Tag Archives: #funding

F.A.Q on software development outsourcing

Software development outsourcing has long been accepted in the IT industry, but there is still no unified recipe on how to find the right partner.

While large enterprise has the benefit of outsourcing advisors, SMB companies and startups have many questions, especially when considering outsourcing overseas.

We’ve put the most common questions into a short, helpful guide. Continue reading F.A.Q on software development outsourcing

NTR Lab Gives Back To The Startup Community

Recently we started an amazing campaign called Give Back To The Startup Community.

The idea is to “give away” two of our development teams as our way of saying thanks to the community that drives our growth.

Each team consists of 2 skilled developers for up to 2 months.

  • Javascript team (node.js + AngularJS or React); and
  • neural networks/Machine Learning team (we are AI experts)

I also want to tell you a bit about why and how this happened.

The motivation is pretty simple — we grew 51% Y2Y in 2016 helping startups scale their software development.

We had an opportunity to work on great products with entrepreneurs from San Francisco, Austin, Boston, London, Amsterdam and many other amazing places around the world.

We worked with a lot of talented founders and the learning was definitely reciprocal. Although NTR Lab, at 16, is no longer a startup, our development centers feel like startups, with that special atmosphere of new ideas and pure enthusiasm.

The startup community has given a lot to us, so we wanted to give a lot back to it. And what better way than to help two of them succeed?

We are looking for two startups — at any stage — with one of three situations:

  • building their MVP to secure funding;
  • urgently needing to complete something to meet a critical deadline; or
  • needing to implement an important new feature.  

Our plan is to cooperate with accelerators and venture capitalists, as well as founders, to choose the two most innovative ideas that are likely to succeed.

There is absolutely no charge to the chosen startups.

If you are interested send our founder an email describing the project (it should be interesting/fun for the developers, too). Please include your pitch deck with your message.

Note: If you want the AI team, you must have a dataset to train the neural network.

There are two caveats.

  1. We reserve the right to choose the applicant we believe is the best fit.
  2. We have the right to document and write about how and what is happening. This is the first time we have given back and want to describe the process and publicize the story. (Be sure to follow us on twitter and don’t forget to check for new posts here).

Be sure to share this post with your network.

How much money?

I just read an interesting article on Business Insider.

 Yossi Vardi, a well-known Israeli investor, warned startups to be careful raising too much capital early, because it makes you “cash flow negative from the outset.”

Sam Altman, president of top startup incubator Y Combinator, said something similar a year ago. His point was that raising money at very high valuations, especially early on in seed rounds, leads to high burn rates and messes up the culture — “Frugality is sometimes incredibly important for startups.”

raising money

Image source: here

That reminded me of the 40% rule for SAAS companies that I read about on Fred Wilson’s blog.

So, how much should you raise?

Although one size doesn’t fit all, a good rule of thumb is raise only  as much money as your company needs to achieve major proof-points/milestones and practice frugality to keep a low cash burn rate, which impresses investors.

Don’t be tempted to raise as much money as you can. This is not a good idea from a financial strategy standpoint. Less capital gives you greater ownership over your company. It also forces you to take your time before scaling, which is a good thing.

You don’t need to raise a lot of money to be successful. Your capital efficiency (that is, raising  what you need and no more) is a more telling indicator of your startup’s success than high valuation.

And be sure to read  The Risks of Raising Too Much Money Too Soon by AJ Agrawal, CEO of Alumnify for even more insight.

Guest post by Miki Saxon. Entrepreneurs: About VCs

 

I’ve been around startups since the late 1970s; long before dot com and software took over the spotlight.

And what I learned about VCs back then was different from VCs now.

Back them, most VCs were guys who had started or helped start companies, with strong operational, not just technical, and strategic background.

Sad to say, most VCs with under 25 years experience often don’t know what they’re doing, because they have never created/built a company, while the rest are just bankers masquerading as VCs following “sure bets.”

Granted, VCs have always had much in common with lemmings, preferring to fund “me, too,” companies, as opposed to earth-shattering, high risk products/services that actually moved society in new directions.

From my perch back then on the edge of the VC ecosystem I watched as the “names on the door” retired and were replaced by Wall Street wunderkinds, whose only skill was manipulating money.

для поста с микой

Flickr image credit: billsoPHOTO

What didn’t change was their lemming-like, follow-the-leader investment strategy.

Things haven’t improved much. Continue reading Guest post by Miki Saxon. Entrepreneurs: About VCs

кролик2

Rabbit blog post: time to do more with less

Salesforce CEO Marc Benioff and investor Bill Gurley, among many others, believe that 2016 is the year that many unicorns will morph into unicorpses as valuations tumble amidst tightening money.

So does that make 2016 a bad year to start your company? No, in fact, just the opposite.

According to Jason Calacanis, angel investor and founder of Inside.com “Great companies are like great captains; they make take advantage of smooth sailing times like now, but are not afraid of rough seas that eventually show up.”

Jeff Grabow, EY Americas venture capital leader says, “If you talk to venture capitalists, they’ll all tell you the best time to start a company is in a downturn.”

And Mike Abbott, general partner at Kleiner Perkins Caufield & Byers, made a great point when he said, “We’ll stop seeing particular folks starting a company for the sake of starting a company, because they see it as this romantic endeavor.”

But it was CB Insights CEO Anand Sanwal who said it best, “While it’s ‘fun’ in a schadenfreud’y way to claim some absurd number of unicorns will falter in 2016, it misses out on the fact that 2016’s climate may force many of these unicorns to become RABBITs.”

Rabbit? Who wants to be a rabbit? You should. Being a rabbit is much like Andrew Wilkinson’s horse that we mentioned last week.

кролик

Image credit CB Insights via Business Insider

The biggest difference going forward means that your valuation will be based on real revenue as opposed to funding rounds — more like Apple / less like Uber.

You’ll learn to do more with less and will stretch not only your dollars, but also your pennies. And your team will learn along with you.

For those of you who haven’t experienced a tighter economy or worked through a real downturn the actual experience can be off-putting, if not downright frightening.

Join us next week for cornucopia of ideas and resources to do more with less.

How to get your tech startup going if you are not technical

NYC and Silicon Valley have a wealth of business people with solid business experience in many important, fundable sectors, but they face a major barrier finding comparable technical talent to form great startup teams.

If you are one of these non-technical co-founders one of your first moves is to decide who will do the tech side. I think 4 options are at play here.

Fake it till you make it

In many cases the first thing that a startup should do is to validate the market – do the consumers really need your product; is someone willing to pay for it; etc.?

In many cases, you don’t really need to build the product to test the market. Building a great landing page or a simplistic prototype and getting some traffic to it often provides enough market validation to raise the angel investment that enables you to hire a team of developers and build the product.

A great example is the story of Aardvark, a social search startup acquired by Google back in 2010. Liz Gunnes writes:

In order to find out, they got users to test-drive their ideas. For the first six months Aardvark prototyped ideas, gave them to 100-200 people, and if they saw they weren’t taking off, abandoned them (a slide of five abandoned ideas is pictured on the left). Once they figured out that social Q&A was the ticket, they didn’t pull back on user testing, bringing in 6-12 users a week over the 30-month span of the startup.

 But Aardvark didn’t actually build products right away. The service connects people with questions to those in their broader social network with corresponding answers, but for nine months a human being was involved in every single interaction — a kind of “Wizard of Oz” that classified the query and otherwise managed the conversation from behind the scenes.  

In the meantime, Aardvark recruited its core team and raised $7.5 million. ”

Learn how to code

Fred Wilson’s advice is: “If you aren’t technical, I suggest you get technical”. He provides a good success story on this point

Even better is the the story of Instagram founder Kevin Systrom: Не went from being a hobbyist to being able to write code that would go into production .

If you want to try going this route, here are links to massively open online courses which provide an opportunity to learn programming:

  • https://www.codecademy.com/completely free with interactive platform. languages: SQL, HTML & CSS, JavaScript, jQuery,PHP, Python, Ruby
  • https://www.udacity.com/ – free but offers paid certificates for course completion. Languages: HTML, CSS, Javascript, Python, Java , Mobile Development. Advantages include short courses for 4-8 weeks
  • https://www.coursera.org/ – free but offers paid certificates for course completion. It boasts a large base of computer science courses covering most of the popular languages; Most courses are 2-6 months.

Find a technical cofounder

Since you are the one with the original idea, you would need someone to drive the tech side. Start searching for a cofounder by asking your friends and querying your LinkedIn network, “I’m looking for a technical co-founder who does X. If you know anyone please introduce us. Also, feel free to pass my request and contact info on.”

Additional places to look are

  • Founder2be.com you can join here more than 40.000 co-founders, designers, marketers, developers, etc;
  • Namesake.com – a new social network where you can ask for recommendations for a tech co-founder; the site is focused on real time conversations and professional recommendations. It is still in closed beta so you will need an invite;

If you are one of them, you can take Fred Willson’s advice and try to pair up or stop only looking for a technical co-founder and focus on building your company instead.

Hire an external team.

Non-technical founders can hire a remote team to build an MVP in short the term, while continuing their co-founder search.

There’s a cottage industry of freelancers and development shops that are willing to take a combination of equity and capital to help you get to an MVP.

Offshoring often offers considerable cost savings. Fred Wilson is sharing his experience, The two primary reasons one company will outsource work to another company are cost and skill set. The third party outsourcing company can provide the required work at either lower cost or higher quality or possibly both. Sometimes time is also a factor. It is often the case than an outsourcing company can get the job done faster.Labor costs in emerging markets are often a fraction of the labor costs in the developed world. And you can often tap into highly educated and skilled labor pools. We have companies in our portfolio that have built world class engineering teams in places like Belarus, Slovenia, and India. These teams cost less and often produce amazing work.”

While many Silicon Valley founders say they would never outsource any significant part of their software development to another company or individual abroad because of various outsourcing horror stories, others swear by it and have achieved notable success.

Here are examples of tech companies that were started by non-technical founders and succeeded spectacularly. Some hired in-house developers, others prefered remote teams and overseas development.

  • Skype
  • Pinterest
  • Snapchat
  • Groupon
  • Alibaba
  • Amazon

The story of Digg is classic. Digg was developed by a freelancer found on Craigslist, who later became Digg’s lead developer:

In the fall of 2004, Rose withdrew $1,000 — nearly one-tenth of his life savings — and paid a freelance coder $12 an hour to mock up a Web page. He got a deal on server space over the Web for $99 a month.”

There are dozens of other stories. Less famous but still successful startups that used remote teams to move forward faster.

  1. The first version of Readyforce.com was entirely outsourced and is being used by customers, while the newly-recruited in-house engineering team builds the second gen product.
  2. Squidoo was founded by Seth Godin (non-technical) who hired a team (Viget) to build the first version.
  3. Glamsquad worked with Applico to build their MVP. After that, Glamsquad was named one of the Top 10 Startups to Watch in NYC by Time Magazine.
  4. The initial version of SumoMe was famously built for $60 by a freelance developer hired by Noah Kagan.
  5. Wanelo was developed by an overseas 3rd party who eventually accepted a small buyout when she rebuilt the code.

Mike Dorsey, entrepreneur & advisor shared his success story about being non-technical and founding his first company with outsourced developers. Leads95.com is a profitable lead generation and CRM company, with a web-based lead marketplace.

Unemotionally discussing options for non-tech founders is all well and good, but doesn’t really solve anything. Hot ideas need to be acted on fast; that’s the nature of the entrepreneurial beast.

The best solution may be a combination of the three.

  • Post co-founder requests wherever possible.
  • Simultaneously, get referrals for remote team vendors and start your due diligence on the one or two that best fit your needs.
  • Finally, as time permits and if you are math-oriented spend some time on the coding sites.

Just remember, you have only so much time and physical/mental energy, so spend them in ways that have the highest ROI.