Angels Resurrected

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Last night was the monthly meeting of the Atlanta Technology Angels. It is the first ATA meeting I have had an opportunity to attend since Mike Eckert became chairman and executive director of the group. And oh my gosh what I difference. To give you some flavor the last ATA meeting I attended in Q3 of 2010 had about 20 angels in attendance. Last night close to 50. And they are getting active.

You may have read about ATA investing in HireIQ. In addition to that deal ATA currently has a term sheet signed, is in due diligence with another company, and has some individual investors moving forward with a third deal. Moreover ATA has already completed three follow on rounds in 2011. Of the four new deals mentioned above, two of them are seed stage investments in pre-product companies.

On top of all this activity one of the most interesting things to watch during the meeting was angels championing startups that pitched. Very passionate support for entrepreneurs.

As part of its evolution ATA has constructed three different deal types that they are interested in pursuing.

One are seed deals. To ATA a seed deal is a $100k or less round into a large well supported market, with a clear understanding of competitive advantage, a preliminary business model, and a team. A member of ATA or other early stage entrepreneur support entities such as atdc must champion seed stage deals. Part of my day job at atdc is to refer the best seed stage deal I see to ATA every month (one of them is in due diligence).

Two are core deals. Core deals are your more historically typical angel deals in the $250k to $1 million range. For core deals ATA is looking for early market traction in a sizable market, an experienced management team with domain knowledge, an exit strategy to liquidation within five years, and a valuation no higher than $3 million.

Three are opportunistic deals. Opportunistic deals are exactly that. As an example I recently discussed a company with Mike Eckert that was raising $1 million on a $9 million valuation. The company has significant revenue traction so Mike met with the CEO to determine if it was a potential fit.

ATA has taken the step to put their investing criteria online. They have also put their seed and core applications online. They are below.

Download ATA Seed Application

Download ATA Core Application

The Atlanta Technology Angels are resurrecting themselves. They are becoming a source of capital that any entrepreneur seeking early investment should consider for one simple reason. They are doing deals. 

April 27, 2011  |  Comments  |  Tweet  |  Posted in Angels

Startup America Comes To Atlanta

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Startup America is coming to Atlanta. 

On Wednesday May 2 from 1:00pm – 4:30pm at the Georgia Tech Global Learning Center in Technology Square senior White House officials are hosting a forum. The objective of the forum is to meet with entrepreneurs and hear directly from them on ideas and suggestions for reducing barriers and improving regulations to build a more supportive environment for entrepreneurship and innovation. In short they want to learn how to encourage business growth. 

Officials attending the event include Deputy Administrator of the US Small Business Administration Marie Johns, Associate Administrator of Office of Information and Regulatory Affairs Michael Fitzpatrick, Deputy Director of the US Patent and Trademark Office Teresa Rae, Senior Economist at the Council of Economic Advisors Ronnie Chatterji.

Entrepreneurs interested in attending the events can learn more by emailing reducingbarriers@sba.gov.  Anyone unable to attend the Atlanta event can submit their ideas for reducing barriers to http://reducingbarriers.ideascale.com. 

Cross posted to atdc.org.

April 26, 2011  |  Comments  |  Tweet  |  Posted in Entrepreneurship, Politics

Atlanta Technology Compensation

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Last week FoG covered compensation at technology startups on the national level. Today we are going to get a little closer to home and talk about technology compensation in Atlanta.

The source for this information is the 2011 Atlanta Technology Executive Compensation Survey conducted by the Technology Executives Roundtable. This is the third year that TER has been conducting its survey. The survey is a bit different than the national CompStudy report. Here is the profile of the TER respondents:

  • 74% have been around for more than five years
  • 68% of the companies are angel or venture capital funded
  • 85% had revenues of less that $25 million
  • 67% had revenues of less than $10 million 

So all in all the companies are more mature than those surveyed by CompStudy. With that setting the table here are the results of the survey rounded for presentation purposes.

Atlanta Technology Compensation

Title

Cash

Bonus

Equity

CEO

 $220,000

 $95,000

7.0%

COO

 $200,000

 $68,000

1.5%

CFO

 $175,000

 $60,000

1.5%

CTO

 $155,000

 $50,000

3.8%

Head of Sales

 $150,000

 $65,000

1.4%

Head of Marketing

 $135,000

 $35,000

1.3%

Head of BizDev

 $160,000

 $55,000

1.9%

Interesting figures by themselves but even more interesting when compared to the CompStudy non-founder compensation figures. The differences are presented below. Using the CEO slot as an example the way you read this data is an Atlanta CEO makes $10,000 less cash salary, a bonus that is the same, and has 1% more equity than their national counterparts.

Atlanta vs National Compensation

Title

Cash

Bonus

Equity

CEO

 $(10,000)

 -

1.0%

COO

 $15,000

 $13,000

-1.5%

CFO

 $10,000

 $15,000

0.5%

CTO

 $(5,000)

 $5,000

1.8%

Head of Sales

 $(15,000)

 $(35,000)

-0.6%

Head of Marketing

 $(25,000)

 $(5,000)

-0.8%

Head of BizDev

 -

 $(5,000)

-0.1%

Keeping in mind that this is a little bit of an apples and plums conversation, from a cash comp point of view (aside from stinginess on marketing base and sales bonus) the figures are pretty much in line with the national numbers. On average folks in Atlanta make 3% less than their counterparts spread across the country.

The equity side is a bit of a different story, 16% less. I attribute this difference to three factors. The Atlanta companies are more mature, the national study reports equity granted at hire not percentage currently held, and the driver of the difference is the COO slot which you mostly find at more mature companies and thus less equity for the gig. If you remove COO equity from the equation the difference in equity held by those in Atlanta versus the national mean drops to just 2%.

The TER report is chock full of great information. The full report is available to members of TER.  If you qualify it seems like $400 well spent. You also may be able to get your hands on the study by reaching out to one of the report sponsors. They are Arketi Group, ExecuLinks, Frazier & Deeter, Morris Manning & Martin, Pritchard & Jerden, Silicon Valley Bank, and Wm Leonard & Co.

Next week FoG will have some thoughts on compensation specifically for seed stage angel funded companies. Until then would love to hear how these numbers compare to your experience as well as any questions you may have. It is a little challenging to present excel spreadsheet data on a blog.

April 25, 2011  |  Comments  |  Tweet  |  Posted in Management, Startups

Atlanta Based VCs

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So I was doing some work on the atdc Startup Showcase that resulted in a quick brainstorming session on Atlanta area organizations that fund technology startups. It looked something like this.

Atlanta VCs

The venture capital firms are Arcapita, BLH Ventures, Buckhead Investment Group, Fulcrum, H.I.G., Kinetic, Noro Moseley, Total Technology Ventures, TechOperators, and Value Plus Ventures. The more angel oriented investor groups include Atlanta Technology Angels, CEO Ventures, the Communications Group, Hamilton Ventures, Profounder, Seraph Group, and Shotput Ventures.

Though they are no longer actively investing in new deals there is of course Imlay Investments. You can add the ATDC Seed Fund and the Georgia Tech Edison Fund to the list as well. There is a total of 20 investment entities . Of the 20 at least 13 are active, having done at least one deal in the past year.

While we can use more this is Atlanta in 2011. It would behoove any entrepreneur that thinks external funding is in their future to do their homework and get to know these firms better.

Update: I was reminded that I omitted Paparelli Ventures.

April 21, 2011  |  Comments  |  Tweet  |  Posted in Angels, Venture Capital

2011 ATDC Startup Showcase

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ATDC Startup Showcase 2011  

It’s that time of year again. It happens every Spring. It’s time for the atdc Startup Showcase. The Startup Showcase is an annual event on the Georgia technology startup scene that draws about 500 or so technology leaders, investors, and aspiring entrepreneurs to see what is happening at one of the world’s leading technology accelerators.

This year there are nine companies becoming graduate members and about 50 of the most promising early stage technology startups struting their stuff. New atdc ringmaster Nina Sawczuk will be running the show. 

I am particularly excited and proud of the 2011 graduating class. Of the nine graduates I have had the honor of working closely with four whose prospects are stellar. They are:

  • BLiNQ Media, which delivers breakthrough Facebook advertising optimization;
  • Clearleap, enables television service providers to stream Internet video over existing broadband networks;
  • PlayOn Sports, the nation’s leading high school sports media company; and
  • WorthPoint, the world’s most largest resource of value data on art, antiques and collectibles.

Along with the other five graduates they comprise one of the strongest classes atdc has had in some time.

The Startup Showcase takes place on Monday May 9 at the Georgia Tech Hotel and Conference Center. Registration starts at noon, the program kicks off at 1:30 and the showcase runs until 4:30 followed by an after party. This is a great networking opportunity.

Looking to raise capital? Investors from every angel and VC group in Atlanta are confirmed to attend.

Looking for a new gig or new business? About 50 startups will be exhibiting in what I would call a target rich environment.

Looking to network with other entrepreneurs? There will be hundreds.

If you have any thought of meeting people in the Atlanta technology startup community, you should plan on being at this event. Buy your ticket now and you’ll save $5 off the cost at the door.

April 19, 2011  |  Comments  |  Tweet  |  Posted in atdc

Skribit Shutting Down ;-(

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A notice that went out tonight to Skribit users this evening. Quite a few people have been involved with Skribit over the years. Thanks to everyone that helped create and grow the company and also to those that are helping to shut it down.

[Notice: This is the last email you'll ever receive regarding Skribit. I will personally nuke the 20,621 user email list. – @Stammy]

On July 31st, 2011, Skribit will be closing its doors. Skribit started several years ago at Atlanta Startup Weekend in November 2007 and has had a good run. As a refresher, Skribit aimed to aid writer's block by allowing bloggers to receive post suggestions from their readers, while helping readers keep track of what their favorite blogger's were working on. 

Unfortunately, Skribit traction was not as impressive as we had hoped and Skribit had become more of a niche solution for a small percentage of bloggers. Over the past few years, 45,162 blog post suggestions have been completed through Skribit, 2,346 of which were completed/blogged. The vast majority of Skribit users did not receive suggestions from their readers for various reasons. Only 1,214 blogs had more than 3 active suggestions. 

We stopped actively developing Skribit last Spring and decided to pursue other opportunities. Thanks for being part of Skribit! We are in the process of refunding current PRO users. We wouldn't have been able to keep Skribit running for so long if it wasn't for a seed investment from Georgia Tech's Edison Fund and lots of advising from Lance Weatherby of the Georgia Tech ATDC.

Follow us on Twitter to see what we're working on now!

Best,

Calvin, Paul & Lance

http://twitter.com/cyu
http://twitter.com/Stammy
http://twitter.com/lance

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Startup Compensation

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From time to time I get questions about startup compensation. To gain some insights into the matter I am planning to attend a special session of the Technology Executive Roundtable on Atlanta technology executive compensation tomorrow. To set the table I wanted to share some national startup compensation data.

Over the years I have found CompStudy to be the best source for equity and cash compensation for top management at technology startups across the nation. Respondents to the survey are spread out geographically pretty much like venture capital funding. Half of the companies have fewer than 20 employees and 70% had less than $5 million in revenue. For the most part these are early stage technology startups that have received institutional financing. And here, with some rounding, is what the survey said, broken into founder and non-founder comp.

Founder Compensation

Title

Cash

Bonus

Equity

CEO

 $170,000

 $75,000

28%

COO

 $165,000

 $85,000

16%

CFO

 $135,000

 $50,000

10%

CTO

 $150,000

 $40,000

13%

Head of Sales

 $150,000

 $60,000

11%

Head of Marketing

 $150,000

 $50,000

11%

Head of BizDev

 $160,000

 $50,000

7%

Non-Founder Compensation

Title

Cash

Bonus

Equity@Hire

CEO

 $230,000

 $95,000

6%

COO

 $185,000

 $55,000

3%

CFO

 $165,000

 $45,000

1%

CTO

 $160,000

 $45,000

2%

Head of Sales

 $165,000

 $100,000

2%

Head of Marketing

 $160,000

 $40,000

2%

Head of BizDev

 $160,000

 $60,000

2%

No big surprise that founders made less money but have considerably more equity than their non-founder counterparts. The equity for the non-founders is at time of hire and is generally diluted over time. In my own experinece I have found that the people that report into the executive team generally make 30% – 70% less then these figures in cash comp depending on the stage of the startup, experience, and skill set.

Some other interesting tidbits.

About 70% of executives are bonus eligible led by the sales, marketing, and business development types. The sales folks had about a 60% of base bonus target while the marketing/bizdev people were at 30%.

About 20% of executives had severence packages. 

Just a third of the companies in later financing stages had the founding CEO in control.

The most common equity vehicle used are incentive stock options.

CTOs get diluted a lot more than CEOs.

While researching this I came across Noam Wasserman's Founder Frustrations blog. Nice resource for co-founder issues, compensation, board management, and investor issues.

Here is the latest complete CompStudy report if you care to read it. In a day or so I will post about Atlanta technology compensation and how it compares to the national numbers.

April 18, 2011  |  Comments  |  Tweet  |  Posted in Management, Startups

Love Jessica Darko

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She wrote what is quite possibly the best comment that I have ever read on TechCrunch. It is in response to Vitrue's CEO Reggie Bradford's article on "Why Even Ron Conway Couldn’t Persuade Me To Move To Silicon Valley."

Not 100% of it holds true for every startup but it's a great piece of writing.

Anyone who tells you that you need to relocate to the valley for your startups is giving you bad advice and is not to be trusted.

The only upside of the valley is that VCs are often not interested in investments they have to travel for, but if you're doing a modern startup, you should not be going after VC money anyway. You no longer need it for infrastructure, and the cost of VC money (both in equity and the terrible advice they will force on you) is not worth it.

In the valley everything costs twice what it should, the regulatory and tax burdens are unreasonable, the employees are going to jump to the next hot thing, and are generally of lower quality than the employees elsewhere. 

Seriously. Give me a state school educated programmer (or one who never went to college– even better) over a stanford grad any day.

But if you want to build a feature that pretends to be a product that pretends to be a "startup" and you want to raise a bunch of cash from douchebags in order to flip it to Google or whomever in 18 months— then the valley is the only place to do that.

If you want to start a business, one that will grow and has a chance of being run well, then you cannot do it in the valley, or at least trying in the valley is handicapping your business from the beginning.

Of course, all the people in the valley think the former is the latter and so that's why they advocate people relocate to the valley.

And I'm not even getting into the fact that if your idea is good you'll have dozens of competitors quickly because there is no integrity in the valley– no VC keeps his mouth shut.

Sublime.

Further down in the comments Chris Stuckey suggested that atdc line up Reggie for an Entrepreneurs' Night. Great idea, I'll try to make it happen. Or perhaps we should get Jessica to fly in.

April 15, 2011  |  Comments  |  Tweet  |  Posted in Entrepreneurship, Venture Capital

Shootin’ & Drinkin’

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Raising $400 million sure does not make you smart.

Living Social Shootin' & Drinkin'

I am socially liberal. I know how to carry a gun. Have been hunting even. I drink alcohol. But encouraging the use of alcohol with guns as the email subject and headline does is not cute. It is irresponsible.

Managing hyper-growth is hard. Too many people coming on board too quick. Not enough control systems in place. I am sure the person that wrote this was trying to encourage opens and click thrus. But somebody somewhere within LivingSocial should have at least caught this and changed the headline or perhaps stopped the deal completely.

Spoken by a guy that once did a bizdev deal with Playboy and paid the price of learning how conversavtive people in the South can be.

April 14, 2011  |  Comments  |  Tweet  |  Posted in Marketing

Ohio

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Earlier this week I wrote an article about the need for some entity to step up and solve the lack of venture capital issue in Atlanta which led Mike Blake of StartupLounge to ask for a little clarification in the comments. I gave him a little there. Here's more.

Shortly after posting I recevieved an email from Merrick Furst. Merrick is a co-founder of Damballa, teachs an undergrad entrepreneurial class out of Georgia Tech's College of Computing, and is managing director of Profounder, a seed-stage investment company in which I am a partner. With a simple FYI at the beginning this is the content of his note.

Ohio Launches Tech Incubator With Fund Led By Sequoia's Kvamme

By Ty McMahan

The state of Ohio is adopting a tech incubator model that has been successful for others, such as Y-Combinator and TechStars, in an initiative to inspire new business ideas and grow the state's economy.

Ohio State University's Fisher College Center for Entrepreneurship has launched 10x, an accelerator focused on the professional development of young, technology entrepreneurs. The program is made possible through capital provided by Ohio's New Entrepreneurs Fund.

The ONE Fund initiative is being spearheaded by Mark Kvamme, director of job creation for Ohio. Kvamme is also a partner at Sequoia Capital who was recruited to head JobsOhio, Gov. John Kasich's new private, economic-development corporation.

Young entrepreneurial teams will compete for 10 spots that will each receive $20,000 for business and living expenses during the 11-week development program.

NCT Ventures, a Columbus, Ohio-based venture capital firm, has already guaranteed that one team to graduate the inaugural 10x program will receive $200,000 in follow-on funding to further pursue its venture.

The participants must agree to live in Ohio for the duration of the program, and any company formed through the program must be set up in Ohio. The teams will have access to all the resources provided by the Center for Entrepreneurship, ONE Fund, NCT Ventures and the start-up community in central Ohio.

"It's a robust environment, more than you would expect from your typical Midwestern town," said Michael Camp, executive director of Center for Entrepreneurship, in Columbus, and the architect of the 10x program. "The notion that place defines how big or good a business can be is out the window.

During my time at atdc I have had two high-level strategic insights of note.

The first occurred back in 2007. I came to believe that atdc needed be more open and reach out to better serve concept and seed stage startups. This, in part, led to the strategic shift atdc began in the summer of 2009.

The second occured this week. Some entity with staying power needs to step up and systematically tackle the lack of seed and early stage funding in Georgia. To architect a program like Michael Camp put together in Ohio. A state fund, big venture capital leadership, a robust program to vet startups, and local angel/venture capital involvement. 

That in, 500 words or less, is what I mean by ownership.

April 13, 2011  |  Comments  |  Tweet  |  Posted in Angels, atdc, Entrepreneurship, Startups, Venture Capital