VentureStart

Agreement Comes Back to Haunt Facebook — Hire an Attorney Early

VStart — Thu, 22 Jul 2010 21:24:43 +0000

We always advise serious entrepreneurs, especially those with big ideas, to make sure an attorney is part of their team from the very start. Not only can they set the company up correctly, they can put standard agreements in place (e.g., stock option, non-disclosure, founder buy-sell, independent contractor, and more). Having such documents can help prevent a multitude of legal issues as the business grows.

Read this article at BusinessWeek to see potential problems for Facebook when a probably “bad” agreement comes back to haunt them when they are really worth something.

Saving money as a startup is usually ingrained in entrepreneurs and spending money on attorneys is not uppermost in their mind (and many have a poor impression of them anyway). But the right attorney is one person on your side to help with the above mentioned items, as well as company valuation and structuring the right deal for investors. They are your best protectors of value and assets, and one business “friend” you can count on.

You will find that many attorneys may strike a deal with you to ease the cash flow burden as you startup with a variety of offers so long as they believe in your potential as a company. Deals can include taking a small stock option in return for delayed fees, and/or delaying fees until you have raised money. Once part of VentureStart we can sometimes recommend regional attorneys to you.

You “launched” your app – now what?

Laura Good — Tue, 20 Jul 2010 17:14:24 +0000

Last week, VentureStart graduate Chrometa, a software company based in Sacramento that’s solving the age-old time keeping dilemma for professionals who bill for time and expertise, shared a blog post on lessons learned from their initial product launch and subsequent marketing efforts.

After mapping out the time-line of their product launch, including successes and failures, Chrometa summarizes the lessons learned from their mistakes and offers this advice to entrepreneurs:

Be patient, measure your progress, and focus on the purest fundamentals – namely improving your product, and keeping your customers thrilled. If you can get these two things right, the rest should eventually fall into place.

Visit Bootstrap Blog: Anecdotes and experiences bootstrapping a startup from the guys at Chrometa to read the entire post as well as other insightful posts on managing a startup enterprise.

SacMix — An Example of How a Startup Should Communicate

VStart — Fri, 16 Jul 2010 17:16:22 +0000

SacMix joined our VentureStart program a while ago and are making rapid progress in becoming a known brand in the Sacramento market — if you are hungry for breakfast, brunch, lunch, happy hour, dinner or late night eats, you can always find a great deal at a restaurant close to you at www.sacmix.com.

All startups need to communicate their progress with potential customers, investors, supporters, etc. on a regular basis to keep mind share and accelerate interest. We got such a note from Tim White at SacMix today, and you can read it on Facebook. It is a good example all startups should follow.

UC Davis — Workshop: Gates Foundation Grand Challenges, April 23, 2010

VStart — Thu, 15 Apr 2010 15:40:34 +0000

Bill and Melinda Gates Foundation
Grand Challenges Explorations Workshop
Friday, April 23, 2010 at 3:00 p.m.
UC Davis Conference Center
2nd Floor Conference Room

The Office of Research, Office of University Development, and the Foods for Health Institute are hosting a workshop on the Bill and Melinda Gates Foundation, Grand Challenges Explorations Round 5.

Grand Challenges Explorations awards of $100,000 support early-stage research projects designed to overcome persistent bottlenecks in creating new tools that can radically improve health in the developing world. Successful projects have the opportunity to receive a Phase II grant of $1 million.
Topics for Round 5 of the Grand Challenges Explorations include:

Create Low-Cost Cell Phone-Based Applications for Priority Global Health Conditions
Create New Technologies to Improve the Health of Mothers and Newborns
Create New Ways to Protect Against Infectious Disease
Create New Technologies for Contraception

Two-page applications for the awards are due online to the Bill and Melinda Gates Foundation by noon on May 19th.
The workshop will be held on Friday, April 23rd at 3:00 p.m. in University Development’s large conference room on the second floor of the UC Davis Conference Center (across from the Mondavi Center for the Performing Arts).

For more information, please contact Vivian Carmichael, Director of Foundation Relations, (530) 754-4138, vlcarmichael@ucdavis.edu.

Sacramento Startup Micromidas Raises Series A Round

VStart — Tue, 06 Apr 2010 18:16:40 +0000

Micromidas has just completed its first major round of funding, having raised $3.6 million. The funds will be used to deploy their technology at the pilot scale.

Micromidas, based in West Sacramento, develops and scales environmentally benign biological and chemical processes that produce valuable chemical and material commodities from waste biomass. The first Micromidas application for their technology is scaling a process that converts the carbon in organic wastewater into PHA (polyhydroxyalkanoate), a family of bio-degradable plastics that can be used in lieu of conventional petroleum plastics. Their process generates highly functional bio-plastic while simultaneously reducing the quantity of bio-solids that municipal utilities must pay to treat. Micromidas is led by CEO and founder, John Bissell, who received his degree in chemical engineering from UC Davis; his entire team are also UC Davis graduates.

If you’ve ever met John you will understand that his passion, focus, determination, and hard work, as well as Micromidas’ huge business potential, were the key factors in launching the company, and raising the money, initially from family, friends and angels, and then from a group of sophisticated investors.

There are some lessons here for aspiring entrepreneurs. John used every resource available to learn about the process of financing a high growth company, including many regional ones. He was inspired by the UC Davis Green TEA Academy which he attended in 2008 at Incline Village (UCD offers multiple versions of its Entrepreneurship Academy). Following the Academy, he found mentors among the Sierra Angels and others and then entered the 2009 California Cleantech Open, where Micromidas won in the Air, Water and Waste group. This created substantial publicity for the company and provided more mentors, and a network of interested supporters, something many entrepreneurs neglect and fail to build.

Along the way, he sought and received advice from VentureStart and local startup CEO’s, and was invited to and attended angel group dinners to get further insight into the ins and outs of raising money. In the entire process, we are sure that, while much of the advice was valid, it varied considerably from mentor to mentor and source to source. That’s the nature of getting a startup going; there is no absolutely right or wrong process; the entrepreneur listens, distills and then decides the best path for his or her company. And in the process they build and communicate with their network, never really knowing the path any lead will take. For Micromidas, that network worked out very well.

Congratulations to Micromidas and John!

Hurting Angel Investing — Unintended Consequences …. or Not!

VStart — Mon, 29 Mar 2010 17:55:46 +0000

Senator Dodd’s current financial reform bill is designed to address financial reform and regulation of the big banks, including the “too big to fail” issue. But it may have unintended consequences by reducing the number of angel investors while at the same time putting regulatory hurdles in place. These hurdles will increase the time it takes (yes, even more!) for entrepreneurs to raise money, and put more bureaucracy in the way further discouraging angel investors.

There is a post on VentureBeat today that has more details and discussion. That post also has some good summary information on the SEC rules that relate to all entrepreneurs Read More »»

Startup Valuation — How It Really Works!

VStart — Tue, 09 Mar 2010 02:37:01 +0000

Want to know how Venture Capitalists think about valuing your startup company? Here is an article by Scott Lenet of DFJ Frontier, who have a Sacramento office. Looks like formulas aren’t used; rather valuation is based on three things:

Valuation of deals done on comparable companies
Investors’ experience, and having the opportunity to see many deals, done or not
Whether the investment return at the time the company exits (e.g., sells to another company, or does an IPO), under the best circumstances, meets the VC firm’s criteria

The article could lead one to think that a 10 times (10x) return is great for the investor. Well, we are not sure that is universally accepted. Consider the early stage investor (angel or seed stage VC) where maybe only one in ten of their investments really make it; 10x will just get you your money back on your entire portfolio (the great one just makes up for the nine that fail or just muddle along)! We would think experienced investors will have higher expectations!

Davis Medical Diagnostic Company Raises Series A Financing

VStart — Wed, 03 Mar 2010 17:49:30 +0000

Gold Standard Diagnostics, Inc. of Davis has just raised a Series A round from private investors. The company started in 2007 and bootstrapped its way by generating revenue from the very beginning. The capital infusion will be used for a major product launch this spring. Investors included Roger Salquist and other angels.

Gold Standard will be participating in the SARTA’s Med Tech Showcase on March 30th at CSUS and has been able to raise its local profile with the assistance of SARTA’s MedStart, a sister program to our VentureStart.

Sacramento Web Startup Chrometa Figures Out Customer Support

VStart — Wed, 10 Feb 2010 02:27:05 +0000

Brett Owens of Chrometa was one of the first entrepreneurs mentored by VentureStart. We recommended “go get customers” rather than trying to raise money from organized investors. He did that and has been growing ever since with an ever-increasing customer base.

Chrometa maintains an excellent blog and today we saw an interesting post on customer support for software companies and its challenges. Take a look and I think you’ll find that Chrometa have met the challenge well with some good thinking. The very fact their blog talks about this is also great marketing. Go Chrometa!

Med Tech Entrepreneurs — Don’t Miss This Sacramento Region Event

VStart — Tue, 09 Feb 2010 17:25:59 +0000

Don’t miss the first annual Sacramento Med Tech Showcase on March 30, 2010 at Sacramento State University. The theme for the 2010 showcase is “Transforming Medicine Through Technology.” Hosted by SARTA’s MedStart Initiative , the event will raise awareness of the medical technology industry and resources in the Sacramento Region and generate excitement about technology developments by companies founded and funded in the region.

The Showcase will feature:

Exhibit Hall Showcasing Med Tech Companies in the Sacramento Region
The Next Wave Med Tech Innovators Challenge, co-hosted by VentureStart
“Telemedicine- New and Exciting Frontiers in Healthcare Delivery” panel discussion
“Emerging Trends In Med Tech Investing” panel discussion

Join with other leaders and innovators in the medical technology field. More than 350 attendees and over 50 exhibitors are expected!

SAVE THE DATE: March 30, 2010 from 1:00 pm – 7:30 pm. (exhibit hall from 5:00-7:30 pm)

LOCATION: Sacramento State University- University Union Grand Ballroom.

REGISTER NOW

ADMISSION: $80 general, $40 SARTA member

For information on sponsoring or exhibiting at the event, please contact Laura Good at lauragood@sarta.org or 916-261-1873.