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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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At last week’s F8 developers’ conference, Facebook CEO Mark Zuckerberg unveiled plans to offer “instant personalization” all over the web , a way for websites to become instantly more social. Without even signing in, sites gain access to publicly available Facebook information like your name, profile picture, friend list and more, in order to personalize your experience on the site. At launch, only three partner sites are offering this feature: Microsoft’s new Docs.com , Internet radio Pandora and user review site Yelp . You can opt-out of this experience if you like, but by default, you’re opted in. Sponsor These changes have raised concerns among privacy advocates and are even now being questioned by government officials like U.S. Senator Charles Schumer who is urging the Federal Trade Commission (FTC) to look into how social networks handle our private information. And yet… and yet …after spending the weekend on these “instantly personalized” sites, I have to admit…begrudgingly, mind you…that the experience itself is amazing. Online Music Gets Personal, Too Personal? Pandora’s Internet radio is a service I usually partake of via its mobile application on my iPhone, not its regular website. But after the launch of the newly personalized Pandora , I had to take a look. And it was worth it. I immediately discovered which of my friends had the same musical interests as I do. My editor, Richard MacManus, for example, is also a fan of The Killers! Who knew? And apparently, a whole bunch of friends are getting into MGMT now. But finding connections like these aren’t the only types of discoveries you can make here. As social media user extraordinaire Robert Scoble found out , you can easily discover your friends’ more embarrassing personal tastes too. Kenny G?, Scoble laughingly chides a co-worker after stumbling upon his decidedly unhipster musical interests. These are precisely the types of things we want to stay hidden. Kenny G, for instance. But also our secret obsession with that attractive actor or actress, our fondness for pictures of cute kitties, our forays into celebrity gossip sites when we have a reputation for being intelligent thinkers, our secret Star Wars addiction and so forth and so on. While there aren’t ” instantly personalized ” sites showing you all these types of interests just yet, believe me, there will be. If Facebook has its way (and guess what? It will), your real identity , not just the public parts you’ve willingly shared in the past, will be revealed to anyone and everyone unless you take action to opt-out. The Real You Can No Longer Be Hidden This is precisely as it should be, Facebook CEO Zuckberberg, more or less said. Earlier this year, he made statements regarding Facebook’s new openness, claiming that if he built the social network now, he would make a lot of the data housed there more public by default. This would reflect the current social norms, he said. But that’s not exactly true. Facebook isn’t reflecting social norms, it’s attempting to create them. That said, what an amazing creation it is. On Yelp, I can find the reviews my Facebook friends authored with just a click. I can see who else really digs that local sushi place. And I can do all this without going through the whole “re-friending” process that Web 2.0 sites have put me through in the past again and again. I’m there, my friends are there, and I didn’t have to do anything to make that happen. Frankly, it feels right. (Fellow ReadWriteWeb blogger Mike Melanson agrees .) A Minute on the Lips… But it’s oh so wrong, isn’t it? By giving into to Facebook’s vision for the web, we’re ceding control of our data, our likes, our interests, our “social graph” (aka who we know, who we friend) – everything – to one company. Historically , one very, very closed company . We’re definitely worried about the implications of that. You should be too. But in the meantime, like that calorie-rich dessert we know we shouldn’t eat, we’re sampling Facebook’s web and secretly savoring its deliciousness. Why does everything that’s so wrong have to feel so good? Blast you, Facebook. Blast you. Discuss
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Giving in to Facebook: A Weekend on the New "Instantly Personalized" Web (Op-Ed)
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Even though we have lots of tools to detect blog comment spam these days, spammers always tend to be one step ahead of our algorithms. While early blog spam was often posted by robots and easily detectable, today’s blog spammers are smarter. Instead of relying on robots, the team behind Automaticc ‘s Akismet spam filter reports that modern blog spam is often written by low-paid workers in India, South-East Asia and Turkey. Sponsor The “best written spam,” according to Akismet, comes from South-East Asia. As the Akismet team notes, SEO firms will often hire these low-paid workers and set them up to work out of Internet cafes and local universities. Akismet: “The ‘best written spam’ comes from South-East Asia.” Detecting Human-Posted Spam is Hard We have definitely seen this increase in human-posted spam here at ReadWriteWeb over the last two years or so. While early comment spam was easily detectable because it had nothing to do with the actual post, we now have to take a closer look at all the links our commenters use in their personal profiles in order to weed out the spammers. Often, comments that look perfectly legit will include a link to a Viagra or SEO site in the profile link. What About Regular Spam? Besides the rise of human-powered spam, traditional spam is still going strong as well. Akismet notes that “old-fashioned” pill, porn and malware spam still tends to originate from Eastern Europe and the Russian Federation. Spammers there still operate huge networks of malware-infected machines that run spambots. According to Akismet, the number of fake blog networks on services like Blogspot, Weebly, Tumblr, Ning and WordPress is also becoming more frequent and more highly organized. Instead of just abusing other people’s blogs, these spammers just create their own blog networks. Other forms of blog-related spam that are on the rise are auto-blog pingbacks from people using auto-blogging plugins ( mostly for WordPress sites), as well as hijacked blogs and wikis. From Porn and Pills to Pet Food and Roofing Akismet also notes that while early blog spammers used to focus on the traditional (and highly lucrative) niches around pornography, pills and malware, today’s spammers are often more interested in search engine optimization than hawking fake Viagra. Because of this, modern blog spam often includes links to “dentists, roofing and pet food.” Discuss
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The State of Web Spam: Human-Posted Spam is on the Rise
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North Carolina has asked online retailer Amazon.com to turn over the names and addresses of every customer who has made a purchase on the site since 2003 and what they bought. The N.C. Department of Revenue is making the request in an attempt to audit Amazon’s compliance with state sales and tax laws, according to a Reuters report. Amazon says revealing this data violates customer privacy and has filed a lawsuit to prevent having to turn over the records which hold the transaction details on 50 million purchases over a 7-year time frame. Sponsor Government Wants Names, Addresses and Purchase History In a lawsuit filed Monday in the U.S. District Court for the Western District of Washington, Amazon states that North Carolina has no need for the personal details of its customers – details which include full names, addresses and information about exactly what they purchased and when. The Internet retailer had already given the state information on what has been sold to N.C. residents, but in the form of anonymized data, which should be sufficient. North Carolina, in turn, is now threatening the retailer with contempt proceedings if they don’t hand over the requested records. The issue at hand, and likely the reason behind the request, has to do with N.C.’s sales tax laws. Amazon doesn’t maintain any offices or warehouses in the state, so they are not required by law to collect sales tax on purchases. However, last year, the state passed a law that required retailers like Amazon to collect tax in the state if they ran marketing affiliate programs, which Amazon does. Amazon responded by shutting down Amazon.com Associates in N.C., the referral program that allows website owners to advertise Amazon products via links, banners, widgets and embeddable “mini-stores” on their web sites and blogs. Despite the program’s shutdown, N.C. wants to find ways to collect back taxes on sales that took place before the law went into effect. Right to Privacy or Right to Tax? Amazon has already given the state order numbers, city, county, zip codes, transaction dates, prices and product codes for seven years worth of purchases – information routinely requested in audits like this. But asking for personally identifiable information goes too far, says the retailer. In the filing, Amazon says N.C.’s demands violate customers’ First Amendment rights, Washington state law and federal law. Now it will be up to a federal judge in Seattle to rule as to whether or not this demand is, in fact, illegal. Beth Stevenson, the N.C. Department of Revenue’s director of public affairs has not yet commented on the lawsuit Amazon filed saying the agency needed to review it first. Discuss
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Amazon Refuses North Carolina’s Demands for Customers’ Personal Data
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Email may be old fashioned, but it’s still where we spend a lot of our time online. Today Google announced that it’s webmail service Gmail is becoming all the richer with the inclusion of support for sending Google Calendar invitations inside the email composition window. In addition to being able to insert invitations, you can also cross reference your calendar availability with the availability of anyone included in your email thread that you have permission to see the Google Calendar for. It’s not a perfect system, but it’s pretty neat and it demonstrates the potential for building cool new features on top of our email inboxes. Sponsor Mashups and platforms are all about cross referencing multiple sources of data or functionality, as in this case: email plus calendar. We wrote earlier this Spring about a startup called Rapportive that cross references email and social media data about an email’s sender (see also competitor Etacts ) and earlier this month we discussed the incredible potential in Google’s announcement of a way to give developers secure access to the contents of your emails for analysis and the creation of innovative services. Yahoo has been calling this kind of approach Inbox 2.0 and has been working on it for more than two years. Here’s what we wrote in November, 2007 coverage of Yahoo’s vision – how do you think it’s worked out? ( Yahoo Says the Future Will Be Modeled on Facebook ) The social network of the future will be populated by the RSS feeds of the activities of your friends and your friends will be determined by email. The big players won’t put a major push into building a new social network. “It is much easier to extend an existing habit than to create a brand,” are the words Google’s Joe Krause. Your email account isn’t valuable because it’s got the email adresses of other people who could be solicited commercially – it’s valuable because it articulates who in the world is able to command your attention. It contains analyzable, direct communication between you and the people most important to you. [Yahoo's] Garlinghouse says that in the future email and IM will be prioritized depending on the importance to you of the people who send it to you. We’re not talking about the number of times people email you – we’re talking about the percentage of times you open those emails, the keywords used in them relative to your personal/work profile, there are metrics so crazy we can hardly imagine that are available for determining the importance of people in your life. In your email. Facebook’s people-search uses some similar math already. Various Ways Email Gets Innovated On Clearly there are all kinds of different levels of sophistication that can come with these sorts of developments. In fact, two plus years after Yahoo’s call to action, things still seem relatively elementary. Rapportive displays data uniquely well but Etacts displays more data. This new Google Calendar integration with Gmail offers some visibility into your and your contacts’ availability, but it doesn’t tell you what you’ve got scheduled at a given time. Etacts offers inferior invitation sending but has a whole set of reminder and follow up features that Gmail doesn’t offer natively. And Yahoo Mail more closely ties in Facebook than any other email, something millions of people are sure to enjoy. So while all the kids rant and rave about Twitter, Facebook, Augmented Reality, iPads and location based social networking, don’t let them deny: email can still be very exciting. Discuss
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Your Inbox as Platform: Google Calendar More Closely Integrated With Gmail
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