StartupAdventures

When it comes to venture capital investment, there’s some confusing terminology that gets thrown around, with some equally mercurial mathematics - sometimes these calculations remain a mystery to even the sharpest of founders. The truth of the matter is, a lot of the more basic math behind early investment capital is quite simple, and importantly, it’s the simple stuff that takes up the majority of what a founder should be thinking about. 

So what goes into this process, where investment comes in the form of cash in return for freshly minted shares? There are two key metrics in this early stage process: “pre-money” and “post-money”, which are descriptive, basic terms.

The “pre-money” valuation is the value of the entire company prior to any investment in the particular round at discussion. So in ridiculously simple terms:

pre-money value = (# pre-money shares) * (share price)

Obviously:

investment = (# shares issued for investor) * (price of shares) 

The key thing to note is that different from traditional publicly traded companies issuing shares, the shares that get purchased in a venture investment are ‘new’ shares, which thus means there is a change in the number of outstanding shares. 

So this then means:

(# post-money shares) = (pre-money shares) + (shares issued)

In most cases, the only direct effect on valuation of an investment at the early stages is to increase the company’s cash reserves — consequently the valuation is increased by the amount of ‘new’ cash the company now has. This is, logically, the “post-money” valuation, which in simple terms is: 

“post-money value” = (investment $) + (“pre-money” value) 

The post-investment equity pile is fairly simple too: the percentage of the company owned by investors after an investment is made is simply: 

percentage owned = (issued shares) / (post-money shares) 

this can also be expressed as: 

percentage owned = (investment amount) / (pre-money value + investment) 

So what does this look like in practice? Let’s say an investor decides to invest $4M at a $6M “pre-money” valuation, this leads to the investor taking a 40% slice of the company. 

$4M / ($6M + $4M) this can be simplified to 4/10 which is quite obviously 40% 

From what we learned above, we also know that the “post-money” valuation is simply $4M + $6M which is $10M 

How about getting the share price? Let’s then say that there are 3 million shares outstanding prior to the investment price, you would then simply say $6M / 3M = $2.00/share

It is useful to note that the share price is identical before and after the investment. 

So if shares issued is equal to (investment)/(share price) then in our example we can say that: 

$4M / $2.00 = 2M 

You might have noted that the numbers seem more clear from the ownership standpoint with the “post-mine” figures, while determining share price is more simply with the “pre-money” figures, going between the two is easy, and acceptable process, you only need to add or subtract the investment amount.

When it comes to determining what to do with company shares, you should keep in mind that shares will need to be set aside for an employee stock option plan. When it comes to doing the math with more than one investor, if they are investing in the same round, simply treat them as “one investor” - adding them together for simple math. With multiple investors, if you would like to determine individual equity ownership, simply divide that individuals investment by the “post-money” figure.

When it comes round to raising another ‘round’ of investment it is also important to remember that in most scenarios that the next round’s “pre-money” valuation will be at least equivalent to the “post-money” valuation of the previous round. 

Forty years ago if you had media to publish, your choices were fairly simple: print, television, or radio (for simplicity.) Narrowing down a content strategy was a matter of selecting a particular outlet (channel, publication, station etc.) and the right time to broadcast. With the internet age has come a deluge of media outlets that are optimized for many different formats and many different audiences. What this means is that it is more important than ever to carefully select where to broadcast your film, article, video, etc. So what is a content producer to do? 

a) Demographics can Demolish: 

It sounds obvious, but you need to go where your target demographics are. This requires some careful analysis and research to figure out which 'user personas' (demographics) are going to be interested in what you are putting out there. Taking these personas, determine which platforms they are most engaged with and where they consume and discover similar content. Similar content is defined in two ways here: 

- Format (i.e. images v. video v. graphs v. text, etc.) 

- Theme (i.e. documentaries v. comedy etc.) 

b) Keywords are Key: 

Examine what keywords are being used by similar media, and how related content is 'tagged' on the platforms that you are targeting. Incorporating these fundamental keywords into your distribution strategy will improve the chances of your target users discovering your content. You also need to research and test "long-tail" keywords that more closely define your content - these are more specific and more unique. (Google Keyword Planner can take you a long way). 

- In a nutshell: figure out what keywords led your target audience to relevant content - how did they get there? 

c) Platform Specific Advertising/Promotion Strategy:

Research to determine what promotional strategies are being used to draw traffic to particular places, focusing on past successes is obviously useful! Which peripheral platforms (such as news websites, forums, etc.) do your target audience use to discover new and interesting content? Determine how you can obtain promotion through these channels, whether paid or earned. Figure out which social media platforms are drawing the most engagement (**NOT necessarily traffic, "Hits" can quickly become meaningless 'vanity metrics') for related media and audiences, and what tags are being used to generate that engagement.

___________________

Venture Capital and Venture Capitalists, colloquially referred to as “VCs” are vital players in the world of startups and entrepreneurship. There's a lot that founders don't think about when it comes to venture capital, and a better understanding of the process  is certainly advantageous to anybody seeking investment.

Traditionally a secretive practice, venture capital certainly has an air of mystery to it that might seem mystifying to outsiders. Regardless of whether you love them or hate them, founders will likely require venture capital to scale a business. Subsequently, founders need to know how a VC operates and what they are looking for, to position themselves most intelligently. 

What are “Venture Funds”:

At the most basic level, venture firms/funds/groups are limited partnerships that require a collection of Limited Partners and at least one General Partner. Together, these individuals cooperate to raise funds from other investors (ranging from individuals, to family trusts, to institutional endowments), source deals, mentor and monitor portfolio companies, and (ideally) solicit/assist in reaching a desirable exit for a portfolio (in the form of an acquisition or IPO, mostly.) 

Limited Partners (“LPs” as they are called) are investors in the fund and might play a role as passively as writing a check, or as actively as involving themselves in deal sourcing and mentoring.

General Partners (“GPs”) are effectively the founders of the firm, and are the central point of contact for LPs and for decision making - it is the GP that establishes the execution of the firm’s strategy and fundraising. 

General Partners can potentially be liable for the debts of the partnership - because of this, GPs are usually set up themselves as a separate legal entity with limited liabilities. This is where is gets confusing in some cases, as the LLC structure permits/requires for overall structuring that might require more layers of liability protection for partnerships.

Venture firms make money in two ways: Management Fees and Carried Interest.

Management fees typically fall between 1%-2% per year of the raised fund. Most firms tend to operate on a ten year timeline, meaning the overall fee might total around 20% of invested principal. (i.e. a $10 million fund would have between $1-$2 million taken across ten years). The management fee goes towards paying salaries, overhead, and any other costs incurred in sourcing and closing deals. 

Carried interest is the percentage of profits generated that the firm is entitled to. Usually around the 20% mark, with the remaining 80% of profits returned to investors. What this means is if a $10 million dollar firm returns $30 million over its ten year cycle, the overall profit is $20 million (principal returned to investors) with around $4 million to the firm itself, and the remaining $16 million distributed to the investors according to their stake in the original fund. The General Partner entity usually invests in each fund which means if $10k is put in for 1% of a $10 million fund that returns $20 million in profit - the investment becomes $200k, which is then distributed to partners.  

In practice however, it’s not quite so simple. Most typically, the General Partner assigns the management fee to another LLC that acts as a management company that itself will administer the fund. This is done to prevent the management fee from mixing directly with the carried interest (this is done to protect income from law suits.) The management LLC remains throughout the life of the firm, while each fund-raise will have its own General Partner entity enabling new partners to join. 

The overall percentages for both management fee and carried interest vary depending on the firm’s past performance and leadership team, current market rates, and industry (a bio-tech focused firm might charge differently than an agriculture focused firm etc.) 

Why Founders Should Care:

The nature of the venture capital industry requires investments to find success within ten years or less, show continuing promise, and generate a healthy return. A prospective venture firm will look at your company at a basic level to determine if success seems likely within the desired time window, if there is a logical and realistic exit strategy, and if there equity can be acquired at a valuation that is favorable. This means a few key things to founders: 

a) Don’t raise money too early and at too lofty of a valuation (this makes the company potentially unattractive to future investors who can’t justify the valuation). Over-boosted valuations can lead to difficulties in future fundraising, and can price you out of an exit. 

b) Present a realistic exit strategy and your roadmap to achieve it. The firm can figure it out for themselves, but they will be happy to see that there is an achievable end goal for the founding team as well. 

c) Focus on developing metrics and strategies to demonstrate the interim successes and milestones that will make a venture firm confident in presenting results to their LPs. This is because if a fund looks promising midway through, the firm can more readily raise another fund. 

___________________

With Title II of the JOBS Act having been enacted just after midnight today - there are some significant changes happening in the world of startup fundraising and investing. The opening up for general solicitation means that now companies can publicize their fundraising needs and actively seek investment through more ‘traditional’ advertising. If you are interested in being a part of this new boom in activity, as either an accredited investor, or a cash-raising entrepreneur, here are some platforms worth looking into. 

Angel List: 

Their home page says it all: “Public Fundraising. It’s here. Tell the world you’re raising money.” In a nutshell, Angel List is a platform for startups to connect with investors, and for investors to shop around for deals. This website is likely to become THE conduit for online startup investment, so having a presence on there will become increasingly vital. 

Crowdfunder: 

Crowdfunder, at its most basic is a platform to connect investors with small businesses and startups. However, it offers far more with over 31,000 investors and entrepreneurs and over $15,000,000 in active fundraising. Crowdfunder will likely prove to be the second most significant platform for online startup investment. 

FundersClub: 

A fairly different model, FundersClub acts just as an “Angel Group” would, and pools investor money together to purchase equity in vetted companies - if a company gets recommended for investment, voting takes place that determines whether or not investment happens. With a five percent investment rate, FundersClub is selective. This platform might be one of the more sensible platforms for the inexperienced investor. 

WeFunder: 

Much like the other platforms, WeFunder acts as a hub to connect investors with entrepreneurs and startups. With backing from the legendary “Y Combinator” accelerator, WeFunder has some serious credibility. Unlike the other platforms, WeFunder already has contingency plans and strategy to accommodate Title III of the JOBS Act, meaning they will be able to quickly add non-accredited investors and enable even more substantial crowdfunding to take place. 

CircleUp: 

This platform is more focused on startups offering consumer-goods. Like the other platforms, CircleUp connects startups to investors, but unlike the others, it also has a serious focus on connecting startups with mentors to help them along. CircleUp might yet gain an advantage in early-stage deal flow due to its appeal to the early-stage entrepreneurs. 

Founders of startups and those involved in startup companies frequently attend networking events, the problem is, in all too many cases we are spending our time at the wrong events. We network in the wrong ways and the wrong places because we are focused on staying within our comfortable circles. Many of us (myself included!) have attended numerous events where we network exclusively with other founders - this isn't a bad thing, but it isn't wholly productive. Instead, we need to network with our users, customers, and partners. 

Instead of spending too much time networking with other founders, you should devote at least half of your proverbial "networking budget" to finding and attending the events where potential customers and partners will be. This seems rather obvious, and the reason so few of us do it is simple: because it's less fun, and it's less comfortable. So many entrepreneur-only events are filled to the brim with fellow "cheerleaders" and "supporters" but beyond boosting your ego, and gradually increasing the reach of your network there is little benefit to be found when it comes to building your business. There's a lot of hype. 

Attend the "scarier" events and focus on the following: 

- Find out who your customers are and who they network with (are there potential "secondary customers" that you have been missing?) 

- Discover pain-points and feedback far more quickly (talking with people face-to-face, you are far more likely to get push-back and objections that you can learn from)

- Discover potential partnerships that complement your own business. 

- Learn more about what other solutions are being used by your customers, and why they are using them. 

- Focus on finding the decision makers, and in building an authentic relationship with them. Find out ways to help them and to continue meeting others. 

Marketing a startup efficiently is vital, I doubt this notion requires much convincing. Ensuring that the user acquisition cost is effective and profitable will practically determine whether or not the company succeeds or fails - a company without customers is just an expensive project. 

Running on a lean budget (as many early stage startups do) means that you need to make every dollar count. So how do you make the most of your marketing budget early on? The key to success is focusing on your "nucleus" a much smaller, highly targeted cluster of customers/users that are most likely to use your product. The nucleus can also provide in-roads to the broader market, act as "trend-setters", they can also offer vital feedback early on. 

1) Market Research

This sounds so arcane, but it is critical. Determine with as much precision as you possibly can the following: 

a) Which individuals are you solving a problem for? 

b) What solutions do they currently use? 

c) How much are they paying for solutions or equivalents? 

d) How much spending power do they have?

e) Where and how do they meet with one another?

f) Where do they discover new things? (and what influences them?)

2) Defining the User 

Addressing the above point "which individuals are you solving a problem for?", you need to work extensively on defining the user demographics. If anything, this is an exercise in making your targeting as precise as possible. 

a) Is there a specific region to focus on initially? (There almost certainly should be) 

b) Is there a specific profession or segment to target? (i.e. "house wives that have an interest in yoga and organic food", or "women in their 30s that work in technology law on the west coast" etc.)

c) Where does your target demographic congregate, work, play, network, and consume media?

In essence, you should try to create absurdly specific statements that define your users. The more specific this becomes, the easier and more efficient it will become to market. You may well have several demographics that you can market to, defining them and separating them is critical; you can then focus on whichever one is initially more accessible and profitable to chase after. Once you've successfully captured one demographic, you can proceed to the others.  

3) Working with The Nucleus

a) Determine how best to deploy new features and then test them. 

b) Implement an effective stream of communication with users to collect feedback and discover 'micro-pain-points' in the product.

c) Figure out how to turn your customers into 'spokespeople' and influencers, importantly figure out how to incentivize them to talk about your product and promote it. **A recommendation from a peer is worth exponentially more than any kind of marketing**

d) Be responsive to your customers to refine your product to their needs in an iterative manner. It is important however to tread this fine line without making the product too "niche". 

If you make a product that answers the needs and requirements of the ultimate "power-user" while also making it accessible to the most casual user, it is inevitable to find success. A perfect example of this is the Macbook Pro which has become the go-to machine for programmers, video professionals, animators, and designers, however it is wonderfully suitable to the total novice. 

______________________

Assumptions - we've all made them from time to time, sometimes they can be harmful, nowhere is this more true than in developing a business. When it comes to taking an idea to prototype, and then from prototype to product, there is a key ingredient to success that is all too often overlooked: assumption testing. In a nutshell, assumption testing is the systematic and objective analysis of the idea and the business model to determine where guesses and assumptions are being made. 

The key to success is to take the assumptions and determine how to turn them into actionable, answerable hypotheses. By taking this step, an entrepreneur can save themselves a lot of stress, time, and money. 

More than anything, assumption testing requires both you and your team to be painfully honest and objective - you get exactly as much out of this exercise as you are willing to put into it. 

Divide the assumptions into distinct aspects; this will make your approach much more efficient and effective. Every prompt should also be followed by: "...and how can this be measured and verified?" 

Problem/Solution Assumptions: 

a) Is the problem that you are solving significant enough to warrant a business? 

b) Is the problem  significant enough that somebody would be willing to pay for it? 

c) What alternative solutions exist (or have existed) that are not sufficient?

  d) Does your solution present a clear differentiating factor?

Market Assumptions:

a) Is your target market interested in a solution that you are offering?

b) Are your market demographics able to make a purchasing decision? (i.e. Don't market to the cashier, if you need the store manager to make the decision, etc.) 

c) Why has the competition not done what you are doing? (sometimes there's a very good reason, and you need to find out why.) 

d) Does your target market currently have the buying power to make the relationship economically feasible. (Every business has a customer, make sure that your target customers actually have cash in the bank!)

Operating Assumptions: 

a) How long can you run and scale before you require outside financing? (maybe you won't need any if you are bringing in excellent revenue, but again this is an assumption till proven otherwise.) 

b) Does your business rely on any key employees/partners/customers? (Who are they, and how can you decrease your concentrated risk?) 

c) Does your business take advantage of any trends/fads/patterns? (It likely does, and this needs to be understood to determine how to architect a long term strategy, think "Beanie Babies") 

d) What assumptions are you making about your key strengths? (How can you improve them and consolidate them?) 

e) What assumptions are you making about your key weaknesses? (How can you minimize these and protect your position?) 

__________________

I am often hesitant and loath to use anything that feels like a “buzzword”, but the often discussed “lean startup” has some real validity. The “lean startup” is really just a marketable description put forward by Eric Ries; the thinking isn’t new, it's simply packaged in an easy-to-consume-then-copy manner. The core of this entrepreneurial philosophy is pretty straight forward:

1) Define your idea/plan

2) Market test the concepts and assumptions (hypotheses meet experiments) 

3) Build a Minimum Viable Product (MVP) / Prototype

4) Roll out new features/designs that are responsive to the market rather than “predictive” of the market. 

5) Test, test, test.

6) Rinse and repeat. 

The idea driving all of this is that until traction and/or revenue is proven, a business is merely a hypothesis, a “faith based venture” as Steve Blank once said. Approaching development with this in mind, you can work to prove the validity of your assumptions, while also iterating with more precision. The end result, if handled well is a development that is resource-efficient (in terms of startup costs) and highly attuned to the market. In one line: don’t spend time and money developing a product that hasn’t had all of its assumptions tested, and its market relevance proven. 

As it becomes ever more accessible and affordable to start a company, large corporations face a very real risk of losing their advantageous positions. By maintaining their traditional models, companies self-impose slow and inefficient mechanisms to innovate and execute. 

Enter the startup model. Large corporations of any industry need to develop their own internal incubators and ‘skunk-works’ divisions, free from traditional constraints. The goal of these divisions should be very simple: receive and generate new ideas and concepts, rapidly market test and prototype them, and then lay the groundwork to scale the new concept/product for the rest of the company. But this is only step one. Scaling the prototype effectively is the next challenge. 

To scale this entrepreneurial approach, large corporations need to develop focused teams for all relevant components (i.e. marketing, web-development, public relations, business development, etc.) These teams should only focus on their own particular project. Each project having its own “CEO” that would lead the direction and decision making of the project.

Having focused teams and dedicated leadership is important, as the development and scalability of new endeavors would be more immune to “cross-contamination” and distraction.

  The significant points for this model emphasize focus and ownership of key projects, while also ensuring that all the mechanisms involved in building a new endeavor are contained and given clear and direct vision and direction. In essence, I am proposing that large companies should instead work as a collection of many smaller companies. The key leadership in each project could then meet in “summits” as and when needed to share frustrations, difficulties and advice. This approach would effectively make the leaders of each project feel less like rivals or co-workers, and more like peer-advisors, each working to make their mark. 

_________________

The entrepreneurial spirit exists in most everybody, the difference between an entrepreneur and a “wantrepreneur” is simply the knowledge and courage to execute on a belief. By encouraging and systematizing an entrepreneurial environment, large corporations will be more able to unleash the creativity and innovative spirit of their entire work force. Not only would this model improve a corporation’s ability to rapidly and efficiently develop new concepts, it would also make the ability to innovate more equal (instead of the traditional “top-down” approach). A possible (and very beneficial) result of this might be that large businesses find it easier to attract both young and “top-shelf” talent that might otherwise be attracted to the more liberated environments of a startup. 

In many cases, we find the best lessons in the most obscure places. I've previously written on the Samurai Bushido in terms of entrepreneurship. In the same spirit, after watching the film "Zombieland" I was able to dig up some more lessons for startups. A key feature of the film is its "rules" - necessary reminders to stay alive. Who would have thought a post-apocalyptic zombie world would be so analogous to the world of startups?! 

1) "Cardio"

It is vital for founders to have endurance and to avoid burnout; the path to launching a company is most definitely a marathon. As a founder, it is one of your key roles to make sure that you and your team stay well rested and  "in shape" - playing the long game and ensuring that everybody is ready for it is very important. Early on, it's also important to begin your startup journey well rested and ready. The best companies have longevity, don't run out of gas too early! 

  2) "Travel Light"

This is relevant in several ways. First, you should go into your startup with very few outside obligations and responsibilities. By traveling light, you won't have the extra distractions and stress that comes from too much burden. A focused and comfortable entrepreneur is a successful one.

Your company should also travel light. This means that you focus initially on a few key features, without going too crazy too early. Remember, Amazon started out selling only books. A carefully defined feature set and strategy, combined with the "lean startup" model is a recipe for success.

   3) "Get a Kick Ass Partner"

Steve Jobs had Steve Wozniak, and Sonny had Cher. Although there are plenty of successful entrepreneurs who've gone solo, the vast majority of successful companies are team driven.

One of my mentors, and founder of Fortify Ventures, Jonathon Perrelli often talks about the "Hacker, Hustler, Designer" dynamic. Making sure that you have a partner who has skills that complement your own is key to success. And don't ever underestimate "chemistry" in a partnership, your partner should be the "Yin" to your "Yang"! 

4) "Limber Up"

The best companies are flexible and can adapt to change quickly. Whether this is a profound shift in the business model as was the case with "Fab.com" or a more subtle pivot in marketing strategy, the ethos remains the same: flexible companies succeed. In all too many cases a company fails because it attempts to adapt the audience to the product, when it should be adapting its product for the audience. Listen to feedback, and keep your processes agile.

  5) "When in Doubt Know Your Way Out"

Most startups fail. It sounds depressing, but it's true. This isn't a bad thing of course; we learn profoundly from failure. The risk of failure is necessary to explore new territory. While your focus on a startup should of course be on success, it is healthy, and also comforting for an entrepreneur to have an exit strategy. When launching a new idea, you should have some general milestones and timelines in mind. If you haven't succeeded after a certain period of time, know when to call it a day and move on. Having a backup plan will put you more at ease to be adventurous, and will also give you a better idea of how long you have to make things work. 

6) "Enjoy the Little Things"

In the process of launching a company, it is very unlikely that you will find success immediately. Finding motivation, satisfaction, and enjoyment in the smaller milestones will keep you and your team running along. Whether it's the celebration of a new hire, a new client, or a spike in traffic, you need to take pleasure in the mini victories to stay sane. You can worry about the yachts and Ferraris later on -- in startup mode, you need to enjoy the little things. 

______________________

Recently, myself and the team launched our Kickstarter campaign for Startupland. This is a series by entrepreneurs, for entrepreneurs. We felt it was high time that something was produced that was both educational and entertaining. With too many "reality" shows and films showing the drama and glamor of entrepreneurship, we realized that there was very little that could be considered authentic. In essence, we are bringing the startup accelerator experience to your screens! Below is our trailer. 

startupland: a documentary series (Teaser Trailer) from Justin Gutwein on Vimeo.

The series will be released later this year, and will continue to cover every important aspect of entrepreneurship, following real tech founders, in real companies. We made this as real as it could be. Join us for the ride, and get a never before seen behind the scenes look at what it takes to take a vision and make it a reality. Become a citizen of startupland today! 

Bitcoin is almost undoubtedly the most popular and successful of the virtual currencies - many of which have boomed in recent months. More hardware and software products are emerging to accommodate new users. While it becomes increasingly easy to get involved in trading virtual currency, a concern remains for many: volatility. 

Volatility effects Bitcoin in particular because it is traded as both a currency and a commodity - it is also not "pegged" to another currency - as a result it is driven vigorously by market demand, which can at times be very turbulent. In fact, the lowest price in 2013 was $13 per BTC and the highest was $260 - a roughly 2,000% difference. How could we ever predict such volatile movements?! 

This might not be all that it appears. Some analysis has been done that might suggest otherwise. Curiously, that Bitcoin would seem to follow the dollar. 

You wouldn't be wrong to expect that because Bitcoin is not affiliated with any particular state, that it would increase in value as inflation intensifies with standard currencies. This isn't the case however - we can see this because Bitcoin's behavior isn't at all correlated with gold, which is a common "inflation hedge". The below chart illustrates the relationship (or lack thereof) between Bitcoin and gold. A Pearson correlation finds that there is a -0.4 correlation, put simply: a weak relationship that moves in opposite directions, gold moves up, BTC moves down (but barely!) 

What is interesting is that when the same correlation is applied to BTC v. the US Dollar, a much more clear relationship can be observed. In fact, a day-to-day correlation of 0.76 is noted (same direction, reasonably strong). Move the USD data three days forward, and we find that the correlation increased to 0.89 (same direction, strong). While such a correlation doesn't endow us with true predictive power, it is interesting to consider, and certainly suggests some kind of underlying relationship between the two. 

There are a few reasons why this might be the case. The USD is (relatively speaking) a fairly low-risk currency, with traders often boosting its value in more turbulent times. In addition to this, about 70% of BTC trading is conducted in USD, which would mean that when USD increases in value relative to any other currencies, so too does BTC. 

______________________

The take away message here is fairly simple, for now, the USD might serve as a relatively useful comparison to determine the trends and movements of Bitcoin. While there is no guarantee against Bitcoin's extraordinary volatility, as more traders enter the market, and as platforms stabilize, so too will the day-to-day behavior of Bitcoin. In the future, it will be interesting to see if Bitcoin is influenced more substantially by other currencies as market dynamics change, and as new countries adopt this exciting virtual currency. 

______________________

Kickstarter and other crowdfunding platforms offer a great opportunity for anybody with a great idea and the motivation to get the funding they need. Successfully launching a campaign takes time and effort, but it also requires considerable strategizing. To make this platform more understandable, and to serve as a reference guide, I have crunched some numbers and compiled a fairly comprehensive data set.

Here it is: Kickstarter -- By the Numbers. 

______________

Kickstarter Growth Statistics: 

2010: 11,130 launched projects - $27 million raised 

2011: 27,086 launched projects - $99 million raised  

2012: 68,878 launched projects - $283 million raised

Kickstarter Traffic Growth: 

2010: 8,294,183 visitors

2011: 30,590,342 visitors 

2012: 34,975,019 visitors

  ______________

Successful Kickstarter Projects, Ranked by Gross Contributions:

1) Film/Video : $86.14 million

2) Games : $56.34 million

3) Music : $52.04 million 

4) Design : $50.90 million

5) Technology : $21.90 million

6) Publishing : $16.77 million 

7) Art : $15.63 million 

______________

Statistics on Kickstarter Campaigns: 

Most popular contribution amount: $25

Average contribution amount: $70 (heavy skew) 

Projects without reward of $20 or less succeed 28% of time (39.99% success rate for film/video projects overall) 

Projects with reward of $20 or less succeed 45% of time

Projects with timeline of 30 days or less have higher success rates (35%) (urgency) while projects of 60 days have 29% success rate

Only 10% of projects that raise greater than 30% of their goal end up failing, only 3% fail that surpass 50% funding. 

106 projects have achieved greater than 10x their initial goal: only 33 of those were projects larger than $10,000 

The below graph charts success rate with time line, there is a medium-strength correlation demonstrating a decreased success rate with increased timeframe. 

Larger goals tend to have a decreased likelihood of success

Greater number of reward levels increases the likelihood of success

Lengthier timelines have a decreased likelihood of success

Featured projects have an 89% success rate, while non-featured have an aggregate success rate of 30% 

Only 25% of projects delivered on time.

Within 8 months of deadline, 75% of projects are delivered successfully

______________

Projects that are successful don't achieve much greater than their goal: 

- 25% exceed their goal by less than 4%

- 50% exceed their goal by less than 11% 

Projects that fail. Failure often occurs by larger margins: 

- Less than 10% of failed projects exceed 30% of their goals

- Only 3% exceeded 50% of their goal. 

The below graph presents the timing and magnitude of contributions as the timeline progresses. A clear bump at the beginning and end is fairly typical. The remainder of the campaign should be a consistent "trickle". 

The average failed project receives $900 in contributions (keeping in mind that unless you reach your threshold you get nothing) 

The average successful project receives $7,825 

______________

All things being equal: 

< $10,000 projects have a 38% success rate

< $50,000 projects have an 18% success rate

> $100,000 projects have an 7% success rate

  Film & Video Information (most popular category):

24.1% of Kickstarter’s successful projects have been film/video

13% (1,325 projects) in film/video have raised greater than $20,000 

Less than 1% have raised over $100,000 in past projects

Average film/video project fundings:   $4,465.99 

80% of all successful film/video projects have goals between $1,000 and $20,000

63% of successfully funded film/video projects have goals between $1,000 and $10,000

10% of successful film/video projects had goals set in $20,000 - $100,000

  ______________

Fastest Growing Campaigns: 

1) Ouya: Portable game console built on Android system, with free games and open SDK (goal: $100,000 -- final: $10,255,846) 

2) Double Fine Adventure: Video game (goal: $400,000 -- final: $3,336,372) 

3) Pebble: Customizable smart watch (goal:  $100,000 -- final: $10,266,846)

______________

There are always exceptions to the rules, and these statistics only tell one part of the story, this is aggregate data. What the data can provide you with though, is a better understanding of how to increase your likelihood of success, and what budgets and timelines are most effective on Kickstarter.

There was plenty discussed and unveiled at yesterday's WWDC, particularly with the new OS releases. More broadly, Apple were touting their latest battery life capabilities, a result of several new innovative features. First on the list is Intel's latest "Haswell" CPU systems, which provide reasonable energy efficiency increases. Because the chips run at lower wattages, they are simply more efficient when it comes to their battery-burden. Beyond this, Apple also unveiled a few other clever tricks, here's a run down and explanation of the key features. 

Timer Coalescing: will only be in operation when the device is running on battery power, as its benefits are purely for energy efficiency. In essence, because the timers of applications can be sending requests to the CPU without any synchronization, it can cause the CPU to be running constantly at varying levels. This new software feature means that the applications can synchronize their timers and send requests to the CPU that enable it to operate with spikes and then idle at the lowest possible power consumption levels otherwise. This means that active applications will drain less power overall. Put simply, that is really all Timer Coalescing does. The below graph, courtesy of "Ars Technica" visualizes this feature. 

Memory Compression is one of the principle components responsible for this improved performance. Compressed memory compacts recently used items to about half of their original size, and then simply decompresses them when they are needed again. Similar to how you can Zip and Unzip large files to make them more portable, this technique makes it easier for the computer to "move" files around and access them more efficiently. Instead of moving information to and from the disk, Apple considers that the compression cycle is more energy efficient and faster. (Even with a solid-state drive.) What is especially exciting is that by installing Mavericks on older machines, even more remarkable performance increases might be made. In a nutshell, this feature should free up some memory, improve speed, and decrease the overall wear-and-tear on your disk. 

App Nap is another feature released, which effectively rations out CPU power more carefully to prevent inactive applications from absorbing too much power unnecessarily. Standard settings will intensely curtail CPU resources to applications that are not visible, or are not playing content. The settings can be altered and developers will be able to override the specific features however. The goal with this is to produce faster responsiveness for active applications, and less system-drain for inactive programs. In concert with this feature, Mavericks will also decrease the UNIX priority for background applications to ration CPU more stringently. This should be of benefit in terms of both speed and energy performance. 

___________

Yesterday, Apple fans around the world waited with excitement and tension as the long-awaited Keynote to WWDC 2013 arrived. After CEO Tim Cook took the stage after the unveilings, many of us probably felt a mixture of surprise and perhaps a little disappointment. If there was a reason to feel let down it was primarily on the hardware front, with no huge announcements made. On the software front, it's safe to say that they knocked it out of the park. Here is a rundown of what they released yesterday, and what it all means. 

1) OS X Mavericks: 

Departing from the long line of "Big Cat" names, Apple shifted towards a new naming convention after the "places that inspire us here in california, in the place where OS X is built": with that the first in this new line is Mavericks. Named for the legendary surfing spot not far from Cupertino. The features in Mavericks are quietly exciting: 

- An emphasis on improving battery, CPU, and graphics performance and efficiency. 

- Improved compatibility and interface with multiple screens, expanding the "command & control" capabilities of the Mac family. 

- Improvements to Airdrop and sharing capability. 

- Integration of more social media into web-browser, feeds, and applications. Including things like "Yelp!" into the maps and Weather into the calendar. 

- Tagging system integrated into save and search: this is exciting as it is a huge step in making the interaction with computer memory a more organic one. 

- Massive improvements to Safari, including social-integration, smooth scrolling, and optimization for Retina display. 

- iCloud Keychain to make passwords and log-ins more portable across devices: a risky notion, but incredibly convenient. 

- Timer coalescing and "App Nap": both to improve the performance and efficiency of CPU usage in both high-performance use and in multi-tasking. 

- Live feed of notifications and alerts, including within-alert interactivity (i.e. respond within the alert itself). 

- iBooks comes to the Mac OS: This could be a push to grab more of the college/professional market, while also pushing the Retina models more.

_________________ 

Mavericks is due to be released this autumn, likely around college laptop-buying season. What Mavericks represents is very interesting, it would seem like Apple's first real push to make the Mac a hub-device to interact and control many other accounts, applications, and devices. The emphasis was very much on the ability of Mavericks to work as a "command & control" of sorts. While the improvements across the board are exciting, it would seem like Apple's main focus is on ensuring that their notebooks are maintaining their position of dominance as a hub device.

2) New Macbook Air & Mac Pro 

With the Macbook Air release:

- All-day battery life was a huge focus

- 4th generation Intel core process, translating into more energy efficiency, and 2x the graphics execution, and 40% improvement in graphics performance of the previous model. 

- 9 hour battery life for the 11 inch, and 12 hours for the 13 inch. 

- Internal flash performance is improved by 40% 

- Improvements all around, with better Wi-Fi reception 

- Prices are already out, and the Air's are shipping already $999 for the base 11 inch, and $1099 for the base 13 inch. 

The sneak preview of the new Mac Pro: 

- Cylinder shape, single piece, with a unified thermal core. 

- Intel Xeon chip-set with up to 12 core configurations. 

- The fastest ECC memory that they have released, 2x improvement over previous generation. 

- PCIe based controller producing 2.5x better flash performance over previous model.

- Release of Thunderbolt 2 with 20 Gb/S performance, 2x over Thunderbolt 1

- Support for 4k displays, with up to three monitor at 4k capability. 

- Motion sensing I/O board that lights up for convenient 'fiddling' 

- Assembled in the USA 

- Release is later this year with no word on price. My guess is that it will start at around $1850 and specs will push it to $3,500 (keeping in mind this will be without a monitor). 

________________

It's a mystery to nobody that the desktop market is constantly shrinking, due in large part to devices like the iPad and Macbook Air. However, this is in my opinion Apple's push to make the Mac Pro a homebase for families and professionals, perhaps the "server of the home" if you will. In addition to this, I also think that this is Apple's way of ensuring that they maintain a tight grip on media professionals in music, film, and animation, which has been, for a long time, one of their most steadfast bases. This is just as much a "thanks guys, we haven't forgotten you" as anything. Meanwhile, the Macbook Air has been improved and made more accessible, this would indicate that Apple are polarizing towards high-performance non-portable, and ultra-portable. Look for the Macbook Air to become the flagship notebook in the next five years. 

3) iOS 7 

This is what many of us were waiting for and, largely, it didn't disappoint. iOS 7 in Tim Cook's words is the "Biggest change to iOS since the iPhone" the experience was shooting to deliver the feeling of "getting an entirely new phone, but a phone that you already know how to use." said Apple's SVP of Software. The release was also a big shipping of new features. 

- New revised and de-cluttered UI and UX , with a big emphasis on "flat design" and a huge departure from skeuomorphic design (imitating real-world patterns and textures like the green felt in "game center") 

- Improved new typography with larger more clear fonts. 

- New color pallets across the board

- Increased use of translucency and layering abilities

- App multitasking across the board, (this will be big for things like Youtube, where people have wanted to play music in the background)

- Multiple pages available within folders

- Improved access to vital system changes (wifi, brightness, etc.) 

- More cohesive integration of widgets.

- "Smart" timing and learning for updating applications and pushing information. (I really hope auto-update is completely optional, as it won't allow developers to introduce users to what updates are being shipped.) 

- Updated Safari iOS 

- Inclusion of "Parralax" system to simulate 3D content on the screen that adjusts position based on viewing angle and movement. 

- iTunes Radio: streaming service that amplified the capability of iTunes, integrates social-sharing into it also. (not a great time to be Spotify or Pandora) 

- Improved dynamic animations within applications (the Weather app really highlighted this)

- An emphasis on "Edge to edge design, taking advantage of every pixel" 

- Improved compatibility and interactivity with iOS in-car systems. This is big, as it is another example of Apple aiming to make their hardware the command & control device for many other peripheral devices (i.e. in-car entertainment/media systems) 

________________

With the Worldwide Developers Conference having kicked off today, there is plenty of information to get overloaded on. A release of iOS 7, new OSX in the form of "Mavericks", a new Mac Pro, and plenty more. Tune in tomorrow morning for a comprehensive review and analysis of the releases. For now, I wanted to go through some of the numbers. Tim Cook (Apple CEO) threw out plenty of mind boggling stats, here are some of the more interesting ones, and what they mean. 

Apple currently has about 1,000,000 daily visitors to their retail stores, a pretty staggering number. They are also consistently ranked in the very top when it comes to revenue generated per square foot. 

They currently have 407 stores globally, in 14 different countries, which is honestly a pretty low number. (This also means each store averages around 2,500 visitors per day!) This could be promising as it might indicate Apple still has a good way to go before they've saturated their global presence. 

In July, the "App Store" will celebrate its fifth birthday. This is remarkable to consider, as it has achieved so much in such a short period of time. It's exciting to think what the next five years will look like. In this period over 50,000,000,000 apps have been downloaded, that's 50 BILLION.

There are currently over 900,000 iOS apps in the store, which is pretty incredible to consider, but more amazing still is that according to Apple's data, over 93% of those are downloaded monthly. This is a real testament to Apple's rigorous quality control and (reasonably) effective distribution system. In addition to iPhone, the store also now boasts over 375,000 iPad applications - plenty more than "those other guys" as Tim Cook quipped. In the content game, iTunes and iBooks also are rapidly approaching the 2,000,000 titles mark - a very substantial library of paid content.  

What makes the iOS ecosystem even more potent is that Apple's App Store has over 575,000,000 accounts, with over 75% of those having an active credit card connected. Tim Cook claims that this is more than any other store on the internet - a claim that isn't too hard to believe! There are also over 600,000,000 active iOS devices. 

iOS users are also happy and active. These devices are used with 50% more frequency than Android devices, supporting what I have mentioned before, that iOS users are the power-users. In fact, Tim Cook even stated that iOS ranks #1 in usage, and also in customer satisfaction - having won J.D. Power & Associate's award nine years in a row now. Web share on iOS is also booming, with iOS accounting for 60% with Android having less than 30%. In the tablet market, iPad owns over 80% of the web share. iOS satisfaction is at 97% overall, with 73% being "Very satisfied' over 20% points over Android. This is all very impressive, but Apple can't "rest on their laurels" as history has shown how viciously fickle the tech markets and consumers can be. 

On the computer front, the Macs are still doing well. In fact there are over 72 million active Mac computers, which is double what it was only two years ago. Try walking around a college campus or a startup incubator without spotting a few! In the U.S. the #1 selling desktop is now the iMac. While the Macbook family is also the #1 selling notebook in the U.S., significant achievements. Year on year growth for Mac has averaged to 15% over the past five years, compared to around 3% for PCs. Apple are owning the U.S. market for now, which is a promising sign, but of course, this means that they need to focus more efforts overseas and in developing markets where money is quickly moving and growing. 

On the software side of things, Mountain Lion shipped over 28,000,000 copies - making it one of the most successful releases ever. Impressively, a considerable majority of shipped Mountain Lion copies were digital only - making margins even more attractive. The adoption rate has been a big success, with 1st 6 month adoption rate for OS X releases averaging over 35% compared to less than 5% for Windows 8. This decreased fragmentation is appealing to consumers and developers alike, and also poses less security concerns. 

________________

With the JOBS Act having gone through, the flexibility available to raise funds to start a business has increased drastically. With this, has come a proverbial tidal wave of services designed to take advantage of this exciting new era of fund-raising and entrepreneurship. Kickstarter is arguably the premier crowd-funding platform - with nearly 43,000 successful projects launched, accounting for over $565 million, the numbers don't lie. In essence, crowd-funding is a way to rally enthusiastic potential customers to pre-purchase whatever you are offering so that you can use the capital to complete the project. Kickstarter has funded everything from films, to underwear, to submarines - all using this model. When done correctly, crowd-funding can be a great option to get your company rolling. Here are some tips to help you run a successful campaign. 

1) Create a passionate and interesting video: 

Central to Kickstarter's project pages is the video. This is where you pitch your prospects. While the video is "optional" it really isn't, as projects with videos succeed 20% more often than those without. A good video is informative and authentic, show the viewer the people behind the project, demonstrate your passion, excitement, and capability to succeed. Show the viewer why they should be excited, and why you need their help. Finish the video with a call to action (i.e. "Join our campaign now by buying a t-shirt below, every bit of support counts!") Production value doesn't have to be Hollywood level, just make sure that it's good enough, and that the content is of a high-quality - remember people are investing in you just as much as they are investing in the idea. 

2) Strategize your "reward tiers": 

Kickstarter operates by giving users many options to support a project, from donating $1 to get a simple "Thank you" email, to donating $10,000 to get a VIP package. The data shows that very few projects succeed without an option under $20. In fact, the most popular contribution amount is $25, while the average is $70 (keeping in mind the average is skewed by the high value contributions). While it is reasonable to expect supporters to pay a premium over market value for reward items (i.e. $30 for a snazzy t-shirt) you can't stray to far away from typical values. The successful campaigns tend to offer rewards that are unique to the project, with high-cost rewards often being unique and/or creative experiences related to the project. Offering unique and exciting rewards, priced about 110%-130% of market value, with increments enabling every possible user to contribute is vital. 

3) Work your own network and social media: 

Although the hope in Kickstarter is that complete strangers will contribute to support your campaign, a significant portion of your supporters are likely to come from your networks. Promoting your campaign with a very personal touch to your friends and acquaintances is important. Don't spam people by any means though! Provide updates through Facebook and Twitter, post your campaign into relevant groups on LinkedIn. A successful campaign entails a considerable amount of active campaigning and marketing on your part. 

4) Run a tight timeline: 

Kickstarter enables you to run a campaign as short as one day, or as long as sixty. Statistically, the campaigns that are less than thirty days are the most successful. This is due to the urgency that it provides, people might "wait and see" and end up forgetting. This also means that you can work your networks and your marketing more intensely, without fatiguing your audience. Be efficient and quick, a successful campaign will be intense and perhaps a little exhausting. 

5) Don't underestimate the difficulty: 

Looking at a Kickstarter campaign, it might appear fairly easy and straightforward. It isn't. I've talked with many fellow entrepreneurs who have run successful and failed Kickstarter campaigns - the successful ones put in plenty of time fine-tuning their page before launching. This should take you at least a week of real effort to get launch-ready. Making sure the wording is perfect, the video is effective, and the rewards properly strategized takes time and feedback. Talk to people and get their feedback, generate buzz within your own networks, and have a general marketing strategy figured out. Expect delays in getting your campaign approved. 

___________________

Kickstarter can be a tremendous platform for you to raise money to get started on your great idea, however, it takes a very high level of preparation and strategizing to succeed. The take away points are fairly simple:

- Fine tune your page carefully before launching

- Invest the time and resources to put a good video together

- Strategize rewards that are interesting, unique, and priced appropriately

- Before you launch, build some "buzz" within your networks, and see if you can get friends to "pre-commit" some money to start the campaign with a bang

- Market your campaign carefully while it's running, just don't spam your networks

- Expect to spend at least a week getting everything ready 

- Study other projects similar to yours that have succeeded and failed, learn from them. 

The world of mobile is growing quickly, nobody needs convincing of that. Mobile payments and transactions have been of particular interest recently; phones have been gradually consolidating our “daily-carry” items such as MP3 players, cameras, watches, and now of course the wallet. Yesterday, the research group Gartner released its findings regarding mobile transactions. The results are interesting to consider. 

The research group is forecasting an increase of 44% from 2012, which saw $163,000,000,000 in mobile payments - that’s billion with a very big “B”. This percent increase however can be considered both small and conservative when one factors in the exploding growth in developing nations, where a large portion of mobile payments are conducted. Look for this number to be larger than 44%, as places like Africa in particular continue to embrace cloud-based, mobile financial platforms in favor of the fragmented and risky existing infrastructure. In support of this assumption, it is forecast that around 72% of mobile transactions will be money transfers. 

On the losing end of the mobile payment world are NFC and “e-wallets” - which are expected to account for less than 3% of the mobile transactions in 2013. This is again, a conservative estimate in my consideration, as it will only require a major player like Apple, Google, or Amazon to really integrate a user-friendly system to shift this percentage considerably. Current systems are too unclear, and the existing data is comprised primarily of tech-savvy early adopters. NFC poses many security risks in terms of data theft - I don’t expect it to grow significantly - add to this concerns of signal disruption and battery performance, and it becomes a much less appealing option. 2013 will be the rise of the e-wallet - which will surely be a huge windfall for mobile security providers. 

Potential winners in 2013 are mobile-based merchandise purchases, and mobile bill-payment. Merchandise purchase is expected to hold a 20% stake in the total for 2013, this is, in my estimation a conservative estimate as retailers of all sizes have been showing a clear push towards native-app commerce environments. Look for merchandise purchasing to eclipse 30% in 2013. Mobile bill-payment while only accounting for less than 5% of this sector is expected to grow aggressively, with Gartner speculating 44% growth in 2013. This is difficult to speculate on, however, when you consider the rate of new-device activation in developing countries, 44% does seem low. 

All of the aforementioned leads to one conclusion, regardless of the specifics: MOBILE SECURITY. There is no doubt that this is going to be an increasingly massive and critical business sector, particularly in the Android-heavy markets where fragmented application-stores, and diverse device models are more prevalent. The level of security required on mobile devices is going to grow exponentially as the mobile begins to account for a broader and more critical array of tasks - financial transactions especially. The significant number of possible malware vectors available to infect and exploit mobile devices presents a far more complicated and concerning situation than standard desktop security. 

_____________