Some new insights from Greycroft:
According to Cambridge Associates, since 2000, 
over 60% of the industry returns on average came from investments that were outside of the 10 largest outcomes. This is a significant departure from the pre-1999 era when the top 10 investments were a much larger percentage of the total pie.
Plus, over the same period, managers with less than $500 million have accounted for a majority of the industry’s returns
Get the full story here.
A great 6-click primer on angel investing.
From the blogs of Hambleton Lord, ACA member, managing director of Launchpad Venture Group
The top six media VC arms are in two camps. AOL, Bertelsmann, Time Warner, and Verizon generally stick to related sectors but Comcast Ventures (generally seen as one of the top corporate VC’s around) and Hearst Ventures veer wide afield. Good research by CB Insights.
Media VCs and their Investments
I favor entrepreneurs with a keen focus on pipeline metrics. Etsy has some great ones worth noting:
Another interesting fact: One reason for Etsy’s high repeat usage is that it isn’t greedy in its fees to customers. Etsy’s revenue, as a percent of its overall gross sales to consumers, is 8-10%. Some marketplaces charge 20-30%.
Great metrics for a company tracking to raise $100 million in an upcoming IPO with a potential $1.7 billion valuation.
These metrics are from Etsy’s S-1 filing as analyzed by Paul Bennetts at AirTree Ventures.
Hard to believe, but 63% of local businesses still have no website, despite the evidence that 88% of local mobile searches for a business result in a visit or call to that store in the next 24 hours. And 25% of local businesses don’t show up at all in search results. While there are now a glut of competitors, SMB digital marketing is still a huge opportunity. This infographic from Marketecture has the data and sources.
from Streetfight 16 JUNE 2014 BY JASON E. KLEIN
What happens when you combine some of the largest and glitziest shopping malls in America – places like Copley Place in Boston, the Houston Galleria, the Stanford Shopping Center, the Westchester, and Tanger Outlet Centers – with tens of millions in investment capital in early stage digital shopping ventures? That is exactly what J. Skyler Fernandes is charged with figuring out as the head of Simon Venture Group, the new venture arm of Simon Property Group, the largest real estate investment trust in the US and the top owner of shopping malls.
A few months ago, I predicted in Street Fight that “2014 would be the year that hyperlocal goes indoors,” and “the battle will turn to reaching the shopper walking in the mall and right in front of the shelf.” Simon Venture Group is looking to invest $250,000 to $5 million per company in up to 50 companies over the next 5 years to do precisely that. Fernandes is presciently focusing on 5 areas for new investment, all of which are aimed to use the web to improve in-store shopping:
1. In-Store Data Analytics. It is ironic that data analytics for e-Commerce companies has far surpassed that of most retailers, with the exception of the largest retail chains like Macy’s and Walmart. Nomi, Euclid, RetailNext, Path Intelligence, MotionLoft and other companies are working to connect the cloud of purchase history and intent with individual bodies walking into and through stores, hoping to return some of the in-store shopping momentum that Amazon has captured.
2. Malls as Delivery Centers. With your nearby mall stocked full of inventory, why should Amazon and all of its partners be faster with next-day delivery? What about same-day, local delivery? In 2013, Simon invested in Deliv, a company which does same-day delivery from local malls, and is continuing to explore this arena.
3. The Internet of Things (IOT) in your Mall. One of my personal reasons for disliking retail shopping is how difficult it is to find your way around a large, crowded mall. Mobile devices offer the potential to change that, but the technology has to catch up to deliver more precise indoor location. Fernandes says we are still 12-24 months away from a good solution for in-store. Meanwhile, Simon recently invested in digital eyewear solution company Augmate to assist sales associates in finding you the right size and color from their shelves.
4. Building Mall Loyalty and In-Store Incentives. Retailers like ShopRite and Starbucks have done well with loyalty systems for frequent shoppers, but it is relatively rare for nearby stores to collaborate on loyalty programs. Traffic and sales in shopping malls tend to rise in step across stores, and Simon is looking for new solutions to break down data silos across stores and incentivize and reward frequent mall shoppers.
5. Improving Payment Technology. As with in-store data analytics, many mall retailers lack a complete solution linking register payments and inventory management systems, and are falling behind the best e-commerce companies. Mobile payments have been slow to come to the US, but Simon sees a better possibility for companies that link payments and a systemic retailer supply chain solution.
Corporate VCs have had uneven financial returns, but Simon is basing its new venture group on a study of best practices across successes like Google Ventures, Comcast Ventures, and Intel. One lesson is to keep the investing scope broad enough to cover adjacent sectors, and not limit deals to companies that are takeover targets or essentially outsourced business development. Simon has a window on the future of shopping, a great platform to help in-mall companies get established, and appropriate focus on ROI as its core metric of success. As the only corporate VC fund backed by a major shopping mall company, its investments should be of interest to Street Fight readers.
As for my other 2014 predictions, I also wrote that Street Fight would spin off a new site called Bar Fight. That prediction is still open.
Jason E. Klein is the founder/CEO of On Grid Ventures LLC, and investment and advisory firm focused on the startup and reinvention of businesses capitalizing on digital and location-based technologies. He is also the Chairman of Harvard Business School Alumni Angels of Greater New York. Follow him on twitter @JKNews.
By David Teten and excerpted from his HBSAANY message on June 12, 2014. Original is here.
I’m happy to announce that Jason E. Klein, CEO of On Grid Ventures LLC, will serve as the new Chairman of Harvard Business School Alumni Angels of Greater NY. Jason (bio here) is an experienced angel and company builder. I’m shifting to “Chairman Emeritus”. I’ll still be very active in supporting our growth, while continuing to serve as a Partner at ff Venture Capital.
In December 2010, Richard Kane, then-President, Harvard Business School Club of New York, asked me if I’d like to found an HBS alumni-affiliated angel group in NY. Since then, we have grown to be the 2nd largest angel group in NY, with 130 members (vs. about 150 for Golden Seeds in New York, the largest group). We believe we are the second or third most active angel group in New York, depending on which metric you use. 33 of our members collectively have made 82 investments for $3.5m in 27 companies. Our average check size per member per company per round is $43K, which is probably the highest of any angel group in the country. We also have won over 800 investors and friends to our mailing list.
When Harvard Business School’s new Dean, Nitin Nohria, took office, he outlined five priorities to shape his agenda for the School during his tenure: curriculum innovation, intellectual ambition, internationalization, inclusion, and closer ties to the University. Our accomplishments reflect those 5 priorities; we were inspired in part by the Harvard Business School U.S. Competitiveness Project, which challenged the HBS alumni community to address America’s declining competitiveness.
1) Curriculum innovation
HBSAANY has evolved into an educational organization, holding investor education events in NY, Florida, New Jersey, Connecticut, and San Francisco, as well as many webinars. That said, doing is the best way of learning. We saw over time that our investor group, just like Angel List and most other angel groups, was good at syndication and not so effective at leading rounds. As a result, we launched the Fast Track program, which helps VCs and active investors who are HBSAANY members to syndicate rounds with members of our network. To date, 11 companies have been approved for Fast Track, and 8 have raised capital from our members. Following a lead investor is valuable education, as it gives the coinvestors access to the deal documents and some of the process used by the lead.
2) Intellectual ambition
In the past four years, I’ve been fortunate to publish two research papers on investing best practices, on origination and portfolio operations, partly leveraging the insights I’ve gained through my work with HBSAANY.
3) Internationalization
HBS Alumni Angels is a global angel group, given our chapters in 15 cities. And of course many of our members in NY are international by background. Because of that, we have been judges or speakers at programs in New York geared to investors and startups from Brazil, Canada, Finland, France, Eastern Europe, Germany, Holland, Israel, Italy, the Maghreb, and Portugal. I’ve enjoyed working with our friends at New York City Economic Development Corporation, VentureOutNY, and the Worldwide Investor Network .
4) Inclusion
In building the group, we had to figure out our origination strategy. Most investor groups specialize by geography, stage, and/or industry. However, our member base is much more diverse on all those measures than any other investor group I’m aware of. In my research on how private equity and VC funds source investments, one of our conclusions was that VCs get better returns when they invest outside of the traditional geographic hotspots of New York, Boston, and the Bay Area. This is a generalizable principle: you get higher returns where other investors are not. Because of that insight, we co-founded the Venture Capital Access Program, a joint venture with the National Association of Investment Companies, focused on helping women and minority entrepreneurs raise capital from HBS Alumni Angels. In a related move, we organized a series of joint pitch nights with the HBS African-American Alumni Association; HBS LBGT Alumni Association (September 8), and HBS Latino Alumni Association (October 6). In the first full year of operation, VCAP attracted 159 applicants. 34 went through VCAP committee screening; 17 went to a HBSAANY pitch night; 6 attended the annual NAIC convention, and 3 received funding (Mirror Digital,Cyber IQ, and Bownce) from HBSAANY and/or other sources.
As far as we know we’re the only investor group in New York to have cast such a wide net in working with diverse communities.
5) Closer ties to the Harvard community
Although we’ve grown dramatically, fewer than 1% of HBS grads in the NY area are now members. So we have a long way to go! In order to recruit members and source interesting companies, we’ve worked collaboratively on a wide range of events and other initiatives with many HBS special interest groups: HBS Healthcare Alumni Association; HBS Club of South Florida; HBS Club of Connecticut; HBS Alumni Angels of Northern California; HBS Women’s Association of Greater New York, HBS eClub; and of course our very close partners and friends the HBS Club of Greater NY. We’ve also worked with the broader university: Harvard Club of NYC; Harvard Club of Princeton (NJ); Harvard in Tech; Harvard Alumni Association; Harvard Alumni Entrepreneurs; Harvard iLab; Harvard Venture Partners; Harvard Social Innovation Collaborative; Harvard Aspiring Minority Business Leaders and Entrepreneurs; Harvard GSAS Business Club; and the Harvard Graduate Student Council.
I look forward to seeing our group prosper under Jason’s leadership.
HBS Alumni Angels NY new chairman: Jason Klein
New York City’s Hottest Start up Neighborhoods! The zone is Silicon Alley/Midtown South/Chelsea/Flatiron, centered around Broadway and above Broome St/Canal St and below 34th Street. Courtesy of ERA graduate The Square Foot.
Guess who’s fueling Silicon Alley’s rise? While angels and early stage funds provide the early sparks, the big bucks are coming from the west coast. For example, Fab’s $160 million Series D is the largest VC investment round in a NYC-based company since 2009. But Menlo Ventures and Andressen Hororwitz from the Other Coast lead the list of VC’s in the round. Below, from CB Insights, are Silicon Alley’s top 10 VC investment rounds in NY-headquartered companies since 2009. And note – Fab and GILT are listed twice.
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