Betakit has a good overview of the new neighborhood social networks here. These businesses are hard to scale and require users to be open to their neighbors…not always a welcome thing. The upside, however, is huge. Just as facebook encouraged people to share more about themselves, the winner in this segment will figure out a way for neighbors to do the same. The early leader seems to be NextDoor, with $18.6 million from Greylock and Benchmark Capital
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A new study of daily deal users is out from Chadwick Martin. Are daily deals are the latest marketing gimmick and likely to peak sometime soon? Key study findings: consumers prefer daily deals that are from a known local business, preferably for a restaurant or entertainment, and for something they already enjoy. This looks like a cannibalized sale to me. More highlights here.
Also, the New York Times reports that Merchants and Shoppers Sour on Daily Deal Sites.
ReachLocal is getting nice traction with its one-stop approach for small businesses to advertise on the web. MediaPost reports today that ReachLocal is launching a new retargeting platform to bring more advanced tactics to its small business customer. With 2012 revenues expected to be $450 million (and adjusted EBITDA of around $20 million), ReachLocal is the leading pureplay today in local advertising.
Here’s a Washington Post interview with my former Bain colleague (vintage 1980’s!) John Backus, a managing partner at New Atlantic Ventures in VA.
What do VCs actually do for their money? Backus says:
“We are basically professional guides to the entrepreneur to help them navigate rapidly evolving industries and solve difficult problems,” Backus said. “We’re like their corporate psychologist.”
Read more here.
Investor Paul Singh covers the common wisdom about angel investing. Very sensible. A good plan. Hard to argue. Let’s call it the base case…
More here.
Noted investor Chris Dixon’s recent blog post on the crunch in consumer web start-ups has gotten a lot of notice. It’s unfortunate that so many start-ups tend to chase the same concept. That’s why, generally, Chris’s points are correct, e.g., you do need 10 million uniques to get anyone to pay attention to you.
But you don’t have to follow the pack. Find a niche segment, where your content had real value. Don’t jump on the next popular trend, like a new app to figure out what to do tonight. Create a real new idea, and calibrate your own metrics.
“Ten million users is the new one million users.
Entrepreneurs and investors have been enamored with consumer internet startups for the last few years. But there are signs this is ending.
Some observations:
– Thousands of early-stage consumer web/mobile companies were started and funded in last 24 months.
– There are only a few dozen VCs who actively write consumer Series A checks, and those VCs will only do a few deals a year.
– Facebook’s market cap is about half of what most tech investors expected before the IPO.
– A few breakout early-stage consumer hits (Instagram, Pinterest) have reached tens of millions of users in record time.
– Internet users have tens of thousands of services/apps to choose from but limited time and attention…”
Read more here.
I keep hearing that Silicon Valley is driving up the valuations of start-ups to absurd levels, and from both NYC-based and West Coast investors. This piece from Business Insider, citing un-named sources, throws a few bombs at Y-Combinator for being the greatest instigator of the explosion in valuations. The bubble in large company valuations is working its way to startups, and no doubt it is a bubble.
“Seven years ago, Paul Graham and his now-wife Jessica Livingston founded a startup accelerator, Y Combinator.
Since then, it has become the most competitive startup program in the world. Its acceptance rate is compared to that of an Ivy League school, with similar prestige stamped on each graduating startup.
To date, more than 460 startups have gone through the accelerator, and they’ve gone on to raise more than $1 billion collectively.
Among them are Dropbox, a file sharing and storage company that has raised $275 million at a $4 billion valuation. Airbnb, a consumer-to-consumer room-rental service, has raised $120 million at a $1.3 billion valuation. Socialcam, which graduated from Y Combinator’s program in March, was acquired this month for $60 million…”
Read more: http://ow.ly/cGZsQ