As a software securities analyst for investment banking firm Canaccord Genuity, Richard Davis spends 200 days a year on the road visiting companies. He goes to public companies such as Oracle and Salesforce.com, but he also visits up-and-coming software companies he thinks will go public in the near future.

ChannelAdvisor: Aiding online retailers

I’ve known this company for several years, and during that time I’ve watched the firm mature and evolve. Several years ago, ChannelAdvisor was tightly focused on the eBay eco-system. Since then, the firm has emerged as a global aid for online retailers, helping them efficiently reach prospects.

This means ChannelAdvisor helps firms manage multi-channel outreach, whether that is down the street or on the other side of the globe. In 2010, the firm managed $2.8 billion in gross merchandise value from leading retailers like Saks, Dell, and Brookstone, and 30 percent of Internet Retailer Magazine’s Top 500 online retailers. It seems to us that Channel Advisor is a company on the move. We plan to pay much closer attention to this firm over the next few years.

Approximate size: $50-100 million in revenues.

Chegg: Digital textbooks, book rentals, and more

Chegg is much more than textbook rentals. The firm offers e-textbooks, course information, reviews and in some instances notes from a few dozen colleges. In addition, the company offers homework help. Basically, the firm is emerging as a go-to source of content (books, notes, comments, grade distribution, etc.) and coursework help. That seems like a viable plan for a big business to me.

I caught up with a Chegg board member recently and we spoke a bit about how the firm is single-handedly saving students millions of dollars on egregious textbook costs. I know this is true from personal experience with my children at college; textbook prices are way too high for the amount of updating that occurs year to year.

Approximate size: >$100 million in revenues.

Gift Side Story: Helping guys buy gifts

I arrived at Buck’s in Woodside a few minutes early for my breakfast with a long-time friend. I saw another fellow advance to the door at the restaurant, which was locked. He circled back, came up, and said hello. “Hey, I’m meeting some VCs around here for the first time and I was wondering if I should be wearing a suit or not?” I said no, unless he was a financial services software firm or he was going up to San Francisco proper where some people wear sport coats. He thanked me and I asked him what the name of his company was. “Gift Side Story,” he said. His name was Ankur Jain.

Jain said his company was a website that helped guys figure out what gifts they should get for their wives or girlfriends. You fill out a brief questionnaire about your significant other’s preferences and the software provides you with recommendations. It has a self-learning component that is designed to formulate better results based upon the more information that is put into it in terms of questions and responses to actual orders. There is also a real-time chat function available if you get really stuck, which is a nice touch.

You pick an item from the recommendations and it takes you to the site’s checkout page. Input your credit card info and presto, the gift wrapped item is on its way! The prices looked good with discount banners indicating 10-50 percent off deals.

Originally posted, February 18, 2012 2:43 PM
Richard DavisRichard Davis is managing director of enterprise software for the brokerage firm Canaccord Genuity. Before joinging Canaccord, he spent 10 years as a senior analyst at Needham & Company. Previously, Davis was at Tucker Anthony, where he launched the firm’s Internet and enterprise software coverage.

We see this as a big thing in Qatar…

Leila Janah, cofounder of Samasource

February 14, 2012 9:25 AM
Christina Farr

12 Comments

Muhammed Yunus, a 2006 Nobel Peace Prize winner and founder of Grameen Bank, sparked a movement with the simple question: “If you are a socially conscious person, why don’t you run your business in a way that will help achieve social objectives?”

Today’s young tech entrepreneurs have inherited Yunus’ vision, and are changing the way we do business. Their space, “social business,” is nothing new, but these under-35s are attempting to alleviate global poverty, climate change, and even armed conflict through commercial enterprise.

There is no clear-cut definition, but most social entrepreneurs would agree that their overarching goal is to use business and business process to drive social or environmental impact.

“There is a growing group in Silicon Valley that believes that social business and technology can change the world,” said Leila Janah. Janah, at 29 years old, is the founder of Samasource, which provides outsourced computer work to women and youth in the poorest pockets of the world, including India, Kenya, and Pakistan.

Impact investors, once a niche group, say they are now inundated by opportunities in this space.

“I was doing this in the mid to late 90s and I felt very lonely in that pursuit. There wasn’t even a language for social or mission investment,” recalled Stephen DeBerry, founder of Bronze Investments and partner at Kapor Capital. “But for young entrepreneurs today, it’s considered the right thing to do and is viewed as being cool.”

To illustrate the “straightforward business proposition,” DeBerry delves into a discussion about his firms’ energy efficiency strategy. In New York, schools are literally dripping mercury on children, he explains, with hazardous florescent lights from the 70s and 80s. “We pay to upgrade your lighting and make the money back over time as you realize the savings on your energy bill,” said DeBerry. Someone has to change these light bulbs, which in itself is a job creator, and there is no shortage of buildings. “We could do this for a long time,” he said.

Nick Flores is a recent Stanford Graduate School of Business alumni who sources early-stage social businesses for the Investors’ Circle, a network of angel investors and venture capitalists that uses private capital to promote a transition to a sustainable economy.

Flores, the Director of Investor and Entrepreneur Services, said there should ideally be a “yin and yang” between social and financial returns. It is Flores’ job to locate small businesses that are capable of making a real impact in the world, and prepare them for a pitch at the firms’ biannual fairs. Investors’ Circle’s greatest success to date? “Zipcar reduces carbon emissions and has a really scalable business model,” he said.

After a series of successful acquisitions by Amazon and Motorola, Danny Shader, a serial entrepreneur, approached DeBerry with an idea for a payment system for virtual goods. DeBerry suggested that Shader focus on an under-served market, America’s low-income “unbanked” population. One in four households don’t use credit cards, and are locked out of electronic commerce as a result.

Shader founded PayNearMe, a Mountain View-based startup, in 2009. Although the company is profitable, it has a social mission at its core: enabling millions of people to pay for online goods and services with cash.

“I’d like to take some credit for mentoring him, but not all the credit,” said DeBerry of Shader. “Danny is a smart guy, and I pointed him in the right direction. He saw there was a huge market there.”

Zipcar and PayNearMe, which DeBerry terms “profit-aligned social businesses,” have caught the attention of the tech community.

“There was a great hubris in Silicon Valley to create huge, billion dollar companies, but that’s changing,” said Janah. The Harvard-educated entrepreneur owes the success of her nonprofit to traditional tech companies like LinkedIn and Intuit. These clients immediately saw the value in Samasource: They need people to sort through mountains of data, and there are bright, young, employed Kenyans who are more than capable of doing the work. “It’s really a no-brainer,” she said.

On the other end of the spectrum, social investors are taking on some of the world’s most complex problems. One example is The Portland Trust, a non-profit with a mission to promote peace between Israelis and Palestinians through economic development and fostering entrepreneurship. The Trust is in the process of establishing a Social Investment Task Force to reduce the social gaps in Israel through the private sector.

“What we’re seeing now is a movement of both investors and entrepreneurs to the massive spectrum of opportunity in between the charitable NGO’s and purely for-profit companies that solely care about their bottom line,” explained Ophir Samson, project manager at the Portland Trust.

Samson, an exceptionally articulate 20-something, said social investment is not fully developed but it is “getting there and is growing extremely fast. There’s a lot of money and talent from all sides of the market going into this.”

The movement has had its ups and downs; perhaps the most prevailing problem is that there is no unit to measure impact. Generally speaking, it also costs more to do the right thing. Social investment is not about making fast cash. It is often a slow-burning, high-risk process that will not make entrepreneurs millions overnight.

With 50,000 visitors to its website per day (higher than any other nonprofit with the exception of Wikipedia), Kiva is often cited as the premier success story in this space. Kiva’s President, Premel Shah, recently recognized as a young global leader by the World Economic Forum, said social investment involved “being more cognizant of how you consume and how you invest.”

Kiva provides loans to institutions around the world, effectively enabling ordinary people to become social investors. Every four days, Kiva raises $1 million. Shah likes to describe Kiva as “social investment meets Match.com.”

Kiva offers loans to institutions in far afield countries, including Palestine and Yemen, but also provides funding for small businesses in U.S. cities like Oakland. “These are places where there’s not a lot of commercial investment because the risk profile is too high. This is exactly where a social investor can step in and be a little bit more patient with their capital,” Shah explained.

One such investor is Reid Hoffman, co-founder of LinkedIn, who will soon announce plans to invest $1 million in small businesses through Kiva’s lending platform. “Kiva’s innovative use of technology as a tool for crowd funding empowers everyday people, companies and major lenders to be social investors,” said Hoffman.

Yunus had the seeds of the idea for the Grameen Bank in the 70s, but it’s our young generation, then in diapers, that is realizing the full potential of his vision. Thanks to their efforts, social enterprise is flourishing, and even the most traditional investors and entrepreneurs are on board.

As VentureBeat’s own Ciara Byrne put it: “What’s cooler than a million dollars? Changing a million lives.”

Christina Farr is a Bay Area-based writer with a graduate degree from the Stanford School of Journalism. She covers entrepreneurship, technology, and investment trends. Christina works for, but does not speak for, Eastwick, an agency in Silicon Valley.

If you can’t code but aspire to start a Web business, odds are you feel just like the ostrich. Ostriches can’t fly, and to add insult to injury, they’re one of the largest bird species out there. They have to hobble around looking for something to do while their avian counterparts swoop into the air in boundless directions.

Despite spending years in school and hours at the workplace, without knowing how to code you can’t create your vision. You’re left with two options: learn to code (Codeacademy is worthy investment of your time if you can fit it in), or find a programmer (an undertaking that warrants its own article). Given the frustrations, many would-be entrepreneurs give up on their vision without giving it a real chance. That’s a pity, and it doesn’t need to be that way.

Here are some tips and tool-recommendations to help you build a Web business without learning how to code.

Simulate your vision with visual tools

Recommended tools: Powerpoint, Balsamiq, iMovie

As an entrepreneur, your goal is to assemble the necessary resources to create your idea. Finding the required talent and money means selling your vision. The first knee-jerk reaction is to write a business plan. Although useful, a business plan is not the best communication tool. It can be jargony, dense, overly-complicated, and simply put, it doesn’t showcase your idea. (If you write anything, go for a 2-3 page executive summary.)

Instead, I recommend building a website mockup. Show each page’s function and simulate how they behave by linking them to one another. Powerpoint is a great tool for this since you can link buttons to each slide easily. I recommend investing in a mockup tool (my personal favorite is Balsamiq), which is very user-friendly given its drag-drop functions. If done properly, your mockups can have the look and feel of a real website. Now friends, investors, or potential co-founders can see your vision instead of reading a long, dry document. If you want to take this to the next step, make a video by “screen recording” your mockup (I use Snapz Pro) and adding some narrative and music using a basic movie editing software like iMovie.

Create a prototype using widget-based website creators

Recommended tools: Weebly, Wix, WordPress, Google Analytics, Qualtrics

Prototyping is all about validating individual portions of your concept. Use widget-based website creators to quickly and easily put together a prototype.Weebly, Wix, and WordPress (just to name a few examples) can be very powerful when mixed with a little creativity.

Letting potential users interact with something will give you valuable data, which you can easily capture using data analytics. My favorite is Google Analytics because it’s free and easy to implement (it just got a great upgrade too). If you can’t capture particular data, use surveys (Qualtrics is a fantastic tool which lets you capture 250 surveys for free) to engage users.

How do you get testers? Put the page up on your Facebook wall, send e-mail blasts, or offer a raffle or a perk (for example, first to get access to your site once it’s built). Having data in your pocket will both educate you and provide compelling information when you’re trying to recruit others or raise funds.

Brand your vision

Recommended tools: CrowdSpring, 99designs, LaunchRock, Facebook, Twitter

We live in a world where the smallest startup can look and feel like one of the biggest companies out there. Make sure you snag a good domain name and create an attractive logo. You can inexpensively outsource design jobs to sites like 99designs or Crowdspring.

Once you have some visuals and an identity, cover your bases: Create a landing page for your site (LaunchRock is a good tool for that), set up a Facebook page (claim your facebook.com/yourbrand), and start developing an audience through Twitter. Family and friends will want to support you, and potential clients will be interested in learning about your company. Having an online presence gives you a stage where others can share in your journey. You’ll have a community of eager users ready to support you faster than you think.

Enjoy your launchpad and raise money

Recommended tools: Kickstarter, AngelList

Your company is now live. You’ve established a presence and have powerful tools to sell your vision. If you want to hire talent, you now have somewhere to point applicants. If you need support, you can show family and friends a preview of what you want to build. If you want to raise money, you can go on Kickstarter or AngelList with a bit more credibility (and hopefully a mockup video in hand).

Tony Navarro (@hoostony) is founder and CEO of Streamcal.com, a venture that redefines the way schedules and calendars are published, shared and consumed across the web. He has an MBA from Wharton and an MPA from Harvard, and currently lives in Boston with his wife. He is also a member of The Young Entrepreneur Council (YEC), an invite-only nonprofit organization comprised of the country’s most promising young entrepreneurs.

Ostrich image via ShutterStock

February 18, 2012 4:00 AM
MicroVentures

This sponsored post is produced by MicroVentures.

Startup investing used to be only for the rich, only if you knew the right people, and only in deals in your city. Those factors left many interested investors on the sidelines.

But today, it’s a lot easier to become an angel investor due to ‘crowdfunding’, micro lending and investment sites like MicroVentures which allows you to invest smaller sums alongside others and to invest in deals stretching from Boston to Silicon Valley.

Gone are the days where you have to risk $50,000 or more, receive a personal invitation to invest from a friend and only see a limited number of deals from the few available in your area.

MicroVenture helps investors learn about companies they may never have heard of, and to invest smaller sums, which is virtually unheard of with traditional investing.

The service matches companies seeking money with investors looking to invest anywhere from $1,000 to $30,000 or more. MicroVentures helps investors with the initial due diligence process by filtering startups and then providing documents to help investors conduct their own due diligence prior to making a final investment decision.

The key to winning at angel investing, of course, is to invest in the right startups. To get there, you need:

1) Good deal flow, allowing you to spot potential winners from many potential options.
2) The ability to invest in multiple deals so you gain experience.
3) A knack for spotting potentially successful companies, and more importantly, management teams and entrepreneurs that will succeed.

Getting good deal flow is often the stumbling block for the average person looking to get started in angel investing. And it’s one of the reasons Bill Clark launched MicroVentures. He wanted to begin investing, but didn’t have access to good deals.

Like others thinking about becoming angels, Clark wanted to invest smaller sums in more companies, allowing him to spread his risk and also increase his chances of picking a winner. And he wanted access to great companies outside of Austin, his hometown.

Today, Clark invests alongside the more than 1,900 investors from 20 states that have joined MicroVentures. To date, investors have put more than $2 million into 13 companies.