Little overwhelmed right now, but thought I would share two links I’ve recently come across that I’ve found quite interesting. One is on the freemium business model for startups and the other is data on recent Series A venture capital financings in New England.
Freemium is Not a Business Model, by Mark Evans. Mark is a Canadian writer/entrepreneur. The comments section here is really interesting; worth scrolling through. I agree that many startups underestimate the difficulties of making a real business via a freemium. However, enough startups have succeeded with this model that it has to be taken seriously. To prove that you’ve got a startup capable of really creating huge revenues via a freemium model you’ve got to have a serious marketing and conversion engine (that’s my two cents…)
Quarterly Review of Series A Financings in New England, by Foley Hoag. (download the pdf for the report) Foley Hoag is a respected corporate law firm. Their attorney’s provide the following commentary: “Series A rounds are getting done despite the general economic climate; and yes, they are getting done at a more modest level because of it.” “The first two quarters in 2008 saw a general decline nationally in Series A transactions (down 8% from the same period in 2007), with a more marked downturn felt in New England (down almost 30% from 2007).” Keep in mind they are using a small sample set for their analysis, but it’s still an interesting read.
October 23rd, 2008 at 3:04 pm
Thanks for referencing our EEC Perspectives publication. I agree that our sample is small and therefore may create a false sense of precision. To some extent our research is dependent upon the information we can derive from databases we subscribe to. I also think that as we report on more and more deals over more and more quarters, a full and fair picture will emerge. Speaking now from my own current experience representing entrepreneurs, the numbers we are reporting seem consistent with anecdotal evidence. For those who are interested, we prepare three reports (1) Series A transactions, (2) Series B and later round transactions, and (3) angel financings. If you have an interest in back issues, you can find them on our site (http://www.foleyhoag.com/newscenter/alertsandupdates.aspx). Also, I gave some thought in our blog (http://www.foleyhoag.com/newscenter/blogs/eec/2008/10/2008-2nd-quarter-series-a-report.aspx) to the Q2 Series A report which seems like ancient history from today’s perspective.