Stephanie Palmeri ’11Journal #1
Two weeks ago, I started my summer internship at NYC Seed, an early-stage venture capital firm that invests in seed-stage, technology entrepreneurs to foster economic growth and create the next generation of companies and new jobs in New York City. In addition to spending time on deal flow, evaluating potential investment opportunities, my responsibilities will also include supporting the participating companies in the first ever NYC SeedStart program, where five exciting start-ups will build a product and launch a company at the end of eight intensive weeks.
Both New York City and New York State have put together a number of initiatives to support entrepreneurship, particularly in the technology sector, after studies revealed that a lack of available funding for young start-ups contributes to the “valley of death” stage between technology maturity and company revenues (where many start-ups ultimately fail). I’m excited to spend my summer working on two initiatives (NYC Seed and NYC SeedStart 2010) that provide funding and mentorship to high-potential entrepreneurs whose ideas will spur the growth of the tech sector in New York.
On day one, I got settled into my desk at the 160 Varick Street business incubator, which is a collaboration between the New York City Economic Development Corporation (NYCEDC), the Polytechnic Institute of New York University (NYU-Poly), and Trinity Real Estate. It’s the first New York City-sponsored incubator, and is another part of NYC’s efforts to promote business innovation through entrepreneurial activity. I’m sitting among 35 companies that have created 110 jobs, hired approximately 250 freelancers and student interns, and raised more than $15 million in venture capital and angel funding since the incubator launched in July 2009. There’s a lot of great energy here.
My first week was a flurry of activity — getting up to speed on current investment opportunities, performing due diligence on a business-to-business (B2B) software opportunity, and meeting with entrepreneurs seeking funding — but it was nowhere near as busy or exciting as week two when we launched NYC SeedStart 2010. The five start-ups met for the first time on Monday to share their business ideas and give ten-minute pitches. The companies are operating in stealth mode until Demo Day on July 27, 2010, so I cannot share what they are working on publically in any detail today. However, I can say that the majority of the teams are engineers and technical leads, so I’m looking forward to researching market opportunities for their technology and building out their financial models as the weeks progress.
The launch of SeedStart also coincided with both New York Internet Week and the NYCEDC’s NYC Startup Exchange, which presented the results of NYCEDC’s survey to understand the needs and perceptions of New York City-based investors and start-ups. Together with the NYC SeedStart 2010 companies, I attended this public-private dialogue between city officials and members of the startup community. Respondents identified access to talent, financing, and markets as the three most important factors for success; from the discussion in the room, it became clear that attracting engineering talent to NYC is both a challenge and opportunity for the city, now that it has begun to address gaps in seed-level funding and companies are requiring more technical talent as they scale.
My first two weeks provided an excellent introduction to members of New York City’s start-up community, as well as the investors and city officials who are leading the drive to increase opportunities for entrepreneurs to succeed. I’m looking forward to taking a deeper dive into both the investment and the operational aspects of my internship in the weeks to come.
Journal #2
I’m one month into my internship with NYC Seed and SeedStart.
On the funding side, I look at anywhere from 10 – 20 applicants to the fund per week. Some of the entrepreneurs come directly to our website, while others are referred through various colleagues or we meet them at any number of meet-up networking events we regularly attend. In addition to reviewing business plans and financials provided by each company, we typically meet one-on-one with the founders of companies that may fit the fund’s objectives. If a sector or company is of interest, I’ll take a deeper dive and perform due diligence to prepare investment memos for our board. So far, I’ve looked at a number of interesting, scalable businesses including opportunities with software as a service (SaaS), enterprise mobility, crowd-sourcing, group buying, and double-sided networks.
SeedStart has been keeping me busy as well. I’ve begun to work closer with several of the teams, including Reducify, a company that provides electricity customers with insights on their monthly bills, and actionable steps to save money and reduce electricity usage. Although the founders have an environmental objective, they are also seeking to run a profitable business. I spent time with the team looking at their initial business model and target customers, then helped them identify alternative revenue opportunities and customers to expand their scope and their overall impact.
In addition to working with the teams on side projects, we have been hosting several weekly workshops featuring leaders from successful start-ups and the venture capital community here in NYC. Having the opportunity to talk to these individuals was priceless. A few highlights included:
Neal Goldman, Capital IQ Founder and Columbia Business School alum, talked about the importance of how to take “no” when fund-raising. Every no is an opportunity to improve and follow-up in the future with facts about your success. He suggests picking and maintaining laser focus on three metrics to improve over and over. For example, starting with 500 page views and then following up with an improvement of 5,000 in one month, then to 15,000 the following month.
Eric Paley, Managing Partner of Founders Collective, spoke about his experience starting Brontes Technologies after completing his MBA, and addressed how difficult it can be for first-timers to raise VC funding. One critical lesson he shared was the importance of, “Building your snowball of credibility,” by bringing together experts in your space. It’s important for founders to know their space. But, it’s also important to get others in the space excited about what you’re doing. He encourages companies to reach out to those in the industry who have some clout, and bring them on board — as team members, investors/board members, or advisers — to increase credibility.
Dwight Merriman, in discussing how he and Co-founder Kevin O’Connor originated the idea for DoubleClick, shared his counterintuitive observation — you can force innovation. While he and O’Connor wanted to start a company, they did not have a specific idea. Instead, they spent an entire summer brainstorming a list of trends and technology needs, and then looked for intersections between the two. By the end of the summer, the pair had 100 ideas that they whittled down to a list of three, eventually settling on the internet trend (it was 1995), and an insight. As with other new media (TV, etc.), in the past, advertising dollars would ramp up online. Recognizing that the volume of websites would fragment the market for advertisers, the team eventually developed the first online advertising network.
Journal #3
Our NYC SeedStart 2010 Demo Day was today. Here, the five SeedStart companies debuted to over 100 venture capitalists, angel investors, and strategics from the New York City, Boston, Philadelphia, and Washington, D.C. areas. The companies are: DataDog, Introspectr, Lexeem, Reducify, and Risktail.
Over the last eight weeks, I’ve had a very unique vantage point into the companies. I’ve gotten to know the teams both personally and professionally through workshops, practice pitches, dinners, pizza lunches (flashback to business school), brainstorming sessions, and working on ad-hoc projects on everything from market sizing, to revenue models, to budgeting needs, as the company grows. I contributed to the progression of their business models, helped their investor pitches evolve, and witnessed their products transform from ideas, to demos, to live betas.
Here’s an intro to the companies:
DataDog enables software developers and IT operations teams to discover and share insights about their IT data across team boundaries, and to run and scale their applications more efficiently and predictably. DataDog provides a consistent, consolidated view into IT data silos and promotes social interactions between development and operations teams.
Introspectr aggregates search across an individual’s personal accounts online. With Introspectr, users can quickly and easily find and share messages, links, documents, and photos from services like Facebook, Twitter, Flickr, and Gmail.
Lexeem is an online, social community where language translators contribute contextual translations to real-time, free requests from fellow translators and every-day users. The Lexeem community curates translations using a robust reputation and rating system. Lexeem plans to connect businesses and translation agencies to its freelance translators via a premium service model.
Reducify provides electricity customers with insights into their monthly bills and actionable steps to save money and reduce usage. Reducify tracks household energy usage through utility providers and breaks bills down to usage per appliance in order to identify areas for savings. Reducify also offers an appliance comparison-shopping tool that calculates the localized, lifetime cost associated with operating each appliance.
Risktail is a next generation platform for options analytics and risk management. Risktail’s dashboard includes advanced visualization tools for options portfolio back-testing, scenario analysis, and proprietary optimization algorithms. Risktail is a cloud-based solution that seamlessly integrates with third party data providers.
I’m thrilled that NYC Seed/SeedStart gave me the opportunity to work side-by-side with development teams after more than a year removed from the business/tech mix. As a whole, the group was represented by first time entrepreneurs and technologists — many of whom quit their day jobs upon acceptance to SeedStart to make their ideas a reality. The opportunity helped me recognize the value my MBA experience can bring to an emerging company, and provided a value perspective into the challenges faced by first time entrepreneurs. Access to mentorship and networks at this juncture is critical, and as SeedStart concludes, and I see the direct impact this has had on our five companies.
