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New York Startup Index: 500+ Companies Ranked by Momentum
This is the Startup Index series, an ongoing effort to measure the momentum of startup companies using external signals. It is calculated based on weighted factors such as web traffic, social media share of voice, inbound links, etc. I usually add some music, to make cruising a spreadsheet a little more fun. Enjoy!
The Startup Index is inspired by the Seattle 2.0 Index, which Marcelo Calbucci produced each month to create a leaderboard for local startups and it is now the basis for the Geekwire 200 in Seattle. But why stop at Seattle? There are many so many startup communities around the world, and today I’ve applied our algorithm to 533 startups from New York that we’re currently tracking. Check them out, see who’s on top and how they’ve been trending this past week, and as always let me know if there are companies I’ve missed and I’ll get them added.
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Funding Rundown: SureDone, Bleachers, Perspecsys, Zoove, LearnSprout & Mutualink Raised New Funding Today
One great source for stories about private companies in the U.S. are the SEC filings of REG D forms. These forms are filed by companies who have completed or are in the process of raising funding. They are not required for many companies, but you’d probably be surprised to learn how many interesting companies are raising money and not being covered by the tech news media. I pull together the most interesting ones through the day, some get their own story and others make it into the roundup.
Do you have a startup that recently raised, or a tip about a company I should cover? Drop me a note at morrilldanielle (at) gmail.
SureDone Raises $416K from NY Angels for Multichannel Ecommerce Management Solution, Edward Tolson Joins Board — Other investors include Philip Grieshaber, Jeffrey Silverman, Sacha Levy and Leo Wang. [Source: SEC Filing]
Bleachers Raises $1M from Angels for Video Sharing Geared Towards Parents & Kids — The founding team includes co-CEOs Sam Klein and Frank Jordan as well as Emily Mommsen (CFO). [Source: SEC Filing]
Perspecsys Raises $9.8M Series B for Cloud Data Protection (FinSMEs reports $12M) [Source: SEC Filing]
Zoove Raises $15.3M Venture Round for It’s Star Star Vanity Numbers Service — Converts Promissory Notes [Source: SEC filing]
Imagine K-12 Graduate LearnSprout Raises $2.7M from Formation 8 for Education APIs — The company launched in July 2011 and is also backed by Andreessen Horowitz. [Source: SEC Filing]
Mutualink Raises $2.3M for Realtime Communications Platform Used by NATO Special Ops — The company’s advisory board includes retired four-star U.S. Army General Barry McCaffrey, General Wesley K. Clark who was a former U.S. presidential candidate, The Honorable Tom Ridge – former first U.S. Secretary of Homeland Security, Ronald E. Brooks – Captain of the San Mateo County California Sheriff’s Department, andd Frank E. Rodgers – former Deputy Superintendent of the New Jersey State Police. [Source: SEC Filing] -
Dreamhost Spinout InkTank Storage Raises $13.4M for Ceph Support & Services
In a regulatory filing today it was revealed that InkTank Storage, the creators of Ceph, have raised $13.4 million in venture funding to continue building their support and services business enabling customers to implement Ceph infrastrucutre. The company is backed by New Dream Network.
Ceph is a massively scalable open source storage system which is operated on-premise by companies who want to essentially build the equivalent of Amazon S3 (but run in-house) and provides object, block, and file storage. Businesses deploy Ceph to their existing commodity on-premise hardware and scale out their storage as needed. While S3 is probably the easiest solution right off the shelf for startups and other small technology companies, companies with specific security needs and those with on premise architecture are welcoming this open source alternative. As one developer put it, “unless you know you need it you probably don’t, yet.”
The company was cofounded and launched in May 2012 by several of the original open source Ceph authors including Sage Weil, who serves as CEO & Chief Architect of InkTank and was formerly cofounder of Dreamhost. InkTank also boasts Dreamhost as a featured customer, where they power the DreamObjects scalable object storage service.
At OpeStack Summit last month GigaOm’s Barb Darrow indicated that “Ceph is hot, hot, hot”. According to her post:
Based on an informal poll of speakers and attendees, Ceph storage is where it’s at. The Swift storage system? Not so hot. Best Buy moved from Gluster to Ceph because of the latter’s self-healing capabilities. Ceph offers object and block storage all in one integrated product while Swift handles object storage only. Mirantis EVP Boris Renski said Swift, which comes out of Rackspace, has lots of production installs, but Ceph is viewed as having a more “elegant†architecture. “Unlike Swift, you can use Ceph as the backend for both object and block.†Also, because of a better algorithm for handling data replication, it can promise better scaling, he said, although Mirantis has not fully tested that out yet.
The VAR Guy (a great blog btw if you are just getting into reading about enterprise tech) covered Cuttlefish, the latest release of Ceph, noting that InkTank has been developing impressive channel partners in the past year:
That update, combined with the close relationships Inktank has forged with other big-name partners including SUSE, Canonical and Dell, promises to raise Ceph’s profile within the channel even further, and cement its key role in open-source Big Data computing. That’s a lot of momentum for a storage platform that essentially had no commercial presence at all until about a year ago. We’ll stay tuned as Ceph and Inktank continue to move forward.
An air of inevitability forming around Ceph and InkTank. Watch this space.
To learn more I recommend this talk from OSCON by Ross Turk:
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Loki Studios, Maker of Location-Aware Mobile Games, Acquired by Yahoo!
Loki Studios, makers of the location-aware mobile game Geomon, has been acquired by Yahoo! according to an announcement on their website. The company was cofounded by Ivan Lee, Chris Meill, and Brian Laub and the goodbye note is also signed by Marco, Sam, Gene and Bart. It looks like the 7 person team will join Yahoo’s mobile team. Notably Jessica Lee, the companies UI designer, does not appear to be included in the note so it is unclear whether she will be part of the acquisition.
The Geomon game, their first and only title, was free to download but makes money when users make in-app purchases to improve their characters and purchase other premium experiences. Sources familiar with the company say they had roughly 300,000 users signed up. According to AppData they last shipped an update to the iOS app in July 2012.
Yahoo! has been on a tear with small talent acquisitions this year so far, and PandoDaily’s Erin Griffith wrote a piece titled “Can’t raise a Series A? Just sell yourself to Yahoo” suggesting that many small teams unable to survive the Series A crunch might find safe harbor there. The article goes on to describe common characteristics of companies acquihired by Yahoo!:
Her targets all generally fit the profile of a Series A crunched startup (though obviously I can’t speculate on each of their exact options when they sold). For starters, none has raised a Series A round. Most had accumulated seed funds in the form of a “party round†with long lists of angel investors but no lead investor. All are consumer-facing. None had experienced any truly notable traction before the deal. (Astrid seems to have been the biggest with 4 million users.) Only one or two had a clear path to revenue. All were well-designed by talented teams of fewer than 10 employees. None of their products were particularly revolutionary or even unique in their categories. All of them were shut down and folded into Yahoo’s offerings upon acquisition with hardly a peep of outrage from their users.
Other acquisitions by Yahoo! this year include Stamped, ONtheAir, Snipt.it, Jybe, Summly, Astrid, Milewise, and GoPollGo.
Read the full announcement:
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Revenue vs. Value
I get a lot of feedback asking why the monthly startup momentum index doesn’t include revenue as a signal. There are two reasons, and the first is that most startups don’t want to provide that data to outsiders. The second is a bit counterintuitive, but stick with me and I’ll explain: revenue doesn’t actually matter for finding hot early stage startups.Startups aren’t supposed to be revenue machines right away; at first they’re designed as business model experiments.While revenue is a useful signal to founders, indicating they are creating something people want, it is also a lagging indicator of success. Startups who are willing to reveal revenue data publicly do so because it reflects well on them. They’re in control of their destiny and decide when and how to raise money. Investors and employees have already missed the window of massive upside that comes with getting in before the company reaches this milestone.
By the time a startup has a predictable and steadily growing revenue stream that means it has built a product and brought it to market successfully, so the risk of investing in it has gone down tremendously and so has the reward. This is why Y Combinator stands to be massively successful – they invest early enough to capture the upside of startups that haven’t figured these things out yet, and then they help them improve and de-risk the company before involving future investors. The YC model tolerates much greater uncertainty than other angel investors and in return they receive outsized gains from big wins, plus minimal losses from companies that fail.
How can we identify these pre-revenue startups with significant upside and get involved in them before this happens? I believe there are many publicly available signals that indicate how a company is doing, and I am building tools to track, measure and organize this information.Revenue First
Early revenue can be dangerously distracting for founders. Once you have some of it you want more, and without strict discipline it’s easy to optimize for immediate gratification rather than the big vision. For founders who have never made $10k a month this feels like a lot of money, especially for the young software engineers straight out of college who never even had salaries that high.
Now in order to make your graph go up and to the right you need to make $12k next month, and $14.5k the next, and $17k the month after that. And that’s just 20% growth month-over-month, which is not actually that sexy of a growth rate – after a year you should have a $87k month in revenue, giving you an annual run rate of just over $1 million. That’s a tiny business, and remember this is revenue not profit. If you run a tight ship this might be break even, but if you’re doing B2B software you probably need to hire support, sales, and lot’s of engineers. You need to raise more money.
What if this same startup, who is seeing steady but not spectacular linear revenue growth, is also fast becoming the most well known new company in its emerging space? They’re discussed on Hacker News all the time, friends have started using them, they’re clever and engaging on Twitter and I see them retweeted all the time, their company blog shows up on Techmeme once in awhile and when their CEO comes to speak at a conference he is the highlight of the event. I’m seeing them everywhere. A couple friends have gone to work there.
These signals, combined with dozens of other more subtle ones reaching me subconsciously, lend the company an air of inevitability.Be everywhere, be awesome.
Capturing Value
How much does this public awareness increase the value of the company? A lot.
As a founder, investor, or employee what matters more? $10,000 in revenue this month or the beginnings of a brand that is known and loved thousands of people and growing every day.When you see unexpected, small, or otherwise questionable companies in my latest top 20 list swallow your cynicism and dig deeper. For investors this is a list of pre-qualified leads worth reaching out to. For knowledge workers these are companies with upside opportunity if you join the team right now. For founders, this is acknowledgement of the hard work you’re putting in pre-revenue to build a massively valuable company.
Don’t let revenue be your vanity metric.
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Seattle-based Clipboard Acquired by Salesforce, Will Shut Down June 30th
In an email sent to users today Clipboard, a service similar to Pinterest for organizing links and bookmarks across the web, the company announced they have been acquired by Saleforce and will shut down the service on June 30th, 2013. The company has also posted a farewell announcement on their blog.The email also states they acquired 140,000 users. The company raised a seed round of funding in October 2011 from Andreessen Horowitz, Index Ventures, CrunchFund and other angels.
Clipboard founder Gary Flake is a well known Yahoo! expat who lead their Yahoo! Research Labs following the Overture merger where he had been Chief Science Officer. Flake also spent time at Microsoft where he founded Microsoft Live Labs and served Technical Fellow. Given the lack of traction of Clipboard and the fact that the product is being shuttered, this acquisition appears to be focused on acquiring him and other talent from the team.
Read the full announcement here:
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Top 20 B2B Startups with the Most Momentum Lead by Disqus, Virool & Bitnami
Last week I published the April index of startups ranked by momentum. But scrolling through hundreds of rows isn’t much fun when all you really want to find the diamonds in the rough, so I thought I’d pull out the top 20 B2B companies with the most momentum right now.The index is built using time series data collected on several signals to create a momentum score combining the footprint of the company and the velocity of changes in the signals. It’s also designed to let consumer and B2B startups to stand on equal footing.
I’ve also included their most recent funding date and round amount. Enjoy and if you have suggestions for startups we should add to the index submit them here.
Full Disclosure: I am an angel investor in Bitnami.
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Facebook
I told a friend today that I really only use Facebook because I feel obligated for work. It’s true, I don’t read the feed and I don’t spend a ton of time there. I post links to stuff I write and respond to messages and chats, but I am not into the rest of the site at all anymore. I hate the feed, it is overwhelming and takes forever to process. I’ve friended too many people who I barely know and it’s too much work to purge. I just don’t care that much about my Facebook account.
I went to community college briefly and then went straight into the workforce, so when Facebook was sweeping through colleges I wasn’t able to get an account (no college email address). I remember the first time I saw it I was visiting a friend at UC Davis and it had recently come to her campus. I had used Friendster and was really into Livejournal, not that big on Myspace, and Facebook seemed pretty simple. She said everyone was obsessed with it, and I signed up when they made it available to everyone. After I signed up I just kind of ignored my account for 6 months (I would later do this with Twitter too) until one day I got an email saying someone had tagged me in a picture. I came back to see what the picture was, and then I stayed.
Shortly after I got onto Facebook I stopped posting on my Livejournal, eventually deleting it for real (not that I hadn’t deleted it tons of times to “make a statement” as Livejournalers used to do). The Livejournal community had kind of died, it had been bought by some Russian company and lost its soul. I was ready to move on and Facebook was ready to let me in. My Xanga account also lost my interest, and my AngelFire site. I had spent countless hours customizing those websites with my meagre web design skills to be a reflection of my own personality but Facebook offered a simple design centered around what I found most interesting – other people.
Fast forward to today and I use Facebook like everyone else. I share pictures, notes, new stories, participate in groups and try to present myself and express myself in that blue and white world. But I know how much I’ve lost – I have a blog I still update regularly and design myself with open source WordPress.org as the backbone. Everything meaningful goes here, not on Facebook. I know my long term social presence on the web, and in the world, won’t be on Facebook and I house my writing somewhere that I control completely. The server, the code, the design, the word… it’s the real expression of me. And while Facebook has evolved in one way I’ve evolved in another direction, and I don’t want to be inside that box.
I know that the motivation to use Facebook is broken for me because when I put out some new information like a status or a picture and no one comments I’m kind of sad, and then I feel ashamed of the fact I’m even considering filtering what I post based on whether I think it will get a “like”. How shallow!
When I put up a new post on my blog, even if I get no comments, few tweets, few pageviews, I feel good. Writing something and publishing it here feels like making a small creation, revealing a small bit of myself, offering up a tiny sliver of something new that I made today. So I think the next Facebook, at least for me, won’t be Facebook at all. It will be a place where I can control the experience of my visitors and express myself as an individual. It is more like to be Wix, Tumblr, Svtble, Strikingly, Medium, etc than anything dubbed as a “social network”.
Hat tip to Scott Hanselman, who has influenced my thinking on this for awhile and who I can finally relate to first hand. If this post resonates with you please check out his post “Your Words Are Wasted”.
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HZO Raises $3.6M to Waterproof Pretty Much Anything
It seems the day I take the protective case off my phone is the same day I spill a cup of coffee on it, and adding a case to my beautiful iPhone 5 ruins the beautiful aesthetic.While these complaints are definitely first world problem, waterproofing electronics is a big business and according to a regulatory filing HZO has just raised $3.6M more to continue its development of nano-coating technology to waterproof devices.
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Quincy Jones Raises $682K More For His “Rosetta Stone of Piano” Startup
As someone who loves (and misses) playing the piano, I was excited to see a regulatory filing showing that Playground Sessions has raised $682,275 to continue building the piano lessons software startup.The company is founded by Chris Vance and co-created by Quincy Jones, a living legend in the entertainment industry and recipient of 27 Grammy Awards. The service was launched in February and Jones calls it “the Rosetta Stone of piano”.
After 3 years of hard work, I’m announcing the launch of my new product @playgroundpiano, the Rosetta Stone of Piano. bit.ly/mRPO3R
— Quincy Jones (@QuincyDJones) February 19, 2013
Michale Carney of PandoDaily covered the company in April and I enjoyed his recounting of Jones listening to a David Sides performance intently. As he described it:
“I had the privilege of sitting next to Jones during the performance. For a man who has collaborated with Sinatra, the Beatles, Michael Jackson, and other luminaries, it was inspiring to watch him become engulfed in the music. While he started off quietly, a few turns in Jones was feverishly tapping his foot along with the beat and humming the melody while swaying in his seat. It was the picture of a man squarely in his element.”
Here is a video of that performance:
According to Carney, Sides scored a 99% in the app for the rendition of One Republic’s “Apologize”.
Investors in this round include two agency execs: Andrew Howlett – CDO of Rain and Neil Munn – CEO of Zag at Bartle Bogle Hegarty of London. The company previously raised $160K in October 2012 from these same investors.
Aspiring recording engineers – it’s important to know how to read music – Quincy Jones has a learning tool for that ow.ly/jI9WX
— Womens Audio Mission (@womensaudio) April 3, 2013
Becoming a member of the service costs $9.99/month to access the community and bootcamp materials. From there members received discounts on tutorials and sheet music, which can also be purchased by non-members at a higher price. Members also get access to badging, leaderboards, scoring of their practice and many other social features to encourage them to practice and play.
Not sure who Quincy Jones is? Listen to this barbershop quartet style tribute to The Dude featuring Ludacris, Naturally 7 and Rudy Currency doing “Soul Bossa Nostra”:
