This is a working list so if you know of any startups that should be added please email me at jonahlupton@gmail.com or message me on Twitter at @jonahlupton
Category Archives: Uncategorized
Boston’s Top Angel-Backed Startups
This is a working list so if you know of any startups that should be added please email me at jonahlupton@gmail.com or message me on Twitter at @jonahlupton
7 Things Every Young Entrepreneur Can Learn from ‘Shark Tank’
written by Jonah Lupton for… YoungEntrepreneur.com and @YoungTrep
When ABC’s Shark Tank debuted 3 years ago it quickly became a favorite show for millions of viewers across the country. This inspiring reality show exemplifies why America is so remarkable and proves that Entrepreneurship is still thriving. Everyday millions of people wake up to pursue their dreams and passions but many of these Young Entrepreneurs quickly realize their businesses need capital to get started, survive and/or accelerate growth.
Shark Tank gives these aspiring Entrepreneurs the opportunity to pitch their business to a panel of 5 very successful and wealthy investors, all of whom have built massive companies. We have witnessed dozens of Entrepreneurs plead with the Sharks for an investment, sometimes striking a deal and other times walking out with nothing.
Below are some of the lessons I believe every Entrepreneur can learn from the Shark Tank:
- Show the passion – Whether you are pitching to investors, talking to customers, or riding the elevator with some random stranger, the passion for your company should be evident. To become successful you better love what you’re doing otherwise it won’t keep you going when times get tough. Very rarely do Entrepreneurs leave the Shark Tank with an investment if they haven’t exhibited passion for their product or service.
- Demonstrate some hustle – A consistent characteristic in every Entrepreneur is the ability to execute. Whether you’re building a product or going after new customers, prove that you can get things done. Don’t approach investors or enter the Shark Tank until you have shown a knack for creating value and the willingness to go the extra mile.
- Have a strong team – I’m not saying that solo-founder companies can’t be successful but I guarantee investors will always prefer a cohesive team consisting of hard-working individuals with complimentary skills. If you’re an entrepreneur without an extensive background and cannot find the right co-founder, then surround yourself with great mentors and create an advisory board of knowledgeable & reliable business professionals.
- Know your pitch – Doesn’t matter if you’re in the Shark Tank, at a cocktail party or sitting in the airport, you never know who you might run into and whether they might become a valuable asset to your business. You should always be able to explain what your company does in under 3 minutes and have the confidence to answer any questions. To have an effective and memorable pitch, be able to explain the problems your company is going to solve, how you’re going to solve them, the core competencies of your team and the value you’re bringing to the market.
- Nice to have vs. Need to have – If you think about the most successful companies ever built, the overwhelming majority of them created products and services that were “need to have”. Every Entrepreneur should honestly ask themselves this question before investing their precious time, energy and money into a new idea. On the Shark Tank, this point is brought up quite frequently because it’s extremely hard to build a big business based on something that’s only “nice to have”.
- Have a plan – I’ve never been a huge advocate for creating massive business plans because once you get started and things begin evolving, your fancy 50-page business plan becomes a useless stack of papers. However, I do recommend having an executive summary, business outline, market analysis, financial projections, investor presentation and marketing strategy. In the Shark Tank I’ve never seen an Entrepreneur whip out a business plan but you can usually tell who came prepared, did their research and methodically strategized about every little relevant detail.
- Is your business scalable – One of the reasons we’ve seen internet companies, consumer web startups and mobile apps explode in the last few years with users and investors is because they’re easier models to scale than other businesses like manufacturing, food & beverage, retail, healthcare, etc. Leveraging the internet and mobile devices not only requires less capital but the ability to reach billions of potential customers every minute of every day. If you’re building a more traditional business, you’ll need to be mindful of the additional fixed and variable expenses, how your cost structure will be affected once you try to scale and the ability to keep operating margins strong and profitable.
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Jonah Lupton is a serial entrepreneur, advisor and investor. He is the founder of Cauzly.com, a new social fundraising & crowdfunding platform. Jonah is also the founder of NextGen Leaders Council, Inspired Futures Foundation, Parabolic Ventures and InterCapital Group. You can connect with Jonah at http://twitter.com/jonahlupton or http://facebook.com/jclupton
8 P’s of Successful Entrepreneurs
As I spend most of my days working with or speaking to different Entrepreneurs, from the 19-year old college student coding in their dorm room to the 65-year old entrepreneur jet-setting around the world. One of the questions that always pops up is “how or why did they become a successful?” Although I could easily spend the next 25 pages dissecting this question for sake of this blog post I’m going to highlight the “The 8 P’s of Successful Entrepreneurs”
- Passion – this one too obvious not to mention first, because 99% of successful Entrepreneurs are overflowing with Passion for whatever project or venture they’re working on. Whether they’re building a technology company, starting a retail store or launching a pet care business, within 5 minutes of speaking to them you should hear the passion in their voice. They typically live, breathe and sleep whatever their passion is (for better or worse).
- Persistence – some successful Entrepreneurs are insanely gifted or incredibly lucky and may never hear the word “no”, but that’s not typical. Most Entrepreneurs as they built their company were constantly bombarded with hardships, rejections and utter disappointments but that never stopped them from pursuing their dreams. I’ve always said “if it was easy, everyone would be doing it” and couldn’t be any more true than it is for Entrepreneurs.
- Perspective – this can be learned and improved upon over time, as I personally continue to do in my own life. Perspective is critical for long-term success and happiness and not just applicable to entrepreneurs. Regardless of your profession, your age, your ambitions, etc, the ability to step back and have the proper, well-balanced perspective of your life, your business and your family will greatly increase your chances of being a successful entrepreneur. For many years I only focused on my career and it eventually made me miserable. In early 2011, I decided to leave behind my 10-year career in wealth management, and 6-months ago I began spending considerably more time with my family and as I result of both these decisions I have never been happier but it took Perspective for me to appreciate these decisions.
- Perfection – this may seem like an overwhelming trait to include but when I’m looking to invest in an Entrepreneur it needs to be there on some level and I would presume most successful entrepreneurs would consider themselves a perfectionist. I’m not saying I expect an Entrepreneur to be perfect, because that’s not only unreasonable but probably impossible. However it’s quite fair to expect an Entrepreneur to strive for perfection, so even if they only get 90% of the way there, they’ve still done a damn good job and should be proud of themselves.
- Potential –every successful entrepreneur had potential and they found a way to capitalize on it. On the surface these individuals may seem perfect, polished and untouchable but that doesn’t mean there’s not room for improvement. Even Bill Gates after building Microsoft into a $200 billion company still had weaknesses and areas of potential improvement. This is why entrepreneurs build advisory boards in addition to a formal Board of Directors, because they want to become better leaders, they want to reach their potential.
- Pressure – can you handle it?? (because not everyone can). Throughout my career I have found the most successful entrepreneurs have a knack of excelling under pressure. Whether they learned it or were both with it, the ability to conquer difficult situations is an enviable characteristic. Whether you’re facing a tight deadline with a Business Partner, an issue with a large client, or some financial hurdle with investors, at some point your company’s future may hinge on the ability to make quick & confident decisions.
- Place – I know this isn’t a characteristic like the ones above but I felt it was still worth adding to the list. There’s been much debate over where is the best place to build a company. The West Coast gets a lot of attention because of dozens of incredible success stories but the East Coast and other metropolitan areas of the U.S. also have large entrepreneurial communities and support systems just as strong. Entrepreneurs should focus on the necessary resources, advisory community, coworking spaces, accelerator/incubator programs and employee talent required to successfully build their company. Thanks to advancements in technology and communication devices, I don’t think the Place matters as much now as it did 15 years ago.
- Personality – this trait can be overlooked but in my opinion personality is a great indicator of future success. I’m sure we all know successful people who are absolute jerks but honestly I think they’re in the minority. Personality may not matter when trying to attract investors but it will be when you are trying to attract and retain great employees. Nobody wants a boss who is constantly screaming at them, despite how much you might pay them or give them in stock options. Startups and high-growth companies already create stressful environments so the boss must learn to control their emotions and treat others with respect. Think about the top 25 Entrepreneurs in the U.S., these are people you would love to spend a day with because they genuinely seem like nice people, this is not a coincidence.
Best wishes on becoming the next successful Entrepreneur.
Boston’s Top Venture Backed Startups/Companies
- Runkeeper (@runkeeper)
- SessionM (@sessionm)
- Wayfair (@wayfair)
- Hubspot (@hubspot)
- Gemvara (@gemvara)
- Boundless Learning (@goboundless)
- IdeaPaint (@ideapaint)
- Basho Technologies (@basho)
- Adelphic Mobile (@adelphicmobile)
- VisualIQ (@visualiq)
- DataXu (@dataxu)
- Black Duck Software (@black_duck_sw)
- Rapid7 (@rapid7)
- Gazelle (@gazelle_com)
- Visible Measures (@visiblemeasures)
- Zmags (@zmags)
- Backupify (@backupify)
- GrabCAD (@grabcad)
- Crimson Hexagon (@crimsonhexagon)
- Crashlytics (@crashlytics)
- Aveksa (@aveksa)
- BostInnovation (@bostinnovation)
- Viximo (@viximo)
- SCVNGR (@scvngr)
- Vimeo (@vimeo)
- Rue La La (@ruelala)
- Bullhorn (@bullhornlive)
- Acquia (@acquia)
- PatientKeeper (@patientkeeper)
- Tauntr Media (@tauntr)
- Gather (@gather_news)
- Care.com (@caredotcom)
- Scanscout (@scanscout)
- Veracode (@veracode)
- Swap.com (@swap)
- Actifio (@actifio)
- CustomMade (@custommade)
- Ginger.io (@ginger_io)
- ChoiceStream (@choicestream)
- PowerInbox (@powerinbox)
- Kinvey (@kinvey)
- Jumptap (@jumptap)
- Shareaholic (@shareaholic)
- Nanigans (@nanigans)
- Apperian (@apperian)
- Nasuni (@nasuni)
- Exagrid Systems (@exagrid)
- Tracelytics (@tracelytics)
- Digital Lumens (@digitallumens)
- Mocospace (@mocospace)
- CampusLive (@campuslive)
- Daily Grommet (@dailygrommet)
- WordStream (@wordstream)
- InsightSquared (@insightsquared)
- ThredUp (@thredup)
- TurningArt (@turningart)
- Cardstar (@mycardstar)
- Smarterer (@smarterer)
- Linkable Networks (@linkables)
- Locu (@locuinc)
- Perkstreet Financial (@perkstreet)
- Smart Destinations (@gocitycard)
- WiTricity (@witricity)
- Vanu
- Quanterix
- Dataupia
- ClickFuel (@clickfuel)
- Cloudant (@cloudant)
- OrderMotion (@ordermotion)
- Sand9
Appreciate the important people in your life
My friend shared this story on Facebook today and since it made my eyes tear up I figured it was certainly worth sharing with others…
Married or not you should read this…
“When I got home that night as my wife served dinner, I held her hand and said, I’ve got something to tell you. She sat down and ate quietly. Again I observed the hurt in her eyes.
Suddenly I didn’t know how to open my mouth. But I had to let her know what I was thinking. I want a divorce. I raised the topic calmly. She didn’t seem to be annoyed by my words, instead she asked me softly, why?
I avoided her question. This made her angry. She threw away the chopsticks and shouted at me, you are not a man! That night, we didn’t talk to each other. She was weeping. I knew she wanted to find out what had happened to our marriage. But I could hardly give her a satisfactory answer; she had lost my heart to Jane. I didn’t love her anymore. I just pitied her!
With a deep sense of guilt, I drafted a divorce agreement which stated that she could own our house, our car, and 30% stake of my company. She glanced at it and then tore it into pieces. The woman who had spent ten years of her life with me had become a stranger. I felt sorry for her wasted time, resources and energy but I could not take back what I had said for I loved Jane so dearly. Finally she cried loudly in front of me, which was what I had expected to see. To me her cry was actually a kind of release. The idea of divorce which had obsessed me for several weeks seemed to be firmer and clearer now.
The next day, I came back home very late and found her writing something at the table. I didn’t have supper but went straight to sleep and fell asleep very fast because I was tired after an eventful day with Jane. When I woke up, she was still there at the table writing. I just did not care so I turned over and was asleep again.
In the morning she presented her divorce conditions: she didn’t want anything from me, but needed a month’s notice before the divorce. She requested that in that one month we both struggle to live as normal a life as possible. Her reasons were simple: our son had his exams in a month’s time and she didn’t want to disrupt him with our broken marriage.
This was agreeable to me. But she had something more, she asked me to recall how I had carried her into out bridal room on our wedding day. She requested that every day for the month’s duration I carry her out of our bedroom to the front door ever morning. I thought she was going crazy. Just to make our last days together bearable I accepted her odd request.
I told Jane about my wife’s divorce conditions. . She laughed loudly and thought it was absurd. No matter what tricks she applies, she has to face the divorce, she said scornfully.
My wife and I hadn’t had any body contact since my divorce intention was explicitly expressed. So when I carried her out on the first day, we both appeared clumsy. Our son clapped behind us, daddy is holding mommy in his arms. His words brought me a sense of pain. From the bedroom to the sitting room, then to the door, I walked over ten meters with her in my arms. She closed her eyes and said softly; don’t tell our son about the divorce. I nodded, feeling somewhat upset. I put her down outside the door. She went to wait for the bus to work. I drove alone to the office.
On the second day, both of us acted much more easily. She leaned on my chest. I could smell the fragrance of her blouse. I realized that I hadn’t looked at this woman carefully for a long time. I realized she was not young any more. There were fine wrinkles on her face, her hair was graying! Our marriage had taken its toll on her. For a minute I wondered what I had done to her.
On the fourth day, when I lifted her up, I felt a sense of intimacy returning. This was the woman who had given ten years of her life to me. On the fifth and sixth day, I realized that our sense of intimacy was growing again. I didn’t tell Jane about this. It became easier to carry her as the month slipped by. Perhaps the everyday workout made me stronger.
She was choosing what to wear one morning. She tried on quite a few dresses but could not find a suitable one. Then she sighed, all my dresses have grown bigger. I suddenly realized that she had grown so thin, that was the reason why I could carry her more easily.
Suddenly it hit me… she had buried so much pain and bitterness in her heart. Subconsciously I reached out and touched her head.
Our son came in at the moment and said, Dad, it’s time to carry mom out. To him, seeing his father carrying his mother out had become an essential part of his life. My wife gestured to our son to come closer and hugged him tightly. I turned my face away because I was afraid I might change my mind at this last minute. I then held her in my arms, walking from the bedroom, through the sitting room, to the hallway. Her hand surrounded my neck softly and naturally. I held her body tightly; it was just like our wedding day.
But her much lighter weight made me sad. On the last day, when I held her in my arms I could hardly move a step. Our son had gone to school. I held her tightly and said, I hadn’t noticed that our life lacked intimacy. I drove to office…. jumped out of the car swiftly without locking the door. I was afraid any delay would make me change my mind…I walked upstairs. Jane opened the door and I said to her, Sorry, Jane, I do not want the divorce anymore.
She looked at me, astonished, and then touched my forehead. Do you have a fever? She said. I moved her hand off my head. Sorry, Jane, I said, I won’t divorce. My marriage life was boring probably because she and I didn’t value the details of our lives, not because we didn’t love each other anymore. Now I realize that since I carried her into my home on our wedding day I am supposed to hold her until death do us apart. Jane seemed to suddenly wake up. She gave me a loud slap and then slammed the door and burst into tears. I walked downstairs and drove away. At the floral shop on the way, I ordered a bouquet of flowers for my wife. The salesgirl asked me what to write on the card. I smiled and wrote, I’ll carry you out every morning until death do us apart.
That evening I arrived home, flowers in my hands, a smile on my face, I run up stairs, only to find my wife in the bed -dead. My wife had been fighting CANCER for months and I was so busy with Jane to even notice. She knew that she would die soon and she wanted to save me from the whatever negative reaction from our son, in case we push through with the divorce.— At least, in the eyes of our son—- I’m a loving husband….
The small details of your lives are what really matter in a relationship. It is not the mansion, the car, property, the money in the bank. These create an environment conducive for happiness but cannot give happiness in themselves.
So find time to be your spouse’s friend and do those little things for each other that build intimacy. Do have a real happy marriage!
If you don’t share this, nothing will happen to you.
If you do, you just might save a marriage. Many of life’s failures are people who did not realize how close they were to success when they gave up….
Top 30 Fundraising Consultants
WHO SHOULD YOU HIRE TO HELP YOUR NONPROFIT ORGANIZATION RAISE FUNDS?
by: Michael Chatman (@MichaelChatman) - http://www.michaelchatman.com
1. Jon Duschinsky - www.bethechange.fr/node/35
2. Penelope Burk - www.cygresearch.com
3. Adrian Sargeant - www.studyfundraising.com
4. Howard Stevenson - www.gettingtogiving-fundraising.com
5. Jerold Panas - www.jeroldpanas.com
6. Tom Ahern - www.aherncomm.com
7. Diane Remin - www.majordonors.com
8. Nell Edgington - www.socialvelocity.net
9. Gail Perry - www.gailperry.com
10. Leslie Crutchfield - www.fsg.org
11. Karla A. Williams - http://bit.ly/yrcL2T
12. Simone Joyaux - www.simonejoyaux.com
13. Gordon Jay Frost - www.fundraisinginfo.com
14. Larry C. Johnson, CFRE - www.megraceassociates.com
15. Kris Putnam-Walkerly - www.putnamcic.com
16. Peter Drury - www.dzostrategists.com
17. Penelope Cagney - www.thecagneycompany.com
18. Sandy Rees - www.getfullyfunded.com
19. Lori Jacobwith - www.lorijacobwith.com
20. Tony Martignetti - www.mpgadv.com
21. Ian Adair - www.re-fundraising.com
22. Tammy Zonker - www.tammyzonker.com
23. Ted Hart - www.P2Fundraising.org
24. Tania Little - www.ideatephilanthropy.com
25. Pamela Grow - www.pamelagrow.com
26. Michael Rosen - www.mlinnovations.com
27. Amy Eisenstein - www.tripointfundraising.com
28. Marc Pitman - www.fundraisingcoach.com
29. Andrea Kihlstedt - www.askingmatters.com
30. Val Porter - http://atlantablog.foundationcenter.org/
10 M&A Predictions for 2012
Here are 10 Bold but very possible predictions for 2012…please feel free to add some comments or your own predictions. In April, I’ll reevaluate and possibly make a few changes or add some new predictions.
1. Microsoft buys Twitter
2. Apple buys Spotify
3. Facebook (post IPO) buys Yahoo
4. Ebay buys Airbnb
5. Google buys Square
6. HP buys Dropbox
7. Samsung buys Blackberry
8. Comcast buys Netflix
9. Salesforce buys Hubspot
10. EMC buys Box.net
Some Good Quotes
- You can’t get what you’ve never had without doing what you’ve never done
- Leaders do not avoid or deny conflict, but rather see it as an opportunity
- Great spirits have always encountered violent opposition from mediocre minds
- Necessity is the mother of invention
- Successful people do that things that unsuccessful people don’t want to do
- There are no failures, only quitters
- Mediocre people have an answer for everything and are astonished at nothing
- Never regret. If its good its wonderful and if its bad, its experience
- If there’s no struggle, there’s no progress
- Winning is not the only thing… but only if you enjoy losing.
- Connecting with people is an incredible skill… and you connect first in their world… because that is where they live their life and where their interests and values lie.
- It never ceases to amaze me how potential can be chiseled into a lame excuse for lack of action.
- Leadership has a higher calling… a higher destiny… and a higher Path for Life.
- Success is not what you think it is. It is what you believe it is, and most never believe.
- Success never asks to be in your life… it asks if you are worthy for it to show up in your life.
- Time is amazing…you spend it, and it multiplies… you invest it, and it intensifies… and you ignore it… it passes you by.
- Time has no favorites… and it doesn’t become kinder to one over another… it just gives us back… what we put into it…
- Goals are simply an image in your mind… that need to be crystallized on paper by your hand… and embraced with your heart…
- Goals are kind of like children… you pay attention to them, they evolve into something powerful… you don’t… they evolve into something pitiful…
- Leaders and Managers are different… managers ask How? Leaders ask Why? Managers say
- “Do!”… Leaders say “Let us Do”…
- Communication skills are the lifeblood of a successful life
- Communication is really all anyone ever gets paid for ultimately… and if you cannot effectively communicate… you will PAY… not get paid…
- Have you ever considered the cost of quitting? For a real eye opener… ask Thomas Edison…
- Steve Jobs… Michael Jordan… Jim Carrey… ask them how much it would have cost them if they had quit… what about you?
- Winning isn’t everything, or even the only thing…it’s the single thing that determines who gets the prize….
- Persistence takes a focus that doesn’t see the obstacles but only sees the opportunity…
- How in the world can someone say they are a loser when they made it over millions of other “tadpoles” in their mother’s body? Incredible…
- Organizing yourself is like eating candy, it makes you think twice about doing it… but once you do…the outcome is SWEET!
- Influence is a matter of trust and attraction… people are attracted to who you are… and trust where you are going…
- To inspire is an implant… to motivate is an injection… to manipulate is an infection…
- Leaders know one thing… if they have no one following… it’s gonna be a long walk.
- Working for a living is great… but only produces a living… nothing more…
- Most people are too busy making a living to ever put more life in their living.
- Life is like an apple… what you do with the core when it’s all said and done speaks volumes.
- Motivation is said to be an inside job… actually it’s an inside career for very successful folks.
- Productivity is determined not by work… but by EFFECTIVE actions disguised as work.
- Wealth is a by product of persistence mixed with patience and wrapped with powerful belief.
- Lack is more of an acceptance of it in your life than a condition… you accept it, and it shows up…you refuse it… it goes away.
- Lack is not something that happens to you… but within you.
- Success can be measured easily… it’s the getting there that is rarely measured with most people… nor tracked.
- Being rich has more to do with a picture than a bank account… it is all about the picture you see in your mind about your life… that determines what’s in your bank account.
- Reality is… success rarely “shows up”…. it is lured and attracted day by day by the right actions, thinking, and heart.
- Your heart is the power core of all your success… no matter what you desire, if your heart isn’t in it… then you will be without it.
- Why do some people succeed and most don’t? Simple…True Expectations.
- What we TRULY expect to happen in our lives… not want… does.
- God has such a sense of humor… we have the opportunity to do whatever we want with our lives… and He lets us!
- Your thinking is simply a reflection… of your heart.
- There is a difference between thoughts…and thinking… everyone has those familiar daily thoughts… most never think past them.
- Time is an interesting thing… it either molds you… or manipulates you… your choice.
- Money is simply a tool… for success… or mediocrity… all depends on how you use it.
- The heart of a leader is the heartbeat of a group… is your group on success life support?
- Thinking has great value to most people… only when it is done though… which actually is rare…
- Making a living is either a stairway to a coffin… or a stepping stone to greatness… your path awaits you.
- It has been said that success only shows up when determination does…but it must be powered by a non-negotiable decision.
- Have you ever really truly and honestly considered why you are not anymore successful? No?
- Therein lays your problem…
- Life is so hard… as I heard it once said… but only to those who are the walking dead.
- Integrity is not something that you should have to think about… nor consider doing… but something in the heart that is already done… then you will see long term success.
- Patience is something that most people want… quickly.
- The true secret to success lies within not the mind… nor actions… nor visions… but feelings… which is a fruit of the heart.
- Making excuses is akin to faking a limp… both are a reflection of your true desires for a crippled life.
- There is no reason to ever quit… unless of course you had no plans to ever succeed…that is called ”Delusional Success”…
- Time is one of those things that can slip past you quietly and easily… or you can squeeze everything you can out of it and it kicks and screams all the way to Success.
- Time has no conscience… it doesn’t judge… it only mirrors… what you have put into your time… it mirrors back as your life.
- Powerful thinking creates a powerful energy in your life… but it all starts with a powerful “Heart
- The word LOSE simply stands for Lack of Success Expectancy.
- What you want in your life occasionally shows up… what you must have… always does.
- The sound of failure is such a familiar sound… it can be found in the center of excuses.
- Life really does take some planning… and doing… and persisting… trouble is… most operate only on a third of what it takes…
- Leadership is the art of seeing the invisible… then touching it.
- Leadership is simply an energy that mobilizes people and moves them beyond where they believed they could go.
- Leadership can be found in the most unusual and unexpected places… like in your daily routine when you live your life… amazing.
- Achievement to most people is something that you do… to the high achiever… it is something that you are…
- Looking is so very important… especially in success… because what you look to happen in your life… usually does… sad part is… most are looking down when success passes by.
- Goals are incredibly important… or impotent. You decide.
- The life you are leading is simply a reflection of your thinking.
- Your success… or mediocrity… or failure… is simply a reflection of you’re thinking
The Venture Capital Crisis
Venture capital plays a vital role in the launching of businesses in the United States. It fills a funding niche for many businesses that would have no other access to the capital required to grow. Given this fact, it should be considered troubling that the venture capital industry is in crisis.
Venture capital plays a huge role in the launching of vital businesses. It is by far the biggest individual funding source for technology companies, for example. Consider the story of Google. The search engine is only a little more than 10 years old. How did it grow to become the dominant force on the web in such a quick time. Yes, it is the best search engine in the mind of most people, but that isn’t enough. It needed capital to hire employees, build out server centers and undertake all the daily, costly tasks involved in building a small company into a large one. Without VC, it never would have pulled it off.
The venture capital industry in the United States is in crisis because it is contracting. This is not just a measure of the economic problems we’ve been experiencing. The crisis started in 2006 with 2007 showing the first real scary statistics. 2008 was even worse. Nobody knows about 2009 because it is too early to tell, but nobody is very optimistic.
So, what is the crisis? Well, the venture capital industry has contracted a lot. The numbers have fallen from 1,019 venture capital firms to 868 as of 2008. That number has undoubtedly dropped even more in 2009. The problem is the number of funds put together by these firms to invest in companies is dropping dramatically as well. Of the 868 firms that existed in 2008, 828 had only launched one fund for investments in the previous eight years. One fund provides capital to between 10 and 20 companies.
What does this all mean? The answer is unclear. As other parts of the world such as China and India grow economically, the investment money may be flowing to them. What is clear is there is less of it in the United States. In these troubled economic times, that simply is not good news.
Thomas Ajava writes for VentureCapitalInvestmentFirms.com – where you can learn more about venture capital funding.