SXSW 2014 - MARCH 7-16, 2014 AUSTIN, TX
Being the leading Music Industry educational event in the country can be a difficult task for anyone but for Rick Perry and the state of Texas, which holds the title of largest private sector employer growth in the United States, it seems like a walk in the park. Actually more like the entire city ;-)
The event offers attendees a Film Festival, a Music Festival, a Trade Show for companies to showcase their products/services while educating consumers both for Music Gear as well as for Gaming and Interactive sectors. There will also be Arts, Crafts, Culinary and sports activities that will complement the many educational sessions filled with industry members, guest speakers, aspiring artists and entrepreneurs alike.
This year, more than 150,000 attendees, 30,000 worldwide advertising and marketing creative professionals, 3,000 volunteers and at least 2,000 local, regional, national and international artists have made arrangements to take part in 800+ educational sessions and present in 100 stages.
TheWirelessCowboy.tv will cast a bright spotlight specifically on the strategic and tactical lifecycle business decisions discussed by both the artist and their management including tools of the trade.
So, now that you have mastered your talent,
how far will it take you?
AT SXSW 2014 there are countless networking opportunities to explore that question however, I want to highlight a few of the most important to young entrepreneurs and artists ready to take their careers to the next level.
"IN-CORP-o-RATING Your-self"
From Federal, State, City and private technology hubs and incubators all the way up to venture capitalists and angel investors. The entire country is committed to the success of our largest international export.
President Obama's Council on Jobs & Competitiveness along with the National Advisory Council on Innovation entrepreneurship are fueling economic recoveries but there are countless other private organizations like, Start-Up America Partnership and Start-up Weekend which have fused together to form global resources like UP-Global.
Recently, even the un-employed are getting help through a program known as Start-Up Quest designed specifically for them. These organizations have gathered great thinkers and doers together to inspire all of us to take calculated risks and bring forward our ideas to market.
Former executives like John Sculley from Apple will present along with current CEO's like Fred Ehrsam from Coinbase, BitCoin's most popular Wallet Service Servicing 900k wallets. They will discuss the good, the bad and the ugly of the various 21st century tools available today.
Speakers like Alex Mital will discuss the discouraging venture capital macro-realities FOR the masses and the need for safer crowd-funding sites like IndieGoGo and KickStarter to invest in micro-ideas FROM the masses.
Aaron Levine founder of BOX, a file sharing and collaboration site he started while in college back in 2005 will discuss how he managed to grow it into a 2 Billion dollar business. In contrast, smaller entrepreneurs like Sung Kim will have the opportunity to inspire all of us by bringing their most recent Kickstarter projects, in his case a project called GESTURES just recently backed.
Of-Course there will always be room for great leaders like Steve Case who through his Washington DC venture capital firm, Revolution has funded many start-up companies like LivingSocial and ZipCar just to name a few.
Marc Cuban, who started as a bartender sleeping on the floor and is today a billionare owner of the Mavericks basketball team and Shark-Tank angel Investor will inspire all of us along side names like Guy Kawasaki ( Apple ), Nick Deprey ( HomeStage ), Peter Jongerius, Craig Key ( Space150 ) Blake Irving ( GoDaddy ) and even presidental family members like Chelsea Clinton and Lauren Bush Lauren who along with Eleanor Whitney will lend a bit of government advocacy to the entire line-up.
While some speakers focus on funding there is a huge interest in empowering women into the entrepreneurial bandwagon so bloggers like Christina Vuleta from 40/20 Vision @4020vision and @FortyOver will focus on Women, Age and misconceptions, bringing along angel investors like Susan McPhearson, Business owners like Maria Thomas ( Etsy, SmartThings ) and community leaders to round the table.
The entire effort is caped by various in-festival events, contests and awards like Start-Up Austin from the Austin Chamber of Commerce. The #SXSWReleaseIT hashtag for short pitches. The Peter Thiels prestigious fellowship program. The V2V Venture Pitch emmceed by Christine Herron. ( Intel Capital ) The Start-Up ECO Speed Pitches for clean energy companies like AdBm, Beyonic, Enervee, Faraday, Fluitec, Framergy, GELI, GreenWizard, Librii. The Digital Creative Job Fair and
The Music Hackathon Championship sponsored by ATT and Tech Open, Air Berlin, Beats Music, Choose Digital, Warner Music Group, Gracenote, Rdio, Senzari, The Echo Nest and Spotify.
Finally The Film Start-Up Alley and Music Start-Up Village will open the floor to national and international companies including a large delegation from Brazil ( 4th largest economy in the world in the next 15 years currently hosting the 6th Largest internet user base ( 86 Million ) and the largest Facebook/Twitter user base along with 123 Million cellphone users.)
Now a 21st Century event would not be complete without the presence of the media and we will have both traditional and digital. Of Note are Rohit Thawani Redditor and Ink Karma up-loader at @Vohit4rohit, Randi Zuckerberg Marketing professional and Dot Complicated Editor-In-Chief.
SXSW 2014 ACCELERATOR START-UPS :
ANALYTICS
Blab - Consumer conversation predictions
SocialGimpz - Mobile big data measurements
FlipTu - Social media management aggregation platform
MobiSocial - Social data ownership
IndieSocial - Social insights revenue, conversions, acquisitions
DEVELOPMENT TOOLS
Tsugi Builder - Cloud mobile app compiler IOS, Android & Unity project ( test/deploy )
WEBSITE DESIGN
Nano Media - Mobile ads NOT 320x50px banners
ViddyAd - Commercially licensed videos and images
Samba.me - Video sharing with reaction shots
Surfly - Surfing the web together
BUSINESS TOOLS
PlayCanvas - First cloud hosted 3D game SDK
SonarDesign - Create, share, publish, monetize, promote APPS
Waigo - Cloudless translations
InsideMaps - 3D furniture modeling in home
ShopStoree - Store virtualization
Ferris - Social video app
Shoto - Private auto cloud photo sharing
MightyCast - Cloud connecting physical objects
MentorMob - Crowd-sourced learning guides
ENTERTAINMENT
Cinematique - Interactive motion touch video
Zepp Labs - Mobile motion capture
HexAirBot - Quadcopter with Arduino SDK and WIFI cam under $159
GADGETS
Eyeris - Webcam with emotions recognition
PPLConnect - Share cellphone with ANY web device
Skully Helmets - Augmented reality ( AR-1 )
Avegant - Wearable head mounted displays ( the Glyph )
Theatro - Wearable Enterprise Augmented retail SAAS
SXSW 2014 TOOLS OF THE TRADE :
GODADDY.COM ( GetFound )
USE it to Build your website
USE it to Get your website/company found
USED with Google, Yahoo, Yelp, FourSquare
SPOTIFY.COM
USE it to Create playlists for promotional branding and marketing
USE it to Create merchandising promotions
BEATS MUSIC
USE it to Create playlists for promotional branding and marketing
USE it to Create merchandising promotions
DISTROKID.COM
USE it to Distribute on Itunes, Spotify, Beats, Rdio, Deezer, Amazon, Google Play
SONGAMPR.COM
USE it to Outsource your merchandising operations
USE it to Sell merchandise on Spotify and Beats Music
USE it to Manage your inventory
USE it to Mark-Up your merchandise
USE it to Create landing pages with e-commerce for your merchandise
USE it to Process your transactions and fulfill your orders
USE it to Collect your profits
USE it to Manage your customer service
ARTISTILINK.COM
REDITT.COM
USE it to Recruit an army for "street credentials"
USED by BuzzFeed, Huffington Post, CNN and ESPN
USED by PR, agencies, brands, creators, start-ups, film-makers
Business Cycle Funding Options : START-UP
According to the Bureau of Labor Statistics there are roughly 150 million tax returns in the USA every year of which 20 million are small business owners and 10 million medium to large enterprises, Whether you are a business owner now, looking to start your own or working for one of these employers, it is important that you understand the following business goals as you move forward with your career and possibly launch the next disruptive start-up.
The Small Business Administration states that the average cost of starting a business is around $30,000 usd and most online and home based businesses can actually start for 1 /4 of that. The consultants, freelancers and online entrepreneurs that operate these sole proprietorships, LLCs justify" account for almost 2/3 of the total companies out there.
Let's look at start-up financing first. . .
SELF FAMILY FRIENDS
They are an entrepreneurs first option after the banks turn them down.I ronically, in today's post recession, underwater foreclosure, 99 week unemployment, wall street bailout, Bernie Madeoff upside down world they may be the only ones you can trust and believe in your ability to repay the debt. None the less be it a bank or your friends you will need to make a business presentation that is professional and makes good business sense so in either case this magazine is for you. Remember, the average small business can take 24 months to turn a profit.
BANKS
Will not look approve your business plan unless you have at least 2 years of Balance Sheets or Profit and Loss in your business or marketing plan. Even if you do, you will have to secure the loan with collateral like your home at a much lower value than it appraises and begin principal and interest payments immediately after disbursement. The SBA and the government may be of assistance if you are a minority, woman or veteran owned business and certain industries and markets may receive special loan guarantees also to relax lending requirements.
ANGEL INVESTORS
Can be a source of personally detached funding but at the high cost of loosing equity in your company and voting control. These investors are focused on funding new ideas and taking ownership so they can cash in at the end either by being bought out or selling the business to the highest bidder. The good news is, they do not require repayment immediately and they will wait 1 -2 years for you to grow your business. Think Shark Tank! ! !
VENTURE CAPITAL GROWTH CAPITAL
Firms like Sequoia and KPCB will be the toughest funding to acquire since they disburse in rounds rather than lump sums focusing on larger business ventures. There are more than a thousand firms in the USA with various verticals as their focus and various degrees of success so feel free to shop around. VCs recoup their capital investment 75-80% of the time, charge interest rates between 5-20% and require median valuations of around 25 million in order to invest. 65% of VC firms are located in California, New York and Texas.
CROWD-FUNDING
Is the newest form of raising capital with KickStarter.com becoming the most innovative funding option for a small business owner with limited financing. Rather than struggling through more traditional and long establish institutional business lending processes you can dis-intermediate the middleman and go right to the consumer to present your product, service or idea. If you are able to convince your potential customer to buy from you ( they have become your financiers ) and you must reward them with something, which is usually first dibs on one of a kind products before anyone else and of-course lower prices than everyone else. Basically, you get to sell your product before it's even made.
GROWTH : Your Market Share
Growing your business can be much easier than starting up depending on your existing business ratios of equity and debt. For those that have high equity and low debt ratios local bankers will feel less risk in light of your business balance sheets. For those that do not meet that criteria the government and the small business administration will provide loan guarantees to lending banks in order to decrease the bank risks and promote lending, there are many seasonal and disaster loans that account other difficult situations faced by established businesses. Private equity lenders and even lending clubs or crowd-funders will lend to riskier nosiness models so long as they have profit potential, however if you are over leveraged in high debt and low equity your financing options will become extremely limited.
Let's look at growth financing options. . .
Secured loans with monthly payments of principal + Interest from banks and government backed lending institutions. Savings and loans local banks and credit unions can cater to smaller communities with local borrowing needs while commercial lenders can address regional ventures and national banks deal with inter-state commerce ideas. Regardless of the business footprint they all have similar lending requirements for their products like short-term loans usually 3-12 months, single purpose loans, seasonal loans known as fast and famine that are backed by the government small business administration. These lenders require good credit worthiness and scoring, business book auditing to prove the ability to repay the principal monthly with interest . The lenders carry the risk of defaults so approval procedures vary depending on many variables including tough business reviews that include auditing of financial statements for the last 2 years to understand your cash flow, profit and loss. In order to help secure the expansion capital you may be required to use your business assets as collateral at a lower assessed value, you may be required to place personal guarantees and liability using your home or other personal wealth including anywhere between 40-60% of your own cash.
Long Term longs with no monthly payments or interest but equity ownership and control of the business assets and profits is shared. There are over one thousand venture capital firms and private equity growth investors with unlimited capital like Sequoia and KPCB who are the top 2 firms in the industry. As we covered last week VCs are used to start new business or grow and expand your market share. The rules are significantly different and include limits on how much debt to equity a company has which should be no greater than 4X so that the company is not over-leveraged the Growth Capital firm Gains Equity & Control while allowing the business much Longer Terms anywhere between 4-6 Years and disbursing the loans into multi-round disbursements like ( Start phase, Early phase, Growth phase, and Late phase ) the investors can demand cash or convert their equity on exit by forcing a sale or liquidation of the business. Because the firms have such power they demand the businesses have high valuations and they must be able to show capitalization potential by both the business model and the market as well as high levels of executive management commitment to optimize for profit and find cost efficiencies.
DEBT FINANCING
Secured loans with monthly payments of principal + Interest from banks and government backed lending institutions. Savings and loans local banks and credit unions can cater to smaller communities with local borrowing needs while commercial lenders can address regional ventures and national banks deal with inter-state commerce ideas. Regardless of the business footprint they all have similar lending requirements for their products like short-term loans usually 3-12 months, single purpose loans, seasonal loans known as fast and famine that are backed by the government small business administration. These lenders require good credit worthiness and scoring, business book auditing to prove the ability to repay the principal monthly with interest . The lenders carry the risk of defaults so approval procedures vary depending on many variables including tough business reviews that include auditing of financial statements for the last 2 years to understand your cash flow, profit and loss. In order to help secure the expansion capital you may be required to use your business assets as collateral at a lower assessed value, you may be required to place personal guarantees and liability using your home or other personal wealth including anywhere between 40-60% of your own cash.
EQUITY FINANCING
Long Term longs with no monthly payments or interest but equity ownership and control of the business assets and profits is shared. There are over one thousand venture capital firms and private equity growth investors with unlimited capital like Sequoia and KPCB who are the top 2 firms in the industry. As we covered last week VCs are used to start new business or grow and expand your market share. The rules are significantly different and include limits on how much debt to equity a company has which should be no greater than 4X so that the company is not over-leveraged the Growth Capital firm Gains Equity & Control while allowing the business much Longer Terms anywhere between 4-6 Years and disbursing the loans into multi-round disbursements like ( Start phase, Early phase, Growth phase, and Late phase ) the investors can demand cash or convert their equity on exit by forcing a sale or liquidation of the business. Because the firms have such power they demand the businesses have high valuations and they must be able to show capitalization potential by both the business model and the market as well as high levels of executive management commitment to optimize for profit and find cost efficiencies.
INNOVATE : New Products
Funding your new product or service will be much easier than starting a new company however, depending on your existing profit margins you may not have enough R&D capital to go at it alone. Taping into your Equity and Debt may be your best funding option in that case. The same ratios of Equity to Debt apply at this lifecycle with high equity and low debt financing being much easier to acquire from local bankers, the government and private equity than high debt and low equity from venture capitalists.DEBT FINANCING ------------------------------ EQUITY FINANCING
Secured, Short Term, w/Interest Long Terms, No Payments BUT gain Control
BANKS / GOVERNMENT
PRIVATE EQUITY
CROWD-FUNDING
The SBA Small Business Administration will Guarantee some loan to the Banks in order to fuel economic recoveries, struggling communities and even specific minority groups and natural disaster and/or seasonal fast and Famine loans from local bankers, savings and loans, credit unions and commercial/micro lenders. The lenders will require that the borrower prove their ability to payback the loans either by having personal or business collateral, cash reserves and good credit. The loans are typically short term/single purpose loans, anywhere between 3-12 months and principal + interest payments will be due monthly. Although the approval process is lengthy it ensures low risks to the lender and allows the borrower to intently carefully consider the business use of the loan. The borrower must provide financial statements for the 2 Years with positive cash flow, profit & loss and business asset records which may be required as depreciated collateral should the business fail to repay the loan. The institutions may require that the borrower secure 40-60% of the loan upfront.
PRIVATE EQUITY
There are over 1,000 private equity firms and the number is growing, however the top 2 firms KPCB & Sequoia account for 31% of all investments with an average return of 5-10% gain over principal and 18-25% of companies funded failing altogether. Because of the high risks associated with lending companies with debt which is higher than 4Xs equity will not be funded because they are considered over-leveraged. The companies whose criteria is acceptable to the investors will have to share company control or equity as collateral which allows the lender to sell such equity at any point in order to repay the original investment. The private equity lenders usually have longer loan terms of 4-6 years and will commonly provide the loans in multi-round disbursement at various stages of the business lifecycle such as Start-ups, Early, Growth, Late. There are usually no monthly payments required until either borrower or lender exit the agreement however since the risk/reward ratios are much greater the approval process must include at least 1 million dollars capitalization potential and credentials depicting a strong executive team that is ready to optimize the business for profit by find every possible efficiency in order to grow exponentially and share control in that business decision making process.
CROWD-FUNDING
There are over 200 crowd-funding websites and services that have raised more than 2 billion dollars in the USA and 5 billion worldwide including some of the original consumer gadget trail blazzers like www.kickstarter.com out of Brooklyn, NY who has offered 54 thousand projects while raising 900 Million dollars from 5.4 million pledges/future customers. The average fee for posting a project is 5% and 44% of projects have been funded. www.indiegogo.com out of California focuses on Arts & Products. They have posted 44 thousand projects and raised 200 million dollars while charging anywhere between 4%-9% processing fees. 34% of the projects have been funded so far.. www.lendingclub.com focuses on personal loans and they have processed 300 thousand loans so far worth around 3 billion dollars while charging an average of 16% APR.
Many large and small companies are using crowd-funding for product development as well as new business ventures. It is the most exciting group to enter the field and promises to help entrepreneurs like you bring complete products to market in record speeds with little to no risk and long financing cycles by selling the product to consumers BEFORE it is actually manufactured.
MATURE OR DECLINE
As a business matures the natural tendency is to sit back and relax watching the profits roll-in, perhaps making as few adjustments as possible in order to keep the momentum going. However that is the most dangerous and difficult time in a business cycle as new competitors with lower overhead expenses can innovate much easier and faster.
Funding innovation at this stage will require that you make a solid presentation with high valuations as the "bait on the hook" and that you are prepared to lose 10-50% of your company equity to the venture capitalist you seek. If this is too high a cost for you then you must prepare for this contingency early on by saving for the rainy day that will inevitably come.
The fate of your company is in your hands and only you and your executive team can determine which is the best course of action at this crucial point. Depending on your continued enthusiasm for your industry, company, employees, supply chain, products, services and customers it may be time to expand your scope by opening satellite offices, expanding distribution channels, setting up a franchise program, mergers and acquisitions or going public in the stock market .
Anyone of those actions will require the additional resources of financing, process and human capital that you may not possess. Underwriting your IPO will be an expensive and arduous endeavor that many private companies dread, but access to an unlimited supply of international working capital with no strings attached can be a tempting proposition. Only you can choose to age gracefully into obscurity or rejuvenating your process, people and products before it's too late.
Anyone of those actions will require the additional resources of financing, process and human capital that you may not possess. Underwriting your IPO will be an expensive and arduous endeavor that many private companies dread, but access to an unlimited supply of international working capital with no strings attached can be a tempting proposition. Only you can choose to age gracefully into obscurity or rejuvenating your process, people and products before it's too late.
Regardless of the path you choose this is the time to stand up and take a hard look at your business. Any investor will want to audit your books anyway. Angel investors, private equity, venture capitalist, growth capitalist, local, regional, national and international banks. Most financial officers, accountants or CPAs can help you set up the tons of paperwork but since raising funds by selling stock in your company involves the general public an investment banker like JPM Chase, CitiGroup, Credit Suisse, Bank of America, Deutsche Bank, Barclays, Allen and Goldman Sachs will be required to register your IPO with the SEC in order for government oversight and the public interest.
These are the folks that buy your equity for an agreed amount and then sell it to the public. A necessary middleman if you want to ask for money in public. In reality going public requires a lot of expertise, a large team and money to pay the underwriting costs, so this is not for everyone especially considering the many other routes to working capital.
