From time to time we'll publish a guest blogpost by the editors at Fueled. The first one is from Chrissy Giglio. Enjoy:
Why Most Startups that got Bought Don’t Have VC Funding: With new data from 2012, we’re able to see some interesting trends that are occurring in the world of startups. This past year there were 2,277 private technology companies acquired all around the world. From this overall number, we’re able to look into each broken down category and see what’s really going on.
According to the official report from CB Insights, out of the total number of companies acquired, 331 of them disclosed information about the finances of their deals. For 331 companies, the total price for all of them was $46.8 billion. The final total would be a great deal higher if more, or all, companies shared their financial information. Of that amount, there were only eight $1 billion dollar deals. The majority of the lot, 80 percent, of the deals were for less than $200 million. And to break it down further- 50 percent of transactions were for less than $50 million.
Beyond the price tags, one of the most interesting things to take a close look at is the fact that the majority of the companies acquired have never received any form of funding. To be exact, 76 percent of the 2,277 companies never received any form of of institutional investment before they were acquired. This number comes as a shock since many people are under the assumption that in order to succeed as a startup, you need to be backed by some financial mavens.
Generally there are many reasons behind one being interested in receiving some form of funding. An article from Forbes lists out the major reasons behind a company needing/wanting funding, as well as some thoughts as to why it is or isn’t necessary.
The fact that the majority of companies hadn’t received funding is a positive statistic that must bring hope to many entrepreneurs who are hoping to expand in the industry. If these companies are surviving and growing without any venture capital or public equity funding, it must mean that they’re doing something right on their own. The general factors that are allowing these tech startups to thrive are their profits in general and also that of angel financing (funds from family or friends).
It’s important to look deeper and see the most important factor. Startups without venture capital funding are starting to be taken just as seriously as any other startup. Having venture capital funding isn’t the only factor that pre determines if you will be successful or not. Originally it appeared that a company had potential especially if a major backer was willing to give money. Now, perhaps, it is even more impressive when a startup can succeed on their own.
It appears this may be a trend in the tech startup world as we see reported by VentureBeat. Incubator, 500 Startups, is now accepting applications to join their program. Every time prior, the new startups were chosen based off of recommendations from others- including venture firms. Now, every startup is allowed to apply and doesn’t need any recommendations from other sources to be considered “qualified”. Starting on January 31st and ending on March 1st, 500 Startups are asking those interested to apply via AngelList.
Exciting and optimistic changes are on the horizon for young entrepreneurs who are trying to break into the tech scene. Based off of how things are going, it seems like now is a good time to jump in...and hopefully not sink.
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Cost is a big one here. In regards to total transportation costs, the last mile comprises up to 53% of those - making it the least efficient part of the supply chain. Expectations of free shipping and next day deliveries add up to this.
Due to increasing digitalization and convenience services in every area of people's lives, the smooth and flawless process of getting the delivery to one's doorstep is exceedingly becoming what customers care most about. On top of that, for companies that package being delivered is an extension of their brand. The consumer is basically coming face-to-face with the brand, which makes it the biggest opportunity to heighten customer satisfaction.
If you live in a city and have even slightly observed your urban surroundings you’ve probably witnessed it first hand - urban congestion and crowded cities make it pretty tough to satisfy the growing demand and rising expectations of super quick deliveries. Add unpredictability in transit (like weather conditions), an incorrect address or remote locations, just to name a few, and you can see where this is going.
The worst part is, all those delivery trucks and vans that also produce a fair bit of emissions, are often only half full when they roll out for deliveries. This is mostly due to low drop sizes and stops along the route that are far and few between.
It’s not all hopeless though - Where there is a problem, there are solutions.
Same old, same old - isn’t always all that bad. Sometimes, all that’s needed are some new perspectives! The city of Utrecht, for example, implemented a zero-emissions electric barge nicknamed the “Beer Boat”.
Since 2010 it’s carrying beer and food to the city’s downtown restaurants by using waterways. Other electric barges in Amsterdam not only deliver but even collect organic waste, which is then turned into biofuel in processing plants! Isn’t that cool?
It becomes clear that cities, logistics, as well as urban planners, are equally part of solving the inefficiency of the last-mile. Tackling this mountain of issues calls for teamwork!
A centralized platform, hub or network for similar companies, could do the trick to fill up the delivery vans & trucks that are barely loaded. Parcels could be distributed more efficiently between different companies and their delivery vehicles.
Like a big pool of parcels from different companies with every single parcel going into that one van with the same route!
Delivery Driver Experience and Smart Delivery Vehicles are also areas with huge potential for improvement and innovation.
Ellie: Two years ago we adopted a new legal structure for Jolocom GmbH according to the purpose model of ownership, manifesting our commitment and dedication to building a self-sovereign organization. That means we can’t take VC funding or sell public shares of the company.
Volker: Jolocom is a community driven organisation – both in a tech sense but also much further beyond. We’re hugely involved in the DWeb community where we organize and attend events for the decentralized community. Every year we also help organize and attend the DWeb Camp in San Francisco, which brings together all kinds of creatives so this technology of tomorrow is built in a collaborative way.
Next to that on-demand experiences have become firmly embedded into people’s everyday lives - be it a mobile app to book a ride, send flowers to your loved ones or order lunch to your office. It’s all possible and has made premium features like real-time tracking a standard. The online consumer expects nothing less and certainly doesn’t like to wait.
Making that quick and instant gratification happen is another story though. Groundbreaking ideas and innovations are needed to tackle all these factors. Does your startup have one?
Volker: There is this really nice place, called Green Rabbit with salads and baked potatoes where I like to go to. Sometimes I just keep it simple and go to Lidl.
Ellie: I eat a lot in west.berlin cafe which is here around the corner and I love the Matcha Lattes from Starbucks.
Chrissy is a turtleneck wearing, interior design enthusiast who is made up of approximately 90% iced coffee. When she's not writing, you can find her walking at a snail's pace through a museum or taking photos of understated architecture throughout Manhattan.