One of my true passions is entrepreneurship.  I love mentoring entrepreneurs in order for them to reach their dreams.  I just started at a company called ClickBank that has been helping entrepreneurs since 1998.  ClickBank happens to be the largest platform on the planet that enables anyone to be an entrepreneur.  Founded in 1998, ClickBank has helped tens of thousands of people gain more financial control and freedom by turning their  knowledge, passions, hobbies, and work experiences into an additional source of ongoing income.  In this day and age of huge mergers and economic uncertainty, its up to the individual to be self-directed towards their career and direction.

ClickBank is on a noble path to uncap the latent potential in literally anyone.  I am excited about this new journey in my life.  Let me know if you are interested in learning more about ClickBank.

We all know that the shift from tablet and smartphone adoption is increasingly fueling an app economy.  The latest numbers from IDC show that the continual growth of tablets at a whopping 142% with Q1 2013 shipments close to 50 million units.  This growth is fueling the app economy.  In fact, if you are not thinking about mobile as part of your strategy you are in a for a painful lesson in the trendline of the proverbial Dodo bird.  In Seattle, you can read about some recent examples of the best of times and the worst of times with comedy site Cheezburger restructuring staff due to having to focus on mobile versus Zillow that recently announced that they are getting more ad impressions from mobile versus desktop.

In the app centric world, there is an entirely new slew of tools that you need to distribute, track, and measure your business.  In the app space, the vernacular may be different but the context is the same in terms of the types of services that you need on the Open Web.  You need the ability to profitability get traffic to your app, track user behavior, and to understand how to optimize for it.  Its not unlike the early days of SEM, SEO, and the overall advertising marketing in the Web 1.0 days.

Since there are over 850K apps in the Apple AppStore and almost as many on Android Google Play, the tools that you need (as an app developer) are super important if you ever hope to break-out of the considerable noise in the app world.  The ecosystem between the end-consumer and the app developer is starting to get filled with an number of different players that help.  Its going to get really noisy in the optimization space.  In a previous life, I ran an ad analytics company and I wrote about the large amount of players that were building solutions from the adserver to the ad presentation layer -- I called it the 'ad optimization stack.'  We are going to see consolidation in the space as well as capabilities being built out that will make some companies deliver a full-service solution.  For instance, ad analytics company Flurry recently announced that they are introducing real-time bidding, TapJoy is getting into the analytics space, etc, etc. 

There are a number of players in the space (especially in the Bay Area) but there are some important companies in Seattle that are building some notable services that I would recommend that you check out in the 'app optimization stack.' 

(Note: I have not invested in any of these companies.)

HasOffers
Peter Hamilton' runs HasOffers in downtown Seattle.  They originally were focused on running affiliate programs on the Open Web but pivoted a little over a year ago to mobile.  They have built a set of technologies to handle the mobile attribution problem.  AKA they know how ad spend performs across over 120 mobile ad networks.  This is a hard problem today and they have built a universal attribution model (helpful since UDID is going away)  to help advertisers and app developers to understand ROAS, LTV, LNTV, etc.  The A ton of companies are using their products -- they are growing rapidly and getting a ton of interest from publishers, networks, and investors. 

Appnique
Jai Jaisimha (former college of mine from RealNetworks) runs Appnique.  They are building a set of services around the mobile version of SEO (called ASO or App Store Optimization).  They are trying to solve the problem of enabling developers to achieve higher rankings by analyzing app keywords, title, product page descriptions.  I am surprised that a company like SEOmoz isn't doing something like this.

Apptentive
CEO and found Robi Ganguly is one of the brightest entrepreneurs in the app space.  He oozes a Bay Area-style cool mixed with a Seattle humility.  Apptentive building a cross between GetSatisfaction and Salesforce.com.  He raised a little over $1M in angel funding late last year.  His team is building services that improve your customer reviews and ratings -- like an app version of the class Net Promoter Score.

Its great to see some promising companies in Seattle building important technologies in the app advertising and distribution space.  I'd personally like to see a huge business bloom out of Seattle to take the mantle of where aQuantive was years ago in the advertising services space. 

Per my previous post,  I recently did a presentation on raising venture capital.  It was great to talk to such a smart and energized group of entrepreneurs.  The link to the full presentation can be found here.

There were many great questions during the talk and many coalesced around both a) how to talk about the opportunity that the starup is targeting and b) when and how to talk about business momentum (in order to justify the valuation and capital raise).

In terms of total addressable market, the prospective investor is going to be looking for opportunities that are large.  So, be prepared to answer the question(s):  is this opportunity big enough? And can your team fill a need in this market?  In short, investors are going to be looking for a total addressable market (aka TAM) that is large enough where a small % of the market share that your company addresses could be an interesting business with a huge high IRR upside for the investor. If you are presenting an opportunity where in 5 years your $20 million in revenue equates to 50% of the TAM, then this is just too small. More importantly, a small market like this while fine as an cash flow business isn't going to offer the potential upside for a liquidity event (e.g., M&A or an IPO).  Investors will typically want you to have a healthy revenue line in 5 years equating to single digit market share.  Totally addressable markets of over a $1 billion dollars usually get investors’ attention.

In terms of telling the story, you have to have a story to tell.  You won’t be able to raise venture capital if there is no business momentum.  Assuming that you have some business momentum with customers and revenue which is the hardest part, you simply need to tell the story in a way that supports your future cash flow projections and valuation ask.  I really like this KPI graph from the Seattle-based company, familiar. 

Think about showing the overall market, your TAM, and possibly other comparable competitors. You will want to clearly state the starting point Year 1 and what Year 5 looks like.   When showing the overall market opportunity, build out market segmentation (by demographic, psychographic, SIC code, etc). You will want to get as granular as possible. Layer in specific detail around segmentation growth rates, if possible.
Lastly, you should be able to articulate why today is the best time to address the market opportunity. The slide should contain as much quantifiable data as possible in order to tell the story to the investor and convince them that this moment is the right time to invest. Make the investors feel like the market conditions are ripe to exploit your addressable market, and avoid making them feel they are too early in the opportunity.

I was invited to speak to at the Microsoft Kinect Accelerator office this last Friday. I ran thru with the aspiring entrepreneurs some tips on raising money.  I was truly impressed with what the people that I met. 30+ very smart and scrappy entrepreneurs jammed into a very creative open-floor plan office in the heart of Seattle's burgeoning tech corridor (South Lake Unions). I was even more impressed with the fact that Microsoft had the foresight to partner with TechStars to get some immediate startup street cred, but, more importantly the results are quite impressive. Managing Directors Matt Dyor and Dave Malcom are doing a fantastic job. We're seeing this trend of other larger  companies of taking a similar approach to partnering with incubators like TechStars. Nike recently announced something similar. It is really great to see pockets of innovation come out of Microsoft not only with innovative products but also injecting cash and mentorship into their ecosystem.