Yesterday’s NYC Mobile Venture & Angel Conference in Hell’s Kitchen was focused on mobile technology within venture capital. The takeaway was that there are lots of opportunities for early stage mobile companies to grow their business, raise capital, get customers and hopefully exit. There are tons of investors interested in the space and lots of action in a growing market. There was a feeling of excitement about the environment that NY is offering in regards to growth and technology.
The discussions also talked about the difficulties startups faced in investment for mobile. Mobile is tough because it’s such a crowded field in terms of startups. Entrepreneurs better be able to explain to investors how they differentiate themselves from the competition. There’s a huge difference between a mobile idea and a mobile business. Nobody is really funding ideas anymore.
“You obviously have to have the right stuff,” said Joe Rubin, FundingPost’s director. “It’s not just, ‘I have something mobile and it’s going to be a huge success’. At first mobile was a novelty, oh wow! Everyone loved it, but now it’s no longer a novelty and it’s about business. So you need to have customers, have a business model, a market, quality development a good team – a business. That’s what it’s all about. Most ideas just stay ideas.”
Panelist Howard Schwartz, HumanDemand.com and an angel investor, explained how entrepreneurs seeking investment need working prototypes. “Everything is so cost-effective to build right now there is really no excuse to talk to an investor with an idea. Now we need something we can touch. If it’s a game I want to play a level of it, if it’s an app I want to see the work flow, I want to see this working. It doesn’t have to be finished, or perfect or pretty, but I need to touch something.”
Key speaker Steve Schwartz, an independent angel investor recently retired from Tangoe concurred. “If investors have any doubt they will just move on to the next company. You need to have a sales and marketing strategy that clearly can be affective – so if you are going after consumers you have to find a way to reach your consumer target with the dollars you raise. For example, I’ve seen a lot of social networks that are going to have great data when they reach a critical mass of consumers. But they don’t have a very clear plan of how they are going to get consumers on the platforms. There’s a lot of talk about ‘It’s going to go viral’. It might, but it’s probably one in hundred or a thousand that is really going to go viral.”
Panelist Skyler Fernandes, Centripetal Capital Partners, was in the same mind. “The vast majority of apps are used 10 times and are never used again. If you are not in the top 100, no one learns about you.” To avoid that, his advice was that entrepreneurs need to understand the difference between being a mobile app and a mobile interface on a website. “That’s what people often struggle with. People building apps think it’s a quick exit – ‘if I make it in a year or two I can sell it to a company’ because it’s more of a latch-on to a company.”
NY was said to have become the place for international to launch their companies. Panelist Istvan Alpek, Primus Capital Venture, came from Hungary. “It is much more comfortable for us coming from Europe than going to Silicon Valley.”
Global mobile payments were also discussed as great opportunities, “But there are some ‘gotchas’ as well,” explained panelist William Davis, Gate Impact. “There is a culture difference between the growing markets around the world. That includes Asia at about $10B, Europe at about 3⅟2B and the U.S. is just approaching $2B in payments. The culture difference is that the infrastructure for payments specifically is strong here in the U.S. so there is no real incentive for an individual that is looking to pay to use any other methods that have historically been used like checks and credit cards.”
Summing it all up, Fernandes said, “We have a handful of great mobile apps in NYC – we have Foursquare, Twitter has an office here. What we have yet to see is if any of those can be monetized. So it’s yet to be seen – can NY companies in mobile space show that they are big winners just as like they are in Silicon Valley. I think the answer is yes.”