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Posts Tagged ‘funding’

Internet Earnings

November 7, 2008 Leave a comment

Below is a chart of the current (October 2008) average benchmarks for websites who contribute to Bizak. Numbers are averages for Visitors, Revenues, Revenues per Visitor (RPV), Costs, Earnings, Earnings per Visitor (RPV) and Valuation. Bizak is categorized into industry, website type and revenue source. The chart below lists the averages for website type and revenue source.   

Internet Statistics

Online Startup

November 2, 2008 2 comments
To increase exposure for startups on Bizak we’ve opened up our project listings for public view.  Sartups on Bizak are categorized according to industry, business type and revenue source. 
The 19 categories below contain the listings for each industry – you can then sort deeper according to business type and revenue source.
  1. Internet 
  2. Education
  3. Advertising & Marketing
  4. Computers & Electronics
  5. Arts & Entertainment
  6. Finance & Insurance
  7. Banking & Mortgage
  8. Business
  9. Politics & Media
  10. Legal
  11. Construction
  12. Design
  13. Healthcare
  14. Industrials
  15. Non Profit
  16. Printing
  17. Retail
  18. Sports
  19. Transportation

Big Money – Recent Venture Capital Deals

October 22, 2008 1 comment

Over the last week there has been a handful of sizable rounds of VC funding in the tech space. Are startups trying to raise capital before the well goes dry? Or is this evidence that the market might not have a big impact on funding deals for companies with solid business models? 

Recent deals:

The Market & Angel Investors

October 20, 2008 Leave a comment

Over the last few weeks I’ve been talking to a handful of individuals who are interested in either investing in or acquiring infoMedMD and Bizak, respectively. To no surprise all of the conversations come back to current market conditions and how it will affect investments in technology. My assumption has always been that the markets will have more of a negative impact on angel investors than the more established VC firms. The reason being, angel investors use their own personal wealth to invest in startups – wealth that is more closely tied to the stock market and real estate industry.

For established companies with revenues of $3 Million or more there will still be venture capital available to them. It’s the early stage startups (and business plans) that will likely see the biggest investment impact. Those startups that are in need of over $50,000 to launch their application will likely have a difficult time raising that money. The stock market will remain in a volatile holding pattern for the next 12-24 months and this will make the angels very cautious. Unfortunately, some good ideas will have to wait while the market figures things out. Those entrepreneurs with successful track records will likely fare better.    

The nice thing about internet startups is that they don’t have to cost a lot of money to build and you DON’T have to use developers from overseas. By bootstrapping operations and finding the right developer, you can easily launch an impressive application for under $20,000. Bizak, infoMedMD and a soon to be released third application all cost under $20,000 to launch.  They are also 100% made in the USA – more specifically made in California and Massachusetts.

So, now is the time to hunker down, be frugal and more creative than ever!

Bootstrapped

October 13, 2008 1 comment

Well, last week was one heck of a week. Wall Street saw one of its worst weeks ever – actually the worst since 1933. After 8 consecutive days of decline the Dow lost 2,400 points, a 22.1% decrease in just 8 days.   Both the Dow 30 and the S&P 500 reached their all time high on October 9, 2007 closing at 14,164.53 and 1,565.15, respectively. The Dow is down 40% to 8451.19 and the S&P 500 is down 42.5 to 899.22, since October 9, 2007.  (Numbers as of October 10, 2008 close.)

Back in 2000 it was technology that drove the market down and this time around it’s the financials.  It will be interesting to see how much technology will be affected by this massive decline. The internet boom of the late 1990s and early 2000s was spurred by massive internet IPOs that saw stock prices skyrocket for companies with shaky foundations. Over the last 5 years there has been some massive internet valuations but most of them never went public – this could work to the internet’s advantage this time around. During the Web 2.0 era many of these startups were acquired or financed by established companies.  Of course some of these valuations were exorbitant, YouTube bought at $1.65 billion & Facebook valued at $15 billion, but they never IPOed.  Facebook has been flirting with an IPO over the last couple of years but given the current market they’re definitely not thinking about it now. One benefit of remaining in private hands is the ability to steer your company the way you see fit – not the way stockholders see fit which is often influenced by emotion.

One benefit of downturns is a startups ability (or need) to bootstrap operations, be creative and run a more efficient business model. Based on Bizak’s startup statistics over 40% of websites rely on advertising to generate revenues. Today is a good day in the markets but it will likely take years to get back to the levels we saw just weeks ago. The first department to feel this pinch will no doubt be the marketing department. Advertising across the web will decline affecting not only startups but also Google. For startups this will hopefully result in new & creative business models – hopefully more startups will generate product sales, services and subscription models. If a website can’t monetize their free content (advertising, Google Adsense) then they might be forced to charge (micro-payments maybe) for it. Adsense was already becoming worthless and these recent events will likely make it worse. 

Other startups will need to lower their burn rate to weather the uncertainty. I don’t think VC money will dry up as much as it did during the first half of the 2000s but it will probably take pause to access the trickle down effect. Right now the markets are running on a lot of emotion so we need time to pass before accessing the situation. Tough times tend to generate some of the most creative ideas – ideas that capitalize on the situation. Think of all the major web apps that you use today – Google, Myspace, YouTube, Facebook, LinkedIn.  All of these apps were post “internet bubble” products that were launched during a time when many thought the web was dead. They helped bring the tech sector back in force. This time around it’s the financials struggling and maybe it will be tech that pulls them out? 

All in all it’s a time to conserve and take the necessary steps to ensure the longevity of your application. According to Ron Conway, startups should heed the same advice he gave in 2000 which includes: 

  • If you are in a funding cycle, you should raise your funding as soon as possible and raise as much as possible.
  • You must aggressively examine and pursue M&A opportunities (unless you have over 12 months of cash reserves!) ro insure you have critical mass (including funding, customers, rolodex power, market
    share, cash, synergy, etc.).
  • Be realistic on valuations – they will fall so be ready and willing to co-operate.
  • Look for corporate partners to invest so you can raise more money. You should also consider a sale of your company to your corporate partners.
  • While it’s safe to say entrepreneurs have had negotiating leverage with the “down draft” in the market, the VC community will start exercising their leverage.

For me I have two startups and three more on the way. None of these applications are funded and all of my “salary” is in equity which will require me to wait another 1-3 years. During this time I’ll continue to launch new and exciting applications but I also need to prepare for the unexpected. To accomplish this I’ll likely join/partner with a well funded startup/company where we can equally benefit during this exciting time. Interested?  My resume and my bio.

It’s an exciting time because social and economic events create a snow ball of technological innovation. Innovation that can grow quickly and adapt efficiently. Whether this is the end of Web 2.0 or not doesn’t matter since no matter how you define it the next wave of innovation has just begun.

Investors, Financing, Venture Capital & Funding Opportunities of Startups

September 16, 2008 Leave a comment

To register please visit: https://www.bizak.com/investors/register

This evening, actually 2am this morning, we at Bizak are starting to role out the investor side of our database. This means investors and corporations can finally view and compare startups within our database.  Different from the startup side, investors can actually see specific data, web analytics and financial data for all startups who elect to have their information published.  

Right now, as of 2am Tuesday morning, investors can subscribe to our XML feed and view and compare benchmarks to startups.  All of the investor applications will be completed by Wednesday afternoon.  The features that still need to be added are the profiles (contact information, bio, links, etc.) for startups and the ability to view and sort the top ten projects according to each sort.  A sort consists of Industry, Business Type and Revenue Source.  For example, you can view the top ten startups who are in the Internet industry, operate a business network and have a subscription model.  

As for the XML feeds this allows investors, venture capital firms and corporations to integrate our data into their platform for both internal use and database access for clients.  Examples of the data included in the XML schemas can be seen below.  Both of the XML files are being modified a bit more and contact phone and URL will be integrated into the startup schemas. Each subscriber has their own unique URL which returns data in XML format using the below schemas.

To register please visit: https://www.bizak.com/investors/register

For additional information about the investor side of Bizak please view the video below the XML data.

Startups & Projects

<?xml version=”1.0″ encoding=”UTF-8″?>
<projectlist>
<project>
<startup>Startup Company Name (text)</startup>
<startupcontact>Startup Contact Name (text)</startupcontact>
<projectname>Project Name (text)</projectname>
<industry>Industry (text)</industry>
<websitetype>Website (text)</websitetype>
<revenuesource>Revenue (text)</revenuesource>
<visitors>Visitors (number)</visitors>
<revenue>Revenue (number)</revenue>
<rpv>Revenue per Visitor (number)</rpv>
<costs>Costs (number)</costs>
<cpv>Costs per Visitor (number)</cpv>
<earnings>Earnings (number)</earnings>
<epv>Earnings per Visitor (number)</epv>
<estimate>Bizak Estimate (number)</estimate>
</project>
</projectlist>
Benchmarks
<?xml version=”1.0″ encoding=”UTF-8″?>
<benchmarks>
<benchmark>
<industry>Industry (text)</industry>
<websitetype>Website (text)</websitetype>
<revenuesource>Revenue (text)</revenuesource>
<visitors>Visitors (number)</visitors>
<revenue>Revenue (number)</revenue>
<rpv>Revenue per Visitor (number)</rpv>
<costs>Costs (number)</costs>
<cpv>Costs per Visitor (number)</cpv>
<earnings>Earnings (number)</earnings>
<epv>Earnings per Visitor (number)</epv>
<estimate>Bizak Estimate (number)</estimate>
</benchmark>
</benchmarks>

 

 

Startups & Public Companies

September 3, 2008 2 comments

Below is a Vencorps forum post in response to a question asked about the ability of Bizak to value startups.  – Tom

Startups and public companies are indeed very different animals but revenues are revenues. Bizak valuation is based purely on revenues – not speculation. So if a startup makes $1 million/year and a public company makes the same then our calculations will value the two exactly the same, ceteris paribus. Of course public companies are more established and therefore usually have higher revenues and valuations. Our calculations also take into consideration the value of each visitor – we call it earnings per visitor (EPV). For example, if a gossip site receives 1 million visitors, but only has an EPV of $0.01, and a corporate consulting firm has 1,000 visitors with an EPV of $10 then both sites have the same traffic value ($10,000). This is then added (like a bonus) into the Bizak Estimate. In my opinion if you don’t know anything about your visitors then there is very little value in them – one major problem that Facebook is having.

Facebook was valued at $15 Billion mainly because Microsoft didn’t want Google to get its foot in their door. Back in June, I wrote an article about Facebook’s revenues (Facebook Revenues) which used the Bizak calculator to come up with a valuation of $1.3B for Facebook. This estimate was based on Facebook’s 2008 expected revenues of $350 million. If you input the $15 Billion valuation into the calculator then Facebook needs $313 million/month in revenues to justify that $15B valuation. Since Facebook is having a lot of trouble monetizing I don’t see that happening this decade. I also don’t see Facebook going public anytime soon since the markets will laugh at that $15 billion and value them more in line with revenues.

As for Twitter this was one of my favorite examples that I previously wrote about (Twitter Costs). Since Twitter has no revenue model and huge server costs my calculations actually valued them at a negative $600,000. The negative valuation is a result of that visitor value (EPV) that I referred to in the first paragraph. Of course there is a lot of value in Twitter that must be considered (and has been) by venture capitalists but since Bizak is based purely on revenues we gave it a negative valuation.

In sum Bizak doesn’t predict what the future value of a startup might be, but either does the stock market for public companies. Just like stock prices and market capitalization, the Bizak valuation will increase for startups who increase their revenues. In actuality the stock market probably places more hype and speculation into their valuations then we at Bizak do.