About JKNews

Jason E. Klein is an experienced media CEO and builder of digital and traditional businesses who has led two successful turnarounds. He is founder and CEO of On Grid Ventures, an advisory and investment firm in digital media, marketing, and information; a member of New York Angels and Harvard Business School Alumni Angels; and a mentor at several NYC-area “incubators.”

Retailers Hop to Get Connected

A couple of items today reinforce how shopping behavior is increasingly integrated on- and off-line. Warby Parker co-founder Dave Gilboa explains why he considers retail stores so important, even though they account for less than 10% of sales, in this interview with Gigaom.

“The future of our business and all retail is going to have some mix of online and offline. The economics make a lot more sense to do as much online as possible but we are that seeing customers who are coming into the showroom and interacting with us initially in the offline world, when they buy again their second, third, fourth glasses, they’re doing so directly through the web site,” Gilboa said.

Michael Carney in Pando Daily argues that bricks and mortar retailers need a strategy to win shoppers who arm themselves with mobile phones while they shop in-store.

“Ideally, retailers would flip the script on their e-commerce brethren, not only agreeing to price match or discount against the catalogs of Amazon and others – an admittedly dangerous game – but also allowing users to immediately locate items within a store using their GPS enabled device. Also, stores should generously reward consumers for installing their apps (if they even have one), checking into their physical locations, and sharing items and promotions on social networks. The idea is to have consumers associate shopping in store with the convenience, serendipity, and connectedness common to online commerce.”

 

Angel Valuation Survey

The median valuation of tech companies funded pre-revenue is $2.75 million, according to a just released survey of angel groups from Gust. With the costs of starting a tech business falling, this means an entrepreneur can raise $500k and only give up 18% of his company to do so.  With the promise of revenue down the road, and no financial history on which to base a valuation, this seems reasonable.  Every company is of course different, but if an entrepreneur can conserve capital, he or she can retain a large share of the company.  Since I’m often asked about valuation, I’ve posted data from some of the larger angel groups below:

2012 Valuation Survey of Angel Groups  
Median pre-money valuation of pre-revenue companies
Software, Internet, Mobile and telecom deals
$ millions
All Groups:  Median 2.75  
All Groups:  Average 2.96
Selected groups:
Alliance of Angels (Seattle) 0.8
Atlanta Technology Angels 1.8
Robin Hood Ventures (Phila) 2
Vancouver Angels 2
Ohio TechAngels (Columbus) 2.45
New York Angels 2.45
Band of Angels (Silicon Valley) 2.75
Launchpad Angels (Boston) 2.75
Mid-Atlantic Angel Group (Phila) 3
Hub Angels (Boston) 3.13
Golden Seeds (NY, Boston, CA) 3.35
Sand Hill Angels (Silicon Valley) 3.5
Tech Coast Angels (So. CA) 3.6

The Consumer Decision Journey

The Consumer Decision Journey, as identified by McKinsey & Company, is a concept well described in this except from the June 2009 McKinsey Quarterly:

The proliferation of media and products requires marketers to find new ways to get their brands included in the initial-consideration set that consumers develop as they begin their decision journey. We also found that because of the shift away from one-way communication—from marketers to consumers—toward a two-way conversation, marketers need a more systematic way to satisfy customer demands and manage word-of-mouth. In addition, the research identified two different types of customer loyalty, challenging companies to reinvigorate their loyalty programs and the way they manage the customer experience.

Finally, the research reinforced our belief in the importance not only of aligning all elements of marketing—strategy, spending, channel management, and message—with the journey that consumers undertake when they make purchasing decisions but also of integrating those elements across the organization. When marketers understand this journey and direct their spending and messaging to the moments of maximum influence, they stand a much greater chance of reaching consumers in the right place at the right time with the right message.

UPDATE December 16, 2014

McKinsey UK just published this version of the consumer decision journey, with recent research.

Capture

For more On Grid Ventures info: Mission … Team 

The Big Data Landscape

Once again, bigger than ever, here is the 2017 Big Data Landscape:

 

For more on Big Data, click here.  

For our investing criteria:  Investment Criteria.

For Matt’s useful 2017 update, here.

Here is version 3.0 of the Big Data Landscape, from Matt Turck, now at FirstMark.

Big Data Landscape

 

And, for some context, here is the prior version:

 

Angel Investors Earn 2.5x Returns

Robert Wiltbank, PhD, a professor at Willamette University and a board member of the Angel Resource Institute, studied more than 1,200 exited investments made by angel investors over a 15-year timeframe.

His key findings:

  1. The best estimate of overall angel investor returns from this data is 2.5 times their investment.
  2. This 2.5x return takes a mean time of about four years.
  3. In any one investment the odds of a positive return are less than 50 percent. 
  4. 90 percent of all the cash returns are produced by 10 percent of the exits
  5. Once investors had a portfolio of at least six investments, their median return exceeded 1X.

His summary:  Angel investing “is a “homerun” game like formal venture capital investing. Second, a portfolio of investments, even in angel investing, is a great approach. Third, whenever you’re making risky investments it is a great principle to limit your bet size and make sure that you don’t put too much of your wealth into aggressive positions.”

More from TechCrunch here.

Angels Created 106,400 New Jobs in 2012

Angel investing continues to grow as an engine for the US economy.  Angel investments created 106,400 new jobs in the first half of 2012, according to UNH’s Center for Venture Research.  27,280 start-ups received funding, up 3.7% from prior year; and 131,145 individual angel investors participated, up 5% from prior year. Total investments were $9.2 billion, up 3.1% over last year.  More here from the Center for Venture Research.

NY is the Epicenter of Healthcare’s Reinvention

NY is a hub for the reinvention of healthcare.  From Forbes, here is a snippet of recent activity:

  • New York Digital Health Accelerator: Fostering startups gaining market validation with leading healthcare providers around the state.
  • MedStartr: The first crowdfunding program specific to the unique requirements of healthcare.
  • Medicaid Managed Care: All Medicaid recipients are moving to a model that is highly successful in the private sector and abroad.
  • WebMD: By far the largest health-related Internet site for consumers and for health professionals (Medscape) is based in New York.
  • New York eHealth Collaborative (NYeC): The public resource for health information technology running a number of programs.
  • Statewide Health Information Network of New York (“SHINY”): Arguably the Health Information Exchange that has the broadest reach and momentum.
  • IBM: Another NY-based company that has done more to vitalize primary care than any other organization. This is critical because primary care is the foundation of any well-functioning health care syste
  • StartUp Health: A 3-year academy program that selects “healthcare transformers” that are enabled by a sophisticated program to get startups through the various milestones pivotal to their growth.
  • Blueprint Health: A healthcare incubator for early stage companies just getting off the ground that has already fed companies into StartUp Health.

More here from Dave Chase in Forbes.

Lessons from Fidelity’s Jim Speros

A few points from Fidelity’s highly regarded CMO Jim Speros caught my eye in eMarketer.

First, Jim has brought Fidelity’s marketing mix to 40% digital, up from 15% just four years ago when he came to Fidelity.  This is on the leading edge of major marketers today.

Second, Fidelity’s new “Thinking Big” campaign is designed first for digital as the lead medium.

Third, Fidelity gained nice ground over the recent economic downturn by spending relatively heavily, and continuously, on its “Green Line” campaign.  Jim says “Marketers who maintain their marketing pressure during an economic downturn usually come out of it stronger than competitors.”

More here.

Angel Valuations Inch Up

How much to Angels typically invest and at what company valuation?  Angel valuations are inching up per the Halo Report for Q2 2012:

  • Company valuations for early stage financing rounds with Angels are $2.7 million in Q2 2012, up from $2.5 million in Q1 (median, pre-money valuations).
  • Typical angel investment rounds total $550,000 for Angel-only rounds and $1.5 million with VC’s involved (these are median values; the mean values are higher at  $1 million and $4 million.
  • And VC’s have Angels co-invest in 72.5% of their deals.
  • And half of Angel  deals are in tech-related fields  (Internet, Software, Mobile, Telecom).

You can download a 16-page pdf of highlights here.

Your Personal Uber-search

The door to your personal uber-search has now been opened.  Several emerging companies are working on various versions, but the basic idea is to conduct the perfect search across all of your personal content, on your various devices and in your personal cloud accounts, like Facebook and Evernote.  Isn’t this turf in Google’s backyard?  Click here for TechCrunch’s profile of CloudMagic as a current leader in this space.  It’s latest release now covers Google Docs, Google Contacts, Google Calendar, Microsoft Exchange, Twitter, Facebook, Dropbox, Evernote, Box, iCloud, AOL, Mail.com, GMX, and Office 365.