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.
Find more insightful articles click here!
In addition to the betahaus locations, we've formed a close relationship with some of the world's best coworking spaces. With your betahaus membership, you can work from any of our partner spaces for 1 day per month.
Republikken // Copenhagen, Denmark // Vesterbrogade 26, 1620 København V, Denmark
Le Laptop // Paris, France // 6 Rue Arthur Rozier, 75019 Paris, France
utopic_US // Madrid, Spain // Calle de la Colegiata, 9, 28012 Madrid, Spain
Nest 71 // Saravejo, Bosnia & Herzegovina // Milana Preloga 12, Sarajevo 71000, Bosnia & Herzegovina
Toolbox // Milan, Italy // Via Agostino da Montefeltro, 2, 10134 Torino, Italy
Edspace // London, England // Block D, Hackney Community College, Falkirk St, London, UK
Bios // Athens, Greece // Pireos 84, Athina 104 35, Greece
CoWorx // Kristiansand, Norway // Markens Gate 8, 4611 Kristiansand, Norway
CRU – Loja / Cowork // Porto, Portugal // Rua do Rosário 211, 4050-524 Porto, Portugal
SPARK // Mostar, Bosnia & Herzegovina // Bleiburških žrtava, Mostar 88000, Bosnia & Herzegovina
StartUp Armenia Foundation // Yerevan, Armenia // 0019, 1 Marshal Baghramyan Ave, Yerevan 0019, Armenia
Tøyen Startup Village // Oslo, Norway // Hagegata 23, 0653 Oslo, Norway
Smart Coworking // Prague, Czech Republic // Václavské nám. 806/62, 110 00 Nové Město, Czechia
Lighthouse // Tel Aviv, Israel // HaHaroshet 14-16 Ra'anana, Tel Aviv, Isreal
Fueled // New York City, USA // 11, 568 Broadway, FL 11, New York, NY 10012, United States **Maximum 3 Days
Capital Factory // Austin, USA // 701 Brazos St, Austin, TX 78701, United States
Público // Mexico City, Mexico // Puebla 403, Roma Nte., 06700 Ciudad de México, CDMX, Mexico
Area Tres // Buenos Aires, Argentina // El Salvador: El Salvador 5218, C1414BPV CABA, Buenos Aires, Argentina // Soho: Malabia 1720, C1414DMJ CABA, Buenos Aires, Argentina
HubBOG // Bogota, Colombia // Cl. 98 #18-71, Bogotá, Cundinamarca, Colombia
CIT // Taipei, Taiwan // 10452, Taiwan, Taipei City, Zhongshan District, 玉門街1號
Of10 // Mumbai, India // Prudential, Ground Floor, Hiranandani Gardens, Powai, Mumbai, Maharashtra 400076, India
Kibar // Jakarta, Indonesia // Jl. Prof. Moh. Yamin No.1, RT.7/RW.5, Menteng, Kota Jakarta Pusat, Daerah Khusus Ibukota Jakarta 10310, Indonesia
Midori.so // Tokyo, Japan // Midori.so Nakameguro: 3 Chome-3-11 Aobadai, Meguro-ku, Tōkyō-to 153-0042, Japan // Midori.so Nagatacho: 2 Chome-5 Hirakawachō, Chiyoda-ku, Tōkyō-to 102-0093 // Midori.so2: 3 Chome-13 Minamiaoyama, Minato-ku, Tōkyō-to 107-0062, Japan
Launchgarage Innovation Hub // Manila, Philippines // Level 2, Industria Mall, Circulo Verde, Calle Industria, Bagumbayan, Quezon City, 1110 Metro Manila, Philippines
Independent Studios // Melbourne, Australia // 39/40 Porter St, Prahran VIC 3181, Australia
Urban Station EGYPT // Cairo, Egypt // 2 Wadi El Nil Mohandeseen, Cairo, Egypt
Nairobi Garage // Nairobi, Kenya // Nairobi Garage, The Mirage, Chiromo Rd, Nairobi, Kenya
BONUS: Cowork & Relax at the Coliving Space, Coconat // Brandenburg, Germany // Klein Glien 25 14806 Bad Belzig, Germany // Get €10 off your stay
Toni: Currently, we’ve somehow ended up in this niche of building a lot of internal tools for startups and teams. But this is not the only thing we want to do. What I like about it is that we’re starting projects from scratch and we have full control over them.
Martin: The first project we worked on was a tool for a large scale real estate development company. What they needed was a tool for their Sales people - to be able to mark their different spots and locations at different stages of the sales funnel. So we created a tool that helps them in this process.
Toni: And this one actually served as a starting point for the tool we’ve developed for betahaus, which aims to allow the Sales and Management team to see which team rooms are occupied right now, which ones are free or will be occupied in a few weeks or months, so no double bookings appear.
Alex: These two projects were more focused on real estate, let’s say, but we’ve also done more design-heavy projects like the one we did for Artique which is an online artists agency. For them, we built a whole website and an online system to present their artists starting only from their logo. It had to be very flexible, because the artists needed to be able to edit their own profiles, putting their resume, changing colours.
Toni: Honestly, we have skillsets that you don’t usually find in developers. Because we've had lives that were not just about computer science. I think to some extent this is what makes us different.
Martin: I believe one of the reasons why people pick us over other studios is because it can be very hard working with developers. If you’re not understanding their work, if the communication is not flowing, you, as a client can feel lost. We're easy to communicate with and we’re always open to feedback and we're open to discuss anything. In the end, after all iterations, if you say we need to start the website from scratch and that you don’t like the idea, we won’t take it personally.
Alex: Also, I think, since we all work as coding teachers, we are officially qualified to explain what coding is to people who don't code, which is actually really rare because a lot of developers, as Martin says, don't want to, or literally just don't know how to articulate what they're doing. Whereas we are trained in articulating what it is that we're doing, why it's meaningful and why it takes a certain amount of time.
Alex: Zimt & Mehl - the Turkish bakery around the corner. It’s just soo good.
Martin: Oh, there is this Italian restaurant called Ristorante del Arte
Tony: Oh, my God, this place is so funny. It looks like a pretty average Italian restaurant, but the whole interior design inside is just decorated in such a weird way. The entire place is covered in frescoes. They have crystal chandeliers and Easter bunnies. Some Greek columns. It has a different name on the menu, on the side and on the Internet. And it was an ex-shoe-store.
Want to get in touch with Obst Digital? Come around betahaus | Neukölln and meet them here or send them an email to email@example.com !
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.