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VC

LA Startup Incubators / Accelerators / Mentorship Programs as Compared to NCAA Football Conferences

by Ryan on November 8, 2011

NCAA logo

So the writer’s block consensus was to write about LA startup incubators and mentorship organizations (2x as many votes as the other proposed topics). In the spirit of a college football season, I’ll break down the LA startup incubator scene by drawing comparison to the top conferences in NCAA Division I Football  (*Please note that I left the Big East off of this list because the conference is in such turmoil these days I didn’t want to get any heat by making a comparison there).

Launchpad LA (the SEC)

Having won the past 5 National Championships, the SEC attracts the top recruiting talent and is the most dominant division in college football today. So if one of these incubators is the SEC, my vote goes to LaunchpadLA. Run by a Mark Suster, the world’s #3 VC Power Blogger ($10 says he’ll be #1 when the new rankings come out in January), LaunchpadLA has not exactly been structured as an accelerator (at least not in the past), but more of a mentorship organization.  Launchpad has previously not made direct cash investments in companies, but that’s all changing…Today Launchpad announced that each member of class 3 will receive a $50,000 investment from a pool of capital contributed by folks like Rincon Ventures, IdeaLab, and AudioMicro corporate counsel, Stubbs Alderton, among others.  In addition to seed capital, LaunchpadLA will also be offering free office space to it’s members in addition to dedicated in office time with it’s mentors.  Launchpad’s mentorship program was previously structured whereby the entrepreneurs are assigned 2 mentors – one of which is a more senior, previously successful entrepreneur, and the other a local VC.  As an alumni of LAunchpadLA, class 1, clearly the rankings here are a bit biased.  That being said, I can honestly attest that our participation in LaunchpadLA class 1 has opened more doors and made more real life, valuable connections, than any other affiliation, conference, or networking event in our company’s 4 year history.

Mucker Lab (the Big 12)

A newcomer with a good PR and a seemingly solid team, Mucker lab comes in at #2 on this list due to their long and impressive mentor roster as well as their official TechStars affiliation. Now it may seem that anyone can start a TechStars affiliate (TechStars has an open source affiliate model), but I imagine that to actually be given the blessing of  Brad Feld Co., Mucker had to prove its the real deal, as a location like LA has been ripe for an official TechStars accelerator for so long.

UPDATE:  It’s important to note that Launchpad LA is also a TechStars affiliate and that David Cohen and Dave Tisch of TechStars are investors in the new Launchpad LA fund.

IdeaLab (the Big 10)

There’s not much I can say about IdeaLab because truth be told I don’t have any personal experience with the folks there.   Headed by GoTo (which became Overture, Yahoo’s equivalent of Google AdWords) founder and serial entrepreneur Bill Gross, IdeaLab’s an incubator that’s been around for a while now.   Bill’s the kind of guy that speaks at the TED Conference and if you’ve ever seen an interview with him, he’s clearly on a higher level of intelligence than most folks (me included) could ever hope to be.  That alone should be enough to make you want to check out IdeaLab.  It’s also important to note that IdeaLab is one of the investors in LAunchpadLA’s new class 3 fund so the two conferences are closely related.

Originate Labs (the Pac 12)

Originate’s an incubator that brings something a little different to the table:  They invest technology resources (in addition to cash). In short, what this means is that they trade software development services for equity. In a world where most of your early capital goes into product, I feel that Originates model is a welcomed addition to startup investment scene. After all, if youre willing to give XX% of your company to a CTO or other co-founder, why not give up less, get your product to market, and get some momentum going without having to be married to a technical co-founder from the get go, especially when solid technical resources are seemingly hard to come by in Los Angeles (at least that’s what some folks say)?  In addition to the technology resources they invest, Originate recently announced an affiliation with the Tech Coast Angels, whereby TCA will work with Originate to invest cash in promising Originate projects. Sort of the best of both worlds.

Amplify (the ACC)

Now I am not entirely sure what the deal is with Amplify as its a newcomer to the LA accelerator scene. What I do know is that its headed by Paul Bricault of Greycroft Partners and though I don’t know Paul well, he sure seems friendly and based on his This week in VC episode he’s highly experienced in the Hollywood / New Media scene. I’d write more if I knew more, but for now there is just a parking page up on the Amplify website and some light chatter among LA entrepreneurs.   I’m not sure if / how much cash they have got to put to work, the structure of the program, or any other details.  I’m now hearing that highly successful entrepreneur, LA angel, and Betterworks CEO Paige Craig may be involved, and that alone should be enough to make you want to be a part of Amplify. Pay close attention to this one and expect more details to be revealed in the near future.

UPDATE: Amplify LA just announced they have raised a 4.5M fund from TV Producer Mark Burnett, Greycroft Partners, Rustic Canyon (shout out to Ed Fu and David Travers!), Tim Draper (the “D” in AudioMicro investors DFJ Frontier), LA angels Paige Craig and Tom McInerney, as well as other notable names. They’ll be investing $50k per startup and providing office space and mentorship.  More details here and here.  Given the news and amazing team, they ‘re surely due for a conference upgrade (perhaps to the PAC 12 or BIG 10). In the interest of not having to re-arrange this entire post, they’ll have to stay here in the ACC for now. Cheers!

Founder Institute (Mountain West)

Now just remember, before you rip on the Mountain West, keep in mind that Boise State plays there (at least for now as rumor has it that they may be defecting to the Pac 12).  Now I don’t know of any huge exits out of the Founder Institute (holler at me in the comments if I’ve missed one) but that doesn’t mean theres not a few in the making. That being said, if you’re startup is funded already, the Founder Institute mentorship program could be a mess to deal with.  The reason being is that they ask for equity in exchange for participation in the program, which makes sense within any incubator / accelerator if they are putting in cash but FI doesn’t make cash investments to my knowledge. They also give you some funky matrices style IQ-like test before accepting you, which is cool and will make you feel smart when you pass.  The downside of them asking for equity in exchange for participation is that if you’re already funded, you’re existing investors are going to question why they had to give up cold hard cash in exchange for shares while you gave up share just to participate in a mentorship org and papering the transaction could be a mess of unnecessary legal fees. The good news is the way in which the Founders Institute handles the equity contributed by each company – the shares actually go into a pool with all of the other companies in your class and you each get ownership on one another’s startups. A pretty cool approach which certainly helps to hedge the risk.

UpStart LA (Conference USA)

My friends Ben Padnos and Eric Jackson are UpStart mentors.  That’s all I really know other than what’s on posted on the UpStart LA website, which sports a seemingly promising mentor list, though the roster does includes a few service providers (i.e. attorneys, recruiters, etc.), just something to note.  No knock to service providers here, the right ones can certainly make great mentors. Since we’re comparing football conferences here, UpStart would have to be Conference USA, which definitely has some solid teams, including the Cougars of the The University of Houston, who are undefeated thus far in 2011 and ranked #11 in the nation.

Now I’m trying to come up with a creative way to close the post, but having just read the TechCrunch / BothSidesOfTheTable annoucement on the LAunchpadLA fund, I think it’s best to close by quoting Mark’s article (which itself includes a quote from Bill Gross)…

“There are at least 6 incubators now being set up in LA. Can the community support them? I use the words of one of the wisest men in this space who started much of this revolution, Bill Gross of Idealab who said:

I think that the more initiatives, the better … I think it’s the many initiatives and variety that make Silicon Valley, Silicon Valley and that we need to do more of that here.”

So we’ll be supportive every initiative in town and doing all that we can in LA to encourage more tech entrepreneurship across any startup incubation or acceleration programs.  And we agree with that. If our community supports more potential entrepreneurs to try, if it funds more people with dreams, if it surrounds talented people with mentors, if it coaches them through their first deals and their team formation … that’s got to be a great win for society overall and for LA in specific.”

UPDATE:

Science-Inc (the Big East) : Just one week after this post was initial published, Mike Jones, the founder of UserPlane and the former CEO of MySpace, announced another incubator / accelerator hybrid called Science Inc.  Conference turmoil aside, this is a serious endeavor with $10M to put to work and would have to at least be comparable to a big time conference like the Big East (in the context of this article).  Science-Inc. not only has a solid team of mentors that work hands on with the companies, they also have real money to put to work.  Mentors / advisors at Science include AudioMicro advisor Sean Percival, LA’s top SEO master Tony Adam, Mike Macadaan, Tom Dare, and Ryan Sit.  While the other incubators may boast VC participants with dry powder, many other incubators themselves don’t have a lot of capital to put to work.  The combo of being able to put in actual hard cash, as well as hands on advisory resources and deep entrepreneurial experience, makes Science a very serious player.

Start Engine (Independent): This one came in way late and I don’t have much time to update today so I’ll just link to them and say that they appear to have some public company CEO’s (JDate / Spark Networks) and execs (e.g. CityGrid Media) on their mentor roster, which definitely sets them appear from some of the crowd above.  It’s also a 90 day (fast churning, good luck keeping the entrepreneur roster quality) accelerator model program.  For now, because they are late on my radar, Start Engine will have to be placed in the Independent Conference, where storied teams like Notre Dame and BYU play.

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I’ve Joined the LAVA BOD! Wanna Meet VC’s? Come to LAVA’s Annual VC Breakfast Tomorrow (Tues)

by Ryan on August 8, 2011

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I’m pleased to announce that I’ve joined the board of directors of LAVA, the Los Angeles Venture Association.  Given my past opinions (err…rants) on Los Angeles Venture Capital, I decided that instead of sitting on the sidelines playing Monday morning quarterback, I ought to get more involved and so something to help the startup community around LA.  If you’re a startup in the LA area, I encourage you to get more involved in LAVA.  Here’s just a few reasons:

1.  We first met and connected with VC firm DFJ Frontier, the first investors in AudioMicro, Inc. at a LAVA event (the  LAVA 2008 Investment Capital Conference 2008 to be exact).  You can actually get funded through your involvement with LAVA  – I’m living proof!

2.  There are a myriad of opportunities to connect with VC’s and mentors at LAVA events.  Yes – there are a lot of service providers in attendance but if you stay focussed and hunt for the right connections – you’ll come away with great additions to your personal network.

3.  Many of the events are breakfasts from 7am to 9am which don’t eat into your work day or evenings (if you like to work late or have a spouse / family events in the evenings)

4.  Did I mention I’m on the board of directors?  Along with myself, LAVA has a brand new president, Randy Churchill, along with another “young gun” on the BOD – Sam Jones of Formation Media.  And despite my lack of event planning experience, I do have experience starting, funding, operating, and investing in startups so I’m hopeful I can help make the LAVA events more focussed on early stage startups.  If you’ve got any suggestions for future events and topics, please shoot me an note or leave them in the comments below.

If you’ve never been to a LAVA event, tomorrow’s VC breakfast would be a great one to start out with.  You’ll get exposure to the following local VC’s:

Dana Settle of Greycroft Partners

Leo Spiegel of Mission Ventures

Jim Andelman of Rincon Venture Partners (one of my personal faves!)

Neal Hansch of Rustic Canyon Partners, and

Monica Dodi of the Women’s Venture Capital Fund

If you’re not yet registered to attend tomorrow’s breakfast, you can do so by clicking here.  Or simply show up at 7am to 9am at the Skirball center tomorrow, Tues Aug 9th.

*Please note there is a small fee to attend the breakfast which helps to pay for the venue and the food.

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7 DO’s and 5 DONT’s for Entrepreneurs (LA VC Revisited)

by Ryan on June 14, 2011

to do list photo

Ever since my post on Los Angeles venture capital, I’ve been getting a lot of email and phone inquiries from local entrepreneurs seeking advice.  It’s not surprising because the post presently shows up #3 on Google when you search “los angeles venture capital” and the 100+ re-tweets and 20+ FB likes certainly helped solidify this position.

Typically the entrepreneurs that reach out want to meet in person and ask for advice.  I try to disclaim everything in that I OFFER OPINIONS, NOT ADVICE.  I’ve been compiling these opinions and figured I’d jot down the cliff note version here.  Without further adieu, here are some strong opinions on various topics that have come up in my recent correspondences with local entrepreneurs.

7 DO’s:

1. Choose a freaking huge market.  Don’t play around in a small market.  If you can’t quantify the size of your market, that means it’s too small, especially for VC.  Go big.

2. Quit your day job – sooner rather than later.  If you want to build a business, it takes 110% commitment.   You’re never going to get anywhere if you relegate your dream to a side project for nights and weekends.  Quit now, not later or you’re only proving that you’re not as committed as you should be.

3. Learn to use an RSS reader.  If you’re in tech but don’t use RSS, I fear for you.

4. Have founder vesting.  There’s nothing worse than founders not having 4 year founder vesting in place, with or without outside investors.

5. Tell anyone and everyone about your idea.  Ideas are a dime a dozen, execution is everything and you’ll learn far more than you could ever possibly lose by sharing your ideas with all.

6. Fire people as fast as possible. The second you think things are not working out.  Fire away.  You’ll never regret firing, you’ll only regret having not done it sooner.  Everyone is replaceable.

7. Read Mark Suster’s blog.  Pretty much every single question I get asked has an answer on BSOTT – “Both Sides of The Table”.  The answer is already out there.  Do your friggin homework.

5 DONT’s

1. Don’t raise money from non-millionaries.  Raise from deep pocketed institutions and corporations.

2. Regardless of what the lawyers tell you, do not form an LLC.  Lawyers love LLC’s.  You know why?  Because lawyers are not entrepreneurs.

3. Don’t have a 50 / 50 co-founder (or 33 / 33 / 33 for that matter).  One of you needs to be in charge and be in control and if you’re the leader…the real entrepreneurial one bringing this thing to life, then it should be you.  Founder shares must have vesting (i.e. be restricted) and be subject to a buy-sell agreement (aka pre-nup).

4. Don’t get caught up in all the press and attention your competition gets.  It’s truly meaningless and in no way indicative of financial success.

5. Don’t raise a round of convertible debt (exception:  if the terms are so Y-combinator style crazy in your favor that you’d be a dumb-ass not to take the cash).  If someone wants to invest, they should set a price and take an equity stake.  If you want a loan, you’d be asking for one or you’d go to a bank / credit card company.

Now each of these points could be a blog post of their own backed up with experiences and circumstances to help you understand why I’ve formed these opinions.  Maybe I’ll get around to doing a deep dive on each item but for now, the cliff notes will have to do.

Now it’s time to get back to what matters most – executing.

Related articles:

p.s. I use stock photos from Photoxpress.

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Every Day I Try and Get Rejected

by Ryan on April 12, 2011

Jack Welch and Suzy Welch Photo

Being an entrepreneur isn’t easy.  You get rejected a lot.  Whether it’s trying to chase down a new customer, pitching investors, recruiting new content providers, sending cold emails / cold calls to partners, journalists, and colleagues, there are just so many times when you’ll be rejected.  Rejection itself can take many forms.  A more polite rejection would be a terse “No thank you” response or the more frequent no reply.  Sometimes it takes on the more harsh form of  “Go f@ck yourself” or some variation thereof.

It’s certainly common to take a rejection as an indication of failure, and it’s the fear of failure that serves one of the primary reasons that people shun away from starting a business, engaging in a new relationship, or otherwise “hanging out their shingle”.  It’s this exact fear of failure that so that often prevents good people from being entrepreneurial.  They’re afraid of the daily moments of rejection that come along with creating something new and / or working for oneself.

To make it as an entrepreneur, YOU HAVE TO LEARN TO EMBRACE REJECTION.

I’m lucky in that somewhere along the road I developed thick skin.  Perhaps it was growing up with an older brother or maybe it’s something I just picked up along the road.  Wherever I got it from, I learned to embrace and welcome rejection.  Rejection started happening to me so often that instead of letting it get to me, I decided that I should use it as a motivator.  Allow me to give an example…

Back in late 2004 I wanted to be a photographer.  At the time I was working for the world’s largest celebrity photo agency, WireImage, as Controller.  But I wanted to do more than just crunch numbers, I wanted to shoot celebrity events.  Because I’m a CPA, it’s often overlooked that I’m creative.  Somehow the CPA designation (which took me just 2 years to get) overshadows the fact that I majored in Art History in college (w/ a minor in Studio Art) and that I’ve been studying and creating art (oil paintings, sculpture) since I was 10, and have received a number of awards and displayed in national museums. Nevertheless, when I asked the assignment desk at WireImage if I could shoot, they rejected me.

Instead of letting this rejection get to me, I used it as a motivator. I went out and found events that the desk wasn’t already covering.  At the time, no one was shooting book signings.  My first book signing was with Jack Welch, the former CEO of GE.  I went to Borders on Wall St, just down the block from my apartment in NYC.  I bought Jack’s new book and got in line for an autograph.  When I got to the front of the line not only did Jack sign the book for me, but he also let me take a few quick photos of him and his wife Suzy. Following the event, I showed the pics to the assignment desk that had rejected me, and they agreed that because I was the exclusive photographer at the event, I could load them to WireImage.

The images were quickly picked up by 60 Minutes who was in the process of doing an interview with Jack.  It’s the image you see at the beginning of this post.  I went on to photograph hundreds of events over a 3.5 year period and it got to the point where I’d routinely be requested by publicists to cover and in certain circumstances I even had better access than WireImage’s own staffers.

It’s in these moments of rejection that you can truly learn and grow.  That’s why EVERY DAY I TRY AND GET REJECTED.  I push the limits as much as I can and do things that have a high likelihood of rejection.  I enjoy the challenge of a rejection and I use rejection as a motivator.  When I get rejected, instead of feeling sorry for myself, I actually feel sorry for the person that rejected me and I yearn to change their opinion or otherwise win over their business.

Related Articles:

This post from Ben Horowitz (of Andreessen Horowitz) on CEO psychology

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Hop Off the Train at the Right Time

by Ryan on March 21, 2011

Time Watch Photo

Louis Gray recently posted a great piece about Digg and it’s founder Kevin Rose.  I’ve been a fan of Kevin since I first saw him on The Screen Savers on TechTV a little before Digg was even live.  I think that there’s really one over arching takeaway from all the talk about Kevin and Digg this week.

HOP OFF THE TRAIN AT THE RIGHT TIME!

What I mean by this is that a financially successful exit is a lot about timing. Just think of how many companies that are on the downswing or no longer even exist today, yet they made such great returns for their initial founders and shareholders because they sold out while they were on the top of their game.  On the flip side, there are many circumstances when companies have sold out to early, only to have their acquirers go on to grow the business 10x after the acquisition (still a better position to be in than having not exited at all).

Businesses and industry move in cycles and technological progress happens extremely quick these days. Companies, particularly those on the web, can so quickly fall in and out of favor. It’s crucial to exit at the right time.

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