPA-E) program, which looks to fund innovations in energy efficiency.

While that is great for 1366, what is more exciting for MA as a whole is that the ARPA-E grants are spurring follow-on funding. Often it is said that government initiatives are not compatible with promoting innovation, in part due to the conservative and slow nature of government spending, as compared to the quicker, riskier VC-funding. Since the recession hit, it seems that bit of a role reversal has happened. What is great for MA is that of the ARPA-E grants awarded in October ‘09, MA captured 22% of the total money. If this trend continues, there will be continued investment in the MA clean energy space and may make it the center for the country’s cleantech innovation. Keep your eye on this trend.

By: Christine Ribeiro

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Competition is everywhere

January 27th, 2010

Great post by Seth Godin. We couldn’t agree more! Competition is everywhere and it’s when people see it that they are pushed to excel. Competitions give an artificial sense of urgency — in reality there is urgency everywhere all the time, people just need to see it.

Sure, there are playoffs in football, but competition is everywhere, we just forget to notice it.

There are three hundred photographers looking for work in a particular specialty. One puts a creative commons license on his shots in Flickr and they start showing up in many places, from presentations to brochures. Which of the 300 photographers has won the competition for attention? Which one of the three hundred has shared his ideas enough to be noticed?

There are twenty towns you can choose for your family’s new home. One invests in its schools, has a focus on inquiry, AP courses and community, while the others are muddling through, arguing about their future. Which one commands a higher premium for its houses?

There are a hundred new kinds of snacks and energy bars at the checkout of the supermarket. One is a little bigger, a little more exciting and a little closer to eye level. Which one of the hundred wins the battle for your impulse buy?

There are fifty people applying for a job. Forty nine have great credentials and beautifully standard layouts on their resumes. One resume was hand delivered to the CEO by his best friend, together with a glowing recommendation about a project the applicant did for the friend’s non-profit. Who gets the interview?

There are ten great jobs for the superstar programmer who is looking for a new challenge. One offers offices not cubes, free lunch, great customer support and the freedom to work on interesting projects. Where does she choose to apply?

There are 30 places that sell bumper stickers. One shows up first in the Google ads when I do a search. Which one gets my business?

There are seventy houses for sale in town. One of them is represented by a broker who is a pillar of the community, a friend of many and a role model for the industry. Which one gets more people to its open house?

….

You don’t have to like competition in order to understand that it exists. Your fair share isn’t going to be yours unless you give the public a reason to pick you.

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“Startup America”

January 26th, 2010

Great post from Andrew Hyde. A startup enthusiast and TechStars employee.

To all my startup friends: you inspire me.

There was a fantastic op ed this morning in the NYTimes More (Steve) Jobs, Jobs, Jobs, Jobs.

What the country needs most now is not more government stimulus, but more stimulation. We need to get millions of American kids, not just the geniuses, excited about innovation and entrepreneurship again. We need to make 2010 what Obama should have made 2009: the year of innovation, the year of making our pie bigger, the year of “Start-Up America.”

I would change it should be Startup America, because startup is a word, in my mind at least.

The people I’m around in the startup world could make a damn good run to change the world on $100,000. The banks couldn’t give a mid level manager a bonus that low.

Reject that mentality. I wonder if we took an ounce of that money and seeded Matt to start a bank, or perhaps not fund, but enable them to compete against those that have failed, and will continue to fail, if we just keep propping them up.

We would have a better country, that is what.

To all my startup friends: you inspire me.

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5 Entrepreneurship Trends to Watch Out for in 2010

January 8th, 2010

What entrepreneurship trends do you anticipate in Massachusetts in 2010?

Blog post from Ben Parr on the upcoming entrepreneurship trends in 2010. What do you expect for 2010? Do you anticipate that Massachusetts will follow the same trends?

2009 started out as a hard year for entrepreneurs. Consumer spending, venture capital funding, and bank loans were all down due to the global recession, making it harder for small businesses to grow. Yet as the economy has recovered, positive signs have emerged for the startup world. Venture capital is bouncing back and holiday spending seems to be recovering.

What can entrepreneurs and small businesses expect to see in 2010? The last twelve months have been an economic roller coaster, but startups can look forward to a brighter 365 days ahead. Here are some trends you’ll likely see emerge in 2010:

1. There will more IPOs in 2010: In terms of exits, the initial public offering is often the granddaddy of them all. It is what turns a few innovative entrepreneurs into millionaires and billionaires. With the market recovering, you can expect more of them to occur this year, including several high profile ones. The big IPO highlight this year could be none other than Facebook.

2. Venture capital will continue to flow: As I said before, venture capital is recovering, but it’s nowhere near its previous peaks. $4.8 billion was invested in startups in Q3 2009, up from $3.32 billion in Q1, but still well shy of the $7.16 billion in Q3 2008. Several VC firms are already predicting that 2010 will be a buyer’s market, and unless we have another economic collapse, I tend to agree with that assertion.

3. More social media starts will find ways to be profitable: Profitability in social media and the web has always been a problem. In the last few months though, companies such as Twitter, Facebook, and Zynga have found ways to become profitable. This is a good sign for the rest of the industry: the online ad market is recovering and social media companies are finding innovative ways to earn revenue.

4. Industries to watch: Biotech, Clean Tech, Energy, Media/Entertainment: These four industries were some of the most-funded and rapidly-growing industries this year. Biotech raised $905 million in venture capital last quarter, while clean tech grew by 89% from Q2 to Q3 2009 alone.

5. More economic turmoil: While I’ve painted an overall rosy picture for 2010 (especially compared to the economic abyss of 2009), entrepreneurs are not out of the woods yet. While the stock market has made a comeback in 2009, banks are still closing and the U.S. federal deficit is still rising.

While the recovery should still continue into 2010, there are likely going to be more bumps in the road. Entrepreneurs need to continue to be vigilant, find innovative ways to sustain positive cash flow, and create long-lasting companies.

Please visit OPEN Forum to view the article in its original format.

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Bettina Hein on How To Get Angel Investment

November 30th, 2009

What are five key steps in obtaining angel investment?

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As a repeat technology entrepreneur, I sit down at least once a week with someone who is looking to raise funding for their business idea. In the last 10 years, I’ve collected so many war stories that I like to pass them on to those just starting out in hopes of giving them a head start. In my last company, I raised about $8 million in capital, $5 million of that from angel investors. I’ve successfully started the process again for my new company Pixability.com.

Here are the five most important things I learned from all those years of fundraising:

A. The Basics: You need to do your homework first. There are plenty of websites and books to help you get there but this is the output you need to start your conversations with serious angel investors:

  1. Executive summary clearly outlining the customer pain and your solution along with what differentiates you (yes, it will change as you go along, that’s no excuse for not doing it now)
  2. Investor presentation deck (10-15 slides are enough)
  3. Financials
  4. A team (doesn’t need to be complete yet)
  5. At least 1 customer

B. You’re in Sales Now: Selling your company to investors is pretty much like any other business-to-business sales job with a long sales cycle. I didn’t understand this until my last company was profitable. At that point the board of directors told me: “You’ve sold the company to us, now go sell our product.” They promptly made me head of mobile sales.

Most importantly, don’t expect money right away. Ask for advice first. Especially with angels, funding is about relationships.

Ok, now you say: “I don’t know anybody rich enough to invest.” YES YOU DO! The average check an angel investor writes with a first investment is $25,000 or less. Many people you know have enough money to be able to afford a $25k check.

I don’t come from a wealthy family, was straight out of graduate school and I didn’t have any connections when I started. When I finished we had the former CEO of Sony Europe, the Chairman of IKEA, the most successful retail store investor in Switzerland and many more as investors or board members.

The key is to find early investors that other investors look up to and follow. So think hard about who could be interested in your venture and why. Find angels that share your background. They might share your industry expertise, come from your region, your college or share your ethnic background. A lot of angels invest for more than the money – they may like to hang out with your other investors, or they may want to keep a foothold in the industry they’ve retired from. Or plainly: they may just like YOU.

Always remember the golden rule of sales: It’s a numbers game. Don’t take rejection personally; go on to the next potential investor.

C. Spoon-Feed Them: You’ve found an interested investor, congratulations! Now they write the check, right? Not so quick, you’ve got more work to do. Spoon-feed these investors with information as you make progress:

  1. Give regular updates on technology development and breakthroughs
  2. Show them happy customer reviews
  3. Give them a chance to get to know you and your team

You can leverage good news into investment money: for instance, at my last company one of the first deals we got was outfitting the Mercedes Benz S-Class with our technology. This was a project with very high prestige but small numbers. Our investors loved it: we collected at least $1 million on the news of a deal that only got us approximately $200k in revenue (not even up front, but several years down the line).

One important caveat: always be honest, don’t make things seem prettier than they are. It will come back and bite you.

D. Listen: Experienced angel investors have seen hundreds if not thousands of deals. You need to profit from that by doing one thing that entrepreneurs often neglect: Listening. Experienced investors are good pattern matchers. Chances are, they’ve seen a deal similar to yours. They may not know your industry like you do but they have seen what factors make a start-up likely to sink or swim. It’s great free advice if you listen closely.

I’m not advocating that you meet with Joe Angel, take all of his feedback and re-write your business plan completely. Treat the feedback as a data point and collect more data points. If it all points in the same direction think hard about changing your business.

If you still think all of the feedback is wrong: prove it. Nothing shuts up doubters like paying customers and lots of them!

E. Step by Step: You’ve invested your own cash, borrowed some from Aunt Emmy and subsequently received your first check from an outside investor. Hooray! With those three steps you’ve now crossed a threshold that will allow you to climb the next steps towards more financing. Here are the rungs of the investment ladder (you can skip one or two if you’re lucky):

  1. Your own money and time (“sweat equity”) first
  2. Friends and family
  3. Individual angels
  4. Angel groups
  5. Super angels (very wealthy individuals that will invest $500k plus in one venture)
  6. Venture capital
  7. Venture debt (loans that help pay for equipment to stretch your cash)
  8. Mezzanine (money that bridges your way to a likely public offering)
  9. IPO

You may be reluctant to risk your own money but think from an angel investor’s perspective: “Why should I give my hard-earned money to someone that isn’t willing to risk his own or his family’s?” It doesn’t have to be your life savings but it has to be enough that it’s painful for you to walk away. The same applies to your co-founders.

So: be persistent and go out there to find more money to make your vision happen. Understand that raising more money will take you much more time that you anticipate. Good luck!

Bettina Hein is CEO and founder of Pixability (link to http://www.pixability.com). Pixability helps entrepreneurs and small businesses tell their story with video and win more customers in the process. Bettina also co-founded Swiss-based speech technology specialist SVOX AG and led the venture-backed software company to profitability. In 1996, Bettina was the initiator of the START (http://startglobal.org), which encourages entrepreneurship among university students. Bettina frequently speaks on the topic of entrepreneurship. You can learn more about Bettina on LinkedIn (http://www.linkedin.com/in/bettinahein) or follow her on twitter (http://twitter.com/pixability).

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Rich Kivel And Others on “Tough Get Growing”

November 12th, 2009

On November 16, 2009, the MIT Enterprise Forum in association with NASDAQ OMX present a Global Broadcast program in celebration of Global Entrepreneurship Week. “The Tough Get Growing: How to Succeed in a Down Economy” takes place live from MIT’s Kresge Auditorium and is available worldwide via webcast for group viewing sites to watch and take part. To attend the live program at MIT, please register online at: http://enterpriseforum.mit.edu/network/broadcasts/200911/index.html For an FAQ on how to become a global viewing site, please visit: http://enterpriseforum.mit.edu/network/broadcasts/participate.html

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Brian Halligan on Why Inbound Marketing is Critical for Startup Success

November 11th, 2009

Brian Halligan

So you’re an entrepreneur (or an aspiring one).  You have a vision to start a business that involves a potentially killer product and a load of ambition, and if you’re anything like my fellow HubSpot founder Dharmesh Shah and I were when our idea for HubSpot was forming, you’re hopeful and extremely excited to get started.  But hey – money is an issue.  You’re a startup, so chances are the company bank account is nothing to brag about.

Still, you need to find a way to get your message out.  You have to let people know you exist, you have to get found by prospects and most importantly – you have to do it on a tight budget.  This is a proverbial problem for so many entrepreneurs, and yet many are still wasting valuable dollars on traditional, outbound marketing techniques like cold-calling, direct mail, print/TV advertisements and trade shows in order to get the word out.

For any small business looking to market its products/services, implementing marketing programs that are inexpensive yet efficient and successful in generating leads is an important part of the business strategy.  For a startup, whose budget is even tighter, the emphasis that marketing programs need to be even less costly is particularly critical.  In addition, the aforementioned outbound marketing methods are both too expensive and are becoming increasingly ineffective as customers use new technologies to block out the messages being pushed onto them.

Inbound marketing is a modern, more efficient marketing method.  It uses the Internet to pull prospective customers in by taking advantage of blogging, social media engagement and search engine optimization (SEO).  Best of all, these techniques cost nothing more than your time, and they save you money.  In fact, inbound marketing-focused businesses have a 61% lower cost per lead than traditional outbound-focused businesses.

If you’re an entrepreneur, I suggest you focus on the following three inbound marketing components to help your startup get found:

  1. Create Remarkable Content: Start creating content to attract prospects to your business.  My recommendation is to start blogging.  Companies that blog get 55% more website visitors than those that don’t.
  2. Focus on SEO: Google is the number one place to get found by potential customers, and SEO make it easier for those prospects to find you.  You should be optimizing your website and the content you create to maximize your ranking in search engines.
  3. Engage in Social Media: Social media involvement will help you increase the reach of your content and draw more qualified visitors to your site.

One of the most important things you need to do as an entrepreneur is to spread your message.  The great thing about being an entrepreneur today is that it’s cheaper.  The “friction” in the marketplace is fundamentally lower than ever, which means good ideas can spread very naturally.  If you started a company 15 years ago with a good idea, there was much more friction in the marketplace, requiring you to spend a lot of money on PR and advertising to spread the word.

Today, the success in spreading your message is a function of the width of your brain, not the width of your wallet.  Instead of wasting your money on outbound methods, use your brain and spend your time on inbound marketing techniques like blogging, social media engagement and search engine optimization to generate leads and close sales.  Then employ marketing analytics to evaluate and improve upon your programs, rinse and repeat.  And hey, it works.  After all, I was once an entrepreneur of an unknown, Little-Engine-That-Could startup, too.

Brian Halligan is the CEO and Co-Founder of Hubspot. Prior to starting HubSpot, Brian worked as a venture partner at Longworth Ventures where he worked with many small businesses helping them build scalable sales and marketing machines.  Brian spent 4 years at Groove NetworksParametric Technology Corporation where he worked in a variety of sales, marketing, and channels functions for over a decade. Brian’s most interesting role at PTC was in starting the Pacific Rim organization while living in Hong Kong in 1993.  Five years later, Brian was SVP of the Pacific Rim for PTC where he built an $80 million business and had 200 employees.

Brian coined the term inbound marketing and is author of a book entitled Inbound Marketing:  Get Found Using Google, Blogs, and Social Media published by Wiley in October of 2009.

You can learn more about Brian on LinkedIn or follow him on Twitter. If you want to meet Brian, you can do so at one of his frequent speaking engagements.  He contributes articles to HubSpot’s blog that you can read, like this one.

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Jonathan Ortmans on Global Entrepreneurship Week

November 10th, 2009

Join the MIT Enterprise Forum on Monday, November 16th, 2009 for “The Tough Get Growing: How to Succeed in a Down Economy”, a Global Entrepreneurship Week event. Click here to sign up.

Jonathan Ortmans is a Senior Fellow at the Kauffman Foundation. As president of the Public Forum Institute, Jonathan Ortmans has more than 20 years experience in engaging citizens, experts, community leaders, and elected officials in substantive discussions about issues that impact the social and economic well-being of all Americans. Jonathan served as a congressional aide for several members of Congress and the U.S. House of Representatives, Committee on Ways and Means; functioned as the executive director of the Columbia Institute for Political Research; and founded three businesses. Educated in England, Jonathan has been published in several academic journals. Most recently, Jonathan developed the National Dialogue on Entrepreneurship and Global Entrepreneurship Week.


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Rich Kivel on How Entrepreneurs Benefit From The MIT Enterprise Forum

November 9th, 2009

Join the MIT Enterprise Forum on Monday, November 16th, 2009 for “The Tough Get Growing: How to Succeed in a Down Economy”. Click here to sign up.

Rich Kivel is the Chair of the MITEF Global Board. He is a serial entrepreneur and a seasoned life science and technology executive. Rich presently serves as CEO of TheraGenetics, a London, England-based pharmacogenetic diagnostic tests to help guide and improve the treatment of disorders such as schizophrenia, depression and Alzheimer’s. Rich is a frequent guest lecturer at the MIT Sloan and has been a judge for the MIT $100K Entrepreneurship competition since 1998. He speaks internationaly and works on behalf of many organizations to promote entrepreneuship. He serves as a Lead Catalyst for the MIT Deshpande Center for Technological Innovation and is a founding board member of Biolin USA-Ireland.


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Jackie Bassett on Changing The World In Remarkable Ways – Drawing On Brilliance

November 5th, 2009

Why should entrepreneurs be proud of Massachusetts?

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At the National Inventor’s Hall of Fame’s Lifetime Achievement Awards Gala in California I was a proud guest of one of the recipient’s Dr John Atalla who invented “PIN” (what we use to access our debit and credit cards) http://is.gd/3pS5a But I was also proud to claim that I am from, educated in and now my own company is based right here in Massachusetts.

Do you know how many of these Lifetime Achievement Award Winners were either born in, educated in, built their companies in or discovered their inventions in Massachusetts? Over 50!

To Change The World in Remarkable Ways

Every one of them came to Massachusetts for the same reason -  to change the world in remarkable ways. And every one of them did:

  • By revolutionizing entire industries:

Rachel Fuller Brown, born in Springfield, MA invented Nystatin invaluable for controlling secondary infections from anti-biotics and donated all of her royalties to science. Charles Sumner Tainter, born in Watertown, shaped the future of the recording industry.

  • By improving our quality of life and saving millions of lives:

John Sheehan, having taught for 31 years at MIT, synthesized penicillin. William P. Murphy, Jr born in Boston, built the first physiologic cardiac pacemaker. Forest Bird from Stoughton, MA introduced the world’s first mass produced pediatric ventilator.

  • By raising the standard of living around the world:

Lewis Latimer, born in Chelsea, MA brought innovation to the process of manufacturing carbons which allowed incandescent lighting to become affordable for all consumers. Robert Rines of Boston, MA designed innovative technologies that enabled noninvasive medical imaging and now he fuels the same spark of innovation in children at the Academy of Applied Sciences that he founded.

  • By forever changing, for the better, how we live our lives:

Vannevar Bush, born in Everett, MA and educated in Massachusetts schools was best known for his essay “As we may think”  that pre-figured development of hypertext and other elements of the World Wide Web. Edward Calahan the Boston-born created the stock ticker used at both the New York and the

Boston Stock Exchange.

  • By growing the Massachusetts economy and creating millions of jobs:

From Charles Draper of Draper Labs to William Stanley of Pittsfield, MA who founded Stanley Electric now part of GE, to Milton Bradley with his namesake company that was headquartered in Springfield, MA to Amar Bose whose multibillion dollar company, Bose Corporation is right off the Massachusetts Turnpike.

A Culture of Sustainable Innovation

Massachusetts seeded a culture of sustainable innovation, centuries ago and it’s what continues to feed the global economy today. It’s where research meets capital. It’s where any one with a revolutionary idea has access to the right resources to support it. It’s where ingenious teams have always, and fearlessly, tackled those really big problems.

We had Robert Goddard, born in Worcester and educated at Worcester Polytech (WPI), who pioneered rocketry and space flight. And now we have Helen Greiner CEO of Droidworks and her iRobot Co-Founder Colin Angle. www.droidworks.com www.irobot.com

We had Charles Page of Salem, MA and his induction coil that became a standard component in the automobile industry.  And now now we have Desh Deshpande Chairman of A123 systems and a serial Massachusetts entrepreneur. www.a123systems.com

We had Luis Walter Alvarez an MIT staff member who won a Nobel Prize in Physics for his research that resulted in a major revision of nuclear theories. And now we have William Swanson, CEO of Raytheon. www.raytheon.com

We had Claude Shannon who came to MA for his Masters degree, stayed to earn his Ph.D., and created what experts call “a blueprint for the digital age”. And now we have Bill Warner, Founder of Avid and Wildfire Communications. www.avid.com

We had Richard Fessenden who successfully transmitted the first wireless radio broadcast from Brant Rock, MA. And now we have Leo Beranek, CEO of BBN www.bbn.com

Drawing On Brilliance

So after a year of researching a collection of 140 original patent lithographs rescued from destruction when the US Patent Office went digital, the pattern of innovation success was clear. I co-authored the book Drawing On Brilliance, with Randy Rabin to capture the process of innovation and to see how the masters took on those really big problems in an economy equally as challenging. And to show how Tesla, Carrier, Westinghouse, Heddy Lamar and all of those great Massachusetts entrepreneurs shared the same challenges and successes that today’s entrepreneurs do.

What we found was that innovation creates millions of jobs, thousands of new companies, entire new industries and it can reignite a global economy. But sustainable innovation success means that a repeatable process exists, that there is a strategic plan in place with a mission behind it that matters to everyone. And it means that these entrepreneurs have a readily available ecosystem of human resources they can draw on; people who are willing to share their own brilliance because like Greiner, Deshpande, Warner and all of the entrepreneurs out there today we don’t ever plan to stop  -  changing the world in remarkable ways.

Note: The Charles River Museum of Industry & Innovation in Waltham launches an exhibit around the theme of this book on Dec 15. www.crmi.org

Jackie Bassett is founder and CEO of BT Industrials Inc., a strategic management and technology consultancy where she helps CEOs of global 500 companies design and execute on their innovation strategies. She was one of the first 100 employees at Netscreen Technologies; which started in 1997; successfully IPO’d in 2001, and then was acquired by Juniper Networks in 2004 for $4Billion. Her background is in investment banking having worked at State Street International. Her innovation strategy work has been in a variety of industries from Telecom, to HealthCare, to Clean Tech, to Digital Entertainment, to Biotech. She holds an MBA from Babson College and a private pilot’s license. www.drawingonbrilliance.net
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