Posted From: Joylent Blog

One of the things we are most proud of at Joyent is our history of helping fledging start-ups bootstrap themselves into a successful business.

A critical component of this is giving you the flexibility to “fail fast”. This means you can try a business plan, see if it catches on, adjust and react to market changes, and most importantly, gain traction and revenues before you ever need to seek funding. With a deal like the free Joyent Facebook Accelerators, we take care of the hosting infrastructure, Facebook provides you with a distribution channel and all you need to bring is the code.

Fred Wilson over at Union Square Ventures has an interesting post entitled Why Early Stage enture Investments Fail which proves the value of this flexibility.

Fred puts it this way:

So it’s pretty clear to me that most venture backed investments don’t fail because the business plan was flawed. In my experience at least 2/3 of all business plans we back are flawed. Most venture backed investments fail because the venture capital is used to scale the business before the correct business plan is discovered. That scale/burn rate becomes the cancer that kills the business.

And to prove it, he gives some nice statistics on companies that he has funded. He compares the performance of companies that were nimble enough to transform their business (aka the ones that failed fast) with the businesses that stuck to one plan and did not or could not ever adjust.

The lessons for this are simple:

• Keep all your costs variable
• Get traction before raising capital.

Using cloud computing as part of your infrastructure is one way to accomplish both of these goals.

Additional reading about failing fast and failing often at Early Stage VC

Vaynerchuk is crazy, but he has a point.

 Be yourself and be your brand.

http://digg.com/business_finance/Gary_Vaynerchuk_knows_marketing

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Seed funding has been challenging to track down, but maybe that's changing. Here's a list of programs designed not only to seed early growth, but provide expertise and inspiration to get you there.

The KTEC PIPELINE is an innovative new program, designed to identify talented and entrepreneurial Kansans, match them with best-in-class training, resources and mentors and encourage them to pursue a career as a technology entrepreneur in Kansas.

Kansas is the only state today that is systematically identifying their top technology talent and connecting them to become future leaders. The KTEC PIPELINE adds to KTEC's comprehensive technology program by ensuring the most important component to any successful economy - cadre of innovators that will lead the Kansas economy for generations to come

Deadline: Sept 10, 2008 Apply

Get up to $15,000 in seed funding for your new company, plus the chance to pitch to angel investors and venture capitalists at the end of the summer.

Only ten spots. TechStars takes only ten companies each summer. Last year more than 300 companies applied. Getting in is hard, and it means something special.
Seed funding. TechStars fills the startup funding gap by providing just enough capital to get your idea off the ground. Your new company receives up to $15,000 in seed funding.
Advice and Mentoring. TechStars fills the experience gap by bringing together the best and the brightest in one place and surrounding you with incredible proven mentors for the summer. With this much talent in one place you’ll get great advice on your product and strategy, thereby ensuring the best possible start for your new business.
Connections. TechStars companies get immeasurable benefits that come from introductions and connections to potential partners and customers. At the end of the summer, each company also has the opportunity to pitch during an investor event that we organize.
A great deal and a great co-founder. In exchange for the TechStars summer program, seed funding, advice, mentorship, connections, and investor demo day, TechStars receives a 5% equity stake in your new company. TechStars receives “founders stock” which is just like yours. We want to be thought of as an experienced and well connected co-founder so we have the same risk and reward system that you do. Learn more.

Deadline: March 31, 2008 Apply here

LaunchBox Digital, an early stage investment firm located in Washington, D.C., is focused on helping entrepreneurs get through those challenging early days by bringing capital, advice, and practical guidance to help early stage businesses succeed. We offer:

• Funding and administrative support to enable founders to focus their energy on developing a great product;
• Mentoring and advice from seasoned technology veterans who have created significant stakeholder value; and
• Access to strategic partners, angels, VCs and the press to take your business to a whole new level

LaunchBox Digital is a place for cutting-edge ideas and cutting-edge talent. It's a way to maximize your chances of success. We've structured LaunchBox Digital so that we win only if you win.

Deadline: March 14, 2008 Apply

Y Combinator does seed funding for startups. Seed funding is the earliest stage of venture funding. It pays your expenses while you're getting started.

Some companies may need no more than seed funding. Others will go through several rounds. There is no right answer; how much funding you need depends on the kind of company you start.

At Y Combinator, our goal is to get you through the first phase. This usually means: get you to the point where you've built something impressive enough to raise money on a larger scale. Then we introduce you to later stage investors—and in some cases even acquirers.

Deadline: April 2, 2008 Apply

Are you a hacker who has thought about one day starting a startup? Have you already started it? Then you're invited to a free, one-day startup school this April 19 at Stanford

Deadline: March 23, 2008 Apply

UPDATE: Found a Few more.

Startup Weekend is a intense 54 hour event bringing together brilliant tech minds (developers, designers, marketers, ect.) together to create a company from concept to launch! You can read more about what the event is here.

Next Events;

• Boulder II (March 21-23)
• Portland (May 23-25)
• Ann Arbor (June 20-22)

More of a competition, but notable! $50K in cash and $50K in Amazon Web Services, a potential investment offer from Amazon and participating VC's.

startFEST+DEMO

startFEST+DEMO is a social gathering with the aim to create relationships among growth-oriented entrepreneurs, innovative companies, and members from the investment community. This first event will introduce the Kansas City business community tostartPATH, a virtual incubator and social network helping entrepreneurs transform concepts into successful companies. In addition, 10 companies will be demonstrating their technology during this event. Fine beers from Boulevard will be provided, encouraging lively social interaction among attendees.

March 6, 2007 (6-9pm)

Boulevard Brewing Company
2501 Southwest Boulevard
Kansas City, MO 64108

Silicon Valley is undoubtedly the center of the startup world. The numbers can be staggering, with 75% of VCi returns coming from a 10 mile radius around Stanford. A good portion of the remaining VC returns come from the area around MIT. The rest of the country trails far far behind.

Stanford and MIT are certainly a large factor in this success, but it isn't the whole story.

Success From Failure

Counter intuitive as it may seem, acceptance of failure seems to be one of the larger contributors to this success. Most startups fail, 60-90% depending on who you ask, and this applies even in Silicon Vally. The community in Silicon Valley not only accepts this, they embrace it. Failing shows that you tried, as long as you worked hard, were quick on your feet, and honest, you could try again, possibly working with the same investors.

Examples in Failure

Failures can be small incremental concept and business plani failures, or they can be catastrophic crashes with investors, founders, and employees being pounded.

Concept Failure: Confinity was initially started to transfer money from Palm Pilot to Palm Pilot to pay for meals! What a ridiculous idea, it only worked on Palm Pilots it was solving a problem that no one really had. They got $3 Million in VC funds to exploit this market. Not much exists from the original idea, which focused around encryption on mobile devices, but they realized their mistake and reshaped into a industry killer.

Result: PayPal!

Total Failure: GovWorks.com WAS an attempt to make transactions with local government (tickets, drivers licenses, property tax)easy. Great idea, but the team had problems, the technology didn't work, and competitors moved faster. They failed completely and a
movie, Startup.com, details their fateful journey.

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Are you frustrated with trying to attract Angel investment? Do you ever perceive your discussions with angels to be a waste of time? Don't worry you are not alone! In fact many times entrepreneurs mistake an investors discussions for lack of interest when that couldn't be farther from the truth!

6. Don’t bootstrap and then raise VC. The VC will stress how much he admires your guts and determination (while secretly thinking “phew, glad I don’t have to do that”) but the current revenues won’t impact the valuation nearly as much as you think. You either get valued on your revenues or your plan, but the mix is hard. Bootstrap and then sell. With your own capital and that track record you are in the game.

7. Don’t trade equity for services. It's really just a VC round in disguise and the better vendors won’t do it (they don’t need to), so you get weak vendors who drop you when they get a cash deal. With some smaller, entrepreneurial services vendors, it's good to do cash plus an equity “kicker” as motivation - to get the best people. Whether this is onshore or offshore does not make any difference.

This seems really enticing at first, but you can give away lots of equity in little chunks. It also makes a huge mess and investors will balk at all of the random equity participants.

10. Learn how to juggle credit card offers. As long as you really do have revenue and just a working capital cash flow gap (between getting paid and payments you have to make) this is quite viable. You can keep getting those 0% intro offers and then swap around. It takes a bit of organization and effort, but it's the best free money out there. Then a few years later you can get a bank line of credit.

We should have a case study of this soon, Joe and Judy Roetheli of S&M NuTec bootstrapped of of the back of rotating credit cards for a long time, but it paid off with $150MM in revenues and a very healthy sales to MARS foods. Disclaimer: They do not recommend the credit card game out of hand, and it certainly seems like a way to max out your blood pressure.

Seed funding is hard to find, but maybe most effective in vetting new ideas.

Charles River Ventures has a program that looks interesting, but CRV is a venture firm and may have different objectives than a seed fund from angels. Y Combinator has a great program that is mostly a intense incubation boot camp, and a small shot in the arm financially ($20K). I think that we need more of this activity, especially with web driven technologies where sub $500k investment can go along way, and maybe be all that is needed.

Here's a great article from VentureBeat

When seed funding is better than Series A

By Carl Showalter 10.9.07

It’s surprising how often I meet with first-time entrepreneurs who tell me they need $5 million.

Not many companies need that amount in their first round of funding. Much of the time, what they need at the earliest stage is enough money to prove the concept and mitigate some initial risk. Often, what they require is seed funding, more on the order of
$250,000 or $500,000.

So why do entrepreneurs think they need so much money right out of the gate? Some seem to be attempting to finance their way to profitability, but more often than not they think they
need to ask for several million to get the attention of VCs. It’s become a bit of an urban legend: VCs won’t take an entrepreneur seriously if they ask for less than $5 million. That tall tale belongs in the archives with the one about how alligators live in the sewer system.

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Entrepreneurs often don't have the ideal office sitution, so you will often find them wherever wifi and beverages can be had.

Here's the top in KC. The Roasterie is the best IMHO, and is where you will find StartPathers.  The Roasterie is owned by Danny and Carla O'Neil, hotshots of the coffee world and fellow entrepreneurs.

 
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The Roasterie The is the default location, best seating, great coffee, and it is owned by a fellow entrepreneurs, Carla and Danny O'Neil 6223 Brookside Blvd Kansas City, MO 64113

Filling Station 2980 McGee Trafficway Kansas City, MO 64108

J P Wine and Coffee Bar 1526 Walnut St Coffee Girls 310 Southwest Blvd, Kansas City, MO 64108

Da Bronx Better than a coffee shop, great subs and pizza teamed with wifi makes for great working conditions, Bring headphones, its a bit rowdy. 3904 Bell St Kansas City, MO 64111

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