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

Taliban's New Leader Says Jihad Will Continue

Top US Afghan diplomat also meets with Pakistani, Afghan officials following news of Mullah Omar's death More

Video US Landmark Pushes Endangered Species

People gathered in streets, on rooftops in Manhattan to see image highlights that covered 33 floors of Empire State Building More

World’s Widest Suspension Bridge Being Built Over Bosphorus

Once built, Yavuz Sultan Selim Bridge will span 2 kilometers with about 1.5 kilometers over water, and will be longest suspension bridge in world carrying rail system 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.
Astronauts Train Underwater for Deep Space Missionsi
|| 0:00:00
...    
🔇
X
George Putic
July 30, 2015 8:59 PM
Manned deep space missions are still a long way off, but space agencies are already testing procedures, equipment and human stamina for operations in extreme environment conditions. Small groups of astronauts take turns in spending days in an underwater lab, off Florida’s southern coast, simulating future missions to some remote world. VOA’s George Putic reports.
Video

Video Astronauts Train Underwater for Deep Space Missions

Manned deep space missions are still a long way off, but space agencies are already testing procedures, equipment and human stamina for operations in extreme environment conditions. Small groups of astronauts take turns in spending days in an underwater lab, off Florida’s southern coast, simulating future missions to some remote world. VOA’s George Putic reports.
Video

Video Civil Rights Leaders Struggled to Achieve Voting Rights Act

Fifty years ago, lawmakers approved, and U.S. President Lyndon Johnson signed, the Voting Rights Act of 1965. The measure outlawed racial discrimination in voting, giving millions of blacks in many parts of the southern United States federal enforcement of the right to vote. Correspondent Chris Simkins introduces us to some civil rights leaders who were on the front lines in the struggle for voting rights.
Video

Video Booming London Property a ‘Haven for Dirty Money’

Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.
Video

Video Hometown of Boy Scouts of America Founder Reacts to Gay Leader Decision

Ottawa, Illinois, is the hometown of W.D. Boyce, who founded the Boy Scouts of America in 1910. In Ottawa, where Scouting remains an important part of the legacy of the community, the end of the organization's ban on openly gay adult leaders was seen as inevitable. VOA's Kane Farabaugh reports.
Video

Video 'Metal Muscles' Flex a New Bionic Hand

Artificial limbs, including the most complex of them – the human hand – are getting more life-like and useful due to constant advances in tiny hydraulic, pneumatic and electric motors called actuators. But now, as VOA’s George Putic reports, scientists in Germany say the future of the prosthetic hand may lie not in motors but in wires that can ‘remember’ their shape.
Video

Video Russia Accused of Abusing Interpol to Pursue Opponents

A British pro-democracy group has accused Russia of abusing the global law enforcement agency Interpol by requesting the arrest and extradition of political opponents. A new report by the group notes such requests can mean the accused are unable to travel and are often unable to open bank accounts. VOA's Henry Ridgwell reports.
Video

Video 'Positive Atmosphere' Points Toward TPP Trade Deal in Hawaii

Talks on a major new trade agreement among 12 Pacific Rim nations are said to be nearing completion in Hawaii. Some trade experts say the "positive atmosphere" at the discussions could mean a deal is within reach, but there is still hard bargaining to be done over many issues and products, including U.S. drugs and Japanese rice. VOA's Jim Randle reports.
Video

Video Genome Initiative Urgently Moves to Freeze DNA Before Species Go Extinct

Earth is in the midst of its sixth mass extinction. The last such event was caused by an asteroid 66 million years ago. It killed off the dinosaurs and practically everything else. So scientists are in a race against time to classify the estimated 11 million species alive today. So far only 2 million are described by science, and researchers are worried many will disappear before they even have a name. VOA’s Rosanne Skirble reports.
Video

Video Scientists: One-Dose Malaria Cure is Possible

Scientists have long been trying to develop an effective protection and cure for malaria - one of the deadliest diseases that affects people in tropical areas, especially children. As the World Health Organization announces plans to begin clinical trials of a promising new vaccine, scientists in South Africa report that they too are at an important threshold. George Putic reports, they are testing a compound that could be a single-dose cure for malaria.
Video

Video 'New York' Magazine Features 35 Cosby Accusers

The latest issue of 'New York' magazine features 35 women who say they were drugged and raped by film and television celebrity Bill Cosby. The women are aged from 44 to 80 and come from different walks of life and races. The magazine interviewed each of them separately, but Zlatica Hoke reports their stories are similar.
Video

Video US Calls Fight Against Human Trafficking a Must Win

The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video Washington DC Underground Streetcar Station to Become Arts Venue

Abandoned more than 50 years ago, the underground streetcar station in Washington D.C.’s historic DuPont Circle district is about to be reborn. The plan calls for turning the spacious underground platforms - once meant to be a transportation hub, - into a unique space for art exhibitions, presentations, concerts and even a film set. Roman Mamonov has more from beneath the streets of the U.S. capital. Joy Wagner narrates his report.
Video

Video Europe’s Twin Crises Collide in Greece as Migrant Numbers Soar

Greece has replaced Italy as the main gateway for migrants into Europe, with more than 100,000 arrivals in the first six months of 2015. Many want to move further into Europe and escape Greece’s economic crisis, but they face widespread dangers on the journey overland through the Balkans. VOA's Henry Ridgwell reports.
Video

Video Stink Intensifies as Lebanon’s Trash Crisis Continues

After the closure of a major rubbish dump a week ago, the streets of Beirut are filling up with trash. Having failed to draw up a plan B, politicians are struggling to deal with the problem. John Owens has more for VOA from Beirut.
Video

Video Paris Rolls Out Blueprint to Fight Climate Change

A U.N. climate conference in December aims to produce an ambitious agreement to fight heat-trapping greenhouse gases. But many local governments are not waiting, and have drafted their own climate action plans. That’s the case with Paris — which is getting special attention, since it’s hosting the climate summit. Lisa Bryant takes a look for VOA at the transformation of the French capital into an eco-city.

VOA Blogs