Just yesterday, Mike Arrington announced the TechCrunch20 conference at the Web 2.0 Expo in San Francisco. The event is going to feature 20 startups that get to demo their products for free to all the attendees. The price for the event? A whopping $1,995 through July 15, 2007 and $2,495 through September 10, 2007. A little to fat for my pockets for the time being. Two days ago I was informed of an alternative event for startups in New York City called “The Hatchery”. The cost for the event? Free! That is music to my ears.

According to their site:

The Hatchery’s Gauntlet affords entrepreneurs the opportunity to interact with objective and expert attorneys, financiers, accountants, Angels and other business professionals in a public forum. The monthly vetting event provides strategic critique, analysis and funding chances for those who are in the process of building their business and in need of publicity, consulting and networking exposure.

I spoke with the creator of the event, Yao-Hui Huang, and asked him if it is guaranteed that startups at the event will receive funding? His response?

To answer your question — yes.
The new rules will be that each presenter will have to get vouched by an industry expert from our panel pool. That panel member will be at the live event. The company then needs to pass the critique of the entire panel. Once through, they will get our management, business development, access to press, and most importantly our funding sources. We will take all that passes with no cap on quantity of companies. In exchange we will take a percentage of the raise and equity in the company. They can still opt to find other sources, but we do keep the equity. The goal is to use our team to drive them to success.

While there is no cap on the number of companies receiving funding as a result of this event, there is a cap on the number of startups that can attend the event. At the event on May 3, 2007 there will be a limit of 5 hand selected companies that will have the opportunity to present. If you are a New York based startup then I encourage you to submit your idea and try to take on “The Gauntlet” (the process of pitching and Q&A that you will go through at the event). To find out more about the event go check out their site. If your company is looking for venture capital, then this is a great opportunity to obtain it.

Last night i was invited to the private site, TheFunded.com. The site provides entrepreneurs with access to ratings of venture capital companies as well as personal contact information of VCs. While it provides a good opportunity for disgruntled entrepreneurs that have not received funding, I don’t think it provides much of a benefit to anyone else. While the concept is a good one, I don’t think people will use it for its intended purpose.

Since the majority of the postings are posted anonymously, there is practically little value in using the information provided by the site. If you are an entrepreneur looking for funding, use this site to come up with a list of potential VCs to contact, but don’t use it as an end all be all resource for research. I would have rather seen this site as one that allows entrepreneurs to pitch their business plans to VCs and then provides the contact information of the entrepreneur to the interested VC. I think the site brings one-sided transparency. Had they made the transparency equal on both sides, there would have been an incredible amount of value. A social network consisting of investors and entrepreneurs would be amazing. Anyone know of an existing one?

It was only a matter of time before Michael Arrington began investing in some of the companies that he writes about on Techcrunch. Yesterday Mike announced that Heather Harde the SVP of M&A and Fox Interactive is joining Techcrunch as the CEO. As of now TechCrunch is one of the most popular blogs online and Arrington’s Crunch Network includes a few other popular blogs as well. Does a small network of popular blogs really require a relatively big name CEO? No.

Mike Arrington says Heather will “leverage the opportunities that we have sometimes let slip by.” It’s pretty obvious that he’s talking about investing. All internet start-ups are constantly pitching to Arrington to get posted and to experience the “Techcrunch effect”. Not a bad position to be in if you are an investor.

Ashkan Karbasfrooshan (Froosh) argues that in addition to investment, Techcrunch will provide preferential treatment on the blog to the companies that they are investing in. Froosh also makes a good point:

More importantly, to VCs, TC just lost some street cred. Think about it, if TC had absolutely no skake or interest in company XYZ but mentioned it in a favorable light, then it can be said that TC helps VCs with the sorting of opportunities. But if VCs now get a sense that Arrington will give preferential coverage to companies who give up a stake to TC, then clearly VCs will go look elsewhere for reviews.

Now that Techcrunch is going corporate, maybe there will be a new space in the market for less biased reviews. Both Frank Gruber and Orli Yakuel seem properly placed to fill the void. It will be interesting to see how this turns out for Techcrunch. Good luck Mike!

With the announcement by O’Reilly Media of their decision to enter the early-stage venture capital market, I’ve been thinking a lot more about venture capital. Two weeks ago, at the Future of Web Apps conference, I had the pleasure of listening to a speaker from Index Ventures (who has invested in companies including Skype, Last.fm, and MySQL). Following the speaker, I walked outside and spoke with other conference attendees who (myself included) wanted to know how to become a venture capitalist. This was ironic because many of the attendees at the conference were all entrepreneurs.

It is no wonder that we were all clamoring about how to become a venture capitalist considering Index Ventures’ outstanding portfolio performance. The key value that a venture capital fund provides is not only capital but a network of resources that can greatly increase the start-up’s chance of success. From an entrepreneur’s point of view, the life of a venture capitalist is one of luxury. I myself partially agree with this position. A VC has the luxury of picking out new ventures that have the greatest opportunity of success within a market that they know intimately. Rather than performing all the hard work of an entrepreneur, they simply need to do their due diligence, provide capital and contacts and their good to go. Well, not exactly. I am undercutting the amount of work done by the Venture Capitalist but this is the glamorous picture painted by the Index Ventures speaker in his short speech (or at least my take on it). I would be interested to hear a venture capitalist’s take on this. Perhaps Fred Wilson could shed some light on my biased view?

While browsing through my google reader today I noticed an article from PodTech.net about the first CRV entrepreneur idol winners. Included in the article was an interesting video of the winning 60 second pitches. One of the pitches was for a new company called PersonForce. Personforce allows any website to make money off job postings. After signing up you simply add the job board to your site in minutes and Personforce will go and find jobs that accurately target viewers of your site. It is the Google AdWords of job boards! Genius!

How do you get paid as a website owner using Personforce? Personforce pays you in two ways: 1) When employers come to your site and post a job, and 2) When potential employees submit an application or view the job.

With a little Web2.0 design added to their website and interface, I could see this site taking off fast. I know thousands of bloggers will be fast to put a job board on their site similar to CrunchBoard, 37Signals job board, and GigaOm Jobs. From the sounds of the video clip, the person pitching Personforce successfully intrigued Matt Marshall from VentureBeat (a blog about the venture capital industry).

The only sample job board that Personforce links to on their website is Brightspyre, which doesn’t really look that slick. I think with a little redesign and simplification (similar to a 37signals type of interface), Personforce will be massive. They already have at least $100,000 in revenue and 300,000 users. Look for this site to potentially take off in the near future. Timing is critical as I’m sure someone will try to create a similar product in the immediate future, but this is truly a great idea.

Update
I found a competitor to Personforce yesterday. The company is called HiddenNetwork.com. Hidden network provides bloggers with an easy way to list job vacancies on their website and get paid for generating leads.

In my last post I commented on how Google and Yahoo should each have their own venture capital departments based on how much they are spending. Maybe not the best idea. I spoke with my friend who currently works at Google and he brought up a great point. If Google created their own venture capital department, it would be the same as suggesting that they don’t have much faith in their internal R&D department. Additionally, it makes much more sense for Google and Yahoo to purchase companies that have a proven track record rather than going out and investing in start-up ideas. So maybe I wrote the previous article late at night … thanks for pointing out the flaw in my thinking Erik!

As mentioned in Techcrunch today, Yahoo has acquired two new companies MyBlogLog and Bix. It seems as though there is a new acquisition just about everyday. Earlier this week Google acquired iRows, an Israeli web company, and acquired another site JotSpot last week. There is a nice list of Web 2.0 websites at Go2Web2.0, provided by Orli Yakuel and Eyal Shahar. If you scoll through the list you can find an array of companies that have already been acquired or are soon to be acquired.

To be honest, I hate using the phrase “Web 2.0″ but it is hard to deny that there seems to be a massive influx of capital into new web based ventures. Will this influx disappear? I’m sure there will be an eventual slowdown of capital but to be honest, I don’t see it having any significant impact on the growth of web entrepreneurs. During the first wave of web startups most companies’ exit strategies was to go public. Now the trend is to become acquired by Google or Yahoo. Another interesting note about the new startups is that they are recieving significantly less startup capital. For example, the venture capital company YCombinator as a rule of thumb provides only $6,000 for each employee in the company (approximately 3 months worth of living expenses for a 20-something entrepreneur). There is a great article in the New York Times titled “For Start-Ups, Web Success on the Cheap“, which highlights this new trend toward lower startup capital.

What’s the moral of the story? With all the hype surrounding Web 2.0, one may expect the hype to die down soon. Unfortunately for many of the nay-sayers, the hype isn’t dying any time soon. Rather than throwing massive amounts of capital at a few interesting start-ups, venture capital companies can now diversify across a wider range of start-ups requiring significantly less capital. Bottom line, the internet industry is where it’s at; you can either hop on board, or let the train roll on past you, and trust me the train ain’t stopping any time soon.