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

Jihadist Assassin says Goal of Tunisia Murders Was Chaos

Abu Muqatil at-Tunusi’s remarks in a propaganda interview also cast light on attack on Bardo Museum More

Russia Denies License to Tatar-Language TV Station in Crimea

OSCE official says denial shows 'politically selective censorship of free and independent voices in Crimea is continuing' More

Kenyan Startups Tackle Expensive Remittances Through Bitcoin

Some think services could give Western Union a run for its money, though others say it’s still got a long way to go 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.
For Obama, It's More Business Than Friendships With World Leadersi
X
Aru Pande
April 01, 2015 9:09 PM
The rift between President Barack Obama and Israeli Prime Minister Benjamin Netanyahu has put a spotlight on the importance of the American leader’s personal relationships with other world leaders and what role such friendships play in foreign policy. VOA's Aru Pande reports.
Video

Video For Obama, It's More Business Than Friendships With World Leaders

The rift between President Barack Obama and Israeli Prime Minister Benjamin Netanyahu has put a spotlight on the importance of the American leader’s personal relationships with other world leaders and what role such friendships play in foreign policy. VOA's Aru Pande reports.
Video

Video Buhari: Nigeria Has ‘Embraced Democracy’

Nigeria woke up to a new president-elect Wednesday, Muhammadu Buhari. But people say democracy is the real winner as the country embarks on its first peaceful handover of power since the end of military rule in 1999. VOA’s Anne Look reports from Abuja.
Video

Video Tiny Camera Sees Inside Blood Vessels

Ahead of any surgical procedure, doctors try to learn as much as possible about the state of the organs they plan to operate on. A new camera developed in the Netherlands can now make that easier - giving surgeons an incredibly detailed look inside blood vessels, all the way to the patient’s heart. VOA’s George Putic has more.
Video

Video Latin American Groups Seek Fans at Texas Music Festival

Latin American music groups played all over Austin, Texas, during the recent South by Southwest festival, and some made fans out of locals as well as people from around the world who had come to hear music. Such exposure can boost such groups' image back home. VOA’s Greg Flakus reports.
Video

Video Stockton Community, Police, Work to Improve Relations

Relations are tense between minority communities and police departments around the United States following police shootings that have generated widely-publicized protests. VOA's Mike O’Sullivan reports from Stockton, California, where police and community groups are working toward solutions, with backing from Washington.
Video

Video Indiana Controversy Highlights Divergent Meanings of Religious Freedom

Indiana’s state government has triggered a nationwide controversy by approving a law that critics say is aimed at allowing discrimination against gays and lesbians. The controversy stems from divergent notions of religious freedom in America. VOA's Jerome Socolovsky reports.
Video

Video Report: State of Black America a 'Tale of Two Nations'

The National Urban League has described this year's "State of Black America" report as a "tale of two nations." The group's annual report, released earlier this month (March), found that under an equality index African Americans had only 72% parity compared to whites in areas such as education, economics, health, social justice and civic engagement. It’s a gap that educators and students at Brooklyn’s Medgar Evers College are looking to close. VOA's Daniela Schrier reports from the school.
Video

Video Film Tells Story of Musicians in Mali Threatened by Jihadists

At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video Ebola Vaccine Trials Underway in West Africa

Ebola has claimed the lives of more than 10,000 people in West Africa. Since last summer, researchers have rushed to get anti-Ebola vaccines into clinical trials. While it's too early to say that any of the potential vaccines work, some scientists say they are seeing strong results from some of the studies. VOA's Carol Pearson reports.
Video

Video Philippines Wants Tourists Spending Money at New Casinos

Tourism is a multi-billion dollar industry in the Philippines. Close to five million foreign visitors traveled there last year, perhaps lured by the country’s tropical beaches. But Jason Strother reports from Manila that the country hopes to entice more travelers to stay indoors and spend money inside new casinos.
Video

Video Civilian Casualties Push Men to Join Rebels in Ukraine

The continued fighting in eastern Ukraine and the shelling of civilian neighborhoods seem to be pushing more men to join the separatist fighters. Many of the new recruits are residents of Ukraine made bitter by new grievances, as well as old. VOA's Patrick Wells reports.
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.

VOA Blogs

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