CJR staffers will be live blogging this program at the Columbia Journalism School with influential venture capitalist, Fred Wilson. The event runs from 4-5:30 pm today.
Read his blog, A VC: http://www.avc.com/ See the list of the companies he’s
invested in (including Twitter, Del.icio.us and much more) at
http://en.wikipedia.org/wiki/Fred_Wilson_(financier)
Most businesses get funding through a variety of sources. Bank funding, friends and family, mortgaging their homes, etc. Venture capitalists only want to invest in businesses that will make a lot of money. Many of you will be involved in businesses that may be very good and successful, but not necessarily big enough for venture capital to be involved.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 04:13 PM
So far, not very encouraging for small journalistic start ups.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 04:16 PM
You will get venture capitalists interested with a business that could yield $50-100 million in 7-10 years. They want to see something that you have built and an audience that is emerging before they invest.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 04:23 PM
Step One:
Quit your job and get the business started. You will need to cobble together enough money to survive from family, friends, bank loans, mortgages. VCs will not be interested until they see a working business, even if it is small. Then present it as their money taking it to the next level, but the basis is already there.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 04:53 PM
Step Two:
Partner with a developer. VCs are going to be interested in something with a technology company, so team up with someone who can really build that tech product.
Step Three:
Plan how much money you will need to ask for because you need to give a proportional amount of control of the business (equity) and you don’t want to end up working for the venture capitalists because you’ve given away
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:24 PM
Journalism isn't dead. The talents of journalists are still incredibly valuable. Come up with interesting story, research it, present it and break it before anyone else gets the story. That hasn’t changed, but the platforms for doing it have.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:31 PM
People with journalistic skills don’t need to work within large media companies anymore. What the companies did was aggregate editorial talent and took most of the profits for doing it. Digital media allows the people with the talent to distribute themselves, have editorial control, and finance themselves more directly.
The distribution is easy--everyone knows how to get the information our there, the financing is a little bit trickier. But there are already mechanisms, such as Google AdSense, that can finance early on. IF you build an audience they want to reach.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:33 PM
There are new models emerging. Kickstarted.com launched about 9 months ago. You put up a pitch for a project--magazine, movie, etc--on the site and then people will contribute, but not philanthropically. You will have to give something back. For example, if you get money for a movie you might have to give someone an associate producer credit.
It’s an example of the internet generating new ways to fund projects.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:35 PM
Check out David Carr’s NYT piece from yesterday pointing out that you don’t need to cross the velvet rope of the media business anymore. The idea being presented is that this is more of a meritocracy and if you have the talent, you can get your project made and it wasn’t always that way.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:37 PM
Q: Audience member asked how best to build the audience.
A: To get to the $50 million value out of a company, you need millions of users. But, you don’t have to have the millions of users when you approach the venture capitalists. What you really need is to show commitment of existing users. So 100,000 users who are addicted and highly involved plus showing growth over time will lead to the conclusion that millions is possible in the future.
But, unless you can see millions in the future, other people might want to invest, but not necessarily venture capitalists.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:39 PM
Q: Audience member asks what should people should read before starting a company.
A: Hacker News. Paid Content. Techmeme. Read aggregators, not single blogs. Read the books: The Innovator’s Dilemma, Crossing the Chasm by Jeffery Moore...
But, he’s not a big business book person.
Look up New Yorker profile about Barry Diller.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:41 PM
Q: Give us some tips on monetizing 2.0. How to monetize media without relying on the advertising supported model.
A: Advertising is becoming more transactional. In social media, we are starting to see brands coming directly into media to talk directly to users and they will pay for that opportunity. Mobile apps are a good way to make money. Free apps plus an in-app upsell for premium features. This is his idea of the Freemium model.
Think about getting closer to the transaction rather than selling eyeballs value.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:44 PM
Note about how VC works:
1/3 of the investments, we will lose our investment money
1/3 are moderately successful. Make a little bit of money, but not what expected.
1/3 are vastly more successful than expected and those are why they invest.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:46 PM
So, journalists, get out there and talk to venture capitalists! Invest in lots of cups of coffee!
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:49 PM
The first mover has great value. Don’t worry too much about your intellectual property and hold things back. Get out there and get it going. Even if copycats come into the market, you will be ahead. Keep a few things under wraps-your best developers for example.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:50 PM
Q: How do you meet the nerds? (AKA developers)
A: “The nerds need you too.” There are a lot of nerd meetups. So, go on meetup.com for example and network. Go to all of the conventions and hackathons. The nerds are dying to work on something interesting and possibly profitable.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:52 PM
ANGEL INVESTORS:
These are private individual investors that are probably more likely the first step for journalists starting.
“Angels hunt in packs so they have networks that they work in.” If you get one, they will bring in others and you can cobble together $100,000. The key is to find angel investors that are tapped into local networks and get them to “fall in love with what you are doing.”
The way to pitch it: raise money as debt not equity and then give them a 25% discount on the next round of investing and put a cap at something like $300,000 of valuation. This moves the deals much more quickly.
The angels are also a good way to eventually get to the venture capitalists for the next level of investing.
The best place to get to angels is in Silicon Valley. It’s a little bit harder in NY, but not impossible.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:54 PM
CHARACTERISTICS OF GREAT ENTREPRENEURS:
They are impossible.
Stubborn.
Charismatic.
Live what they are doing from the moment they wake up in the morning.
Charming when they want to be.
Difficult when they need to be.
Visionaries.
Incredibly passionate and committed to what they are doing.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:56 PM
Go get those nerds! The venture capitalists won’t come anywhere near you if they are unsure of the technology.
Posted by Diana Dellamere on Tue 1 Dec 2009 at 05:57 PM