Thanks to tech startups, Crescent City added thousands of jobs in the information sector from 2009 to 2012. Bourbon Street attracts thousands of visitors annually but tourists aren't the reason behind Cresent City's growing industry.
Many tech companies are moving to New Orleans, resulting in lots of enthusiasm and growing customer base.
Started in 2012, Apptitude - an app development studio, is on a rapid rise with their fast growing smartphone apps like New Orleans Food Trucks and Premium Parking.
Samantha Diamond and her business partner Monika Smyczek who are new to the city, are giving museums and cultural institutions the software to publish mobile applications and draw a much wider audience with their company, CultureConnect.
Apptitude and CultureConnect are just the tip of the iceberg.
Airpnp and Dinner Lab, two inventive and inspiring New Orleans startups, were featured on Entrepreneur Magazine's 100 Brilliant Companies list.
But the city's biggest homegrown tech breakthrough has been iSeatz, a service that lets shoppers book multiple travel arragements on one website. iSeatz has grown its platform from $8 million in gross bookings in 2005 to $2 billion in 2013.
New Orleans is quickly becoming America's nextg great innovation hub and it seems the city will continue to see rapid growth.
Monday, May 19, 2014
Monday, April 7, 2014
What If Oculus Crowdfunded For Investment?
In 2012, Oculus successfully raised $2.4 million through a Kickstarter campaign to develop their virtual reality headset. On March 25th, 2014, Oculus was sold to Facebook for $2 billion. As you know, Kickstarter is not a equity crowdfunding but rather a rewards-based where backers of projects are offered tangible rewards and special experiences in exchange for their pledges. But what if Oculus crowdfunded for equity and the 9522 backers were investors? How much would their invests be worth today? Probably about 145x.
Assume that instead of preorders and donations, Oculus's Kickstarter campaign was for equity and raised a seed round entirely online. It's anyone's guess as to what those terms would look like – Oculus is a sexy hardware company that captures the imagination and it's easy to believe that VR will be a huge industry someday. I'm going to be conservative and assume founder-friendly terms for this hypothetical fundraise: a convertible note with a $15m valuation cap and no discount or interest rate. You can read more about convertible notes here but back-of-the-envelope this is like saying Oculus was worth $12 million with an exciting prototype and promising customer development:
After their crowdfunding campaign they went on to raise a $16M Series A and then a $75M Series B. I don't know what the valuation of those rounds were but as a general rule of thumb startups tend to give away 15-25% in venture rounds. I'm going to assume 15% for both, making their Series A and B pre-money valuation of about $90m and $425m, respectively.
Okay great. So in this universe what would've happened if you invested $1,000 during the crowdfunding campaign?
Your $1,000 would have started as "convertible debt" until it converted the day Oculus raised its Series A. Since the Series A valuation is above the $15m cap on your note, your $1k converts into equity as if the Series A valuation is $15m instead of $90m. Collectively all the seed investors own 16% ($2.4m / $15m) of the company before applying the Series A investment, so your $1k investment converts to 0.00567% equity of Oculus after the Series A.
This sounds pretty small but your investment is worth about $5.1k.
Six months later Oculus raised their Series B diluting your hypothetical stake by 15% to about 0.00482% of the company, but the higher valuation makes your investment worth about $20.5k.
Fast forward to Oculus's $2B sale to Facebook. Since you own 0.00482% of the company your $1k investment is now worth $145k. That's a 145x return on your $1k in less than two years!
Monday, March 24, 2014
Kickstarter Marks $1 Billion In Crowdfunding Pledges
Kickstarter, the world's largest funding patform for creative projects, announced on March 3rd that funding pledges has surpasses $1 billion.
Here are some interesting Kickstarter statistics:
- 5.7 million people funded projects (versus less than 1,000 active venture capital forms worldwide)
- Over 135,000 projects have been started with over 57,000 successful.
- More than half of the $1 billion was pledged in the last 12 months alone
- $913 is pledged on Kickstarter every minute. In 2012 this figure was $607
- 1,689,979 people have backed/funded MORE than one project
- 15,932 people have backed/funded more than 50 projects
- $619 million has been pledged by returning backers
Leading the position among crowdfunding platforms, Kickstarter also expanded to UK on October 31, 2012 and over the first year, more than £22 million was pledged to projects in the UK. In September 2013, Kickstarter officially opened to projects based in Canada. Two months later in November Kickstarter opened to projects in Australia and New Zealand.
Considering that more than $1 billion has been pledged through just Kickstarter alone, the crowdfunding dollars far exceeds that amount with other platforms like IndieGogo, RocketHub, etc.
As the platform continues to expand globally the growth in crowdfunding doesn’t look to be slowing down anytime soon.
Wednesday, March 12, 2014
Biotech Surging
The Biotech industry has experienced cycles of boom and bust since its inception in the 1970. Last year more biotechnology companies joined American stock markets and raising more money than at any time since 2000. During the last year, S&P 500 index went up by 20% while shares in biotech rose by almost three times as much.
One reason for the 2000 boom was that investors who made lucrative profits from internet firms were excited and optimistic about the idea of HGP (Human Genome Project) and how this would pump out many profitable new treatments. However, you have to consider the complexity of Biology and how drugs many times tend to be too toxic to be used or not as effective as they should.
According to The Boston Consulting Group, 90% of the money that went towards researching for new treatments goes on drugs that fail at the end. Even if a company comes out with a drug that works, it has many obstacles to overcome such as tough regulations, and convincing of governments and patients whose wondering if the drug is worth the money.
However, overcoming these obstacles can results in huge returns. In December of last year, America's FDA approved Sovaldi, a treatment for hepatitis C and now it could earn more than $3 billion this year for its maker. Biogen Idec, a firm from Massachusetts, is looking to make over $1 billion a year from a recently FDA approved Tecfidera, a pill for multiple sclerosis. But the real question is can these successes continue in the future?
There are few reasons to be optimistic about biotech firms prospering. First is many smaller firms are taking the role of being the research engines for bigger companies. For example Sanofi, a pharmaceutical firm from France, who is now depending on an American biotech firm called Regeneron to help drive its growth, will put about $1 billion into Regeneron's research program.
Second and more important, companies are finally starting to benefit from studying the human genome. As researches on the underlying genetic causes of a disease are being done, many new ways to developing treatments are opening. For example, Vertex has a drug to treat a subset of patients with cystic fibrosis, thanks to a better understanding of the faulty gene that causes it. Bluebird bio, one of Celgene’s small partner firms, which Third Rock also financed, is working on a treatment for sickle-cell disease that inserts into the patient’s blood cells a properly functioning version of the faulty gene that causes the inherited ailment.
Advances in genomics are making clinical trials smaller and cheaper, since it is now easier to identify which patients have the specific genetic trait that a new drug is aimed at. This makes it more worthwhile to research diseases that are rare, and those that have so far proved intractable. The FDA gives special consideration to drugs that treat such ailments, so companies can expect a speedier path to approval.
One reason for the 2000 boom was that investors who made lucrative profits from internet firms were excited and optimistic about the idea of HGP (Human Genome Project) and how this would pump out many profitable new treatments. However, you have to consider the complexity of Biology and how drugs many times tend to be too toxic to be used or not as effective as they should.
According to The Boston Consulting Group, 90% of the money that went towards researching for new treatments goes on drugs that fail at the end. Even if a company comes out with a drug that works, it has many obstacles to overcome such as tough regulations, and convincing of governments and patients whose wondering if the drug is worth the money.
However, overcoming these obstacles can results in huge returns. In December of last year, America's FDA approved Sovaldi, a treatment for hepatitis C and now it could earn more than $3 billion this year for its maker. Biogen Idec, a firm from Massachusetts, is looking to make over $1 billion a year from a recently FDA approved Tecfidera, a pill for multiple sclerosis. But the real question is can these successes continue in the future?
There are few reasons to be optimistic about biotech firms prospering. First is many smaller firms are taking the role of being the research engines for bigger companies. For example Sanofi, a pharmaceutical firm from France, who is now depending on an American biotech firm called Regeneron to help drive its growth, will put about $1 billion into Regeneron's research program.
Second and more important, companies are finally starting to benefit from studying the human genome. As researches on the underlying genetic causes of a disease are being done, many new ways to developing treatments are opening. For example, Vertex has a drug to treat a subset of patients with cystic fibrosis, thanks to a better understanding of the faulty gene that causes it. Bluebird bio, one of Celgene’s small partner firms, which Third Rock also financed, is working on a treatment for sickle-cell disease that inserts into the patient’s blood cells a properly functioning version of the faulty gene that causes the inherited ailment.
Advances in genomics are making clinical trials smaller and cheaper, since it is now easier to identify which patients have the specific genetic trait that a new drug is aimed at. This makes it more worthwhile to research diseases that are rare, and those that have so far proved intractable. The FDA gives special consideration to drugs that treat such ailments, so companies can expect a speedier path to approval.
Tuesday, March 11, 2014
Why Is Pre-IPO Investing Attractive
Pre-IPO investing is when an individual invests into a privately-held company prior to going public and shares being publicly available. This allows an investor to purchase shares at a much reduced price compared to what the share price will be once it goes public. And once the company goes public, an investor can possibly experience uplift within a relatively short time. This gives pre-IPO the edge compared to investing in seed investments which are prone to much higher risk and longer time span to see profit.
Another advantage of investing into a privately-held company is the significant financial gains. Considering investing at a discount pre-IPO and shares trading at a much higher price after going public, you can potentially double, triple, or even increase your profit by more than ten times. Taking a look at some of the past successes from big name firms such as YouTube (acquired by Google for $1.65 billion) and PayPal (acquired by eBay for $1.5 billion) to smaller ones Affinity Labs (acquired for $61 million by Monster Worldwide) and Orbital Data Corp (acquired for $50 million by Citrix Systems) are evidence that substantial profits can be made through pre-IPO.
Investing in pre-IPO companies is a great way for investors to but it's not certainly without risks. Whilst pre-IPO deals may be more mature than their seed or start-up stage companies, they are still small companies after all, which carry risks. It's important to manage your risk and study companies to select more mature, IPO-ready companies to reduce risks.
Pre-IPO investment has great upside but not without risks. However with the new issues market picking up and other alternative investments offering low rates of return, investing in pre-IPO companies becoming increasingly attractive and is set to pick up in a big way.
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