WayTooEarly

AxialMarket - Making Private M&A Markets More Liquid

One of the great things the Internet can do is reduce friction in various marketplaces by bringing them online. Early examples in the history of the internet include transformative online marketplaces like eBay and Craig's List; others more recently include eHarmony (personality-based online dating) or Groupon (aggregating supply and demand for merchants and consumers).  The internet, however, has not penetrated B2B markets as easily or as swiftly, usually because the transactions that occur in B2B markets are often larger, more complex and sometimes confidential. First Round is proud to announce its funding of AxialMarket, the premier online M&A marketplace connecting qualified buyers and sellers of privately held companies. Business owners and their M&A Advisors use AxialMarket to research, identify and engage qualified potential buyers; M&A-focused public and and private companies, as well as lenders and private investment firms, join AxialMarket to increase company-wide deal flow and lower deal origination costs.  Launched in 2008, the company has helped over 2200 privately held companies, with revenues ranging from $5M to $275M, complete an M&A or financing transaction.   Peter Lehrman, the CEO, is a serial entrepreneur who understands that the value is created not by dis-intermediating the existing market, but attacking the points of friction and cost of discovery for qualified participants, leading to more success for both buyers and sellers. In the U.S. alone, where millions of established private companies exist, this friction and complexity creates tremendous noise for buyers, who receive deals that aren't relevant, and sellers, who find themselves spinning their wheels trying to identify the right buyer. AxialMarket solves these problems by overlaying its relationships with large datasets and algorithms to create success for both buyers and sellers. Of course, doing this is not so simple, both technically and from a market sense, but Peter's team has the ability, experience and expertise to do it, and First Round is excited to be part of their team.

SinglePlatform - A new First Round investment

I'm pleased to announce @FirstRound is investing in SinglePlatform, a real solution for helping restaurants join the 21st century marketing world of internet and social media.  For publishers it's a great way to enrich their local experience and monetize with restaurant content, and special.

The top item on First Round's criteria is people, and the SinglePlatform team is led by a terrific entrepreneur, Wiley Cerilli, who was a key player at Seamless Web.

In addition to the great management team, our co-investors include the founder of Seamless Web, the founder of restaurant.com, and some terrific venture capital partners, RRE and DFJ Gotham.

We're excited to be working with a strong team and great set of investors at SinglePlatform!

NYC is a great place for deals

As I wait (and wait) for the construction of our First Round Capital NYC office (overlooking Union Square)  to finish, it’s good to know that our decision to open the office is sound.  I went to last Thursday’s Open Angel Forum,  co-led in NY by First Round EIR Charlie O’Donnell, and started by @Jason (Calacanis) and Tyler Crowley out in LA.  We saw six excellent companies, any one of which would have gotten at least into our due diligence.  Being the grandfather of several NYC based children, Aristotle Circle, which noted that admissions rate to NYC kindergartens are at 7% - worse than all the Ivy League schools- is solving a true pain point for people, getting admitted from pre-K to graduate school.  Kodingen.com  has created a cloud development environment that seemed easy to use, and well designed for the types of virtual companies being created today.  Have already made two recipes from Food52.com, started by ex-NYTimes food editor Amanda Hesser, checked out the maps from UpNext, and pointed some of our other companies at HD Cloud – for video transcoding at high speed using the cloud.  Sample sale aggregation is coming, and MyNines.com already has it.

All in all, it’s clear that New York City is a vibrant place for startups, not only in the media and advertising technology areas, but also in the more technical side.  I’m hoping we get our final city permits today and can finish our construction in the next three weeks.  And if there’s an Open Angel Forum in your area, and you have a startup, by all means apply.

Thoughts for a new decade

I can remember talking with Idealab’s Bill Gross just before the Millenium about themes for the coming decade.  At Idealab we decided on more internet (Bill having created Citysearch and Overture among others in the prior decade), energy and robotics.  A number of excellent companies were spawned as a results of this, including eSolar which is now putting solar energy into the Southern California grid, Evolution Robotics, about to announce some exciting products at CES, and Snap, Perfect Market and Insider Pages (since sold to IAC).

In mid-decade,  I helped Josh Kopelman as we started First Round Capital.  Josh and I had similar thematic discussions, and decided that the space between angels and VCs could provide real opportunities to invest, and that the Web 2.0 and social media phenomena should be areas of extreme interest.  I am proud to be part of First Round’s growing success, and our recent sale of Mint to Intuit, and our growing portfolio  serves as evidence that we got at least something right.

Now, we’re about to start a new decade, and I’ve been pondering what themes will make sense as we move into the teens.  As readers of this blog know, I have a tendency to invest at the way too early stage. This tendency is fortunately tempered by the various wonderful people I’ve been able to partner with, so my current thoughts should not be seen as a blueprint for First Round, Idealab, or any specific investments.

It is clear to me that one of the great revolutions in the next decade will be the exploration and exploitation of the personal genome.  Further this will largely, but not exclusively, be done using the tools of information technology that will later drive various pharma and other technologies. There should be lots of opportunity to find and invest in companies that lead and ride this wave.  First Round already has a small toe in this water.

Second, I have always found it useful to think about what could happen when a constraint is removed from present day computing.  In the decade just ending, one of those constraints was storage, which cost an enormous amount at the start of the decade, when the concept of a terabyte was large, and moved towards free by the end of the decade, when I could buy terabyte drives at Costco for $150 or less.  Wireless bandwidth will move in this direction over the teens , whether via WiMax or other technologies.  This means that all sorts of applications that need to move large amounts of data to and from servers will be economical.  As a corollary, mobile apps will become the norm, as the iPhone has shown the way.  I’ve even been watching Stanford’s CS 193P (programming the iPhone) course during this vacation. It’s available on iTunes University.

Third, I’m beginning to see people start to deal with processing massive amounts of data and making new sense out of it. The tools developed for handling giant datasets are important (First Round’s AsterData provides an example), but so are the applications. In particular, companies such as Neurovigil, making sense out of brainwave patterns, FitBit, aWare Technolgies and others making sense of accelerometer data, and other using vital signs, can lead to a revolution in personal health.

Finally, having been a participant in the eBook world as Chairman of Franklin Electronic Publishers, which sold the early Rocketbook, the eBookman,  and then sold it’s ownership in Mobipocket to Amazon, as a key part of the Kindle’s software technology,  I would say this is the decade of the eBook. And as we’ve watched the various music discovery and other sites grow during the past decade, we’re likely to see many new companies created in the eBook space – both better and more interesting hardware, and in software.

In any case, I’m going to enjoy watching the decade unfold, and will keep looking to be just a little too early, though maybe not way too early in my investing. 

Happy New Year to all.  #FRC

First Round Comes To NYC

When Josh Kopelman and i started First Round Capital in late 2004, we viewed it as an extension of the investing we had been doing for a while. Nurturing great entrepreneurs and interesting ideas in the new environment, one of capital efficient startups.  Part of our shared style was being location agnostic - we wanted to work with the best entrepreneurs, whether they were in the Philadelphia area we called home, in the Bay area, or anywhere else in the US. It was not a great surprise to either of us that more than half our deals were California based  - necessitating more than 20 trips a year for each of us, and leading to Josh's widely read and aptly title blog RedEyeVC.  To help in evaluating all the Bay area deal flow, we opened a San Francisco office, ably led by our Partner Rob Hayes.

I have always spent a fair amount of time in my native city of New York, and helped David Rose when the New York Angels was founded early in this decade.  So it was only natural that we tried to see as many New York deals as we could. In fact, we've now got more than 10 companies that are based in the NY area.  We've finally decided to formalize that, and ease the Amtrak redeye equivalent (6:30am Ben Franklin from Philadelphia) by opening a New York office of First Round Capital.  I'll spend a lot of time there, but continue working from the Conshohocken office as well - and don't see cutting down on CA trips. My partner Chris Fralic, and Phin Barnes will also spend time in the NY office.

I'm excited to announce that we've added one of New York's best known entrepreneurial community members,  Charlie O'Donnell as our first full time Entrepreneur in Residence.  Charlie has been very influential in creating and nurturing the infrastructure for startups in NY. He's helped create events where budding entrepreneurs, startup talent, angels, venture capitalists and the other service providers that make for a vibrant startup community have gotten together to share ideas, tips and moral support.  And he is an entrepreneur in his own right.

New York is seeing a surge in new company creation, fed by this environment and a growing number of experienced high tech and digital media savvy people in this great city. First Round is proud to become a resident member of this community.