Category: Community

A few days ago Dave Walters published a TechDrawl piece about the state of angel investment in the Atlanta startup community. Dave made a strong call to action for investors to step up and fill the void that is being created as the most prominent angel investor in town, Sig Mosley, stops making new investments at the of this month. Lance Weatherby followed up with a good post arguing that Dave was asking the wrong questions and that entrepreneurs in Atlanta need to take their companies further without angel investors.

Two areas I haven’t seen mentioned in the blog posts and ensuing comments are that of dividends and private equity (PE) firms. Here’s how they play a role with angel investors:

• Dividends – I know of two examples where angel investors put in money, haven’t had an exit, but have had dividends that paid back the initial investment within five years, and the companies are still doing well. In one case, the company is doing north of $10 million a year in revenue, paying out an annual $1 million dividend, and is still growing 10%+ per year, but feels that investing the dividend amount back into the company doesn’t have an ROI, hence the annual payout.
• Private Equity – I know an investor that put $200,000 into an early stage company several years ago and exited the investment recently when a private equity firm bought out his stake for $650,000 as part of a recapitalization. My understanding is that private equity firms are still sitting on a ton of money, and even though the acquisition and IPO market are soft, my belief is that we’ll see more angels make money from PE firms buying out investors in good, profitable companies.

Granted, these aren’t homeruns, but angels making money helps the community in that the angels have more of an appetite for future deals.

What do you think? Should dividends and private equity firms be talked about more in conjunction with angel investors?

One of the most beneficial things I’ve done as an entrepreneur is to join the Entrepreneurs’ Organization (EO), and, more specifically, join a forum within EO. A forum is a small group, typically 7-9 entrepreneurs, that meet once per month in a specific format. Here are some of the benefits I’ve found from having a peer group that meets regularly:

• Always have a group of entrepreneurs that are there to help each other and who genuinely care
• Constantly learning how other businesses operate including what works well and what doesn’t
• Ability to develop deeper relationships compared to other professional colleagues

I’m the membership chair for EO Atlanta for 2010-2011, so please reach out to me for more information. We have EO for entrepreneurs with revenues over $1 million and we have Accelerator for entrepreneurs with revenues under $1 million. Our goal is to assemble the most influential entrepreneurs in Atlanta that have a thirst for learning and peer-to-peer experience sharing.

A friend yesterday was asking me questions about Shotput Ventures. Five minutes into the conversation he posed a good question: what’s the number one reason applicants are rejected by Shotput Ventures? Immediately, I knew the answer.

By far, the main reason applications for Shotput Ventures are turned down is due to not meeting our stated requirements for the team. Within this generic reason, here are several specific examples:

• Not having a technical co-founder that is an experienced programmer
• Not having all co-founders able to work 100% on the new venture (e.g. one has to keep his or her day job)
• Not having all co-founders in the same city (e.g. one is based in D.C. and wants to stay there during the program)

Applying for Shotput, and meeting the published requirements, is just part of the process for choosing companies in which to invest. My recommendation is to read the Shotput Ventures site and apply once the criteria have been met.

I was reading the TechFlash blog post on the RescueTime founder and CEO leaving after 28 months to start a new venture and it occurred to me that there are almost no launch-and-move-on entrepreneurs in Atlanta. What I mean by that is an entrepreneur who enjoys the birth to early growth stage of getting a company off the ground, but then turns the reins over and goes on to their next idea. Now, I don’t know if this is a good thing or bad thing, but does a strong startup ecosystem need more of these types of entrepreneurs?

As another example, last Fall, the Twitter co-founder Jack Dorsey announced his new company Square to process credit cards on iPhones. He’s another launch-and-move-on entrepreneur. One benefit of this type of entrepreneur in the community is that there will be more companies with strong foundations growing fast. One downside might be that the entrepreneur leaves prematurely and the company doesn’t do as well. Of course, that is hard to predict.

What do you think? Does Atlanta need more of these types of entrepreneurs? Do you know of  any entrepreneurs like this in Atlanta?

Side note: RescueTime is partially funded by an angel investor in Atlanta.

At the end of last week we made the announcement about Shotput Ventures 2.0. The general idea is that we’re doing the same type of investing in new, capital-light web services companies, but are no longer having a single class each summer, like last year. Instead, we’re having an always-open application where teams can apply at any time. Teams that are accepted, and thus turned into companies, get 12 weeks of mentoring, learning, and introductions from the Shotput partners.

Here are some of the reasons behind the changes:

• We proved last summer that we could get eight great companies to move to Atlanta for the program, but the challenge was keeping them here (three stayed and five moved)
• Great teams and ideas don’t want to wait for the summer to get going, and thus making Shotput a year round program opens us up to more opportunistic funding
• We thought there was more pent up demand in the Southeast for a program like Shotput, but the majority of applications both years were from outside the Southeast

Atlanta no longer has a Y Combinator clone but still has a fund committed to the spirit of it, and will invest in 3 – 5 companies per year.

What are your thoughts? What do you think of Shotput Ventures 2.0?

I was talking with Mike Landman, the incoming President of Entrepreneurs’ Organization (EO) Atlanta, earlier today about how to spread the word and recruit more members into EO. EO is the organization that entrepreneurs who’ve been in business for a few years, and have over a million dollars in revenue, wish they would have known about all along. It’s an exclusive non-profit for entrepreneurs to network with other entrepreneurs with a strict non-solicitation rule, participate in peer-to-peer experience sharing forums, and learn from some of the best speakers around.

So, our discussion today was about where entrepreneurs hang out, and how to reach them. We identified the obvious places:

• ATDC
• TAG
• Atlanta CEO Council
• Technology Executive Rountable
• MIT Enterprise Forum Atlanta

What else? What are some other places entrepreneurs hang out in Atlanta?

After looking at the Atlanta Logos (atllogos.com) site, which lists hundreds of Atlanta startups in different stages, I realized we can do a better job of highlighting the categories, or markets, that Atlanta has a strong base. Historically, people tend to think of Atlanta as a strong market for B2B companies, Internet security (ISS), and logistics (UPS, Delta). Here are some other categories with a strong local base of companies:

• Online marketing software
• Lead generation sites (e.g. RentWiki, Clickscape, etc)
• Vertical ecommerce sites (e.g. Case-Mate, Sylvane, etc)
• Phone technologies (e.g. Cbeyond, Vocalocity, Aretta, etc)

Oh, and Atlanta has the largest number of data centers of any metro area in the country. I encourage people to talk about these other categories, in addition to the usual suspects.

What are some other startup categories with a strong base of companies in Atlanta?