Since becoming the CEO of Skype last October, Tony Bates has overseen the launch of a Wi-Fi hotspot service, a partnership with Facebook that produced the social network’s first video chat feature, and a pending acquisition by Microsoft.
Though it didn’t make as many headlines, Skype also launched its formal education initiative under Bate’s leadership. Skype in the Classroom, a dedicated teacher network, came out of beta in March with about 4,000 teachers already signed up. It now has more than 15,000 teachers sharing more than 779 projects on the site.
Mashable recently asked Bates about Skype’s new education initiatives and the developing education technology space. Bates will also be speaking at Mashable’s Social Good Summit in September.
Q&A With Tony Bates, CEO of Skype
What does video chat have to do with education?
The education process is moving beyond the traditional classroom/lecture setting. More and more teachers are seeking tools and techniques to engage their classes and enrich their lessons. Video calling is one of these tools, as it removes barriers to communication and lets students move beyond the boundaries of their classrooms. With Skype video calling, teachers can provide their students with first-hand knowledge from experts around the world and with other classes who are studying the same subject halfway across the world.
Personally, have you ever learned something via Skype that you wouldn’t have been able to learn without it?
Absolutely. One of my first days at Skype, my anxiety about not having a desk phone was quickly erased after I had a Skype (video) call with an important partner. [It] would have taken months to arrange a face-to-face physical meeting. The immediacy of video contact allowed the two of us to understand each other better and that really cemented for me the power of Skype. Every day at Skype, I am able to connect with employees from around the world and engage with them on a level that just is not possible through a conference call or email. When I speak to an engineer in Stockholm, he is able to talk me through a new product he is working on. The amount of education, in the most basic sense of the word, I receive on a daily basis through Skype amazes me. The technology is one of the reasons I wanted to join Skype and am eager to get Skype into every classroom around the globe.
Do you think that there’s still a resistance from schools when it comes to incorporating technologies?
There is always a certain amount of resistance when people try to introduce new technologies and methods of communication in any setting. The biggest cause of this resistance is usually a lack of awareness about ease of use and concerns about costs.
More broadly speaking, what are some applications of technology in education that you’re excited about?
There are a number of different technologies and applications that are being used right now that I am very excited about. One Laptop Per Child is a visionary program that is leveraging technology to make an impact on a global scale. Additionally, Blackboard is a company that is using enterprise technology to find ways to benefit students and teachers. Khan Academy is a truly exciting new method of … reaching students in new and exciting ways. Coming from Cisco and understanding the benefit of enterprise-level technology, I am always encouraged to see the ways enterprise technologies can be leveraged for the classroom.
What changes would you like to see in the way that schools implement technology?
I think an open dialog between educators, administrators and school districts would go a long way in removing the obstacles that are traditionally faced in introducing a new technology into a school or classroom. Many of the technological solutions that are available to teachers right now can be easily and affordably implemented in almost any setting. By working with school districts to educate their decision makers on the technologies that are available to educators — and exactly how they will benefit — would go a long way in increasing the rate of adoption in schools.
Sunday, August 28, 2011
Education Tech: Skype's Vision for a More Connected Classroom
Monday, July 4, 2011
Five Lessons Olympic Athletes Can Teach Business Leaders - The Source - WSJ
British rowing athlete Greg Searle first won gold at the 1992 Barcelona Olympics with his brother Jonny. In the 1996 Atlanta Olympics he finished third in the coxless four event. After a fourth-place finish in Sydney in 2000 he retired from top-level rowing to concentrate on his career as a practice director of performance development consultancy, Lane4.
Now at the age of 39 he is back in exhaustive training to qualify for London 2012 and the chance to once again compete for Olympic gold.
He describes how the strategies used by elite athletes are very much the same employed by business leaders to compete at the very top.
1. Find a vision; set short term goals to achieve overall success.
I am in the midst of training for an Olympic comeback 20 years to the day after I won gold in 1992. Winning that medal is the compelling vision that sits above everything else. I was also inspired by London winning the games and I thought, “I want to be a part of that.”
I thought I still have the raw potential to be an athlete for the 2012 games so took the risk and started training again with that goal in mind. Another big part was imagining winning a gold medal 20 years after winning my first, which no one else has ever done.
However, the real work is to achieve smaller goals before that overall target is within reach, such as rowing 2,000 meters in six minutes on a rowing machine, performing well in trials, sticking painstakingly to my training program and getting enough rest. These day-to-day behaviors may sometimes be difficult—but because there is the compelling vision of competing at London 2012 Olympics, it provides the inspiration for the difficult things I need to do.
So many leaders talk about goals and talk about a vision but they don’t make it exciting, compelling or engaging enough for people to want to achieve it. The great leaders are the ones that can create that enthusiasm for long term success which drives everyday behaviors in their team.
Rowing on a machine is really tough, and in itself it isn’t exciting. What “is” exciting is knowing and seeing the benefit of the hard work once I get into the boat, or at the next training session.
2. Feedback is your best friend.
The difference now in British sport compared to when I first competed is astonishing. We have the chance to win several gold medals next year while in 1996 we only won just one.
The major difference is the amount of support we get from our coaching teams. This is an important point for businesses and their leaders as many companies don’t use the support function as well as they ought to.
I receive constant feedback measured against the goals that I set at the beginning of the year. Everything is meticulously measured: nutrition, psychology, and physiology, but it’s the personal feedback regarding my impact—how I behave around the team and influence them, as well as how I move the boat—that I receive from my coach and fellow athletes that is most valuable.
It’s not always the case that this has been done well. I remember on one occasion I received feedback that caused me to jump out of the boat, swim to the bank and say I would never row with that person again.
Now however, feedback is given in a much more sophisticated way and people are asked to comment on their own individual performance. The people who want to improve are ready to identify their weaknesses and ask others for constructive criticism.
In a corporate environment however, people can be reluctant to invite feedback because they are nervous about how they are going to be judged.
In sport, the higher the level you perform at, the greater the level of support. But in business the higher you are in an organization the less support you receive, or people will not offer feedback as they may be wary of you. You might employ someone outside the company who can give impartial feedback that might not otherwise be possible.
3. Unshakeable self-belief: Self-confidence versus self-esteem
When I came fourth in Sydney in 2000, I had the feeling that I had failed. I had to be helped to recognize that I hadn’t become a bad performer—or even a bad person—because I lost a race.
The respect you earn as a sportsman or in your career has been gained over the course of years. It’s important to remember that respect can’t be lost in the blink of an eye.
Many of you will have experienced the “school of hard knocks” and you must expect to lose as often as you win—maybe more. But you have to put those performances into context as steps toward the ultimate goal.
On an individual basis, self-esteem is deep lying and built upon successes and setbacks over the course of a lifetime. As such it will not be affected by things that happen day-to-day but will be swayed over longer periods of time.
Self-confidence however, is affected in the short-term by everyday events. Self confidence can afford to take a few knocks, but it’s vital to maintain self-esteem by reminding yourself of your successes in the past and that overall, your quality will shine through.
4. Controlling the controllable.
As a leader or a sportsman it’s important to be prepared by addressing the things that are within your control. There is so much out there that you think could be relevant to make you perform, but, the real trick is to recognize the things that will really make a difference and make them your focus.
After that, it is simply a case of controlling your reaction to everything else.
In my sport it is a case of moving the boat as fast as you can down your lane. What the other boats do in their lanes is their concern.
Any strategy needs to be based upon what we can do to make a difference to our performance to get the best result.
I must admit that in Sydney in 2000, I thought our boat was inferior to our competitors’ boats. I remember that I let my mind drift and think about other things that were beyond my control.
We came fourth. It was a lesson learned.
5. Recognizing pressure as a positive
I know that I can perform at my best when I am under pressure. I don’t necessarily like it. I still get racked with self-doubt and nerves—but I know when I am in that situation I have to accept that feeling as it produces the best from me.
It’s only halfway through the race that I realize I have found strength that I didn’t know was there.
In a business environment there are high pressure situations to be dealt with every day, but often that pressure can help you become focused, sharp and at your best. The key is to recognize the symptoms and embrace them. You have to reframe the situation so it ceases to be a threat and becomes an opportunity.
A vital coping strategy is to ensure you have other things in your life. I am a father with two kids. I can keep pressure in perspective. As I sit on the start line, I think about my daughter who was recently in her first swimming gala. When it comes to the Olympics, I will be in a boat with eight of my mates doing something that I have been doing for the last 20 years. I think that what I do isn’t tough compared to a 10 year-old facing the world and competing for the first time.
Greg Searle director of performance development at consultancy Lane4. He draws upon his commercial experience and elite sporting background to deliver programs in the fields of leadership and team development.
Thursday, May 19, 2011
How to Write a Business Plan for a Consulting Business | Inc.com
There are four key areas that you should focus on when developing a business plan for your consulting business.
By Darren Dahl | Apr 14, 2011
If you've found yourself holding a pink slip from your corporate employer or perhaps are just tired of the old 9 to 5 grind, one of the best ways to get back on your feet might be turning your experience and skills into a consulting gig since just about anyone who possesses specialized skills can hang out a shingle of their own. But before you do, you might want to consider taking the time to create a business plan for your new venture, which will not only help you map out the opportunities before you, but also the threats.
While business plans doesn't appeal to everyone, especially if you don't ever expect to raise capital for your business, it can be a critical factor in getting your business off the ground, says Jennifer Leake, a certified management consultant and founder of Consultants Gold, an online community dedicated to helping consultants run their ventures successfully.
That's why, as you get started, Leake offers the following tips for developing a plan:
- Write it! "Putting it on paper requires far more thought than just having it in your head," says Leake.
- Keep it simple so that you revisit it often—so don't make it too long or too complex, she warns.
- Spend the lion's share of your time defining your niche and why you are uniquely situated to serve it. "If you can't succinctly articulate what your business is selling, you'll never get people to buy," says Leake.
- Don't create your plan in a vacuum. "You'll develop a better business plan if you have feedback, and you'll be more likely to take action if you have accountability from mentors, coaches, or success partners," she says.
But crafting a business plan for your new consulting company doesn't mean you should stick to the average template you can find online, as you should spend your time focusing on the elements that most often make or break companies in your industry.
"Writing a business plan for a consulting firm sounds fairly straightforward because there are so many who call themselves 'consultants,' but it can be quite difficult for many reasons," says Michael Hermens, president of Finance Forward, a financial advisory firm in Dallas.
That's why Hermens says that you should focus on four key areas when fleshing out your business plan:1. Value Proposition
Answer this question: What is your specific value proposition?
"Thousands of ex-IT programmers are now 'Social Media Consultants,' " says Hermens. "What do you do that thousands of other people don't?"
The keys to building a solid value proposition are to give decision makers solace that they made the right decision, he says, which can be done in three ways: 1. Offer a service guarantee, 2. Build and take prospects through a well-defined methodology, or 3. Specialize so narrowly that it is easier to increase your stature. "The challenge with a guarantee is that larger firms don't normally purchase on that basis and smaller firms generally take a service guarantee as a tacit admittance of being mistake prone," says Hermens. "A well defined methodology or approach takes a while to build, but is well worth it for prospects who do not know you. Narrow focus helps potential consultants gain exposure, increased stature helps clients be satisfied with their hiring decision."Dig Deeper: Nobody Buys a Value Proposition
2. Target Market
Answer this question: What is the best target market for you, or do you hunt every potential client that might possibly need your services?
"Understanding your target market is the most difficult planning activity," says Hermens. But developing an understanding of the competitive landscape is crucial, particularly go-to-market and pricing strategies, as well as the specific problems that the industry or market segment is trying to solve. "Gaining insight into how companies in your industry go to market, the basis on which consulting firms compete, matters," he says. "In strategy consulting, it might be references of former clients or the published knowledge share that gets clients interested. In large IT deployments, it is probably the strength of the methodology. With forensic consulting, your name and personal credibility is a huge selling point." In other words, determining how you should go to market, how (or how much) you charge your clients, and your familiarity with specific industry jargon and problems the industry is trying to solve, are crucial in planning your consulting business, according to Hermens.
One approach offered by Beth Corson, founder of Your FundingKey Advisors, is to choose a few industries and then outline the size and type of businesses that you'd like to work within those industries. "Rather than the desperate approach of taking any client that comes along, be selective and create a clear road map of where you want to go," she says. "Several years from now, your client roster should be fairly close to the plan that you make now. By working with similar clients in a specific industry, your company creates a level of expertise that makes it easier to perform well and get new clients because you understand their unique challenges and how to overcome them."Dig Deeper: How to Define Your Target Market
3. Marketing
Answer these questions: How do you market your consulting business? What tactics do you employ to get in front of decision makers to evaluate your offering?
There's no question that in order to get your new consulting venture off the ground, you'll need to market your skills and experience to potential clients. That can be difficult, though, when you're a sole proprietor, since time spent marketing is time you're not billing for. While you can always hire an outside firm to help, your fledgling business might find the cost prohibitive. The answer, then, is to be creative in finding ways to promote your offering. One way to do that could be through landing public speaking engagements, which can be very effective at promoting your knowledge and point of view on your industry's challenges, says Hermens. Another option can be to partner with other companies that might offer complementary services to your own, a tact that may also help you build experience in new areas. But, at some point, you must develop your own client relationships independently if you want to keep your company growing.Dig Deeper: How to Promote Your Consulting Business
4. Employees
Answer these questions: If you have employees, what is the best way to deploy them, given the reality of project work? Do you plan to pay them hourly, by confirmed project, or salaried?
"The issue here is how do you leverage yourself to grow revenue?" says Hermens. "Consultants who develop their brand can write books and charge an hourly rate, but they still cannot serve two clients simultaneously. Leverage allows your consultancy to flourish as your company takes on more projects." The key, then, is to think about how you align revenue arrangements with employee compensation and how to pay employees to ensure they are available when you need them by asking yourself questions like: Do you pay a salary and risk a lull in projects? Or, perhaps you pay employees on a project basis, only when they work, risking their availability when you get a new contract? "The goal here is to align revenue with employees compensation in the beginning as your consultancy grows," says Hermens. "Once your business becomes large enough, put key people on a salary, with performance bonuses. They will stick with you, have learned your go-to-market strategy, and know your methodology inside and out."Dig Deeper: The New Rules of Employee Compensation
Tuesday, May 17, 2011
8 Tips for Nailing Your Next Startup Job Interview
While unemployment remains high, some sectors are hiring at a breakneck pace. New startups are cropping up in cities across the U.S., with hotspots emerging in New York, Chicago, Austin, Seattle and, of course, San Francisco and Silicon Valley. If you’ve been limiting your job search to more established companies, you might just be missing out. For every Twitter, Groupon and Zynga, there are dozens of smaller-stage companies emerging and hiring everyone from programmers to interns.
However, when it comes to hiring decisions, startups are a breed of their own. With their unique value systems, knowing a startup’s particular “fit” criteria can mean the difference between a second round of interviews and being shown the door. Equally important, of course, is understanding how well the startup fits you.
1. Why “Fit” Matters
Startups are for believers. This isn’t to say that Pollyannas abound at your average startup, but most folks are there to make a significant impact. This is true with regard to their own day-to-day roles as well as the impact that their company makes on the world at large. Startups like to disrupt markets and challenge Goliath-like competitors. Getting everyone on board is crucial to their success, and the wrong fit stands out like a red-shirted crew member in a Star Trek landing party.
Fit goes beyond merely finding believers, though. In larger companies, you can often avoid interactions with the office jerk, but the small size and fox hole mentality of a startup can turn a jerk into a real morale killer. Not surprisingly, startups are laser-focused on making sure the fit is right. When there are less than a dozen employees in a company, every one really matters. The challenge is that what constitutes fit varies from startup to startup. Some startups celebrate collaboration and autonomy, while others are manically focused on productivity or technical innovation.
And, of course, fit is a two-way street. It has to be right for you, as well. Find out as much as you can about the culture before you go in. Check out LinkedIn and sniff out info from people in your own network. Read reviews on sites like Glassdoor, but take these with a grain of salt. Company review sites can be a haven for the disgruntled and startups likely don’t have lots of ex-employees anyway. Ask pointed questions of managers and individual contributors and see how their answers line up. Don’t compromise any strongly held beliefs and don’t expect the startup to adapt to you either. If the fit is not right, be ready to walk away — buyer’s remorse of the career variety is the worst kind.
2. Getting Noticed
Once you have your sights set, the first thing to do is get on the radar. Startups’ focus on fit makes them a fairly incestuous lot. They tend to hire friends and former colleagues, so relationships really count. The best way to get noticed is not through the front door. Hop on LinkedIn and comb through your contacts. There’s a good chance that someone in your extended network knows someone who knows someone who can get you in touch directly. Take the burden off of your contact by making it clear you aren’t asking for a recommendation, only that they pass you along.
3. Spring Cleaning
While you’re mining your network, make sure your LinkedIn profile is current and nicely polished. A pretty resume template looks very “1997,” and many startups have a bias against those not taking advantage of what they consider superior tools. Besides, at some point, the decision maker is going to pour over your profile looking for someone who can provide an unsolicited reference. So make sure your skills and job history are current and your endorsements are strong.
Lastly, do yourself a favor and Google your own name before they do (and they certainly will). Make sure your online presence is the very best version of you. You don’t need to eliminate your personality, but that late night tweet or old spring break photo might be perceived unflattering.
4. Do Your Homework
Before your interview, find out who you will be meeting with. Get the names of your interviewers and research their backgrounds. You might even get lucky and know someone who has worked with them and can give you the inside scoop. When asking for feedback on a company or prospective manager, resist the temptation to send the easy email. Offer to buy a coffee instead. In a world where emails get forwarded fast, you’ll find people understandably reluctant to dish online. When candor matters, cappuccinos are currency. Even if you don’t have a direct connection, understanding your interviewers’ unique backgrounds can give you insights into how they think and what they are looking for.
When candor matters, cappuccinos are currency.
Preparation goes beyond the interviewers, though. Get to know the company’s products and get to know them well. Have pointed questions and suggestions written down and ready for discussion. Candidates who don’t bother to try a company’s products demonstrate an appalling lack of interest and are often shown the door.
5. Showing You Have What it Takes
Startups don’t want people who do what’s asked of them and little more. They want people who genuinely love what they do. Be ready to tell multiple stories about how you went above and beyond the call of duty. If you don’t have any examples in your work experience, create one as a side project. Taking on an extracurricular project shows passion, curiosity, and enthusiasm — characteristics that are incredibly attractive to startups. When interviewing engineers, my teams always look for “tinkerers” — engineers dabbling in Ruby on the side, or designers escaping their day-to-day template work with more exciting outside projects. Demonstrate that you’re more than a solid contributor and have all-star potential, and remember that showing is always more powerful than telling.
A close second to having initiative is being adaptable. In a world where terms like “fast failure” and “pivot” are celebrated, you have to be ready to flex. Startups change direction. Sometimes it’s simply a collection of tactics, but on occasion it’s the entire company strategy. Prove you’re not just tolerant of change, but actively embrace it. If you were a part of a new initiative at your previous employer, be ready to tell the story.
Startups also value candidates who are focused on what can be done, rather than on what cannot. This might sound obvious, but early stage startup teams in particular are focused on validating the appeal and market for their products. This requires rapid and repeated trial and error. What makes this possible is a culture that champions what can be done, and done quickly. Startup productivity comes to a grinding halt when the focus shifts from the possibilities to edge cases. Demonstrate your openness to new ideas and creative thinking, taking care to build on the ideas of others rather than tearing them down.
6. Tilt Your Scale Toward “Work”
Every company talks about valuing a work/life balance, but the fact of the matter is that most startups’ scales are weighted more heavily toward work. If your situation requires a predictable 9-to-5 schedule and 40 hours a week, a startup probably isn’t the right place for you. If you are accustomed to longer hours and the occasional night or weekend, that’s the kind of thing they want to know.
7. Beware of the Oncoming Bus
Take care when referring to your previous employers and managers. While your last manager might have indeed been incompetent, you’re not going to earn any points by throwing them under the bus. If you do, you’ll come across as jaded and start raising big, red “fit flags.” Find the positive in your previous gigs and, when pressed about why you are looking, retain a positive outlook. If the situation warrants it, by all means be candid, but don’t be petty. No one hires that guy.
8. Follow Up
Don’t disappear once you’ve left the interview. It’s important that you not only stay top-of-mind but also that you build your own personal momentum as a candidate. Get business cards or email addresses from your interviewers. For extra points, go beyond the mere thank-you note that expresses excitement about the opportunity and add something to the conversation. Flub an answer? This is your chance to fix it. Have an epiphany in the car afterward? Share it. Continue to demonstrate passion and interest and you’ll rise to the top.
Above all, the most important thing you can do is find out what the startup uniquely values, ensure it aligns with your own interests, and then demonstrate that you’re the perfect fit. Startup teams labor over hiring decisions heavily. The skills conversation takes about five minutes. The fit conversation? That one can take hours.
Monday, March 7, 2011
14 Creative Marketing Ideas For Small Business
Let’s face it, sometimes ideas are just hard to come by.
We are so overloaded with things to remember and things to do, that coming up with some newer ways to help promote our business can be challenging.
Over the past few weeks, I’ve jotted down some ideas that appealed to me.
Some I thought of myself, some I discovered through all of my surfing ventures of late.
14 Creative Marketing Ideas
1) Create a calendar to give away. If it applies, and the photos can relate to your business all the better. Of course, this calendar will have your business name and contact information on it!
2) Conduct a free clinic or seminar about a product or service that you offer. These can be webinars as well. They don’t have to be complicated, but they do need to be relevant.
3) Put together a marketing video. Google loves video. When it’s complete, upload it to YouTube and then embed it on your website, and where ever else you can think of.
4) Write an article about what you know and post it on your website, blog, other websites, everywhere! We all know more about something than someone else does, so promote yourself as an expert in that!
5) Write a press release and submit it to your local newspaper. There are also numerous websites that you can submit your press release to, and some of them are free.
6) Create an annual award for something and publicize it.
7) Join your Chamber of Commerce, mostly for the incredible networking opportunities that it will offer you, but also to show your sense of community.
9) Create a customer loyalty program.
10) Create a monthly newsletter and start an email marketing campaign.
11) Team up with a non-competing business to offer a promotional package.
12) If possible, loan your facility out for meetings and other events. This is a great way to spread the word locally about your business and what you can offer.
13) Spotlight a customer as Customer of the Month. Be sure to advertise this in numerous places.
14) Start a blog.
Friday, November 19, 2010
Startup Advice: Inside Tips From Expert Entrepreneurs
When the dot-com bubble burst in early 2000, many investors lost 80% to 90% of their net worth; some lost even more. The CEOs of those tech startups fared no better. Many companies that were once million dollar babies soon became the laughing stock of Wall Street. But, after a slow and deliberate crawl back to a state of equilibrium, the startup scene is thriving once again.
To gauge the pulse of today’s tech startup ecosystem, we spoke to a group of New York-based entrepreneurs and investors. We asked the CEOs of Learnvest, Roadify, Hunch, and HowAboutWe what it’s like to pitch, run and grow a company. We also asked angel investor David B. Lerner and seed-stage venture capitalist Brett Martin what they’re looking for when they evaluate a company.
How healthy do you think today’s tech startup ecosystem is? Are you a founder? Investor? Enthusiast? Let us know what you think in the comments section below.
More Business Resources from Mashable:
- 5 Lessons Madison Avenue Can Learn From Startups
- Why the Best Online Marketing May Be Headed Offline
- HOW TO: Get the Most From a Small Business Social Media Presence
- HOW TO: Run Location-Based Google Ads
- What’s the Value in a Brand Name?
Monday, August 16, 2010
'Super Angels' Alight
By PUI-WING TAM And SPENCER E. ANTE
Much of the venture-capital industry is undergoing a shakeout. But a growing
breed of start-up investors dubbed "super angels" is rapidly raising new
money-and ratcheting up competition with established venture capitalists in
the process.
Aydin Senkut, a former Google Inc. executive, plans to announce that he just
closed a $40 million super-angel fund from institutional investors and
wealthy individuals including hedge-fund manager Peter Thiel. His fund
follows a $20 million super-angel fund by start-up investor Ron Conway in
May and an $8.5 million fund from by former Google executive Chris Sacca in
June.
Meanwhile, former PayPal Inc. executive Dave McClure is raising a $30
million super-angel fund, according to a regulatory filing. And super-angel
investor Mike Maples, who raised a $33 million fund in 2008, is raising a
new $73.5 million fund, according to a regulatory filing.
Many super angels started out just as mere angels, wealthy current and
former Silicon Valley entrepreneurs and executives who invest their own
money in technology start-ups.
Aydin Senkut, in his office in Palo Alto, Calif., last week. plans to
announce a $40 million super-angel fund.
What elevates super angels into an unofficial upper class generally is the
magnetic effect their participation in a deal has on other investors-a main
reason entrepreneurs like to do business with them.
And for super angels, investing has evolved into something more than a
hobby. These players are now raising funds with outside money, investing
full time and competing with VCs.
While their funds tend to be small, super angels have had an outsize impact
on Silicon Valley. As many traditional venture capitalists retreated after
the tech bust last decade, super angels filled the gap, investing small
amounts of $25,000 to $1 million in dozens of new start-ups such as Facebook
Inc., Mint.com and Zynga Game Network Inc. Super angels also work with
established venture capitalists to bring them new deals.
As these micro-cap venture capitalists now raise their own funds-giving them
more ammunition to participate in later financing rounds of a start-up-they
are siphoning off more investment deals and fund-raising dollars from larger
venture firms.
Judith Elsea, a managing director at Weathergage Capital, a $250 million
fund-of-funds firm that invests in venture funds, says she recently invested
in Mr. Senkut's new super-angel fund and has also put money into Mr.
Maples's super-angel fund-at the expense of traditional venture funds.
"It's been pretty spotty" performance from regular venture funds, says Ms.
Elsea. So "we have material exposure to several of these [super angel]
managers."
Investing in super-angel funds can pose risks in that they typically invest
in far-less-proven start-ups than venture capitalists do. And unlike venture
capitalists, who have hundreds of millions to invest, super angels generally
don't have enough money to fully fund a company to fruition.
Still, super angels are increasingly jockeying with established venture
capitalists for stakes in start-ups. Geoff Yang, a venture capitalist at
Redpoint Ventures, which closed a $400 million fund earlier this year, says
his firm has been "squeezed" into a smaller ownership share in some
investments because super angels wanted a bigger slice of the deal. While
angels have brought many new start-ups to Redpoint's attention, "every
[venture capitalist] is trying to figure out what their strategy is" with
them, he says. "Are these guys friend or foe?"
Some start-up entrepreneurs say super angels have thrown them lifelines they
couldn't secure from venture capitalists. Ryan Howard, chief executive of
San Francisco online health-care start-up Practice Fusion Inc., says venture
firms turned him down in 2008. They "want no risk," he says.
Super angels wrote Mr. Howard checks for $25,000 to $100,000, so that he was
able to raise $1 million by early 2009. "Their network is mind-blowing,"
says Mr. Howard, whose firm raised a venture round from Morgenthaler
Ventures late last year.
The super-angel activity contrasts with the rest of the venture industry,
which is winnowing out after a decade of poor returns amid a lackluster
initial-public-offering market for start-ups. The number of active venture
firms is nearly one-third less than the 1,326 in 2000, according to research
firm VentureSource.
Super-angel Mr. McClure says he tends to make dozens of small start-up bets
and can comfortably make money if just a few of the start-ups are bought by
larger acquirers for less than $100 million.
In contrast, big venture funds-often sized at several hundred million
dollars and up-need bigger paydays to turn a profit on their huge funds.
"We have a whole different set of exit criteria," says Mr. McClure, whose
biggest exit to date is Mint.com, the financial website that Intuit
<http://online.wsj.com/public/quotes/main.html?type=djn&symbol=INTU> Inc.
bought late last year for $170 million.
Mr. Senkut, who has invested in more than 60 start-ups as an angel investor
since 2005, says he raised a super-angel fund because he wants to shift from
being a minority investor in start-ups to taking majority stakes more often.
With the new fund, the 40-year-old is growing from a one-man shop to a
larger operation by hiring two staffers.
Having seen 10 acquisitions of start-ups in his portfolio over the past
year-including Mint.com to Intuit and social search service Aardvark to
Google <http://online.wsj.com/public/quotes/main.html?type=djn&symbol=goog>
Inc. for $50 million in February-Mr. Senkut says he is exiting from his
start-ups three months to three years after the initial investment. By
contrast, most venture-backed companies now either go public or get sold
after a median time of 9.4 years, according to VentureSource.
Write to Pui-Wing Tam at pui-wing.tam@wsj.com