Money and Software » Money

Best software startup information – Week 12

Ted_Graham — Sun, 08 Apr 2007 20:24:27 +0000

New entrepreneurs are often paranoid that someone is going to steal their idea. With time and experience, most come to around to Howard Aiken’s point of view, “Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.” More experienced entrepreneurs often decide to take on an established market. Competition proves that customers are willing to pay for a solution.
The lure of working from anywhere often motiviates micro-ISVs. My wife and I want to move to Mexico, others are planning to move to Europe and the Sphinx is going to Egypt. Other people move somewhere cheap to take advantage of the low cost of living while launching the ISV. If you don’t have a country in mind, you can pick your new location by the friendliness of the tax and business environment. But if you are looking to find partners or hire staff, you have much less flexibility in picking a location.
Many micro-ISVs think that Marketing means $100/month on Adwords. If you have a bit more money available, this discussion on how to spend $50k is interesting.

Best software startup information – Week 11

Ted_Graham — Fri, 30 Mar 2007 15:07:25 +0000

TechStars is a Boulder, Colorado based clone of Y Combinator. They are doing their first round of companies this summer. They provide $5k/founder, plus office space, servers, classes and some pretty serious contacts. They take 5% of the company. They have received 175 applications so far, and accept a maximum of 10 companies. I plan to attend their end-of-summer presentations to Angel Investors, and I’d be surprised if a couple of the companies don’t get another round of funding.
I just discovered Techquila Shots, where Steve Poland posts random business ideas. I like Classifieds by Cell best and hope it is chosen for RingsideStartup. If you are looking for business ideas, check it out.
I attended the launch of the Colorado chapter of the Keiretsu Forum this week, and was impressed by the passion of the existing members who came from other chapters for the launch. CTEK Angels and RVC are already active in Colorado, it will be interesting to see how Keiretsu fits into the mix. Keiretsu Forum’s ability to syndicate large deals to other chapters will make them appealing to entrepreneurs looking to raise larger rounds, and deal flow of already funded companies to the Denver chapter seems likely to attract Angels. As a novice Angel, I’m attracted to their commitment to education through the Academy. If you are curious about Angel Investing, this article provides a good introduction. I also like the book Winning Angels, although it is heavily flavored by the tech boom and Capitalyst angel fund that the authors started in the boom is dead.
Everyone wants more traffic, many of the traditional suggestions are discussed in this thread.
Setting up the accounting for a micro-ISV can be painful for a first-timer. QuickBooks is the standard, and has a free edition, although I’ve been tempted to try Microsoft’s Small Business Accounting package.

Taking Funding?

Ted_Graham — Thu, 29 Mar 2007 14:04:47 +0000

Most micro-ISVs have a single founder who works in his spare time until there is enough revenue to quit. While safe, that violates several of Paul Graham’s 18 mistakes that kill startups. I’m almost done reading Founders at Work, which reinforces his points; many of the founders warn of the risks of the sole developer doing a side project:

A single founder is a huge point of failure. Having a partner or two keeps the momentum up, so even if you are in a slump or busy with outside commitments, the company keeps moving forward.
Commitment keeps you going. Quitting your job, publicly announcing you are doing a startup, raising money from family and friends, indicates to the world, and yourself, that you are serious. This commitment makes it more likely that the company will keep going when you hit the inevitable problems.
If you have competitors, development speed is important. A lone developer working nights and weekends can’t keep up with a 1-3 developers working fulltime, or fulltime AND nights and weekends.

We are currently doing our startup part-time, although two people have dedicated days during the week. We are starting to have the conversation about taking funding to allow us to go fulltime, I’ll be blogging more about that in the future.

Tax credit for Angel Investments?

Ted_Graham — Fri, 23 Mar 2007 15:45:14 +0000

I wrote about a proposed change in the accredited investor definition a few days ago. From talking with Steve Murchie at the Keiretsu Forum, I learned that,

…there is an even more progressive measure in Congress with bi-partisan support that would give a 25% tax credit to individuals making angel investments in the year the investment is made. This measure apparently is written with the current definition of accreditation, and actually promises to unleash a lot of capital that is now in other instruments and markets

This measure has been introduced in both houses of Congress, and appears to be progressing. The reaction among investors appears to be generally positive, although some experts are concerned that it will lead to more bad investments.

Protecting investors from themselves?

Ted_Graham — Wed, 21 Mar 2007 21:42:30 +0000

The SEC is considering changing the accredited investor definition from $1M including your primary residence to $2.5M excluding your residence. Most of the protests center around excluding investors from higher risk/higher rewards opportunities. It will also reduce the pool of eligible Angel investors, which hurts startups that need seed funding.

Cool animation of relative incomes and life expectancy

Ted_Graham — Mon, 19 Mar 2007 18:34:46 +0000

http://tools.google.com/gapminder displays the changes in per capita GDP and life expectancy across countries over the last 20 years. Having just read And the Band Played On, watching the life expectancy in South Africa fall is especially tragic. The default income scale is logarithmic, changing it to linear makes China’s amazing advance a little less impressive.