New Ways to Fund Your Startup [VIDEO]

MSNBC's Your Business:
 Where's the Money?

It's not easy to go to the bank and get a loan these days. If you're looking to secure some funding for your startup, there are some options you may not have considered. Venture attorney Jennifer Hill has tips for new ways to find money.

08:06 by Robert dawne · 0

Female Entrepreneurs Seek Capital and Connections at SXSW

Jane Applegate is reporting live from SXSW in Austin.
Outnumbered by men by about 25 to 1, hundreds of female entrepreneurs are at SXSW Interactive to pitch potential investors, make connections and promote their apps and technologies.
“We’ve met some great people and already have a lot of follow up meetings, says Kaylyn Thornal, co-founder and CEO of Fanzooloo, a website and smartphone app that provides local information on tickets, parking, restaurants and merchandise for sports fans across the country. “There’s a couple of companies that would be really good strategic partners.”
Thornal and co-founder Natasha Bedu (pictured) traveled from Los Angeles to Austin to raise awareness of their new company and raise $500,000 from angel investors.
Sitting on the steps outside the chaos of the Austin Convention Center, they said the inspiration for their website came after they spent $40 on parking to attend a baseball game in San Francisco. Then, they spent two hours trying to get out of the garage after the game.
“When we finally got out of the garage, we passed a garage that charged $8,” Thornal recalls, adding that providing insider information to sports fans seemed like a good idea and spawned their new venture.
To support themselves and their new company, Thornal and Bedu both work in television production in Los Angeles. Thornal, an editor, originally pitched Fanzooloo as a reality TV show, similar to the popular travel shows starring Anthony Bourdain.  In 2009, even though the show didn’t sell, she decided to build a website and app. (She still thinks it would make a great sports-oriented travel show).
The potential universe of users is huge. Sixty percent of Americans are sports fans, she says, with 55 percent of men and 45 percent of women identifying themselves as sports fans. Last year, more than 100 million people attended a professional sporting event, with 73 million professional baseball tickets sold, Thornal says.
“Sports is the fifth largest industry in America with revenues of about $500 billion,” she says.
So far, they are feeling positive about finding investors. They managed to meet briefly with Kay Koplovitz, founder of USA Networks and co-founder of Springboard Enterprises, an organization dedicated to helping women find venture capital.
“We just won a pitch competition at the Los Angeles Venture Capital Association,” says Bedu. “And we will participate in a three-month incubator program in Pasadena.”
And last week they got their first check, for a portion of tickets sold through an affiliate.
Other women gathered at a Springboard dinner to share their SXSW experiences. Morgan First, co-founder and CEO of Second Glass, a site promoting wine for young consumers, flew in from San Francisco to look for cash and contacts. Sandy Barger, chief marketing officer for Everloop, a new kid-friendly social networking platform, was here to meet potential sponsors and mingle.
SXSW Interactive is a hotbed of entrepreneurial activity. Women pitched potential investors during a Dolphin Tank program organized by Springboard Enterprises. Hundreds more attended ‘speed-dating’ style sessions organized by Dream Life, which runs boot camps in the U.S. and Israel.
The international contingent this year was robust, with France, Canada and Ireland sending business development teams to the trade show. Le Camping, a six-month small-business accelerator program—founded by Silicon Sentier, a group of entrepreneurs, and supported by Google, BNP Paribas and SNCF, among others—set up a booth on the SXSW trade show floor to promote their mentorship program. So far, six companies have attracted seed funding, according to Patrick Perlmutter, entrepreneur in residence.
Sean O’Sullivan, "chief socializer" for LocalSocial in Dublin, was in the Enterprise Ireland booth to promote his new discount program for small businesses. Special offers and discounts are unlocked when customers step into a store. He said businesses pay about $30 a month to participate.
I asked O’Sullivan what he thought about SXSW. “It’s like a combination of Mardi Gras and Paddy’s Day: absolute madness,” he says with a smile.
Photo credit: Jane Applegate

06:49 by Robert dawne · 1

Bringing Luxury to the Masses

Wouldn’t it be great if there were a place where you could buy designer clothes and accessories at prices up to 90 percent off? If you’re like me, you’ve dreamt of this place for a while. It wasn’t until recently, though, that I found out it actually exists, and not just in my dreams.
It’s called Gilt Groupe, and it's a members-only e-commerce site that offers merchandise like women's sweaters, men's socks, kids' booties and home decorations—all at price points that don’t induce fainting spells. The best part: The site boasts wares from runway designers such as Zac Posen, Carolina Herrera and Valentino, to name a few.
Friends and fellow Harvard MBAs Alexis Maybank, 37, and Alexandra Wilkis Wilson, 35, launched Gilt Groupe in 2007 as a way to bring the New York City sample sale to the masses. The caveat: Those who wanted in had to be invited (today you can ask to be invited), thereby increasing the exclusivity and excitement around the venture. The plan worked beautifully, and today the business boasts $500 million in revenues, more than 900 employees and offices around the world. This year the duo will release a book documenting the company’s meteoric rise, titled By Invitation Only: How We Built Gilt and Changed How Millions of People Shop.
We got in touch with Maybank and Wilkis Wilson to find out how they managed to successfully change an entire industry.
Could you tell me about your backgrounds?
Alexis Maybank (pictured, right): I grew up between Charleston and central New Jersey. I met Alexis while at Harvard undergrad in a Portuguese class. We were a couple years apart and became great friends. After college I worked in Silicon Valley through the first wave of the technology boom. I was an early employee at eBay, when there were just 40 people. We both ended up going to business school at Harvard. While there, I did an independent study with Zac Posen.
Alexandra Wilkis Wilson (pictured, left): I grew up in New York City and after school worked in investment banking in London for a few years. After business school, I switched gears into retail and luxury goods and worked for Bulgari.
How did you come up with the idea for Gilt Groupe?
AM: In 2007, I was coming off an opportunity, and Alexandra was ready for a new challenge. We would often go to sample sales and had family members from around the country that would ask us to pick up items for them. Sample sales really weren’t available to people outside the tri-state area, so it dawned on us to think of a way to bring those sales to a mass-market audience. We started meeting and talking about how to launch the perfect concept.
AWW: Alexis started working on the site full time, and I stayed at Bulgari for a little while longer. She managed the building of the site while I started reaching out to brands.
How were you able to secure funding?
AM: We started talking with VCs about three weeks before we launched and were successful with AlleyCorp, a group started by Kevin Ryan, one of our co-founders. Dwight Merriman, the founder of DoubleClick, was also able to help us. That funding provided us enough to hire a few employees and rent office space.
When did you launch?
AWW: We consider Nov. 13, 2007, our official launch date because that was the day of our first sale, a Zac Posen sale. Two weeks prior, we did a membership launch where we teed up thousands of e-mail addresses to invite them to join Gilt Groupe.
How many members signed up out the gate?
AWW: We got over 13,000 members to sign up, but we didn’t know if that was a good number or not. We were trying to aim even higher and encouraged friends to invite friends with the incentive of a $25 credit.
What challenges did you face starting out?
AM: One of the first challenges was building a team. After two months we realized that we were hiring people just like ourselves, bright-eyed optimists. It didn’t make for a balanced team so we brought in executive coaches to help. About five months in, we hired an excellent woman out of Ralph Lauren. She brought a really measured approach to the business and made decisions based on experience and facts and not as much on intuition.
We also focused a lot on open communication. Seeds of distress can really tear apart startup teams when they aren’t addressed, so we made communication a priority.
How did you survive the recession only a year after your launch?
AWW: While the recession was a terrible thing, it ended up actually helping our business. Many brands were dealing with excess inventory and having a hard time selling things at full price. Plus, a lot of customers still wanted to shop for designer goods but didn’t want to walk around with big shopping bags; they wanted to be discreet. We ended up growing our membership faster than forecasted during that time.
How are you able to offer such slashed prices?
AM: There are two things that help us with pricing. First, we don’t have overhead or pay rent on Fifth Avenue. Second, we work in an industry that has seasonal inventory, so things need to turn over.
What does the future hold for both of you and for Gilt Groupe?
AM: We’ve talked about taking the company public, but at the same time don’t want to lose sight of providing the best possible customer experience. We will discuss the option of going public this year. [Wilkis Wilson reports the company received a $1 billion valuation in spring 2010.]
I love Gilt and couldn’t think of a business I’m more loyal to. I’m happy right now and just had a baby boy two weeks ago. I also have an 18-month-old daughter at home, so raising a family is a big part of my future plans, as is continuing to be involved heavily with Gilt Groupe.
AWW: I really enjoy mentoring young entrepreneurs and am now a mentor at TechStars. As for my future, I love Gilt so much and am still personally learning.
Could you tell me about your book?
AWW: The book is coming out in April, and it really focuses on our early days, getting the company off the ground. We worked on it for about two years, meeting every Thursday at 8 a.m. to brainstorm and go through anecdotes. We are really proud of the final product and hope it inspires other entrepreneurs.
What advice can you give budding entrepreneurs?
AM: Figure out if now is the right time to launch your company. Who is doing it already? If there isn’t anyone doing it, is there a reason why?
Also, execution is so much more important than the idea itself. Get your product out there and get feedback from your customers. The earlier you can get feedback, the better. Don’t over-invest before you know more from your customer base.
AWW: You really need to trust the people you go into business with. If you have any red flags or don’t know the person well, pay attention. It is easy to get sucked in by excitement and adrenaline. Invest time in reference checks.
If you are starting a business and throwing out ideas to consumers and investors, it is important to listen to criticism. That doesn’t mean you should back down on your ideas, but take that feedback to heart and think of how you can apply what people are saying to your business model.
Photo credit: Courtesy company

08:50 by Robert dawne · 0