Sunday, November 29, 2015

E-Commerce Startup Jet Raises $350 Million, at $1.35 Billion Valuation. Inc. said it had raised $350 million of fresh equity in a new funding round that values the e-commerce startup at $1.35 billion.

Mutual-fund giant Fidelity Investments led the round, joined by previous investors.

Jet said it expects to raise another $150 million “shortly,” bringing this round to $500 million.

In addition, Jet it expects to obtain $125 million in debt financing, including a $50 million increase in a credit line from Silicon Valley Bank and $75 million from venture debt investors. It also plans a smaller amount of “strategic financing.”

Jet founder and Chief Executive Marc Lore declined to name any other new investors in the round, nor the source of the venture debt or details of the strategic financing.

Jet is challenging Inc., Wal-Mart Stores Inc. and other e-commerce players with an array of household items, electronics, pet supplies and more. It initially planned to sell $50 annual memberships for access to discounted prices, in hopes of attracting more customers to the site, but abandoned that plan in October.

Before the latest financing, Jet had raised about $195 million of equity and debt, said Mr. Lore.

The funding provides a badly needed infusion as the company had been running low on cash.

The Wall Street Journal reported in early November that a recent financial plan showed the company projected it would have $63 million of cash on its balance sheet by the end of October and was forecasting a cash drain of $76 million in November and December. Mr. Lore said Jet now expects to burn less money before the end of the year and to consume about $417 million during 2016.

The membership fee was supposed to help fund Jet’s big marketing budget — which Mr. Lore said on Tuesday should be about $270 million for 2016 — with whatever was left providing the company its profit margin. Instead the company will now charge more for products, hoping to break into the black by 2020 when it reaches much larger scale.

The new business model is more “retail and brand friendly,” said Mr. Lore. Jet doesn’t want to alienate suppliers who don’t want their items to appear on a discount site that might undercut other distributors. At the same time, it needs to advertise low prices to attract customers away from rivals like Inc.

Mr. Lore said customers will be attracted by “smart cart” savings that Jet offers when they add multiple items to their order, for example. He said Jet hopes to save on shipping by getting more items into each box sent to customers. He said the average customer order includes 5.5 items and they are shipping 3.1 per box.

Thus far Jet is struggling to break through with consumers despite a large marketing budget that includes TV commercials and outdoor ads in big cities. For instance, Jet’s mobile app is currently ranked #63 in the Shopping category of Apple’s App Store in the U.S. according to research firm App Annie.

Disclaimer : Following article come from WSJ.D

Monday, November 16, 2015

Funding roundup : A chill in startup funding

Conversations across startup ecosystems, from Bengaluru to Silicon Valley, are increasingly about the coming winter in startup funding. The chill seems to be here already, with a drastic fall in deal value week-on-week.

The number of deals in the second week of November stood at 16, with the value at $10.6 million. We are also revising our numbers for the first week of November with the addition of the fund raise done by food startup Yuvi Hospitality. The $15-million investment takes the total number of deals for the week of November 2 to 8 to 19 and overall value to $54.5 million.

But every single deal in the second week of November fell under the angel, seed or Series-A categories. This shows that early-stage investors are still quite optimistic—a sentiment that later-stage investors do not seem to share. This does not seem to be just year-end funding blues. Last year, Zomato had raised $60 million in November.

An appetite for food and foodtech

It is interesting to see that two food and foodtech companies have raised early-stage investment at a time when the news cycle has been dominated by the shut down of some foodtech startups and firings at many others. Chef’s Basket raised the biggest amount, at $6 million, in the week under review. It raised Series-A funding from venture capital firm SAIF Partners and existing angel investor Haresh Chawla, a Partner at India Value Fund Advisors. The three-year-old company offers ready-to-cook, multi-cuisine dishes that are retailed through hypermarkets and e-commerce sites.

Delight Foods, an e-commerce platform that curates mostly regional and unique food brands from across the country, was the other food company that raised funding.

Considering the fact that the week saw only early-stage deals, it is not surprising that only three companies crossed the $1-million funding mark. Apart from Chef’s Basket, skill training startup iStar Skill and beauty and wellness marketplace BigStylist raised funds.

M&As bring cheer

It is not all doom and gloom, however: four startups were acquired in the second week of the month. Three acquisitions—Shadow fax-Pickingo, Car Trade-CarWale and Indian Grahak-Dyscover—saw competitors merging. The Shadow fax-Pickingo deal was primarily an acquire, though according to reports, there was a cash component. This acquisition follows a reported falling through of funding by Zomato into Pickingo. Car Trade’s buyout of Car Wale has given an exit to the latter’s investor Axel Springer, which sold off its 91 percent stake in the company. Both platforms will operate independently. Kolkata-based online hyperlocal grocery delivert startup Indian Grahak acquired Jamshedpur-based hyperlocal marketplace Dyscover. JetSynthesys, the digital and technology subsidiary of JetLine Group of Companies, acquired online and offline fashion retailer Rudraksh. Rasika Wakalkar, founder of Rudraksh, will head the fashion vertical of JetSynthesys.

There have been rumblings and warnings of an imminent slowdown in funding for quite some time and now we are seeing deals, especially growth-stage ones, dry up. How bad is this funding winter going to be?

Thursday, November 12, 2015

Some Sources of Start-up Capital

When thinking about funding for your start-up, it is important to understand different types of potential investors. Not every wallet is right for you.

Figuring out who to raise money from and why will save you time and yield better results. Here are some potential investors to consider for your start-up.

1. Friends and family

Often, the first check comes from a family member or a friend. In theory it is a lot easier to close them because they already know you. In practice sometimes this is awkward, and may lead to awkward situations in the future. For example, if a friend gives you $10,000 and the company goes belly up, you may lose this friend. 

Think carefully before taking money from family and friends. It can be awesome or could be bad.

Every situation is different. Another thing is that friends and family members may not clearly understand the risk and how start-ups work. Take the time to educate them, and if they get it and still want in then you are all clear.

2. Angel investors

Angel investors put in between $10,000 to $100,000 (lower is more common), and can participate in priced or debt rounds. Angels can be valuation sensitive. It is important to distinguish between active or professional and occasional angel investors. 

Ask them how many deals they do per year, and look them up on Angel List. If someone only does a few deals a year, only talk to them if they approached you, someone gave you a warm intro or they have relevant experience and background in your space. Otherwise, infrequent investors should not be on your target list. Occasional angels will take longer to close, and will be more flaky.

Active or professional angels do at least six deals per year. Expect to close them within the first three meetings. It is totally fine, and a good idea, to ask them if they are interested at the end of the first meeting.

Before you meet an angel understand what they are interested in. Don’t go after people randomly. It will be a waste of time. Confirm with whoever introduces you that the introduction makes sense. Target well.

3. Angel groups

An angel group, as the name implies, is a pool of investors sharing deal flow. Angel groups can do priced rounds, and if a significant percentage of the angels in a group are interested, they can lead your deal. 

Angel groups meet regularly, and have regular pitch processes. Some do more due diligence than others, but typically several members of the group would be assigned to do the diligence if your initial pitch goes well.  

Your check will typically range from $50,000 to $500,000. These groups are not syndicates, and unlike AngelList syndicates, they don’t have carry fees. Angel groups are also valuation sensitive, and will typically price the rounds lower compared to venture capitalists.

Start-up With Some Advice Is Always Better

4. Angel List syndicates

Angel List syndicates are the most effective way these days to raise money on Angel List. Syndicates are formed by influential angels, and investments range from a few hundred thousand dollar to more than a million. The key thing is to identify investors who have significant syndicates on Angel List and get in front of them.

If you can get such angels excited, he or she will run the syndicate. For example, the angel might put in $50,000, and then another $250,000 will come via a syndicate. The amount raised via syndicates varies, and is not guaranteed.

5. Micro VCs

These investors are either individuals writing $100,000 or more checks or a firm with $10 million to $50 million under management. They are basically angel investors with larger amounts to invest. They will commit to invest or will say no after two or three meetings. They may lead, and be comfortable with either debt or equity.

Micro VC funds will likely take longer, and would not be too far off from a typical VC. Micro VCs in New York City typically invest $250,000 to $500,000 and can price and lead your round.

These investors care about ownership, but to a lesser extent than a typical VC. They are not looking for 20 percent of your company, but more likely 8 to 10 percent and then invest more in the next round (depending on the size of their funds).

Like with angels, you need to decide if a specific micro VC is right for you. Spend time studying their portfolios. Not only do you need to understand each fund, you need to understand each partner. Partners have different experiences and focus areas and different preferences for companies as well. Target specific partners at a specific fund.

6. VCs

Traditional VC firms have funds ranging from $100 million to $500 million. For seed deals, they would do as low as $250,000 to as high as $2 million. Typically, between $500,000 and $1 million is these investors' sweet spot.They really care about percent of ownership, and would likely only do the seed if they think they can do series A as well. That is, they would want to buy up the ownership to be at 15 to 20 percent after a series A round.

Note that some funds may not have the capital because they are in between funds, but they would spend the time with you anyway. It is probably not the best use of your time though.

Figure out who will be the partner on the deal. With larger firms it is not always obvious. Look at how many companies they are involved with and ask them how many companies they typically manage. In a $150 million to $300 million fund, a partner is investing in eight to 12 companies at any given time. Research how many investments the partner has to understand your chances. 

Ask them what their process is like and how to best follow up. Each firm may have a unique process and you need to understand it up front so you can know what to expect. Set up clear next steps and follow ups. Be direct, and ask if they are interested in continuing the conversation. Try to avoid the vague state of maybe.

7. Mega VCs

Mega VCs are firms that have more than $1 billion under management. These include Andreessen, Khosla, Kleiner Perkins, Sequoia and Bessemer. Research if the fund has a seed program. If they do, figure out who runs it and what the process is.

It is likely that there is a partner in charge of seeds and the process is compressed compared to raising more capital.

Recognize that VC funds need to deploy large amount of capital per deal to be able to return their massive funds. Rather than spending time trying to get their attention for your seed round, it may make more sense to start building relationships with them for a series A and B round.

Disclaimer : Following article come from Entrepreneur

Monday, November 9, 2015

Why Funding is not a Parameter for Startup Success.

What is the first thing that comes to your mind when you think about startups: funding or customers?
A startup comes into the limelight after raising the first round of funding. Just talk to founders of a funded startup and they will tell you that funding just gave them extra leeway for proving their success. Success, however, is still far away.

A company can be successful only when its customers are happy. Your potential customers don’t care about the amount of funding you raised; they only care about their problems and how your product can heal their pain points.

Funding will solve one issue: you will have more fuel to run your company for a little longer period. You will have some more time to find more customers and make them happy. Ultimately, you will have to improve your cash flow and start making profits.

Remember that funding is borrowed money and you have to return it to your investors (multiple times of what you have raised). Your investors expect more than market returns because they put money in your company at the riskiest time. You know that banks do not lend money to startups even at 20-25 percent interest rates.

If your company bank balance is going low and you failed to become profitable, then either you have to shut down your venture or raise another round of funding. If you raise another round of funding, then you will return the money of your previous investors, but now you will be obliged to pay a bigger cheque to your current investors.

If you failed to raise money and shut down your startup, then no VC will give you money for your next startup. No one is going to trust you again and it will be a rough journey for your next initiative. Once you’ve accepted funding, you will always be on the marathon of raising money until you become profitable.

Leadership Leads To Success With Team, Patientce etc;

What, then, do you need in order to become profitable? Lots of happy customers who are willing to pay for your solution.
So when and how can funding help you?

When you figure out how to find customers and make them happy. A big bag of money can help you extend what you are doing. You can hire a couple more developers to fix the bugs, a bigger sales team, bigger budget on marketing and ability to provide quick customer support.

You can do more with everything. But, beware; if you are already making mistakes, chasing wrong customers, hiring wrong team members, doing wrong marketing, then you may do more wrong with more money.

The money will not help you set the right direction; it will just propel you with more force in whatever direction you want to go.

Funding can help you go from 100 customers to 1,000, if you know where to pump investors’ money. If you have not found your initial customers yet, or are still wondering how to make them happy with your solution, then funding is not going to solve your issues.

You probably need a mentor at this stage or a right mix of the team that can execute the plan.

Disclaimer : Following article come from YourStory

Thursday, November 5, 2015

Intel Puts $22 million in 10 Startups.

Intel Resources, as we all know the arm of venture arm of tech has announced $22 million in new investment over 10 startups. The news of it has been conveyed at the company's annual global summit and it is also news that it would invest half a billion dollars in total this year.

This is kind of both profit and loss. As fact of comparing the same event of last year, Intel has announced $67 million of investment in 16 startups, but the total of 2014 investments was $359 million.

Just this past September Intel invested in Chinese startups with the same amount $67 million, looks like it's lucky number.

Today’s investments cover a range of companies running from later stages in larger and more established startups through to newer companies and emerging technologies, and come from five countries: China, Israel, Taiwan, the UK, and the U.S. Intel is not disclosing the value of any individual stake today.

China, Israel, Taiwan, the UK, and the U.S are the five countries where there startups running in larger stages, where it is established via newer companies and emerging technologies.

Freedom-Pop, a provider of 'free' wireless voice and data services that makes its money on options like voicemail, extra data allowances and much more. It's strategic investment Freedom-Pop, which is planning to use the money to broadband services that will challenge the Google Project Fi - precisely, it will use Intel's new SoFIA platform to launch a Wi-Fi based smartphone with free mobile services.

There is a part of Intel's $125 million Diversity Fund, it's LISNR maker of Smart Tones, which sends data over audio using high-frequency, inaudible technology that makes speakers and other media into beacon.

Sckipio, the first ever company which delivers 1Gb p/s with a long range. It also announced and ship commercial chip-sets for modems.

There is a platform of 'addressing' which provides exact location than GPS, it's 'what3words'.

Body Labs, which is for collecting, digitizing and organizing data of a human body shape, pose and motion. Its job is to transform the human body into a platform which digitalize and designed a goods and services which can be produced, bought and sold.

Micro-program Information, an internet thing startups which is contain a turnkey hardware and software solution and back-end information management services for transportation services like taxis, rental bicycles, and mobile sale systems.

Perfant Technology, out of China, develops imaging and video technologies with 3-D reconstruction and virtual reality for artificial intelligence.

KMLabs, a creator of laser systems for research and industrial applications, including multi-photon imaging, spectroscopy, OCT, THz-generation, CEP, micro-machining and attosecond, coherent soft X-Ray etc, as well as 'tabletop x-ray laser' light source.

Prieto Battery, a 3-D advanced battery provider " focused on commercializing a patented Lithium-ion battery technology that delivers transformational performance at a competitive cost using non-toxic materials with the ability to customize shapes.

Intel has also invested in Parallel Machines, for the machine learning startup on an early-stage predictive analytic, but they didn't contained in $22 million/10 startups total.