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Nothing ventured, nothing gained: Danielle Dalkie finds the rules for raising startup capital are (gradually) changing

01 Aug

Fuelling the digital economy: options for startups (Image: Stock.xchang)

I have first-hand experience of raising capital; pounding the pavement and listening to people tell you that something you have put your heart and soul into doesn’t really interest them: sorry. Then, just when it seems you are about to give up , when you have spoken to every investor – twice – you suddenly stumble across someone who is actually willing to invest.

In the current economic climate it seems this process is even more arduous as people are less willing than usual to part with their hard-earned cash.  When it comes to venture capital, the conventional wisdom has been that if you want money the Americans are pretty much giving it away. Finding investment in Europe, however, while far from impossible, isn’t exactly easy either (particularly in Italy). Take for example the Italian startup wunderkind, Mashape, an API marketplace for cloud-based services: they spoke with every VC and investor in Italy – all without success. And then (miraculously) after just 19 days in the USA they found funding in San Francisco.

According to Marco Palladino, one of the founders of Mashape (along with Augusto Marietti and Michele Zonca) it’s entirely cultural. He told TechCrunch: ‘in Italy, the investor community is smaller and has less money than in Silicon Valley. Therefore, they don’t want to take a risk by investing in a new and innovative model – they want to invest in something proven and secure. Thus, they fund models that already exist, which ends up slowing down local innovation as a consequence’.

However, you can find venture capital if you’re in the right industry.  A recent report states that there has been a 37 per cent increase in investments in the US this quarter. Not surprisingly companies in the mobile sector have been the main beneficiaries, including seed funding for startups. In fact, 22 per cent of all deals have been at the seed stage this quarter.

Even though the Italian investments market still trails its main European counterparts it has been growing and an increasing number of opportunities are available.  In the past three years, 183 startups have received financing, according to a survey by “Startup Numbers”. The combined investment capacity of the funds for 2012-13 is about 320 million euros, aimed at supporting around 160 new businesses. The average lead time between the issuing of the business plan and the actual investment is about 6 months. Some firms can manage it in 3 months, while others need up to 10 months. The average share of capital controlled by investors is 30%.

There is also growing interest in the Italian startup sector, attracting not only homegrown VC funds, but also foreign money. Government support in the form of a Task Force to propose new laws more favourable to startups has also helped to spur optimism, as we reported on NetworkMilan recently.

Kickstarter: the world's largest funding platform for creative projects

However, while the traditional funding route for startups remains hard just about everywhere there is a new trend in the form of online funding networks.  Depending on which site they use a startup can raise whatever amount they need to get their business off the ground.  Whether you’re a one-man-band with a brilliant idea, or a small company seeking further development funds, this seems to be where most people are getting angel funding. Kickstarter is the one most people have heard about, creating a community for people with money to invest: anything from $10 up to $1 million, as was the case for Nano Wristbands (which convert an iPod Nano into a watch).

I also came across Payable.com as well, which takes a slightly different approach.  You share your idea on the site, which then gets funded by the ‘investor/s’.  Payable’s own developers step in to get you up and running and the software is sold via their online store, which is how the investors make their money back.  One disadvantage with this model is that you don’t own the IP.

And there’s Kabbage.com, which, according to its website can ‘provide working capital to online sellers to help their business grow in less than 10 minutes‘.

I like the idea of startups funding startups.  It makes sense; they understand the risks involved and are generally more in tune with the way entrepreneurs think.  And it is these companies that have been the driving force behind the growth in seed investment, as I mentioned above.

Certainly, the times they are a-changin’ for the investment sector. I personally do not believe you can say one location or market is better or worse than any other, especially since the dire economic outlook affects everyone equally (at least in the West, still languishing in recession). (According to an article in the Wall Street Journal, U.S. government spending relative to GDP is 36%, which is very close to that of Spain. And the US debt-to-GDP ratio is 103% whereas Spain’s is 68%.)

But while times remain tough, the growing diversity of funding sources for startups is one of the factors helping to get new high-tech businesses through these tough times.

By Danielle Dalkie, Social Media / PR Consultant and Co-founder of mobile payments startup Waspit.

BREAKING NEWS: Danielle has recently founded Network Roma, a sister group of the Milan Business English Network. You can become part of Network Roma by joining their group on LinkedIn.

Racing ahead: venture capital is available for startups with real potential that explore every funding route (Image: Formula One by Mark McArdle via Wikimedia Commons)

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NetworkMilan welcomes Danielle Dalkie, mobile entrepreneur and PR /Social Media expert

12 Jul

We are delighted to introduce our first guest blogger, Danielle Dalkie, who has a fascinating background as a mobile payments entrepreneur and is currently planning a strategic move to Rome. In this article she talks about her experience in setting up Waspit, a social banking service, and how she plans to use her PR and social media skills in her new life in Italy.

Danielle on the Digital Mission Stand at ad:tech NYC Conference and Expo 2010

Ciao! I am really pleased to be writing for NetworkMilan.com – and I am looking forward to sharing some of my ideas and business experiences with you. I’m also really excited about coming to Italy! I am an Australian who grew up in New Zealand and for the past two years I have been living between London and New York. And now I am moving to Rome!

I am Co-Founder of a startup called Waspit, a social banking platform for students. More specifically, it combines traditional banking features with social platforms to create a more intuitive and enriched experience for users. In essence, Waspit is “Banking 2.0”, and I have been involved in product development (right from the conception of the company) and more recently realigning the product to suit the target market: I have also been doing some business development and I aided the company in raising its first round of venture funding in New York.Waspit is designed not only to provide all the latest banking capabilities including mobile payments, but to enable for the first time a dynamic communication between users, their friends and the merchant on how and where they choose to spend their money.

Waspit lets you plug in all your social media platforms into one place so that you no longer have to manually check-in on Facebook and foursquare or post separate reviews to Yelp, Twitter and your other networks.

Social banking for students

For the more traditional ‘bank-like’ transactions Waspit is accepted in-store and online anywhere MasterCard is accepted; cash can be withdrawn from most ATMs; and students can pay their bills using ACH (Automated Clearing House) or Billpay. The FDIC* insured account also has a traditional routing and account number so students can receive their wages and allowances.

In the social world, students can easily, securely and instantly send and receive money between friends via Facebook, Twitter or mobile phone. Making quick payments in store is as simple as tapping your mobile phone over any MasterCard PayPass terminal. Students can even use the iOS, Android or Facebook apps to split restaurant bills or request money from their parents.

My own background is in public relations and social media, however. I have been involved in developing and implementing customer acquisition strategies in the tech, digital and social sectors. My skills include traditional PR such as managing press releases, publicity, social media, online content, corporate events, conferences and creating brand awareness.

I also specialise in social marketing and developing viral strategies (including guerrilla marketing efforts), as well as many successful viral and online campaigns in the both the US and UK. In addition, I develop comprehensive campaigns which rely heavily on social media and social marketing.

Rome calling (Image: Trevi Fountain by Fod via Wikimedia Commons)

But the big news is… I am relocating to Rome this year and I am currently looking for a suitable position and some cool social media projects to work on (so please get in touch with me if you have something I might be interested in!)

I am also involved in setting up the Rome Business English Network – the first sister group of the Milan Business English Network to be based in another Italian city. (Visit Network Roma for all the latest news about events and networking for people speaking, learning and doing business in English in the eternal city.)

NetworkMilan.com have invited me to write a series of blog posts on how mobile commerce is changing the way we interact with companies and its wider implications for the digital economy. I hope you enjoy these articles and find them useful, too!Read Danielle Dalkie’s next guest post, coming soon on NetworkMilan.com:
Money in motion: how mobile payments technology is changing the face of retailClick here to find out more about Waspit and social banking.

*Federal Deposit Insurance Corporation: A US federal agency that insures deposits in member banks.

UPDATE (AUGUST 2012): Danielle has recently founded Network Roma, a sister group of the Milan Business English Network. You can become part of Network Roma by joining their group on LinkedIn.

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