Fred Scille, Work Stylist poppin #launch

Interview with Fred Scille, Work Stylist poppin @Launch 2014. Poppin offers well designed, colorful products at the same price that you would get elsewhere. They are from NYC & they do all design in house & their own manufacture & their own warehousing & distribution. First Round Capital funded them.  Fabulous hot pink stuff I was in heaven!

James Redford: Advice to Entrepreneurs about Storytelling

I interviewed James Redford, CoFounder Redford Center & Jill Titman, Exec Director Redford Center @Investors Circle Forum.  James talks about his new movie ‘Watershed’.  He makes some brilliant documentaries on environmental issues. During the interview I asked him for advice about storytelling for entrepreneurs.

James Redford’s keynote @Investors Circle Spring Forum

Jalak Jobanputra: It Can Still Be Challenging for Women to be Heard

Jalak Jobanputra gave me a few minutes interview @SmartMoney Silicon Valley last week.  I asked her to comment on how the ecosystem looks now for women raising funding.  She also gave her perspective on how things are shaping up for European entrepreneurs.  You can check out my interviews with Jalak a couple of years ago Women Startups & Venture Capitalists & European Startups & Venture

Jalak is a venture capitalist with 20 years experience in digital media, enterprise software, communications, broadband infrastructure, healthcare IT, ed tech, mobile and Internet in NYC, Silicon Valley, Boston, India, Africa, Europe. Investments include (sold to AOL), TxVia (prepaid card processing platform, sold to Google), Thumbplay (mobile music subscription service), Imagespan (digital media monetization platform), Datasynapse (enterprise grid and cloud computing, sold to Tibco), Viacore (enterprise partner integration, sold to IBM), Demantra (demand chain management, sold to Oracle), Yodlee (online banking), Zinio (magazine ereader). She spearheaded formation of NYCSeed in 2008, seed fund for early stage startups in NYC. Served on its Investment Committee and Venture Advisory Board. Portfolio includes Enterproid, Seatgeek, Magnetic,Ticketfly. Selection committee, mentor and speaker for 2010 Seedstart, NYC’s first accelator bootcamp.  You can follow Jalak on Twitter @jalak

Here is the keynote that she gave @SmartMoney Silicon Valley ‘Macro & Micro Trends in Global Tech Landscape’

Who Wins the Crowdfunding Site Awards?

The 2 major players online Crowdfunding Sites are Indiegogo & Kickstarter.  Of course there are many niche Crowdfunding Sites which may suit your needs. Here is a quick comparison which clearly shows Indiegogo to be the winner.  You should also check out my video interview with Danae Ringelmann, CoFounder Indiegogo.  Also the Crowdfunding Panel #startupconf

Bitcoin Interviews #futureofmoney

Video interview with Jered Kenna, CEO TradeHill/ & Charlie Shrem, CEO @ Future of Money & Technology Conference.

Jered Kenna, CEO TradeHill/  Jered was a former Marine, professional soldier in Afghanistan and early adopter of Bitcoin. He is Founder and CEO of TradeHill / Currently residing in San Francisco. You can find Jered on Twitter @jeredkenna

Charlie Shrem, CEO/CoFounder BitInstant LLC. Known on the Bitcoin forums as ‘Yankee’, he has over 5 years experience working with start-ups and business development in the eCommerce industry. Along with Gareth Nelson, he found the need for a more secure, fast and convenient way of transferring funds between and within exchanges. Using his experience and knowledge in finance and foreign currency markets, Charlie leads BitInstant through the complex compliance, licensing and regulations of the worldwide banking system. Currently residing in New York City he is also the Director of Operations for DailyCheckout, Inc and consults with dozens of business’s to manage their development and success.  You can find Charlie on Twitter @CharlieShrem

Please note: Apologies for Charlie’s late appearance on the vid, he arrived spontaneously after I had started shooting & I forgot to move the camera.

Virtual Currencies panel @Future of Money & Tech Conference with Jered Kenna, Bitcoin & Philip Rosedale, Coffee & Power & Charlie Shrem, & Rebecca Watson, RadiumOne with Eric Chan, Embee Mobile moderator.

David Hornik, August Capital: SandHill Rd is Full of Men & it’s an Interesting Challenge!

Video interview with David Hornik, Partner August Capital.  For more than a decade, David has worked with technology startups throughout the software sector. In 2000, David joined August Capital to invest broadly in information technology companies, with a focus on enterprise application and infrastructure software, as well as consumer facing software and services. Prior to joining August Capital, David was an intellectual property and corporate attorney at Venture Law Group and Perkins Coie. In his legal practice, David represented high tech startups in all aspects of their formation, financing, and operations, including the likes of Yahoo!, Evite (Ticketmaster) and Ofoto (Kodak). Before that, David was a litigator in New York City at Cravath, Swaine & Moore.  You can find David on his blog Venture Blog or on Twitter @davidhornik

Transcript follows & video below

I was wondering what kind of themes you like to invest in? What’s your sweet spot with startups?

As a general matter our theme is people, it’s not about technologies or markets. We invest in great entrepreneurs who have come to an idea in a context of their history. Sometimes that’s an industry in which they’ve worked. Sometimes its a problem that they needed solving. They come to us & say: here’s how we’re thinking about this problem. We think it’s big & we think the way we’re solving it is interesting. And when we think to ourselves that’s true, it is a big problem & it’s a big interesting opportunity & we think that the entrepreneurs are going about it in a smart way, then we might invest. But we’re not a firm that wakes up on the 1st January & says OK we’re focused on big data, we’re going after bio infomatics, we need a mobile ad thinger whoozy. Our approach is, we describe ourselves as systematically opportunistic. We work very hard to see the most interesting opportunities that people can describe & we hope we have the good sense when we see them to say ‘yes that’s it!’

David Hornik

So would it be seed stage or round A or B?

It’s one of those tricky things. On the one hand we’ve invested $500k in a company & we’ve invested $130m in a company. So it’s an incredible range. We tend to invest in early stage ventures. I’ve invested in a number of 3 people with a great idea kinds of companies putting in $2m or $4m. I’ve invested in lots of series A investments where the team is a dozen people, they’re working on something interesting & they need the next $6 or $8m. I think that early is fun & interesting & the world’s your oyster! It’s also risky & challenging. Then we have a later stage fund where we invest in opportunities where the teams are doing great things & they need more money to leverage the skills they already have or the relationships they already have to acquire companies. So we’ve had lots of interesting opportunities there where we say Oh, we’ll invest $20m or $25m & you can buy this other company or we can spin you out of some other place. And we find that exciting as well.

David Hornik

I just love your office & you’re obviously a really creative guy. Do you like to get involved with the startups & if so what’s your boundary around that?

I wrote this blog post. I have a blog called Venture Blog & I wrote this blog post once “Every VC thinks he’s a Marketing Genius” Marketing is one of those things that you can opine on infinitely & if you think “You know what I think you should do!” My view of venture capital is that it is not our job to steer our companies. We’re not in charge. If you’re running the company then something has gone very, very wrong. On the other hand I think there’s lots of things I think we can be helpful with. Sometimes that’s recruiting & sometimes that’s thinking about the broader opportunity, sometimes that’s relationships. I’m happy to do what’s helpful for my companies & sometimes that’s “Hey David can we meet every week & talk about how the company is doing or whatever.” I have had that & very happy to do it. Sometimes it’s ‘I really need you to convince this great engineer to join the company.’ And sometimes it’s “We’re thinking about this particular product or market or whatever, what do you think about it?” I’m thrilled to help any way that you think is useful & I think I am that: I am the support structure for a great team of people that are going to build a big business.

David Hornik

Fabulous. So I wondered if you’ve invested in any female founded companies & what you think about that whole area of startups?

I like to think it’s not an area of startups. Women approach startups the same way as men. They’re founding companies across a range of technologies & a range of opportunities. I do think that there is an interesting challenge that the venture capital market has. I’m not someone who is going to look at you & say: This is a pure meritocracy & if women are disproportionately under invested that that’s their fault. Because the things that lead to investment are really amorphous. It’s about introductions & relationships, it’s about sales & marketing & convincing people & engagement & connection. To the degree that this is about making those deep connections, there’s clearly plenty of folks up & down Sand Hill Road where that’s a harder connection to make with people that are less like them. And Sand Hill Road is full of men! It’s a lot of men so I think it’s an interesting challenge. It’s a challenge that the venture community would be well served to be cognizant of & to try & make progress. Which isn’t to say funding women who are engaged in business you are not interested in, it’s more about understanding how you judge people & businesses & not creating double standards & not having expectations that make it harder for one group of people, whether it’s women or African Americans or Hispanics or whoever. Don’t create hurdles that get in the way of ‘This is a great business!’ Let’s go build it! That said I have backed female entrepreneurs. I look forward to continuing doing it. We recently funded in the second half of last year, 2 of our CEOs are women. We’re excited about that. So I don’t think this is a crisis at August Capital, I just think that people have to be realistic. They have to come in eyes wide open & look for the best athletes who are going to do the most interesting things whatever their background.

David Hornik

So that’s your advice for the venture community, would you have any tips for women who are wanting to raise venture or angel investment? Is there anything that you could say that would encourage them (because obviously that’s the basis of my interviews)?

Sure at the end of the day, it’s always the same. Relationships drive activity in Silicon Valley. Everything is relationship driven. My advice is very much the same that I have given many starting entrepreneur which is that, you need to engage in a meaningful way with the broader ecosystem. The way you come to the venture community is through friends of the venture community. Because ultimately if someone I trust says you should meet with this entrepreneur, I’m not filtering it by are you female or male? I’m filtering it by who made this introduction? So to the degree that there is any differentiation between men & women engaging in that behaviour, then I think that “Be bold, create relationships & get to know people & live & die by the things that you’re doing. I do think that Silicon Valley is a meritocracy in many respects. I think that many people are looking for great opportunities & they’re willing to be convinced that the things you’re doing are exciting. So make those connections, build those relationships & get in front of lots of people. And I think that ultimately you will prevail even though it may take a few more of those relationships, a few more of those connections, a few more walls you have to break through. But boy that’s what entrepreneurs do all day!

David Hornik

What is a Good Pitch?

I wondered if you could tell me what constitutes a good pitch to you when an entrepreneur comes in to pitch their startup? What are the things that you’re looking for that’s going to say hey I’m interested in this startup?

It’s one of those, in some ways, very tough questions to answer. I know it when I see it! But the reality of it is that pitching a business is about selling a vision. It’s about selling a vision in 2 respects. It’s about selling a vision on a person who is well suited to bring this thing to fruition. And then it’s about this thing that I want to bring to fruition is interesting & engaging & will change the world in some meaningful way. The greatest pitches are the ones where you say: “Wow that’s an interesting opportunity I hadn’t thought about & it’s exciting. Secondly, man I really want to back that entrepreneur to go do it because it looks like he or she is just going to kill it!” And I often say that the best judge for me of what was a great pitch is the next morning when I wake up. Because if I wake up thinking about that pitch, thinking about the opportunity then we’re onto something. If I wake up thinking about breakfast or my kids or what meetings I have that day, I’m not going to fund you. It’s because you haven’t captured my imagination in a way that has occupied my brain. But the things I have funded: I finish the meeting & I go wow that’s really interesting. I go into the next meeting & in this background process I’m thinking about the last meeting. Those are the pitches where you just say “Oh OK that’s amazing, I wonder if they thought about this etc.” It’s hard to describe that magic but it’s all about vision & it’s all about passion. And passion can be expressed lots of ways. It doesn’t have to be about me, frenetic passion. I’ve funded founders who are very no nonsense & methodical but you don’t question for a second that the thing they’re doing is what they were born to do. So when you leave with that feeling, that this person was put on this earth to build that search engine for data or to build that price optimisation or whatever, you leave excited & energized & wanting to spend more time with them.

David Hornik

Thank you so much David, I really appreciate your time today.

Sure, thanks for talking.

David Hornik

Advice for European Startups

I know you were recently at Le Web & I wondered if you’ve got any comments for European startups & how the market is fairing over there? (That’s where I originally hailed from.)

Sure it’s the same thing no matter where we are. We have a wealth of riches in Silicon Valley. We have a lot of people that live & breathe this company building stuff. So that’s hard to create in other places. So you kind of have 2 choices: you either come here, fine lots of people do that because there’s lots of money & there’s lots of investors & there’s lots of advisors. And there are people who’ve done all that stuff. Or you have to create that universe & it just means more work. It means that if you come here & meet with a dozen executives to talk about a startup some fraction of them are likely to engage in a conversation about a good idea. I think in Europe that dozen people really needs to be twenty. So it is harder, it’s more work. On the other hand, there’s less competition, there are fewer startups, there are great engineers that are looking for jobs. So understand your unfair competitive advantage, use it to the degree you can & then just…. Startup building to me is amazing because it’s so hard, it’s just stunning to me that anyone manages it. It’s crazy! When it works, it’s the most euphoric, amazing thing but it takes a lot of work & it’s really risky & it’s really hard. So in many places it’s harder & it takes more work but there are things that may make it more satisfying or less risky. So just take advantage of those things while doing what all great entrepreneurs do: just kill yourself to overcome all those barriers that you’re going to be overcoming for a decade to come.

David Hornik

Fabulous that’s very encouraging!

Torben Rankine: Portuguese Startup Culture

Torben Rankine Country Manager Leadership Business Consulting/Coordinator Global Strategic Innovation Programs focused on Portuguese startups.  Angelika Blendstrup interviewed him about Portuguese startups & women entrepreneurs.  Torben is a financial and Management consultant with over 12 years experience. He has worked in investment sales and management and as a project director in the financial, insurance, transport, telecoms and public administration sectors. He has a deep understanding of the Iberian markets and is fluent in Spanish and Portuguese.

This interview was reposted @TheNextWomen

Pedro Gordo,CEO g3p technologies has come from Portugal to Silicon Valley

Pedro is a 42 years old Mechanical Engineer with a Post Graduation in Logistics and a MBA in International Management. He worked for different industries: automotive, railways and ATM. He is the co-founder of 3 companies: g3p consulting; Centro Gamma Knife Radiocirurgia and g3p technologies and now also CEO Centro Gamma Knife Radiocirurgia.g3p technology is a Portuguese startup that designs cash management and payment solutions. The company has a very experienced team with more than 100 years of combined experience in engineering and banking industry. They started the company in 2010 and already have several customers in Portugal where their solutions are working.In 2011 they took the decision to introduce a cash management solution for small retailers through their new Deposit ATM and launch it in the US. Since April they are at Silicon Valley in Plug and Play Tech Center with very positive feedback.

Thanks to Angelika Blendstrup for doing both interview

Ed Reitler: Legal Issues Startups Face

Video interview with Ed Reitler partner at Reitler Kailas & Rosenblatt.  He attended Harvard Law School (J.D., 1990), magna cum laude, where he was an Editor and a contributor to the Journal of Law and Public Policy and a contributor to the Harvard Journal of Legislation.  Ed handles a wide variety of corporate matters including private equity, venture capital, mergers & acquisitions, capital markets and joint ventures transactions. Ed handles a wide variety of corporate matters including private equity, venture capital, mergers & acquisitions, capital markets and joint ventures transactions.

Transcript follows & video below

Could you highlight some of the legal issues that startups face when raising venture capital or angel investment?

Sure, when an early stage company takes on any type of capital whether it’s from a venture fund or angel group or single angel, they’re really taking on a partner.  The rights that are negotiated, particularly by venture funds are extensive.  They fall into 2 general categories. One imposes encumbrances on the entrepreneur’s equity. So really the vc seeks to help shape the path of the company from an exit standpoint preventing the entrepreneur from selling her shares. Or allowing the venture fund to tag along into a sale, perhaps even imposing a drag along right which would allow the venture fund to force a sale. The other area of rights that the entrepreneur has to become accustomed to, is around corporate governance. That means that the investors have a right to have a say in new equity raises or maybe more than a say, a consent right to new equity raises & sales of the company.  Perhaps additional executive hires, perhaps debt financings, any changes to the corporate organizational documents that could affect the rights of the venture partners. Probably the biggest thing for an entrepreneur, especially a first time entrepreneur at least one who’s first time at getting financing, has to become accustomed to is the notion that they’re no longer with the founding team calling the shots alone.  The Venture & Angel investors will want a right to participate in major decisions in the company’s future.

Ed Reitler

Fantastic, that’s really clear, thank you.

What percentage of women startups have you had as clients?

I looked at your questions before you came over & I thought about this question. A suprisingly low number. I’d never really thought about it until I first got your email about the video interviews you’re doing. I’d say females on an executive team, which is broader than saying the one founding, the primary mover of an early stage company, I’d say probably around 10% of the companies have women. I was surprised by that because as I thought about that it’s a shockingly low number! Given on a nationwide basis, there’s more women in the work force than men on a percentage basis. So I found myself surprised by how low that number is.  We operated a small fund out of this office & it’s called Angel Run Capital.  It’s made up of venture fund general partners, entrepreneurs, I’m an investor.  It’s entirely volunteer partnership. We just invested in a woman led company called MyNines which is a flash sale aggregator, aggregating information off sites like Gilt, Rue La La, ideeli, HauteLook, Editor’s Closet.  Apar Kothari is the CEO of that team. We’ve invested in 5 companies but of the 5 we’ve invested in, she’s the only female entrepreneur that we’ve invested in. My client base has a similar dynamic. Even though you haven’t really asked the question, in the questions that you sent me, I’ve never been clear on why that is.

Ed Reitler

That’s the purpose of my interviews.  I’m trying to nut down why there is a shortage & how we can boost the numbers.  Thank you for that.

There are groups out there that are trying to do that. Are you familar with Girls in Tech , Golden Seeds , Astia .  I went & looked at some of the interviews on your site, you spoke with Natalia, she’s with Pipeline Fund & I’m a mentor to that group. Those are all groups that are very active in trying to encourage female angel investors & help train them. also to back & support women entrepreneurs & women led businesses. I’m also on the Technology Committee of the New York City Investment Fund & Fred Wilson’s heavily involved with that.  I know you’ve interviewed him . That’s a fund that seeks to invest in women led businesses within the 5 boroughs of New York City.  There are a lot of efforts out there & I think they have been successful.  But the numbers are still staggering about how much more work that needs to be done.

Ed Reitler

Yes, yes thank you. Do you think that networking with Venture Capitalists is harder for women entrepreneurs? I know that entrepreneurs are often connected to vcs through lawyers & through their other contacts.  So I’m just wondering if you’ve noted if that networking piece is missing?

I certainly actively work to put companies together with capital. It’s part of my job as facilitator or counsel to the venture funds or the companies.  There’s no filter as to whether it’s a man or a woman that’s leading a venture led effort.  I certainly make the introductions.  On the networking front, perhanps there is a difficulty there in that, if you’re doing something after hours maybe the dynamic between a man & a woman is different than between 2 men if you’re having a beer or dinner. But I would think that that dynamic would be the same in any area where networking is crucial, any sales effort or any investment banking type of service work that there would need to be that type of interaction between  a female service provider perhaps male clients or vice versa. I don’t think there’s anything unique about venture that prevents women from networking as effectively as in other industries.

Ed Reitler


Dana Mauriello: Community Funding not Crowd Funding!

Interview with Dana Mauriello, Founder & President ProFounder.  Dana lives, eats, and breathes entrepreneurship – and has for as long as she can remember, as she has helped start and run multiple family businesses in a wide range of industries. Dana is a master of developing a deep customer understanding and applying this empathy to creating, marketing, and selling outstanding products. Working on the Corporate Product Innovations team at Estee Lauder, she created new product concepts and brought them to market. Dana created a unique major at Stanford University, earning her BA in Product Development, and double-dipped to earn her MBA from the Stanford Graduate School of Business a few years later. Dana is a champion powerlifter, and die-hard New Yorker. You can find Dana on Twitter @danamauriello

Could you tell me briefly what your motivation was to set up ProFounder & possibly a little bit about the site?

Sure, We started Profounder in August 2009 & we both overlapped @Stanford Graduate School Business. Actually that summer after I graduated we were sharing some office space with a few other classmates who were starting businesses. One of the classmates had this company called WikiMart & there was this great spirit of cumbaya around graduation with everybody saying ‘Let’s stay in touch! We’re going to miss each other.’ It was in this spirit that these 2 classmates said ‘Well wouldn’t it be great if any of our classmates wanted to invest in us we gave them the opportunity to do so.’ So it wasn’t out of desperation, they’d already got their angel funding. Just wouldn’t it be nice if more people could get involved. So they sent an email out to our classmates. There were about 300 of us & we were all quite close & said if anyone wants to invest just let us know, no pressures, just wanted to let you know about the opportunity. In 24 hours they had gotten 60 people who had responded & said they wanted to put in $1,000 each. That should have been the end of a beautiful story that we could celebrate. But that’s when the hard part started. Because as soon as that was over it was not all roses. It was them going to lawyers saying ok what are we going to do with this? The lawyers saying Woooh, woooh, wooh these folks who want to invest in you are up to their ears in student debt. They’re far, far from what the SEC would call accredited investors, people with $1m net worth they’re making over $250k a year. They’re students, they can’t invest. Who are you kidding, they have to be able to invest? So they spent some time & this team took about $20k & spent a couple of months with their lawyers trying to figure out how to make this happen. They finally did & at the end of the day they were able to get $35k invested. They’d already spent almost that much just trying to get the deal done. It certainly was not an efficient process at all. So Jessica & I started looking at ‘Oh my goodness how can we help our classmates & ourselves in similar situations to make this more efficient?’ It seems crazy, you could have people over here doing something amazing & people over here who want to support them & they just can’t get together. What is that about? So as we dug into it as a kind of side & night project we learned wait a second this is more than something that is for us, this has huge, big applications. We started to see the one stat that really blew us away was that $144b of friends & family funding happens every year. That’s how much money is moving in this informal investment circle. So 87% of all funding for private businesses is coming from this informal circle of friends & family etc. We said ‘Oh my goodness this is the white elephant in the room. Nobody ever talks about it but it’s huge & there’s no innovation ever. Nothing new is happening to move this space forward for all these dollars that are moving. Let’s be the ones to do that. If we do do that think about the applications, we could create more access to capital for more people. If people saw new access to capital they had, entrepreneurship would seem more accessible to them because they could see the clear path to how they could get to where they are going. I grew up in New Jersey, Jessica grew up in Pittsburgh, PA & we’re both very cognizant of how lucky we were to be in Silicon Valley where resources were abundant & there’s very clear paths forward to start your business with these great systems in place. We knew the other side to the coin, how if you’re not lucky enough to be in that environment, it’s not a clear path & you don’t have those resources available to you. But we said you know what everybody can develop a supportive community around them. So great, everybody can do that. So now what we can do is give them the tools so that supportive community can also be a source of access to capital for you. That’s what we’ve been able to do.

Dana Mauriello

Wow that’s a brllliant story, fantastic. Having been based in London for 5 years trying to raise capital, I can agree with you that if you’re not in the right place, you can almost forget it.

Absolutely it’s hard.

Dana Mauriello

So this is really making it possible for anyone, anywhere in the world really. Could you describe the business model behind ProFounder & how it works?

Sure so I’ll give you an example of a specific customer & how they would walk through our system. Raja is a customer whose business is Bucket Feet. He had this great business where he & his partner Aaron were on a college campus. They were students & they started taking their white vans, their sneakers & they were drawing on them & making these great designs. People would stop them on campus & say I want a pair of those, they are the greatest! They said well maybe we should make this a business, if so many people like these. They said well now we need funding for that business, where should we turn. Wouldn’t it be cool if those same people who said they liked our shoes were the people who could actually help us start this business. Because that is truly the proof of the pudding is if those people who liked them, like it so much that they’re willing to invest, great then we should really do this. So they came onto our platform to facilitate this process. The first thing they did was create their pitch. So we really believe that if you’re going to a community for investment capital, it’s not about giving them reams & reams of data,having them pore through numbers. It’s about telling them your story & trying to understand why are you doing this & getting them engaged. All of the investors we’ve talked to, money is never the primary motivation. Someone is not investing in someone they know to make a quick buck. They’re investing in someone they know to be part of the story because they find that to be rewarding. They want to be treated fairly & they wanted to be treated with respect in a way that makes sense. But they also just want to be a part of something, right. So we have them create a story in that way with a video etc.
The next step is creating your term sheet. So we have term sheet templates that you customize. Here’s where we also save you a lot of money because you’re getting the term sheet fed to you that you can then customize. The primary term sheet we have is revenue sharing. They chose a percentage of revenue, say it’s 2% of revenue that they would share over 5 years with their pool of investors. Every individual investor would get their pro-rata percentage of that. Now last week we launched a new term sheet, an equity term sheet that is non voting common shares that you could also offer. So now you have two choices on Profounder. Once you have your pitch & term sheet those things go onto a private fund raising website that we create for you & that website becomes the destination for all of your fundraising. For Raja & Aaron at Bucket Feet they were able to invite their friends & family, their classmates, other people in their community who they wanted to invest. They invited them to view the opportunity. They saw the site & said ok thumbs up yep I want to be involved. They were able to transact directly online by investing in the opportunity. Now after all the investment money was received they raised about $60k. They, Raj & Aaron then signed their term sheet electronically online through the Profounder platform. The investors then got the term sheets to also sign electronically so now they’re duly executed & stored on our platform for everyone to use. We also walked Raj & Aaron through the Compliance. We have a very intense Compliance Engine that’s part of our platform that we’re really proud of that automates & serves up the legal compliance in every one of the 50 states as well as the Federal Government that makes it possible to raise with unaccredited investors. So we served up that information & walked them through this filing process.

Dana Mauriello

Wow absolutely incredible, it’s really an awesome platform by the sound of it. Thank you. I was wondering how many women are on Profounder? Do you know how many female startups or female business owners?

In terms of the customers who are using our platform I don’t have a specific number. We haven’t noted a gender bias one way or the other.

Dana Mauriello

Well that’s good, that means there is nothing that is limiting women from getting on there & going for it. By the sounds of it, everything is provided really to actually raise that capital. Are there any issues or challenges that have come up since you’ve been running the platform for entrepreneurs on the platform?

Yeah when we first launched we talked about crowd funding, crowd funding. We had in mind this definition of everyone can contribute in small amounts. You can get a lot of people engaged etc. When our entrepreneurs hear the world crowd funding, they say oh crowd funding great, I’m going to post my opportunity on the site, I’m going to go on vacation & when I get back here’s my mailing address to send my cash to. We said no,no, no that is not how it’s going to work. You have to put in the effort to engage your community. Because really we are not claiming that it is easy. There is an engagement task that you have in front of you. So we really like to say crowd funding is a misnomer. It’s not crowd funding, it’s community funding. So get that right! The biggest challenge for entrepreneurs is overcoming that hurdle. Often that emotional hurdle of asking. We really tell people you’re not asking for money, you’re offering an opportunity. You should be confident in your business & so confident that you really believe you are offering this great investment opportunity to people. What’s been really interesting to observe is sometimes, & in fact oftentimes people find that they’re not that confident & it’s a real moment of reflection for them to say wow why am I hesitating at this point? What am I not confident about? Did I jump the gun? Is this really not a good time for me to be fund raising? I should actually come back when I am more confident & do believe this is a great opportunity for people to get involved in. So we’ve seen that happen as well.

Dana Mauriello

This is one of the issues that people have fed back to me during the course of all these interviews is that women have trouble asking for money. So a lot of us put our hands up for that one. And also have difficulty as far as confidence goes. So what you’re saying is that it’s a great exercise in actually challenging those 2 core pieces if you want to go for it on Profounder. That you could actually work through it or make the decision to actually wait until you’ve built those 2 pieces up.

And we’ve seen it from men & women alike. It’s a very common issue that people face. So we try to make it as easy as possible. We’ve really put a lot of thought into best practices etc. So for instance, its scary to pick up the phone & call someone you may not have spoken to in a while & say hey do you want to invest? What we do is create a platform where you can send out an email invitation to all of these people so already the mode of communication might be something you’re more familiar with to get them to start by emailing & then do follow up phone calls, if you like. We also often encourage people to offer multiple things so there’s no opportunity to say no. So if you just say will you invest, there’s a yes or no answer. But if you say will you be part of my community & a way to do so that would be really meaningful to me is through investment but I’m also really excited about your advocacy. I’d be really excited if you’d lend your marketing expertise. We’ve found that that’s also a very effective way.

Dana Mauriello

So really what they’re doing then is building up a community of mentors & support systems. Not just getting money.

Exactly, we found that over & over again. We had some entrepreneurs who’ve come to us & said you know I could have gotten a bank loan. I could have done this but then it would just have been about the cash. I know with Profounder it’s not about the cash, people are actively involved. We have many amazing cases, for instance our very first customer Bronson Chang, he has The House of Pure Aloha, which is a shaved ice business in Hawaii. He had his investors voting on what new flavors of shaved ice he could offer. They were tweeting like crazy about what he was doing, because they were so proud to be part of this community. People involved in this venture, they felt the sense of ownership, the sense of involvement that made them want to be active.

Dana Mauriello

That’s fantastic.

Ed Reitler: ‘Challenge to Startup Lawyers’

Video interview with Ed Reitler, partner at Reitler Kailas & Rosenblatt.  He graduated Harvard Law School (J.D., 1990), magna cum laude, where he was an Editor and a contributor to the Journal of Law and Public Policy and a contributor to the Harvard Journal of Legislation.  Ed handles a wide variety of corporate matters including private equity, venture capital, mergers & acquisitions, capital markets and joint ventures transactions. Ed handles a wide variety of corporate matters including private equity, venture capital, mergers & acquisitions, capital markets and joint ventures transactions.

Fred Wilson, Union Square Ventures, posted a challenge to startup lawyers  & I quote from Above the Law ‘he discusses a recent investment his fund closed, a seed round. The parties used standard form documents, without negotiation, and the investors had no counsel: “We just signed the standard documents, which were tweaked to reflect the round size, share price, and board provision in the term sheet.”  The legal fees for this rather straightforward deal came to $17,000. That’s pocket change for a successful financier like Fred Wilson, but he still wasn’t happy about it. Given how little work was involved, couldn’t the legal bill have been even lower.’  Do you agree Ed & could you give a little feedback about the issue of these costs?

If you really want to get the legal costs down to $5k, you have 3 choices:

1) Use Convertible Debt Financing

2) Use Common Stock with some basic contractual rights surrounding it


3) Come to our firm we will do the seed financing in preferred stockform with the $5k cap

It’s a loss leader for us but we won’t lose as much as larger firms.  In our case we’re hopefulof developing a long term relationship with the entrepreneur.

Ed Reitler (summary)

Fred Wilson, Union Square Ventures: Female Role Models Key to Success

Video interview with Fred Wilson, Partner at Union Square Ventures.  Fred has been a venture capitalist since 1987. He currently is a managing partner at Union Square Ventures and also founded Flatiron Partners. Fred has a Bachelors degree in Mechanical Engineering from MIT and an MBA from The Wharton School of Business at the University of Pennsylvania. You can find Fred @ his blog AVC & on Twitter @fredwilson

Transcript follows & video below

What is your sweet spot, in what kinds of businesses do you like to invest?

We invest in companies that are building large networks of engaged users on the internet.

Fred Wilson

What percentage of women startups do you get pitches for? And what percentage have you funded?

When you say women startups do you mean where there’s a woman on the founding team? I’d say probably 20 to 25% of the companies that pitch us have a woman on the founding team.

Fred Wilson

Great that’s really good news & what about the ones that you’ve funded?

It probably depends on what vintage you’re talking about. I’ve been doing this for 25 years. I think if you look at it over the past year, maybe it’s about the same about 20% of the companies we fund have a woman on the founding team.

Fred Wilson

That’s brilliant, thank you.

Have you noted differences with women entrepreneurs in how they pitch & build businesses?

Well I think as operators, there are definitely some differences. I think that women (this is a generalization so it’s a little bit unfair) women typically end up being probably better managers. And maybe a little bit less risk takers?

Fred Wilson

And just the very fact that you had to think about that makes it probably not such a big issue for you that you’ve noted in the past, I gather?

We don’t have a bias about it one way or the other. Just observing the situations that I’m aware of, just stylistically there are some differences in that regard.

Fred Wilson

Sure. I know that you do a bit of work in Europe & wondered if you could tell me what differences that you have observed there with respect to the US as regards female entrepreneurs raising venture?

I don’t have a lot of experience with female entrepreneurs in Europe. Of the companies that we’ve funded in Europe, I do not believe that any of them have women on the founding team. But I also don’t think that we have enough of a sample size in Europe yet to be…. I don’t know that you can make any conclusions from that? We haven’t looked at that many opportunities in Europe, so I’m hesitant to suggest that it means anything.

Fred Wilson

Yes I get your drift, thank you. Cindy Gallop, IfWeRanTheWorld, says: ‘I think not as many women as men actively seek VC money because they’re not as tapped into the boy’s network as male entrepreneurs are. Young male entrepreneurs can very easily become the flavor of the month and get introduced around from one VC to another — get the perception going that they’re ‘hot’ and get their funding. It doesn’t happen for women that way.’ Do you think Fred, that networking with Venture Capitalists is harder for women entrepreneurs & have you noticed differences particularly in Europe?

I have a hard time talking about the European situation because I’m not as plugged into what the venture capital community looks like in Europe. Obviously I know who some of the investors are but its not a world that we have a tremendous amount of experience in so it’s a tough thing for me to assess. I do think that the whole assertion that it’s harder for women to network with investors than men is false.

Fred Wilson

Great, that’s a really good sign. I know that you do attend a lot of events in London or Europe. So I just wondered if you noted if there’s women in those audiences? Is there anything like that?

Yes definitely.

Fred Wilson

Brilliant that’s really good, What do you see as the obstacles for inclusion of women entrepreneurs in achieving funding in Europe? I know probably your experience is more in New York, right?

Well no, we invest throughout the United States & in Europe. I think, obstacles? I think it’s a question of whether or not women believe that they can be successful. I think it’s just a question of changing people’s perspectives on that. I think if women felt that they could be successful entrepreneurs, you would see more women do it.

Fred Wilson

So we just need to get out of our own way! That’s brilliant!

I don’t mean it in a negative way. I think that there aren’t as many role models out there. If you think about popular culture, whether it’s in movies or tv shows, books or magazines, reading on the web, I think that the role model of the entrepreneur is most often played by a man. And I think that as a result there’s a little bit of a perception that it’s a man thing. I don’t think that’s true. So if we just had more role models & we saw more women being portrayed as entrepreneurs, I think that a lot of this would shift very quickly.

Fred Wilson

And definitely last year was a very big pivot year, with so many conversations about this issue. So hopefully we are in the flux of that change? I read a Telegraph article recently ‘Women in tech are flaky and hopeless, says leading women’s advocate’  from which I quote “The problem with female entrepreneurs is that if you don’t get a financial commitment from them, they don’t show up or they cancel at the last minute,” Obviously this is a UK publication & speaks loudly about the underlying negativity about women in tech that prevails in that culture more than the US. Fred how do you feel about this gross generalization of female entrepreneurs & what has been your experience with women sourcing venture?

That doesn’t sound right to me at all. I think that there is no evidence in the world that I live in that the notion of them is flaky??? That’s ridiculous I’ve never seen it, never thought about it!

Fred Wilson

It’s obviously one person’s negative view of that interview, I would say! Often advice for sourcing venture is equated with dating, implying that there is a matching that needs to happen with entrepreneur & investor. Have you noticed a general psychological profile of venture capitalists and also of entrepreneurs that promotes the attraction & synergy between them to develop a great startup?

I definitely think that it’s very important for entrepreneurs to do their homework on investors in advance of pitching them. And to try & identify investors who will be receptive to their pitches. In that regard I think that there is a matchmaking kind of opportunity. I think the entrepreneur needs to do that though. I don’t think that there’s a lot of good intermediaries to do that for them. There are some but I think for the most part they’ve got to do their homework. They’ve got to figure out who are the most likely investors in their company. Then do their research on them & try to identify the individuals. Do a lot of pre-qualification before going for pitching.

Fred Wilson

Brilliant thank you, that’s really great pragmatic advice. In the dance with an entrepreneur both in the decision making process of funding a startup & then in working with those startups what are the necessary qualities that make a good venture capitalist. Some of the talents mentioned: Would you trust your gut instincts & feelings that happen within the relationship with the entrepreneur as signs about what’s happening in the business, in the startup? Or would you ‘manage by influence or persuasion?

I think about it a little differently. My feeling about what entrepreneurs need to find in investors. They need to find people who are as excited & enthusiastic about their business as they are. People who believe in the opportunity & are as excited about the possibilities. And are committed to the success of the venture. You don’t want someone who’s cynical & negative. You want someone who’s positive.

Fred Wilson

Yes, fantastic, that’s really great. Thank you again Fred for your time. I know it’s very precious & you’re very busy. I appreciate it. Bye

Jalak Jobanputra, Future Perfect Ventures: Women Startups & Venture Capitalists

I interviewed Jalak Jobanputra this week regarding women startups.  Jalak has over 16 years experience in venture capital, media and technology, most recently with the NYC Investment Fund. She spearheaded the formation of NYCSeed in 2008, a seed fund dedicated to funding early stage tech entrepreneurs in NYC. She was previously a principal at New Venture Partners, a $300 million early stage venture fund that incubated technology at corporate labs. Prior to that, she was at Intel Capital in Silicon Valley and was on the launch team of online financial information startup Horsesmouth in 1997, during which time she first discovered the NYC sample sale scene in Nolita. You can find her on Twitter and her blog NothingVentured.  

Transcript follows & the video is below. This is Part I of the interview. You can view Part II here.

What is your firm’s sweet spot, the type of startup in which you like to invest?

Well we do everything from early stage seed which usually means that there is some sort of prototype.  Not necessarily full revenue but some customers that are using the product or service.  And then go all the way to funding Series A & Series B which usually have some revenue but needs growth capital.  Currently invest in NYC & so by virtue of that we are currently looking at digital media, financial services, technology, advertising technology companies.  So its mainly technology companies.

Jalak Jobanputra

Do you see many women entrepreneurs/startups sourcing venture capital coming to you specifically?  What percentage do you find that are women startups that you fund?

I think by virtue of being one of the few female VCs out there, I end up attracting a lot of  women who are looking for funding.  And as more & more women start businesses where women are also the primary consumers of the technology or service, I think the number of women seeking venture capital is only going to accelerate.  And I’ve been seeing that happen over the course of even the past year, so I think that is very encouraging.  And it has a lot to do with the number of women who are using technology.  I wrote a piece in VentureBeat that was just published yesterday on the Evolution of the Online Fashion Industry ‘Fashion is the new black online’.  If you look at the number of startups who are creating the next generation of fashion & commerce, you’ll see that a lot of the founders are women.  So I’d say its still a small percentage but its only going to accelerate & I’m encouraged by that.

Jalak Jobanputra

I quote from a comment you left on Fred Wilson’s blog ‘There are many groups in NYC that I have been actively involved with that are encouraging more tech entrepreneurship amongst women in NYC, including Girls In Tech, Astia, Springboard, Women 2.0.  I have mentored, organized, moderated and participated on countless panels on the topic and have invited men (who make up a large percentage of my network) to attend but many do not. We need an inclusive conversation on the topic. One of them was held at Dogpatch and many of the 20 something male entrepreneurs there attended and commented that they found the conversation enlightening.’  What do you think needs to happen to encourage men to participate more fully with women in the entrepreneurial scene?  What have you found that works & what doesn’t?

I think there are 2 issues here.  One is general networking in the technology space.  That is happening organically as more women are starting businesses & going to these networking events & understanding that this is where you interact with other entrepreneurs & VCs.  That interaction is already starting to happen which is good.  So I go to New York Tech Meetup & while it is still predominantly male, I still see a lot of women who I know are looking for funding, attending these events & interacting with other entrepreneurs & VCs, so that’s happening.

I think there is another issue women & first time entrepreneurs in general being able to actually close on a deal & get venture funding.  I think there needs to be a realization that men & women are different.  There has been a lot of press recently & I have to say that my own experience verifies that women are more conservative a lot of times when putting together business plans. In my experience they often weigh the risks a lot more & so there’ll be more downside scenarios in their plans sometimes.  Or they don’t want to overcommit and VCs are used to seeing things through a certain lens in terms plans & doing their standard haircuts of the plans.  So I think there just needs to be more an understanding (& again you don’t want to overgeneralize) but there is some reality behind these real differences.  So those were the topics & conversations that I think that the men that were in attendance said they hadn’t really thought about before & found it interesting because why would they think about it otherwise they were hearing some extremely successful women there discussing it.

Jalak Jobanputra

So what works is education or more awareness about the differences that women bring to pitching for venture?

Yes the differences and recognition of what those differences are so that it doesn’t negatively impact them when they are out there looking for venture.

Jalak Jobanputra

What are some of the challenges you have had to face personally to be a female venture capitalist?  Is there a huge list?

I love the industry and I feel extremely fortunate to have found something that I love doing so much that most often it doesn’t feel like a job.  That’s first & foremost.  I think its always interesting to be the only one of anything in a room and there are times when I notice it & times I don’t.  But I am most often the only woman on a board and I do think I bring a different perspective, that’s being a woman & being a minority and there’s a whole set of experiences that I bring to the table & everybody brings their own.  But there’s not enough of me out there in terms of perspectives.  And often having to argue more for that perspective or recognize that I am going to have to sometimes work harder to get others to see that perspective but to me that’s a small price to pay for doing something that I love doing.

Jalak Jobanputra

And being a pathfinder, you’ve obviously got those qualities & abilities to break the ground for other women so that must also fire up your passion, I would imagine.

Absolutely, absolutely its the number of women from around the world who write me every day talking about that they heard me speak or they saw a clip or read something that inspired them.  Or I put them in touch with somebody who was helpful.  So to me that is a huge part of my work & what I can do to help encourage them.

Jalak Jobanputra

Tereza Nemessanyi: ‘xx combinator’ & Women Entrepreneurs

I was fortunate enough this week to interview Tereza Nemessanyi on ‘XX Combinator’ & Women Entrepreneurs.  This conversation started on Fred Wilson’s Blog where her idea about an alternative incubator that would be accessible to women & fathers who are unable to access Y Combinator to develop their startups.  Tereza is a CEO of a stealth venture, launching in August 2010 based in New York.  You can find Tereza on her Tumblr blog Twitter @TerezaN

Transcript follows & video below. 

I wanted to welcome you Tereza & just found it so stimulating & interesting the conversations that have been happening on Fred Wilson’s blog.  Obviously you have become a bit of a celebrity through your contribution which is incredibly generous.  Because you have kept it up, and so you are a better woman than me Gunga Din!  So I wanted to welcome you & get a bit of information about your businesses & what you are involved in at the moment?

Sure, I’ve got my fingers in a few pies. I’ve been very active in getting a new web & mobile startup off the ground.  It is as yet undisclosed, we’re going to be launching it in August.  It is in essence a mobile friends network where you can ask your friends for feedback.  Its in keeping with the mobile Q&A theme that has been flying around.  But it definitely has a female focus, as I think the inspiration behind it has a strong female thrust.  The  monetization model is lead generation & a social CRM for long tail local businesses.

Tereza Nemessanyi

And obviously you’ve had to source venture capital for this, is that correct?

Well I’ve been working on it & I’ve been doing so not terribly aggressively.  Because we have really been trying to follow the ultra light model. I decided to go after this particular opportunity because I had gotten to know it based on a different business that I was working on.  So I felt that I was walking in really understanding what the market opportunity was & if I were to reverse engineer a really killer social mobile solution for it what would it be? It was clear to me based on where the market was at that moment in time that no-one was funding concepts.  I’m an experienced business executive & I’ve done a ton of innovation, I’ve done startups but a long time ago so I’m not really on the map in the regular startup scene.  So it didn’t seem to me like the regular institutional folks were going to take a bet on me.  So I felt it was really imperative for me to define a mimimum viable product, get it out into the marketplace & let the marketplace do its talking. So that’s what I set out to do.  I ring fenced a little bit of my own money, I don’t have a lot. I created a budget & just started talking to a whole lot of developers.  I talked to 20 different developers.  I looked into possible partnerships, agency models, outsourcing & the whole gammit.  I made a decision at that time as to what seemed the best way to  go forward.  Now quite a bit further down the line I think it was the right decision for us.  I have since brought in a partner.  In the last few weeks I went out seeking some seed funding to just put some gas in the tank.
Today is my 40th birthday, ok, so I’ve been around the block.  What I found is that with a very little bit of money there is a humungous amount that we can get done because we’ve got great networks.  But it takes time & when you’re calling in favors you can’t put a deadline to it.  So the way I saw it whatever money we could get in the door will put gas in the tank & give us velocity to get our product to market.  So we are pretty close at this point, our web platform is almost done & we’re almost done with our first mobile application & that’s how we’re going to hit the market.  But its been interesting, as people that know me, like former bosses are super excited and say ‘Sure, Tereza, you’ve made us lots of money in the past, we’ll back you up!’  They’re not part of the standard scene so I’ve been trying to be selective about who we would talk to just in the spirit of pre-qualifying conversations.  If it doesn’t seem to be up someone’s alley, there are only 24hours in a day and I’m still trying to get this company off the ground. So I am trying to select these conversations carefully.

Tereza Nemessanyi

So I gather from that statement that you have been basically trying to match up your startup with potential sources of venture.  You are trying to find out whether those venture companies are interested in your business & whether it is their sweet spot?

Yeah, we are pre-launch & we are in essence a web consumer business so it seems that the investment hypothesis among the classic venture funds is get into market, show your traction & if you can hit a certain number of users, let’s just say 100,000 users then you are a great bet.

Tereza Nemessanyi

It’s an interesting policy that they’ve got to see whether or not you are a good bet before they risk their investment.  It’s an interesting piece as far as venture goes?

Well its clarifying, for sure.  I think then it highlights what your next challenges are.  What can you put out in the market with as little capital as you that is going to get enough traction to get the next level of attention.  And I do wonder & I think this is motivation behind the blog post that I wrote, the really early stage investing strikes me as an extremely visceral decision.  So we hear about pattern recognition in this industry and I get it. I understand it that, there’s a bit of ‘I know it when I see it’ with it especially in both consumer & B2B.  The investor wants to get their hands on a product & they want to fall in love with it.  They want to think that its the coolest thing!  I understand that & when you don’t match their pattern then it becomes a more mechanical decision than a visceral one.  I think that that mismatch is hard to bridge.  That’s my insight & I’m curious to know what other people think?

Tereza Nemessanyi

Thanks for that insight, I really appreciate your contribution.  I know that the Fred’s blog post featured your idea of xxcombinator.  Would you give me some further feedback & your vision & involvement with that, because a lot of people are just jumping up, clapping & applauding & it looks like something is going to happen.

I would love to see something happen. It started with a previous comment on Fred’s blog in which I expressed a little bit of frustration in a particular moment.  Fred asked me ‘Tereza, what is stressing you out about your startup right now’ & I went on a bit of a rant.  I was feeling frustrated that it has taken a long time for me to get from concept to market. And I have been watching the ycombinator from afar, for a long time & they so drive kind of the agenda of tech.  They have really redefined the market of the ultra light startup where you push something out to market really, really fast & you let the marketplace talk & see what happens.  They were as I understand, created for a pretty special case.  It tends to be very, very deep technical people, tend to be pretty young, they come full time or very active in the program on site for 3 months.  And with the demo day, its really the best people in the business are revolving around it.  It gets a ton of attention. When some people are affiliated with the ycombinator there is a real WOW about it.  In fact a while ago, I thought well I’m a swing for the fences person, let me look at it & see if I might apply for ycombinator.  Now I’ll say from the start that I’m not a coder, I’m not technical.  I have a ton of experience on the business building & innovation side but I am not technical.  So when I looked into it it said well you need to commit to relocating to San Francisco or Silicon Valley for 3 months.  I went oh well, at the time I have 2 1/2 year old & a 6 year old & I live in the suburbs of New York.  And there is absolutely no way I could relocate for 3 months – its completely impossible.  I said oh well too bad, I guess this program isn’t for me! And yet I yearn for that WOW factor & it just seems to me that that is a structural issue.  At the same time there are a lot more people like me that have some ideas could be brought to market that are not being served in the market.  It would be very beneficial to help them define what that minimum viable product would be, help them wire frame it & build something & get it out.  So my thought about what I coined the xxcombinator, which may or may not be the right name, would take the best of the ycombinator, would have that WOW factor, would have the best people revolving around it & would address some structural realities that are related to people who are not males in their early twenties.

Tereza Nemessanyi

So locking those people that can’t physically attend out, in other words?

Yes I think its a geographic thing.  Also I think its  a family status thing, if you’re a parent versus not. I got a lot of positive response from Dads which was really interesting.  If there are some that do get in, they are the types that get in.  And frankly we don’t have enough of those, I wish we did. And I think that that is an important population for us to me.  And I have to tell you I also got some really strong push back from some really deep women scientists/coders who don’t have children. Because they’re the types that do get into ycombinator.  If there are some that do get in, they are the types that get in.  And frankly we don’t have enough of those, I wish we did. And I think that that is an important population for us to support & foster, but I think that is a long term strategy.

Tereza Nemessanyi

Point taken.  Well I hope that the idea continues to move & becomes a reality in some shape or form because obviously there would be opportunities for people who are locked out of that situation to have further opportunities.  The mentoring & the networking would be a fantastic piece of that, I imagine.

Funding Support for Women

Recently at the end of a long trek attempting to pitch for funding, I discovered an organization that supports funding & mentors women, Astia.  I am only sorry that it was so late in my journey that I discovered them.  In UK & Ireland, I found there was an old boys club when I was sourcing funding.  I also found the UK to be a nation of what I termed ‘shop keepers’, having come from a background of manufacturing & trading tangible goods, they are risk averse to technology (more intangible) investments.  In Silicon Valley they like to fund locals so it is more like a ‘young boys club’.