Turns Out Location Doesn’t Matter When Raising a Series A

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From Tomasz Tunguz

Great entrepreneurs can come from anywhere. But do the locations of startups affect their ability to raise follow on capital? Do seed stage companies in the Bay Area face lower likelihoods of raising a Series A because of more competition? Or is it that New York based startups, because of a smaller ecosystem, face more difficulty?

Using Crunchbase data, I charted the financing follow-on rates across the 12 US cities in which at least 10 seeds, 3 Series As and 3 Series Bs have occured in the Crunchbase data set from 2005-2014. The first two charts below contrast the success rates of post-seed startups raising an A having raised a seed and raising a B having raised an A. The third chart shows the success rates of raising a B having raised a seed round.

Plated Raises $5 Million Series A to Bring You Dinner

New York-based startup Plated has raised $5 million in a Series A to expand their dinner delivery system. According to Crunchbase, the round was led by ff Venture Capital with participation from Lerer Ventures, Founder Collective, and Great Oaks Venture Capital. ff Venture Capital and Founder Collective both participated in the company’s $1.4 million seed round last year.

Plated also participated in the Techstars New York 2013 class.

Founded in 2012 by Nick Taranto and Josh Hix, Plated doesn’t just send you a box of food. Each week the site offers 7 chef-designed recipes. Pick your recipe(s), and Plated ships to you on your region’s delivery day. All food is as locally sourced as possible, so some recipes vary by region. When you get your box, the ingredients are ready to go with recipe cards that outline the cooking process.

Users can order as many or as few recipes as they’d like each week. You can buy a la carte, for $15 a plate, or join for a monthly fee plus $12 a plate. When you select a recipe, the page tells you what will come in your box, what you need to have at home, and what pots/pans you need to use. It also alerts you to any potential allergies or intolerances.

The beauty of Plated is that it provides fresh, sustainable food, but it also seeks to teach people how to cook. But, if you’re already a pro in the kitchen, the recipes sent right to your door take some of the pressure out of experimenting with new things. For busy founders and entrepreneurs who want to stay healthy, Plated offers the option–at least a few nights a week.

At the moment Plated already delivers to 80% of the continental US. (I was ecstatic to see it delivers in Nashville! The husband will be so excited to see something besides alfredo on our next date night.) While current plans for the capital weren’t announced, you can imagine continued expansion in delivery locations is in the works.

Plated isn’t the only New York startup delivering dinner in a box. In-town rival Blue Apron has raised $8 million and offers a similar service via a weekly subscription model.

The Series A brings Plated’s total funds raised to $7 million.

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Cyanogen’s Startup Was Cyanogen, Closes $7 Million Series A Round

Cyanogenmod, Seattle Startup, Series A, Venture Capital, Steve Kondik

(img: Technobuffalo.com)

Back in May we ran a story on Steve “Cyanogen” Kondik, the Android developer behind the Cyanogen Mod operating system that runs, and improves, the Android operating system. The popular “rom” has millions of users who root their Android device to run the open sourced software.

After creating the initial Cyanogenmod, the project became a community effort with several developers working on future releases of the firmware that when installed, allows users to take advantage of many of the benefits Google has in the Android Operating system.

Android’s biggest manufacturer, Samsung, took notice of Kondik and his work with Cyanogenmod. Kondik moved from his Pittsburgh roots to Seattle to work on Samsung’s Android team.

Kondik posted a note on his Facebook page looking for developers in the Seattle area. We reached out to Kondik at the time, and told us he was working on a startup but couldn’t tell us what it was. Knowing that Cyanogen is the most popular “Rom” for Android, we were quite curious as to what could be so interesting that Kondik would quit that job at Samsung and get his feet wet in the startup world.

It was revealed last week that Kondik had teamed up with Kirt McMaster,a cofounder of Boost Mobile, to turn Cyanogenmod from a community based effort, happening in garages and basements across the globe, to an actual company where they could push out the latest features faster.

Kondik wrote on the company blog that McMaster had contacted him by email last year and they were able to secure venture capital meetings in December. Those meetings led to a $7 million dollar series A round led by Benchmark with RedPoint ventures also participating. A confidential source told us by phone that CyanogenMod had turned down other investors including Google Ventures.

Kondik is adamant that the community know that Cyanogenmod won’t fundamentally change, but rather get better. Now they won’t have to worry about raising money from the community for new servers or having to use day jobs to support their development.

With the $7 million dollars, CyanogenMod became CyanogenMod Inc. They also opened up offices in Seattle and Palo Alto. Kondik was also able to bring three long time members of the Cyanogen team to work for the company full time. Kondik first recruited Koushik “Koush” Dutta. They also brought Chris Soyars Head of Infrastructure and designer Dobie Wollert from Google.

Monetization

We were tremendously excited to hear that a project that started out community based, and built up a huge following, was getting funded. But we were curious about how Cyanogenmod was going to make money. After all they just raised $7 million dollars from some of the biggest VC’s around; surely thode investors would want their money back. Also, Cyanogenmod itself is free and Kondik has already indicated it would stay that way.

We spoke with industry analyst Russell Holly over the weekend who assured us that the “ROM” or “OS” would remain free. Cyanogenmod is looking at hardware partnerships that they couldn’t get before because they weren’t a “real company,” and there should be news on their first hardware partnership in the coming week.

They will also work on other features outside the realm of their operating system that could become premium features. For the immediate future we can expect quicker, more thorough releases.

“Our mass market plan is for the second half of 2014, which will include services and third-party integration,” McMaster explained to Fortune.com. “We’ll begin to make money on services we can build and integrate in ways that Google or Apple (AAPL) don’t necessarily do for their own business reasons. We’re not beholden to any OEM or mobile operator.”

When we originally read that statement, we were curious as to the implications stemming from “Apple” being in McMaster’s statement. Holly told us that while we won’t see a “CyanogenMod” for Apple anytime soon, services that may link the two operating systems could be forthcoming. As a hypothetical example Holly brought up the fact that while great in their own systems, FaceTime and Google Hangout were incapable of talking with each other. A more streamlined messaging service may be something the new CyanogeMod takes on.

While that still paves no direct route to monetization, Cyanogemod seems to be in a much better predicament than several social startups that have ballooned to astronomical valuations and huge funding rounds without a solid plan for growth. Undoubtedly the investors will see their money back, in the meantime though, they have now funded a collective of some of the best mobile OS developers in the world.

Findo out more about Cyanogenmod here.

Are VC’s Bypassing Early Stage Health Deals?

Healthcare startups,Venture Capital,startups,funding,seed round,series a

(image: policymed.com)

Success stories, like the one of Memphis’ medical device accelerator Zeroto510, where 80% of their first class received follow on funding, seem to be growing scarce on a national scale. In their first class of six startups at the ZeroTo510 program 5 of the startups received follow on funding, with one, Restore Medical Solutions, going straight to a $2.5 million dollar series A round.

Well national medical startup publication MedCity News, released two graphs this morning that may be alarming to early stage medical startups, who often need a lot more seed money than your social, mobile, webtech startups.

The data, published by CB Insights, shows a significant number of VCs are skipping over earlier stage “seed round” deals for healthcare startups. Conversely, the same data set shows that the “series A crunch” may not be as prevalent in healthcare startups.

As you can see clearly from the data set Series A and Series B seem to be the preferred stage for a VC firm to get into a startup business, at least over the last five quarters.

According to MedCity News VC Funding in healtcare was up over the last year, in fact reaching a “multi year high”. Also worthy to note is that the medical device category is eating up the most VC funds. That should be good for the next round of ZeroTo510, Rock Health and Health Box.

Restore Medical talks to us about their $2.5 million dollar Series A round.

Baltimore Startup: SocialToaster Grabs $1.975M In Series A Round

Baltimore startup Social Toaster seems to be on the cutting edge of monetizing social media distribution. There are a lot of companies in the same space as Social Toaster but none some to be executing with the same results.

The concept is pretty simple. If you have are a digital publisher or major brand Social Toaster helps you register ambassadors and super fans. These people are charged with helping to get your message out to the world, and because their fans, they do just that. Ambassadors and Super Fans are the type of social media folks who carry a lot of weight. How much?

Well according to Social Toaster’s CEO and Founder Brian Razzaque, “One of our clients told us that with 60,000 ambassadors, we were more effective than their Facebook page of 2 million.” he told the Baltimore Sun

In fact, one of Social Toasters clients is the Baltimore Ravens. The Ravens use Social Toaster for monthly media sharing contests which help their content go viral.

This isn’t a fly by night operation or a flash in the pan. Social Toaster has been perfecting their craft. Last year their sales were $300,000 this year they are projecting $2 to $3 million in sales. That’s why Razzaque was able to announce last week that the firm had completed a $1.975 million dollar series A round.

The round follows a seed round in 2011 from Neuberger Ventures and other individual investors.

Blu Venture Investors led Social Toaster’s latest round, Baltimore Angels, Wasabi Ventures, and Piedmont Investment Advisors also participated.

Razzaque plans to double the headcount from 22-50 and also plans moving the company to larger offices to Clipper Mill with about three times the office space they are currently operating out of.

William Militello, Founder of Piedmont Investment Advisors, LLC commented, “I am always excited to fund great entrepreneurs. I believe that true innovation occurs when skilled labor, intellectual capital, and entrepreneurs with great ideas are combined with the financial capital Piedmont can provide.”

Paul Silber of Blu Venture Investors, said, “our team was really attracted to SocialToaster’s novel “message amplification” solution, to the company’s leadership, and to the fact that they were rapidly gaining traction with recognizable name-brand customers. We liked the fact that their software solution offered a cost-effective and simple way for organizations of all kinds to effectively use social media to get their message out to a wider audience.”

Linkage:

For more info on Social Toaster visit them here at socialtoaster.com

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Source: Baltimore Sun

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