Month: September 2009
In the few weeks since I wrote the post The Founders Visa Movement there has been a ton of positive momentum, input, ideas, and support. Thanks to the efforts of Dave McClure and Eric Ries, we shifted the name to the StartupVisa, figured out that the EB-5 visa was the most logical one to try to “modify”, and got a web site up about it. In the mean time, I’ve now had extensive conversations with three of my congressmen, all of whom get it, including one who is deep in working on some draft legislation around it. I’ve also gotten a CU Law JD/MBA student to work with us as an intern to help put some substance around the approach and proposal. I’ve also been taken to task by some folks who think I’m naive, misguided, or simply are against increasing the number of legal immigrants into our country.
I have no idea how to address the entire immigration issue in the US. However, I strongly believe that we should make it easy for people to start new entrepreneurial ventures in the US. As a result, the EB-5 is an interesting visa to consider. The simple version is that if a foreign national invests up to $1,000,000 in a US company that creates at least 10 jobs, the foreign national can apply for the visa. This seems backwards to me. Rather than grant the visa to an investor, let’s grant the visa to the entrepreneur. If we change the EB-5 so that foreign nationals starting US companies that are backed by qualified US investors can apply for the visa it seems like we can preserve the general construct of the EB-5 while applying it to a more compelling recipient (the entrepreneur).
From the various conversations I’ve had, the biggest issue – not surprisingly – is figuring out ways to create an efficient and fair evaluation process for the visa that does an effective job of preventing people from gaming the system. In thinking this through, it seems like there are two goals: (1) use as much existing SEC and IRS filings as possible as the basis (so as to not create new filings) and (b) create appropriate thresholds to make the definitions and parameters easy to test and validate.
Following are some items for discussion. This are not a firm proposal, but rather my synthesis of a bunch of different conversations, including an attempt to synthesize the comment threads on the various blogs posts such as Fred Wilson’s that I’ve seen. I encourage an open discussion of these – please tell me why these are constructs or thresholds that won’t work and feel free to suggest better ones. I’m definitely still in “figuring this out mode” and the more input I get – both positive and negative (preferably constructive) is really helpful.
Proposal: An entrepreneur applying for a StartupVisa can be sponsored by a qualified VC or a qualified Super Angel who is investing at least $100,000 in an equity financing of at least $500,000.
Definition of a Qualified VC: Whenever a VC raises a fund, they have to file a Form D indicating that they are a venture capital company and disclosing the amount of funding that has been committed to them. For purposes of the StartupVisa, this form can be amended to include the disclosure that the VC firm is a US-entity comprised of US citizens. To eliminate the chance that anyone can set up a VC fund for this purpose, the VC fund needs to have a minimum amount of capital commitments (say – $5m).
Definition of a Qualified Super Angel: For angels, let’s define a category called “Super Angel”. A “Super Angel” is an accredited investor (as per the SEC accredited investor rules) and has to have made at least five angel investments in the preceding three years totaling at least $250,000.
Duration: The StartupVisa is valid for two years.
Renewal: For the StartupVisa to be renewed, the company needs to either (a) create 5 new jobs every two years, (b) raise at least $1m every two years, or (c) generate at least $1m in revenue and be profitable.
Ok – have at it. What’s wrong with these parameters? How can the system be gamed? What am I missing?
Defrag 2009 is happening in Denver on November 11th and 12th. As this is Defrag’s third year, I can say with great confidence that it will be an amazing experience. I’ve watched Eric Norlin orchestrate two Defrag’s and one Glue conference and he is a master at the small, intimate, high quality tech conference. The simple metaphor for Defrag versus all of the other tech conferences that exist can be summarized in one question: “Would you rather eat at TGI Fridays or the family owned restaurant, where the owner brings the food to your table?"
The agenda is taking shape on the web site. As is Eric’s style he’ll keep fiddling with it until the actual event. He recently wrote a post about the keynotes which include Andy Kessler, Lili Cheng, Chris Sacca, John Winsor, Scoble + Bruggeman, Feld + Wilson + Lindzon + Ehrenberg + Tybur, Paul Kedrosky, and Searls + Locke + Levine + Rangaswami. Go read Eric’s post for more details including info on the “fragments’” from Stowe Boyd, Anil Dash, Kevin Marks, Jeff Dachis, and Kim Cameron. Or look at some of the topical explorations being led by Andrea Baker, Dan Neely, Micah Baldwin, Maggie Fox, and Laura Fitton.
Eric always has a bunch of tricks up his sleeve as the event gets closer – I know a few of them and they are doozies – but am also pleasantly surprised every year. In an email today explaining one of them to me, Eric said “this year’s Defrag is going to make the other Defrag’s look like child’s play on the content side.” And – for any of you that attended the past Defrag’s, you can confirm that the content was some of the best that is out there.
Eric is running an end of September discount – if you register today or tomorrow and use the code septspecial1 you will get $300 of the normal registration price. This is the cheapest it gets so if you are thinking about coming, decide now and register.
All four of the Foundry Group partners will be there – come join us for two great days.
I’ll start with the lesson that I learned: Always make sure your license plate matches your registration and insurance forms that you keep in your car and that these are the same as the information the DMV has in their database.
Here’s the story. I was driving home last night around 10:30pm on the road to Eldorado Canyon. I drive this road hundreds of times a year and have trouble staying at the speed limit, especially when it’s late, no one is out, and I’m in a mellow happy mood. I was listening to the XM Chill station (my favorite radio station) and reflecting on the day.
As occasionally happens, I noticed flashing red and blue lights in my rear view mirror. After the initial exclamation of “fuck” and a brief adrenaline rush, I slowed to a stop and pulled over to the side of the road. As I sat in my Range Rover, I pondered how excruciatingly bright the policeman’s floodlights were.
The policeman marched up to my car. As I’ve been through this drill before I handed him my drivers license, registration, and insurance form. He asked if I knew why he had pulled me over. I suppressed the sarcastic thought that immediately rolled through my head and said “I imagine I was going too fast.” He asked if I knew how fast I was going. I replied “I have no idea.” He asked me where I was going. I responded “home – I live about three miles from here.” He asked if there was anything he should know. I pondered this for a second and said, “No. I’m just heading home from dinner. I didn’t have anything to drink if that’s what you are asking.” (I hadn’t). He took this in stride and said “Just checking – I clocked you going 63 in a 45.” In an effort to be cute, cuddly, and charming, I replied “I have no excuse for that – I just wasn’t paying attention.”
He took my documents and went back to his car. Fifteen minutes later I was wondering what he was working on when he came out of his car and approached mine very purposefully. He asked, “Is this your car.” I responded, “Yes?” He said, “The license plate is registered to a 1990 Blue Ford Pickup truck. Do you own one of those?” My first response was going to be no, but then I realized we do own a 1990-ish Blue Ford Pickup truck that we use to plow our road (I never drive it because Amy doesn’t allow me to plow.) I explained this to the officer. He then asked, very directly, “Are you sure.”
At this point, I was really perplexed. I looked him directly in the eye (there hadn’t been much eye contact up to this point because the flashlight he was shining in my face was excessively bright) and said “Yes. I’d be happy to call my wife Amy who is at our house to confirm.” He noticeably relaxed and said, “Ok – let me tell you what’s going on.”
He started by explaining that in most situations at this point I’d be in the back of his police car handcuffed on my way to jail after having a gun drawn on me and told to get out of the car and put my hands on my head. He saw the shocked look on my face and told me not to worry – that he’d decided the car I was in wasn’t stolen based on the documentation and my answers to his questions. Apparently the license plate on my car was for a 1990 Blue Ford Pickup. And while the registration number for the Range Rover had a similar license plate, it was off by one letter. Luckily, both cars were registered to Amy (my wife) instead of me and my drivers license had the same address on it.
He said when he first brought up the DMV data, he almost arrested me since my “1990 Blue Ford Pickup” had turned into a “2007 Black Range Rover” which is a normal type of stolen car scenario. The only thing that stopped him from doing this was that he noticed my address was Eldorado Springs, which matched the small town in which he had pulled me over. Since this didn’t match the stolen car scenario, he dug deeper (hence the 15 minutes) and ultimately decided that I probably hadn’t stolen the car, but instead either had the wrong license plate on it or the DMV had made an error. Apparently I answered his questions consistently enough that he was comfortable that I wasn’t a car thief.
By this point he wanted to make sure he explained the problem clearly enough so he escorted me to his car and showed me the DMV record he had pulled up. I wasn’t processing much of what he was saying at this point since I was just happy to get whatever ticket he was going to give me. I also realized Amy was probably getting worried since I was now at least 30 minutes later than I said I would be so when I got back to my car I sent her a quick email.
A few minutes later my new friend the policeman came by with a ticket (yes – after all that – he gave me a ticket.) He was almost apologetic about the ticket at this point, but said he felt compelled to give it to me since I was speeding. Being in no mood to argue, I thanked him for the ticket and also thanked him for doing the extra bit of research that kept me out of jail.
Not surprisingly, it took me a while to fall asleep when I finally got home. This morning we are trying to figure out if it’s a license plate error or a DMV error (it appears to be a DMV error.) Hopefully I don’t have to visit a special part of hell to get this resolved.
The Startup Visa movement is picking up a lot of speed. I’ve had more positive conversations about it than I have about any other government related thing I’ve been involved in or worked on in the past few years.
David Binetti and the gang at @2gov have set up a way for anyone to make a $50 contribution to the Startup Visa effort. This is an anonymous donation and you have to be a US Citizen to make the donation – just go to the contribute page. If you want to contribute more than $50, just email firstname.lastname@example.org.
Thanks in advance for any and all support.
A few weeks ago I wrote a post titled An Angel Investor Group Move That Makes Me Vomit. In the post, I lambasted the practice of charging entrepreneurs to pitch to an angel group for funding. I think this is completely backwards – the angel group members should cover all the costs and the entrepreneurs should not be charged.
Last week David Cohen (the founder of TechStars) wrote a post titled An offer to Funding Universe. On 9/30, Funding Universe is having one of their CrowdPitch events in Denver. The were originally charging $125 to present – David welcomed Funding Universe to Colorado and offered to pay the presentation fees for half the companies if Funding Universe covered the other half.
Funding Universe responded to David’s offer by having the Pitching Fee Removed! Nice job guys.
In an intense environment like TechStars, filled with smart and extremely driven people, you might expect that things would get competitive among the teams. However, one of the most interesting things I’ve seen over the three years of the program has been the level of collaboration among the teams. I’ve seen them practice their pitches together, test product strategies, discuss approaches to getting investment, and share stories when things are going well and when they are not.
Two of the companies from TechStars 2008, DailyBurn and Occipital, have taken this collaboration even further and have formed a partnership to release FoodScanner – the first food journal iPhone application that incorporates a barcode scanner to let users quickly input multiple variables of nutritional information.
DailyBurn is one of the fastest growing fitness sites with over 250,000 users and has been really innovating in the space of fitness tracking, including peer challenges and user-generated content.
FoodScanner pairs DailyBurn’s fitness, motivation, and nutrition expertise with Occipital’s powerful RedLaser barcode scanning technology. You just scan a food item’s barcode, and then tap the number of servings consumed. The information syncs with the your DailyBurn account or the app can serve as a standalone food journal.
Here’s a demo from DailyBurn’s CEO Andy Smith:
I’ve written about entering fitness data before. The holy grail is when I don’t have to do anything at all to log my fitness data, but scanning a barcode is a nice step forward.
As I continue to walk the earth, like Caine in Kung-Fu, I’m enjoying another early morning in Mountain View. I look forward to getting back home to Boulder late tonight, just in time to have avoided the crummy weather this week.
Next week has plenty of walking the earth, starting in Boulder, then Mountain View, then Boston, then back to Boulder. I’ve had a number of requests to publish an “event calendar” of stuff I’m doing that’s public – look for that on this blog soon. In the mean time, following is info about where I’ll be and what I’ll be up to in case you want to come hang out with me.
Monday 9/28 (Boulder): Entrepreneurs Unplugged with Niel Robertson (founder – Service Metrics, Newmerix, Trada). Last year I was a participant in the CU Silicon Flatirons Entrepreneurs Unplugged series. This year I am the moderator / interviewer. On Monday I’ll spend an hour asking Niel Roberston questions about his amazing career to date. I’ve been – first thought Mobius and now through Foundry Group – an investor in each of the three companies Niel has founded and have known / worked with Niel since 1996 when I met him as an engineer straight out of MIT working at NetGenesis (I was chairman of NetGenesis at the time.) Niel is a superb serial entrepreneur who has seen huge success as well as plenty of failure and has developed a unique and insightful view on how to run a VC-backed company as founder / CEO. Come help us kick off the first of this year’s Silicon Flatirons Entrepreneurs Unplugged events.
Wednesday 9/30 (Mountain View): TechStars Bay Area Demo Day: As I wrote about last week, we’re going to have our annual TechStars Bay Area Demo Day at the Microsoft Silicon Valley Conference Center. The event is only for accredited angel investors and VCs – if you are interested in attending drop me an email for an invitation.
Thursday 10/1 (Boston): MassTLC Innovation 2009 Unconference: Ah – Virgin American redeyes – how I love you. I also wrote several weeks ago about the MassTLC Innovation Unconference. I’m psyched about this event – created by Bill Warner (who was instrumental in bringing TechStars to Boston) – now in it’s second year. For a taste of last year’s event, take a look at a great three minute video. Plus, if you come, you get to see me totally ragged out from the redeye (which I’m getting too old to do, at least according to Amy – and my body.)
Friday 10/2 (Boulder): Boco: I finish the week in Boulder at a new event that Andrew Hyde has cooked up. Boco is “a mountain conference about the best things in tech, music, and food with the charm of Boulder.” There is a very cool list of presenters and the agenda is shaping up nicely. Register, attend, and help us make the first year a success.
After the week is done, I’m heading up to Keystone for the weekend to work with David Cohen on a top secret special project. And play Beatles Rock Band. And sleep.
I was fortunate that two of my early mentors were master dealmakers. They had different styles and approaches so I learned an incredible amount from each of them. Before I met them I’d never made an investment, acquired a company, or sold a company. In the past 17 years since I met them, I’ve done a ton of each.
React to the following:
“We’d like to buy your company for between $35m and $50m.” That means $50m to you, right?
“We’d like to invest between $5m and $7m at a valuation of between $10m and $15m.” That means a post money valuation of $22m to you, right?
Or what do you think when someone says “about $10m” instead of “between $9m and $11m”?
Given the extensive negotiation theory that exists, I’ve never understood why people talk in ranges when they are proposing a deal. While I understand the hesitancy of many to put the first number out there, I’ve never understood why this often translates into a range. When you put the range out there, you are by definition showing your negotiation flexibility at the very beginning of the negotiation.
While I understand that some people will assert that the range softens up the first volley in a negotiation and also indicates what the negotiating range might be, everyone I know that is a strong negotiator ignores the range and views the starting point as whatever number is most advantageous to them. All the range ends up doing is reinforcing that the range giver is tentative and uncertain about their starting position.
Now, let’s translate this into something useful for the entrepreneur raising money. If you tell me you are raising $3m to $5m, then I don’t really know what you need (or want) to raise since there is a big gap between the two. Instead, if you tell me you are raising $3m, then I can have a discussion with you about how much I think you should actually raise. And – if you have more demand than expected, you can always raise more.
So, before tossing out a range in any negotiation, think again about the starting position you are trying to establish.
We’ve just wrapped up our third year of doing TechStars and not only do we have some interesting companies coming out of Boulder, we also have a bunch coming out of our new Boston program as well. In all, we had 19 companies go through the program this summer. I expect at least 14 of the 2009 companies will eventually close their seed rounds, which is similar to the ratio we’ve seen in past years.
Last year we brought some of the companies with the most progress out to Silicon Valley and it was a big hit. So this year, we’re doing it again and we already have well over 100 investors registered to attend. We are taking about a dozen of this years brand new startups to Mountain View where we’ll be doing a demo day on September 30th. These are the companies who are currently raising money and that have substantial product and customer progress. We’ll also bring one or two companies from past years who are now raising follow on financing.
This isn’t your usual VC pitch event – these are fun eight minute pitches and attendees will get to see all the companies in the morning. We’ll wrap up with lunch and some networking.
If you are an accredited angel investor or VC, or if you know someone who might like to attend on the morning of September 30th, just drop me a note and I’ll be sure to get you an invitation to the event. I hope to see you there – it should be a fun day.
I received an overwhelming response to my post last week titled The Founders Visa Movement. There were tons of comments – both positive and negative (many constructive on both sides), lots of emails, and plenty of tweets. I sent the comment thread on to the senior staffer in my congressman’s office who I was talking to and got a thoughtful response from him.
I’ve got a series of calls set up this week to talk with several other of my congressmen (and women). In addition, we are in the final stages of getting a CU Law student to intern with us at Foundry Group on this project to help pull together more substantive material, options, data, and support (we hope to announce this next week). There is no question in my mind, after hearing the response and thinking about this more, that the time to do something about this is right now.
This morning I woke up to Eric Ries’ post titled Support the Startup Founder Visa with a tweet. Eric is in DC with Dave McClure and the GeeksOnaPlane DC/Europe 2009 trip. In his post, Eric talks about the Founder Visa idea, discusses an approach to modifying the EB-5 visa, and points to a project called @2gov where you can register your support for this via Twitter.
So – if you want to help and get involved, go take a look at @2gov and tweet away.