News / USA

Startups Jostle for Funding, Attention at SXSW

Bruce Springsteen delivers a keynote address at the South by Southwest (SXSW) Music Festival at the Austin Convention Center, Texas, March 15, 2012.
Bruce Springsteen delivers a keynote address at the South by Southwest (SXSW) Music Festival at the Austin Convention Center, Texas, March 15, 2012.
Reuters
Entrepreneur P.K. Fields was delighted when she won a contest and a chance to pitch her Los Angeles-based startup to a venture capitalist. So delighted, she dropped everything and flew 1,400 miles (2,250 km) on her own dime to the South by Southwest Interactive conference in Austin, Texas, for just 20 minutes alone with
angel investor Dave McClure as he was driven around town in a tiny red-and-black electric BMW i3.

Fields is emblematic of the thousands of entrepreneurs who converge on Austin each year, hoping to rub shoulders with venture capitalists and win funding for their companies amid the current startup boom.

Despite long odds, many hope to replicate the success of past "South-by" standouts such as Twitter Inc in 2007.

It's rare to find so many would-be startup investors in one place at the same time; rarer still to catch them in a casual setting removed from the pressures of Sand Hill Road, the California locale known for its cluster of venture capital firms.

But that convenience comes with a price: The growing volume of startups today at South by Southwest, or SXSW as many call it, engulfs both the startups and their audience.

Since Twitter, "South-by" success stories have been hard to come by. Many entrepreneurs and venture capitalists say that going to Austin and trying to clinch funding after meeting a potential investor for the first time just doesn't work.

"It's kind of like the great white whale of Austin," said Ethan Kurzweil, a partner at Bessemer Ventures, likening finding an investment-worthy company at the conference to Ahab's elusive prey in Herman Melville's novel "Moby Dick." "Everyone goes thinking they'll see it, but no one does."

An estimated 32,000 people swarm through Austin for the Interactive conference, which began on Friday and ends on Tuesday, and a parallel SXSW film conference (About 16,000 attend the famed SXSW Music and Media Conference beginning on
Tuesday and ending on Sunday.)

The entrepreneurs don't lack opportunity to pitch venture capitalists. SXSW Interactive typically puts on multiple events where entrepreneurs can showcase their talents. This year's Accelerator contest gave entrants the chance to pitch their
companies and were judged by a panel that included venture capitalists like Kurzweil.

The "Pitch a VC" ride-along that Fields took part in was sponsored by startup Life360, a social network for families. But even Chris Hulls, Life360's CEO, doesn't recommend startups swing by South-By with the sole intent of meeting a VC backer.

"You have to be somewhere where the ratio is right," he said. To the venture capitalists dealing with approaches by hordes of entrepreneurs at the conference, "you're just noise."

Chasing the dream

Yet many still flock to the conference for opportunities to pitch, at considerable cost or inconvenience.

More startups are springing up than ever before, spurred on by the success of the likes of photo sharing services SnapChat and Instagram - which are often little more than great ideas and well-executed mobile apps that have drawn millions of dollars in
funding.

As inspiring as those success stories are, they represent just a tiny sliver of startups. Most fail.

Still, money continues to pour into startups. Last year, venture capitalists invested $29.4 billion, an increase of 7 percent over 2012, into almost 4,000 young companies, according to the National Venture Capital Association.

Entrepreneurs are often willing to go the extra mile to try to get a slice of that.

Fields, for example, cashed in frequent flyer miles, both her own and an adviser's, for her last-minute plane ticket. With hotels in Austin sold out, she took a red-eye flight that got her to the city early Sunday morning, a few hours before her ride-along pitch meeting, and left a few hours afterwards.

It's too soon to know how successful this year's attendees will be in raising money. But contestants from past years say the events didn't always go the way they hoped.

"The advice was very high-level and the investors didn't even remember my pitch 10 minutes later when I went up to speak with them after the event," recalled Javid Jamae, who pitched a startup idea two years ago.

"I'm not personally aware of anybody who got funding with SXSW as a starting point," said Jamae, who now works full time as an engineer at someone else's start-up.

What does work? Using the trip to cement a relationship forged before the conference, investors and entrepreneurs say.

Ryan Swagar of Venture 51 said that at a past SXSW he was able to hammer out funding terms over tequila at an Austin bar for a company whose people he'd met previously. John Arrow, chief executive of Mutual Mobile, said he clinched a deal to
build an Apple iPad app for Garrett Camp, founder of Internet recommendation service StumbleUpon and an existing client, after running into Camp at a bar.

But with a little luck, lightning sometimes strikes. Bryan Stolle, a partner at venture firm Mohr Davidow, recalls hosting a party at SXSW a few years ago and spotting
some unfamiliar guests lurking nearby. Toward the end, they approached and pitched alternative-lending service Kabbage.

"At the right moment, they sort of pounced on me," he said. "They wanted to make sure we'd done the rounds already, so when they cornered me, that we could actually have some quality time."

It worked. Stolle led Atlanta-based Kabbage's next funding round. Kabbage co-founder Rob Frohwein said he and his co-founder had wrangled the invitation through one of the party's co-hosts and turned up specifically to meet Stolle.

As for Fields, her ride with McClure didn't lead to an offer for a term sheet, the document that accompanies funding. But she got valuable advice, such as what revenue levels she needed to achieve for her startup, care-provider Eldersense,
before approaching venture capitalists.

Perhaps the biggest coup: McClure "favorited" her tweet and photo about the ride.
"With a startup, it's every little step along the way," she
said.

You May Like

Nigeria Incumbent in Tight Spot as Poll Nears

Muhammadu Buhari is running a strong challenge to Goodluck Jonathan, amid a faltering economy and Boko Haram security worries More

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo tells VOA that despite her fame, life is still a struggle as she waits for government's promise of support to arrive More

Video Cambodian Land Grabs Threaten Traditional Communities

At least seven different indigenous groups in Ratanakiri depend mainly on forest products for their survival, say they face loss of their land, traditional way of life More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Liberia's Almost Last Ebola Patient Grateful but Still Grievingi
X
Benno Muchler
March 26, 2015 3:41 PM
Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video US, South Korea Conduct Joint Military Exercises

The Eighth U.S. Army Division and the Eighth Republic of Korea Mechanized Infantry Division put on a well orchestrated show of force for the media this week during their joint military training exercises in South Korea. VOA’s Seoul correspondent Brian Padden was there and reports the soldiers were well disciplined both in conducting a complex live fire exercise and in staying on message with the press.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.
Video

Video Young Filmmakers Shine Spotlight on Giving Back

A group of student filmmakers from across the United States joined President Barack Obama at the White House this month for the second annual White House Student Film Festival. Fifteen short films were officially selected from more than 1,500 entries by students aged 6 through 18. The filmmakers and their families then joined the president and a group of celebrities for a screening of their films. VOA’s Julie Taboh reports.
Video

Video VOA Exclusive: Interview with Afghan President Ashraf Ghani

Afghan President Ashraf Ghani, during his first visit as president to Washington, gave a one-on-one interview with VOA Afghan Service reporter Said Suleiman Ashna, about his request for a change in U.S. troop levels, the threat from the Islamic State, and repairing relations with the United States and Pakistan. The interview was held at Blair House, late Sunday, in Pashto.
Video

Video California Science Center Tells Story of Dead Sea Scrolls

The ancient manuscripts were uncovered in the mid-20th century, and they are still yielding clues about life and religious beliefs in ancient Israel. As VOA's Mike O'Sullivan reports, an exhibit in Los Angeles shows how modern science is bringing the history of these ancient documents to life.
Video

Video Angelina Jolie Takes Another Bold Step

Hollywood actress and filmmaker Angelina Jolie has revealed she had her ovaries and fallopian tubes removed to lower her odds of getting cancer. Doctors say the huge publicity over her decision will help raise awareness about the importance of cancer screening. VOA’s George Putic has more

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More