Venture Capital backed startups are a special breed. VCs invest in portfolio companies and expect a return in the form of capital gains. These returns often come in the form of an exit via acquisition. VC backed startups know this from the beginning and work towards returning their investors’ money.
What is the whole experience like from building a company to acquisition on the employee and founder side? We caught up with Matt Burton, currently the CEO of Orchard, who has been a part of two VC backed start-ups that were acquired: AdMeld by Google and LiveRail by Facebook.
Matt explains his experience building a startup as an exciting and challenging process: “You’re focused on building a product and going to market, which gives you constant insight into what’s happening on the front lines. You see the needle move (or not) and adjust strategy accordingly.” Many tech startups leverage this type of development and use market feedback to make adjustments.
Everything changes when the company is in acquisition mode explains Matt, “Product integration becomes the focus. Figuring out how to combine two separate company cultures is an essential part of the success of the two companies coming together. This isn’t always easy to figure out.” Disparate company cultures has been sited as one of the main reasons that the AOL – Time Warner merger did not work.
Although the acquisition process itself doesn’t vary significantly, each experience is unique. “Both Admeld and LiveRail had very strong company cultures that empowered employees and created comfortable work environments,” according to Matt. “Admeld was my first acquisition and I learned a lot about the process. When I joined LiveRail, I knew what to look for and what questions to ask. You get smarter with every acquisition.”
Matt Burton is currently the CEO of Orchard, an investment and analytics platform where institutional investors and loan originators connect and transact.
Before Co-Founding PlaceIQ, Duncan McCall, led the operations of a growing retail organization and before that he built and led IS Solutions INC, a Silicon Valley based System Integrator. Usually entrepreneurs found companies in the same industry of their professional experience. How did Duncan come up with the idea for PlaceIQ, a “location-intelligence” company that provides digital consumer insights?
It took a trip to the Sahara desert and a desire to make his own path for the idea of PlaceIQ to be born. Typically visitors hire a guide to take them through the 12 mile gateway to the Sahara desert. Duncan wanted to do it his own way. He found a set of waypoints on the internet from a recent traveler and downloaded those to his GPS device and made it through successfully.
Duncan’s trip to the Sahara sprouted his passion for local: “…it isn’t local itself but the power of location… the ability for location to create a connective backbone to bring together, connect and make sense of a huge amount of digital data about the world, and consumers within that world,” Duncan said. “That ultimately builds a new model for consumer behavior. Not one built on panels, survey and modeling – but one built upon actual observed behavior in the real world.”
Founded in 2010, PlaceIQ is a VC backed local technology company based in New York.
What inspires you to come up with business ideas?
Venture Capital backed companies typically go through unique stages of business. Although experiences range and the timing of stages vary by company and industry, a typical VC backed company goes through the following stages.
We recently connected with David Daneshgar, Co-Founder of BloomNation, a community marketplace for people to list, discover, and send unique floral creations by local artisans across the country.
David describes the greatest challenge in finding an investor was “finding someone we really liked, shared the same vision and connected with to lead the deal…We realize that it’s almost like a marriage and you want to make sure that those are the people you want to work with for years to come.” Typically gaining a board seat, investors have deep relationships with the company.
BloomNation raised a Seed round of funding for $1.65M one year ago. Looking back over the year David’s advice to new entrepreneurs is to not over-optimize: “Everyone wants the best partners, the best valuation, to raise the most money, the least dilution, the best terms, etc. But you can’t have everything and the sooner you get a couple of your bucket list items checked off and just move with the business the better.” Prioritizing what is most important to the founders and being flexible on less important issues enables the company to progress quicker.
With about 6.5M companies being founded and 2,700 companies receiving venture funding each year in the US, not everyone will make the cut. David notes “at the end of the day by being venture backed, you are one of the very few that made it to this stage and now the most important thing is to execute.”
How would you execute a Seed round?