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A new study published by professors at the Harvard Business School shows that angel-backed companies are more likely to succeed and show more growth than those funded by venture firms alone. Researched and written by William Kerr and Josh Lerner, the report found that companies with angel funding see between 30% and 50% higher growth figures in terms of website traffic, are more likely to survive for four years, and are also in a better position to receive further rounds of funding. Sponsor Angel investing itself has seen large growth over the last several months with the creation of various organizations, events, firms and legislation to spur it on. We've discussed the Open Angel Forum series of events, the creation of "Super Angel" firms , the curated Venture Hacks AngelList , as well as current legislation both helping and hurting angel investments. Angel investing has become more common, and as this report shows, this is largely due to the value and success it tends to breed. But why are angel investments the secret sauce for some companies? As the report points out, its the intangibles that angels bring to the table that could be playing a large role in company success. "Access to capital per se may not be the most important value-added that angel groups bring. Some of the 'softer' features, such as angels' mentoring or business contacts, may help new ventures the most," the report says. One of the other reasons that companies could tend to be more successful with angel funding is because of the human face placed on the investments. Angels are usually investing in companies at an early stage, and are investing their own capital in the company. Entrepreneurs may be more likely to work that extra bit harder when they know they are playing with the personal cash of an actual person, not the collected funds of an entire firm without a human name. The reputation of the angel could play a large role as well, both for the attitude of the people running the company, and for the audience they are looking to attract. Most angels tend to be successful entrepreneurs themselves, and thus are likely well known in the startup scene. The chance to sit and talk with these investors, let alone receiving funding from them, is likely a treat for most entrepreneurs, so they may be more likely to be more careful with their money. Additionally, when the public hears of a new startup that may not immediately interest them, the mention of particular angel investors can change their mind. As angel investors mature, they build their own personal portfolio of companies they noticed and provided early funds for, so when company XYZ launches with angel funding from an influential angel investor, that alone can attract people to the product. I know personally that I have looked into startups I otherwise would have largely ignored simply because an important angel investor was certain they'd be a hit. "Some of the 'softer' features, such as angels' mentoring or business contacts, may help new ventures the most." - Harvard Business School report Since some companies receive early financing rounds from angels, it is also logical to assume that when working with a limited amount of cash, the entrepreneurs may be more focused on doing more with less. A company that bursts out of the gate with large amounts of VC firm funding may spend it slightly more haphazardly, whereas a company running on limited angel funds may adopt leaner practices and take baby steps toward success and future funding. As the report mentioned above, the "softer" features provided by the angels are also a large help to the companies. In his email newsletter yesterday, angel investor Jason Calacanis discussed loyalty and how he goes to bat for the people who are loyal to him and his companies. He mentioned that whenever he invests in a company, he immediately becomes an evangelist for that company and it's founders, doing all he can to promote it. This may not be the same for all angels, but when influential investors like Jason get behind your company, they do their best to make sure good things happen. I would be interested to see similar data from this report that compares companies with solely angel funding versus those with more traditional VC firm funding mixed in. The influence of angel investors is significant, but I would think the angels alone are not enough to create more successful businesses at a higher rate. But the lesson here is, if your startup has the opportunity to include some angel investors (especially at the early stages), it would seem like a wise decision to go ahead with. Photo by Flickr user Brooke Anderson . Discuss
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Angel-Backed Companies More Likely to Succeed, Says Harvard Study
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Devver , maker of developer coding tools and TechStars 2008 graduate, announced last Monday that it would be shutting down after being active for nearly two years. News of a startup closing up shop is never a fun thing to hear about, but fortunately many lessons can be gleaned from the experiences of the entrepreneurs. Today, co-founder Ben Brinckerhoff provided just such lessons with an insightful blog on the Devver journey and why he and co-founder Dan Mayer are choosing to move on. Sponsor An unfortunate truth about startup culture is that a lot of the most valuable lessons are learned when entrepreneurs fail to heed them. Some notice their mistakes early on and can pivot their products and business toward a more successful future, but sometimes they don't realize their mistakes until its too late and there is nothing that can be done. This was the case with Brinckerhoff, Mayer and their startup, Devver, which they say failed to focus enough on one of the most important parts of building a startup: customer development. As Brinckerhoff points out in Monday's blog post, the company assumed they had found their minimum viable product (MVP), and as a result focused more on product development than listening to customers' needs. "You can teach a hacker business, but you can't make him or her get excited about it, which means it may not get the time or attention it deserves." - Ben Brinckerhoff "Our mistake at that point was to go 'heads down' and focus on building the accelerator while minimizing our contact with users and customers (after all, we knew how great it was and time spent talking to customers was time we could be hacking!)," writes Brinckerhoff. "We should have [been] asking, 'Is there an even simpler version of this product that we can deliver sooner to learn more about pricing, market size, and technical challenges?'." Both Brinckerhoff and his co-founder are "technical founders," which means their specialities are on the development side, not the business side. The only other person the pair hired to help out, a fellow software developer, also fits into the technical side of the startup. Brinckerhoff says this may have been one of the hurdles that led to the downfall of the company. "Looking back, it would have been to our advantage to have a third founder who really loved the business aspect of running a startup," writes Brinckerhoff. "Having solely technical founders is non-optimal. You can teach a hacker business, but you can't make him or her get excited about it, which means it may not get the time or attention it deserves." Brinckerhoff also adds that having a split team located in different states contributed to the company's struggles, but it seems to me it was more of a hassle than a reason for failure. Split teams are actually growing in popularity and probability for success, as we discussed earlier in the year with companies like Blank Label and chocri . Devver undoubtedly had issues with its split setup, but its likely that it didn't contribute toward its closing as significantly as the other errors. Regardless of this issue, its clear that the Devver team learned and shared some valuable lessons about the importance of customer development. As Steve Blank noted during his presentation at last week's Startup Lessons Learned conference, startups shouldn't be too eager to product management before customer development. Devver may have jumped the gun a bit in terms of over developing their product, so learn from their mistake and remember to develop your customers before throwing the kitchen sink at them. Discuss
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Learning From Failure: One Startup's Story of What Went Wrong
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Google just announced a nice addition to its Street View feature in Google Maps. Starting today, you will be able to see the names of local businesses as you move through a town in Street View. A click on one of these names will bring up the standard Google Maps business listing with the name of the business, hours, phone number, address and reviews. According to Google, these new "local business annotation" in Street View are the first step in the company's plans to enhance the discoverability of content in Street View. Sponsor As Stephane Lafon, one of the software engineers on Google's Street View team points out, Street View will currently only highlight the top listings for the immediate area around your current position in Street View. The company plans to extend this coverage with more listing soon. Google also plans to incorporate transit location in this feature. Bonus Tip: Street View in 3D Earlier this month, we noticed that Google still offered the 3D version of Street View it announced on April Fool's day. To see this, just right-click on any Street View image and select "3D mode on." Google is clearly working hard on highlighting local businesses across its properties. Google Maps already shows the names of local businesses once you zoom in close enough and last week, Google announced Google Places , a new version of its Local Business Center, which allows local retailers and restaurants to claim and update their own listings. In addition, Google is also taking pictures of the in and outside of local businesses around the U.S. Discuss
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Google Street View Now Highlights Local Businesses
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There are just two more weeks until the ReadWriteWeb Mobile Summit 2010 , so we invite you to register now . Be a part of high-value, intimate conversations with people working throughout the world of mobile, from garage developers to industry luminaries. The summit will take place May 7, 2010 , in Mountain View, California and will be an exploration of the latest mobile development trends, both the technology and the emerging business applications. We are looking forward to some amazing discussion and debate about mobile with participants like : Sponsor Deb Schultz of Altimeter group Patrick Chanezon, Don Dodge & Bob Meese of Google Ted Morgan of Skyhook Wireless Scott Raney and Tom Tunguz of Redpoint Ventures Adam Blum of Rhomobile Brady Forrest of O'Reilly Brent Simmons of Newsgator Technologies Patrick Burns of DASH7 Alliance As with our first event, the Real-Time Web Summit last October, the Mobile Summit will be in the "unconference" format. Laura Fittion, founder of oneforty.com , had these thoughts about ReadWriteWeb's last summit: "There were a lot of investors there and it was a great dialogue between startups and investors. The unconference format was great because it got away from the bogus who-is in the real-time Web, and made it who-wants-to-be. You didn't have to be big and influential to get your ideas across - if it was a good idea then it got heard. It wasn't just Twitter, it was many things real time, defined pretty expansively." How Unconferences Work What's an unconference all about? Here's the idea: Convene an incredible group of people, frame the discussion, ask important questions, then guide participants in building an agenda for the day to maximize the value of the event and minimize hot air. Martin Källström, CEO of the real-time blog and feed tracking service Twingly brought his team over from Sweden for our last event. " Last year we happened across one of Kaliya Hamlin's unconference events," he told us. "We spent a couple of hours there and it was an amazing experience. The unconference format is an amazing way for things to happen; it gets everyone to lower their defenses. By opening peoples' minds to 'this is about whatever we want it to be about", they look at how they can create value. " Or, as Google's Brett Slatkin said when using the elite FooCamp events as a way to explain the unconference format: "Foo-style [unconferencing is] always way better than talks." As with our previous event, the Mobile Summit will be facilitated by Kaliya Hamlin , who in our opinion is the best in the business at this style of event. We're using the same venue too, the beautiful Computer History Museum. Mobile was one of our top five trends last year and continues to undergo explosive growth , so our aim with this event is to help you navigate the opportunities. Get ready to explore, think and create the future of mobile! Because it will be you - the attendees - who ultimately set the agenda. You can begin adding your suggestions now. We will have two main tracks at this Summit, Development and Business . Here's a sample of some of the topics we'll explore in both of these tracks: Geo-location services - what can you do using location as a platform ? Commerce & Marketing - as more and more consumers use smartphones, how can businesses utilize this channel? Content, Publishing & Recommendations - the technologies and best practices. Mobile Social Networking - how to tap into communities on mobile devices. Internet of Things - the emerging opportunities from sensor and RFID data. Augmented Reality - the technology and business applications of AR. Native App vs. Browser Based - Including iPhone, Android, RIM, Palm, Windows Mobile and Symbian. If you're a company in the mobile Internet market, you may be interested in becoming a sponsor for this event. Please contact our COO Sean Ammirati for more information about sponsor packages. And a big thank-you to our current event sponsors: CallFire , WorldMate , Alcatel-Lucent and Ipevo . The ReadWriteWeb team is excited about our second event and we can't wait to discuss the opportunities in Mobile with you on May 7. You can find banners and logos to link to our event here , if you're so inclined. We hope to see you on May 7! Discuss
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2 More Weeks Until the ReadWriteWeb Mobile Summit - Register Today!
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SugarSync is one of several companies competing these days to benefit from the disruptions in the market created by the new ways that people organize and share information from the any number of devices they use in their day. That's a fundamental shift that is happening as people move beyond the desktop as a place to keep their documents, their media and their productivity applications. Sponsor Services like SugarSync serve in many ways as personal clouds that people use for their own work. They seem like plain vanilla services but that as well is the benefit the services provide. They are very simple to use. Data is automatically backed up to the cloud. SugarSync's latest hosting numbers are revealing as they demonstrate how much data people are storing online. SugarSync reports that in the past year, the amount of data added to the SugarSync data centers went from an average of 1 terabyte of data to 5 terabytes of information. In total, the company now hosts two petaybtes of information. What's fueling this growth? The customers may provide some clue. About 33 percent of customers are from outside the United States. Mobile devices are far more predominant outside the U.S. It makes sense tht people would need an alternative place to store infromation besides their smart phone or netbook. In light of the booming mobile device market, SugarSync, Dropbox and a host of other services are companies that seem like it would make most sense to develop mobile apps. That appears to be true. In the past 18 months, Sugar Sync has released apps for the Android, BlackBerry and iPad. Services like SugarSync show how the data we create will become part of a personal cloud network. These services lay the grounwork for a new generation of personal and business offerings that work with users to create data as a service opportunities. That's down the road a bit but people do want so share. And they want to share outside the borders of a social network. Personal clouds could be a means to do that. Discuss
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SugarSync: 2 Petabytes and Counting - Welcome to the Personal Cloud
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