From Internet infrastructure to employee inspiration, witness the memorable journey of Indian entrepreneurship in these excerpts and stories! StoryBites is a weekly feature from YourStory, featuring notable quotable quotes in our articles of this past week (see the previous post here)! Share these 20 gems and insights from the week of December 14-20 with your colleagues and networks, and check back to the original articles for more insights!

StoryBites

I want my son to grow up in a culture that respects women, men and children and where safety is a given, not an aspiration. – Surya Velamuri, SafeCity

Art and culture can serve as powerful agents in personal development and social change. – Laurence Estève, Zip-Zap

Ask yourself why you are doing what you are doing. – Kumud Srinivasan, Intel

Yoga becomes a way of life in, deed, speech and awareness. This is not just my story but everybody’s. – Rinku Suri, Yoga 101 Studio

The largest internet company in India has to be an Indian company. – Amod Malviya, Flipkart

With the hectic work and travel schedules of working people and entrepreneurs, making sure you have breakfast as a priority meal for the day is important. – Archana Doshi, Archana’s Kitchen

There are a lot of companies in Japan that are looking to expand to India and this platform can be a means of entry. – Sho Nakanose, CloudLancer

Home design and furnishing is largely serviced by mom-n-pop shops today. The pain point at the consumer end is high. – Rahul Chowdhri, Helion

Intelligence is never unwelcome. – Melchizedec Sunararaj, CloudInfra

Hustlers, as we know, sold that ‘one in a billion idea’ with the right tactics. – Laxman Papineni, AppVirality

The “app economy” and the new generation start-up eco system are expected to give a boost to the growth of content and applications provisioning in the country. – V. Sridhar, IIIT-Bangalore

Offline retailers till now were wary of the growing clout of ecommerce industry suddenly realized that they could immensely benefit by adopting the hybrid medium of online and offline retail. – Dev Dave, DesiDime

Aap asparagus jaante hain? – Om Prakash, Kinnaur

There is only one key difference between the Indian and the Chinese scenario – and it lies in the presence of vernacular language mobile applications. – Phani Bhushan, Anant Computing Platform

Today, we get lost with buzz-words like disruption, market niche, valuations and so forth; but what really differentiates companies and entrepreneurs- people and values. – Naman Shah, BizEquity

Efficiency and productivity are more important that actual effort. – Hari Krishnan, MavenHive

This year I perceive that there will be a huge move towards mobile payments.   They represent a massive opportunity for commerce in India to move straight into mobile payments from Cash on Delivery. – Stewart Noakes, TechHub Bangalore

Beginnings are special. They are qualitatively different from all that comes afterward – Peter Thiel, PayPal Founder

OTP through SMS is an innovation from India, which people started to use across the globe. – Kumar Abhishek, MobileGullak

As technologies and economic engines evolve, the regulatory framework needs to keep pace with the new paradigms. – G Raghunandan, TaxiForSure

The most challenging time was when I was made head of the front end team — I basically just came to know what responsibilities mean rather than just being responsible for individual work. – Aman Singla, Housing.com

I am a committed believer in the social, economic, and personal value of angel investing. – David Rose, New York Angels

Believe in yourself and your idea. Don’t look for historical references; you never know you are creating a new one. Always lead by example. – Ankush Tiwari, Mobiliya

Top line is Vanity. Bottom line is Sanity. Cash Flow is Reality. – Ritvik Lukose, Vahura

Madanmohan Rao

Madanmohan Rao

Madanmohan Rao is research director at YourStory Media and editor of five book series (http://amzn.to/NpHAoE). His interests include creativity, innovation, knowledge management, and digital media. Madan is also a DJ and writer on world music and jazz. He can be followed on Twitter at @MadanRao

Article source: http://yourstory.com/2014/12/startup-journeys-what-you-are-doing/

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On Friday, May 18, 2012 Facebook.com filed its initial public offering, allowing any one in the world to invest in their company via the NASDAQ. It launched with a price per share of $38 dollars and a $104 billion dollar valuation. At its peak, the stock rose to $80.77 per share, up from $38.00, the IPO price. At the time of this writing, it hovers in the upper $70s.

What this means is that anyone who invested in Facebook’s IPO has essentially doubled their money. Your $38 is now worth $77 so if you invested $50,000 in Facebook stock on May 18th, it would be worth $101,315 (roughly) now.

This is true but there’s more to the story. After all, if Facebook’s initial offering valued the company at $104 billion dollars, it means there was a lot of money made well before you or I could ever participate. So you might be wondering how you get on the other side of deals like this?

The problem is you likely can’t – at least not without jumping through a few hoops.

First, to invest in exchange for equity, the SEC wants you to be what’s known as an ‘accredited investor’. The requirements to be an accredited investor are that you have an annual income of $200,000 as an individual, $300,000 in annual income as a household, $1 million dollar net worth, or $5 million in assets under management. According to the 2013 census, only about 2.8% of American households fall into this category. So for the rest of us, this type of investing is discouraged in the form of SEC compliance regulation that discourages companies from selling equity to ‘average people’.

There are a few exceptions. Most notably Regulation D, the ‘friends and family’ exemption. Basically, if you happened to be in the right place at the right time, and you know the right people – that special someone building the next big thing in tech. Only then will the SEC will allow a non-accredited investor to invest.

Yet, there were many points in the life of Facebook where one could have invested in Facebook well before it was worth $104 billion. Shortly after Mark Zuckerberg and friends created it in his dorm room, when they were working out of the now infamous ‘hacker house’ in Silicon Valley, websites like SecondMarket.com where Facebook employees unloaded stock they earned in the company pre-IPO, the list goes on. However, because you (most likely) aren’t an accredited investor, the SEC restrictions listed above would have prevented you from participating.

Six months ago at the Community College of Philadelphia, nine people recognized these hurdles. We’d met as part of the Goldman Sachs 10,000 Small Business network – a program that helps established small businesses of all types get a crash course on various business skills via a Babson College curriculum. Goldman started this program as means to help 10,000 American small businesses learn to accelerate their growth using their own respective businesses as a case study in the classroom. Getting into the program isn’t easy, there are strict requirements on how many years a company must have been in business as well as the number of staff and the amount of revenues (from hundreds of thousands annually to tens of millions). After a very competitive selection process, the companies are selected and the work begins. Every six months there is a new group of entrepreneurs selected (called a ‘cohort’). We were the third cohort selected from the Philadelphia GS10K program.

While we were all strangers, what we had in common was the fact that we were ambitious entrepreneurs. It was after a course about business valuation methods that a handful of us began kicking the idea around of about creating an investment fund. In class we observed the scenario above, that venture capital investing was lucrative, but most people in the room couldn’t participate due to compliance law.

We decided the best way to get into the venture space was to establish our own small fund. With a fund we could collectively share the risk of investing and the burdens of legal compliance, the costs, and the necessary due diligence. We could also leverage more capital than any one of us could on our own. For instance, some of us had dabbled in angel investing before but were only doing about one or two deals per year. The fund could invest in upwards of eight per year!

So our group of nine eventually came together, each putting in a minimum of $10,000. Over the life of the fund we’ll have deployed between $300,000 and $500,000 in capital. Because we were the third cohort to go through the GS10K program in Philadelphia we named our fund to honor the circumstances, Third Cohort Capital.

third cohort capital

Some things to note about our model:

• We chose to do a fund rather than an angel group. In angel groups individual investors decide whether or not to invest with one another on a case by case basis. We felt this creates a lot of back and forth which cases deals to be slow and a lot of legal hassle.
• We do an annual capital call where participants of the fund have the option of maintaining their stake in the fund. While $10K was easy for most of us to come up with, more was difficult.
• We created a financial model for our fund to project what our earnings might be and what the fund valuation is based on our holdings in the portfolio companies. This is necessary so we know how to distribute earnings and to help us evaluate our progress.
• SEC regulation dictates any fund made up of non-accredited investors is also non-accredited. Because of the compliance burden, many companies won’t accept non-accredited investors. We’ve found a number of workarounds that still allow us to comply.
• Accredited investors can back our fund as limited partners. We are open to participation from new backers who might be interested.

Finally, the last thing we did with our fund was attempt to honor the fact that most of the partners are not from the tech sector and our companies are the type that would never be backed by a venture capitalist. Companies like restaurants, food trucks, print/design companies, baby clothing producers etc.

These types of small businesses tend to be attractive to investors only after they are big and highly successful. At the early stage they have a hard time finding capital. Usually they get loans, but most people don’t have great credit or enough collateral to get private loans from banks any more.

So while 90% of our fund is for venture investing, 10% is reserved for low interest loans to GS10K graduate companies that need capital. Our interest rates are lower than most banks and our process is a thousand times easier. For now we use the Goldman Sachs 10,000 Small Business program as our filter. Given that Goldman and Babson do such great due-diligence, we consider their stamp of approval enough to write checks behind. Companies that are currently in or who have completed the GS10K course can apply for up to $10,000 in low-interest loans on 12 to 24 month terms.

Third Cohort has been an absolute blast. In the process we’ve learned more about SEC compliance than we ever wanted to know, but that’s been great because it’s allowed us to find a way to structure an investment vehicle that is inclusive as opposed to exclusive. Most of our Partners do not represent the 2.4% of households that are accredited. We are not the 1% of Americans who have wealth. However, we are entrepreneurs who want to back other entrepreneurs. When faced with obstacles we decided to get around them the only way we know how – by being entrepreneurial!

Visit us at ThirdCohort.com

This blogger graduated from Goldman Sachs’ 10,000 Small Businesses program. Goldman Sachs is a partner of the What Is Working: Small Businesses section.

Article source: http://www.huffingtonpost.com/jon-gosier/bootstrapping-a-venture-c_b_6355268.html

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Julius Aiken, manager of The New York Butcher ShoppeJulius Aiken, manager of The New York Butcher ShoppeJulius Aiken, manager of The New York Butcher ShoppeJulius Aiken, manager of The New York Butcher ShoppeThe New York Butcher Shoppe on Augusta Road on Wednesday,A customer checks out at The New York Butcher ShoppeThe New York Butcher Shoppe on Augusta Road on Wednesday,The New York Butcher Shoppe on Augusta Road on Wednesday,Julius Aiken, manager of The New York Butcher Shoppe

Five years ago, Jim Tindal and his business partner were seeking investors for their small chain of gourmet butcher shops.

They had bought the New York Butcher Shoppe brand three years earlier from an entrepreneur in Mount Pleasant and moved its base of operations to Greenville.

As they searched for funding to expand the business, they discovered the Upstate Carolina Angel Network, a group of affluent individuals, mostly from Greenville, willing to put money into fledgling companies in exchange for equity.

UCAN’s 55 members are among nearly 300,000 so-called “angel” investors around the country who last year invested $24.8 billion in more than 70,000 entrepreneurial ventures, according to the Center for Venture Research at the University of New Hampshire.

Support from angel investors can help a startup survive long enough to prove its business model without having to leave town in search of funding.

After a vetting process, Greenville’s UCAN provided a cash infusion of an undisclosed amount to Butcher Shoppes International LLC.

Three UCAN members joined the Butcher Shoppes board and have provided valuable guidance over the years, according to Tindal.

The chain, which sells high-quality beef and other meats through seven stores in four states, has enjoyed a doubling of sales volume since UCAN invested in 2009, he said.

UCAN hopes to find other investment opportunities — and do its part to boost the South Carolina economy – by working with a new statewide network of angel investor groups.

The South Carolina Angel Network includes new angel investor groups in Columbia and Asheville in addition to the six-year-old UCAN. A fourth group is ready to form in Spartanburg, and a fifth meets virtually to help entrepeneurs who are Clemson University alumni.

The alliance of investor groups was launched this year by Matt Dunbar, UCAN’s managing director, and Paul Clark and Charlie Banks, two former CertusBank executives who joined UCAN when they were with the bank.

The various groups plan to pool capital and share information as they invest using processes developed by Dunbar during six years of running UCAN.

Dunbar said he hopes the network will help boost startup activity in South Carolina beyond what the state would otherwise have.

“If we scale up, and have investors across the state, we don’t have to have a full-time, separate staff at each place to run the activity,” he said. “We can leverage one central back office, so to speak.”

The result will be “more capital-efficient and sustainable for everybody in the network,” he said.

To join one of the angel groups, individuals must have a net worth of $1 million, not counting their primary residences, or an annual income of $200,000 for at least three years.

Dunbar said a 2010 study by accounting giant Deloitte shows there are at least 100,000 people in South Carolina who meet those criteria.

“If we can just get a fraction of those people to put some money into this asset class, that could be a significant amount of capital to help some of these companies and give us all a chance to succeed,” he said.

Dunbar, Clark and Banks have also launched the Palmetto Angel Fund.

It’s for people who want to help South Carolina startups — or at least make money investing in them — but don’t want to attend angel group meetings or get involved with investment decisions.

The fund will put money in all deals struck by the various angel groups involving at least $100,000 and five investors, automatically spreading the risk like an index fund.

Clark, who’s administering the fund from Greenville, said he hopes it will have $1.5 million by the end of this month.

SUCCESS OF UCAN

Organizers of the angel groups in Columbia, Asheville and Spartanburg are hoping to duplicate the success of UCAN, which this year was ranked the nation’s No. 8 angel investor group out of 370 examined by CB Insights, a New York City firm that tracks investments in private companies.

The ranking came after UCAN members sold their stakes in two companies for a profit: Selah Genomics and Verdeeco.

Dunbar wouldn’t release UCAN’s financials but said its members overall are “in a position” where a 20 percent rate of return across their portfolio is “doable.”

UCAN has put money into 36 companies over the years, 22 of them in South Carolina and 17 of those in the Upstate, Dunbar said.

Five of the firms it funded no longer exist, underscoring the high risk involved in angel investing.

UCAN’s members include Greenville businessman Joe Swann, who was president of Rockwell Automation’s Power Systems division until selling it eight years ago in a $1.8 billion deal.

OUTSIDE OF GREENVILLE

In Columbia, the new angel investor group is called Capital Angels.

It’s managed by Banks, a 32-year-old Camden native with a business degree from Newberry College and experience as an entrepreneur.

Members began meeting regularly in the summer and now number 35, he said.

They include Lee Bussell, chairman of Chernoff Newman, a well-known marketing communications firm, and Marty Brown, chief executive of Colite International, a signage company.

At least one previous effort at launching an angel investor group in Columbia failed, but Banks said Midlands business leaders who understand the importance of entrepreneurship have watched the success of UCAN.

“I think the timing is right now,” he said.

Banks said Capital Angels has invested in three companies so far: Pandoodle of Columbia; Baebies of Durham; and PharmRight of Charleston.

In Asheville, the Asheville Angels launched in October with 25 investors, said Josh Dorfman, the group’s managing director.

He works for the Asheville Area Chamber of Commerce, leading its initiatives for high-growth entrepreneurs.

As Asheville business leaders thought about organizing angel investors, Dorfman said, they looked to UCAN as a model.

“We felt UCAN, in a relatively short period of time, is developing an excellent track record, is very well managed, has great screening processes in place,” he said.

“And we feel strongly there’s great potential and synergies to be had between Asheville and Greenville in tying our communities and economies together.”

Dorfman said he wasn’t at liberty to disclose the one Asheville venture that the Asheville Angels has funded so far.

He said three other Asheville companies are scheduled to make presentations to members of the group in January.

“We have very optimistic expectations for 2015,” Dorfman said.

The group forming in Spartanburg will be called the Spartanburg Angel Network and will be owned by the Spartanburg Area Chamber of Commerce, said John Bauknight, one of the organizers.

Bauknight and his partner in Longleaf Holdings own five businesses, including R.J. Rockers Brewing Co.

He said organizers of the Spartanburg Angel Network hope to recruit 40 investors. Information sessions have been scheduled for three dates in January.

“We’re hoping that our first true member meeting will be in February,” Bauknight said.

He said a previous effort to organize an angel investor group in Spartanburg didn’t work but “everybody seems to be paddling in the right direction now.”

Also part of the statewide network is an angel investor group that’s focused on helping entrepreneurs who are Clemson University alumni.

The Tiger Angel Network, formed last year, includes 17 experienced investors who live around the country and meet virtually, said Matthew Klein, manager of the group.

Participants include Spiro board members such as Michelle Higdon, a former Nestle executive who runs a pet food company in Greenville.

Klein, interim director of Clemson’s Spiro Institute of Entrepreneurial Leadership, said the Tiger Angel Network doesn’t originate deals but joins deals arranged by other groups.

“The purpose is to help entrepreneurs that have an affiliation or an affinity for Clemson,” he said.

Joining a network of other angel groups in South Carolina “only adds to the opportunity to see deals across the state,” where many Clemson alumni live, Klein said.

He said the Tiger Angel Network has put money into one venture so far, but that he couldn’t share details because the deal hadn’t closed.

Article source: http://www.greenvilleonline.com/story/money/business/2014/12/19/investors-band-together-fund-startup-companies/20639347/

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We’re all aware of the amazing research and technologies that universities are doing to improve people’s lives. What makes many angels excited is that these new innovations can lead to great companies – if universities can connect with the right startup entrepreneurs.

What is often surprising to learn is how difficult it is for angels and universities to work together to bring these technologies to market. While Google Google, started by Stanford graduate students Sergey Brin and Larry Page, is forever connected to the university through licensing agreements, many successful companies such as Facebook, Microsoft Microsoft and Dell weren’t. Although they were conceived of by college students, they were started after the founders left school.

What causes these gaps? Jamie Rhodes, a former university tech transfer head, serial entrepreneur and founder of Alliance of Texas Angel Networks plus an Angel Capital Association (ACA) board member, notes that other than Stanford and MIT, few universities have figured out how to transfer their technology into successful startups. One reason for Stanford and MIT’s success is that their professors understand the importance of having relationships with entrepreneurs and investors. Their technology transfer offices understand that a successful partnership means more than a big corporate licensing agreement. So how can angels and universities tighten their partnerships to close these gaps?

 Spvvkr | Dreamstime.com - Stanford University Photo

© Spvvkr | Dreamstime.com – Stanford University Photo

On the surface, it seems easy. Angels want to increase deal flow so partnering with local universities to bring promising research to market makes sense. Likewise, universities want to partner with angels, and many already have set up technology transfer offices to connect to the private sector. So where does the break down happen? The crux is that usually universities are seeking investments in technologies long before most angels would invest because they need to fund the product development. In fact Rhodes notes that fewer than 10 percent of angels are interested in super-early stage opportunities because it requires building a company from scratch. Simply put, investors don’t invest in technologies – they invest in businesses.

Another factor is the complex relationship between universities and angels – which involves many players. Rhodes calls it a “four legged table” that includes faculty, university tech transfer offices, startup entrepreneurs and investors. Each has a different agenda, unique culture, language and approach leading to misaligned needs. Case in point:

  • Faculty are rewarded for their research, patents and papers, and are driven to attract university rewards for publishing their work in academic journals.
  • The university owns the patent and technology – not the faculty member working on the research.  Their goal, working through the technology transfer office, is to build revenue for the university and they need to follow the universities policies and procedures.
  • Most angels are looking to invest in a fully formed startup that includes an entrepreneurial team and business plan already in place.
  • Startup entrepreneurs are interested in building companies with innovations that can scale into large markets and are seeking investors with cash, connections and interest in their industry and technology space.

Here is how the misaligned needs commonly play out: The technology transfer office’s main job is to create income for the university. To achieve that goal, many look to license technologies to large corporations in exchange for big up-front fees. However, this model doesn’t work for startup entrepreneurs who can’t pay high upfront fees. They need a different deal structure. This requires entrepreneurial thinking by universities and more willingness to take risks. For example, limiting up-front fees in exchange for royalty payments tied to successful product sales and/or the university taking an equity position in the company.

EyeVerify, an ACA-member invested company (me included), is a great example of balancing the diverse needs of the 4-legged table. Spawned from the University of Missouri-Kansas City (UMKC), EyeVerify is reimagining password security with software that uses a mobile phone photograph of blood vessels found in the whites of an individual’s eye as a security key instead of a password or fingerprint. This company is successful because an entrepreneur was interested in working the UMKC professor and the university set up an entrepreneur-friendly deal. This enabled a company to form with business leadership that led to angel investment which fueled its growth.

Clearly, startup entrepreneurs and universities are starting to find ways to work together. But what can angels do to help close the gaps in working with universities? Rhodes suggests the following:

  1. Build relationships: with professors and students working in research areas in which you have interest or experience.  Over time these relationships could turn into an investment opportunity, even if it happens years down the line.
  1. Think creatively: Talk with university tech transfer leaders about developing entrepreneur-friendly licensing policies that work within the financial capabilities of startups. Explain how the short term risks for universities are balanced by potential long term rewards. Stanford’s “bet” on Google is a great example. It was a lucrative win-win for the university, both financially and in its relationships with entrepreneurs and investors for more new opportunities.
  1. Create integration opportunities: Work with universities to create a showcase of interesting research and invite professors and investors to mingle and learn from each other. This could lead to deeper relationships between investors and faculty.  Optionally, some universities are facilitating connections by hosting angel group meetings. The point is to find ways to educate university leaders, faculty and students about how investors think and then find ways to create engagement with the angel community.

Why is this important?  Rhodes says “the world class research conducted at our universities has the potential to save the planet.  We might never see the benefits if we can’t successfully commercialize it!”

Interested in learning more? Rhodes will lead a webinar on the topic on January 14. And this issue will be a topic covered at ACA’s 2015 Summit.

Article source: http://www.forbes.com/sites/mariannehudson/2014/12/19/angels-and-universities-finding-the-next-google/

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Bobby Goodlatte, the newest addition to the investment team at Silicon Valley venture capital firm Greylock Partners, is best known for being an early product designer at Facebook, playing a key role in user growth, chat, and photos. But over the last two and a half years, he’s been dabbling with angel investing, backing companies including Coinbase and FlightCar, and even the Samovar Tea Lounge in San Francisco.

As the designer-in-residence at Greylock (the firm was an early investor in Airbnb, Dropbox, Facebook, and LinkedIn), he’ll be wearing two hats: one as an investor and another as a design adviser. About two weeks into the job, Goodlatte chatted with Quartz about what he’ll keep an eye on as an investor, along with lessons he learned from leading design at Facebook, and why the most important design projects are often the most boring. (This transcript has been edited for clarity and condensed.)

What does being a designer-in-residence at Greylock entail? And does it mean you’ll likely launch a company at the end of your residency?

This is a different take on one of those in-residence jobs. It’s really a hybrid investor-designer role where I’ll be actively working with the consumer investment team. When we make an investment in a company, I’ll jump right in and work with the entrepreneur. These roles are somewhat temporary. It’s not a 10-year job. It’s maybe a two-year job. The expectation at the end of two years is maybe I do start a company, jump into a company I’m working with, or continue investing. I don’t know yet.

Have there been any themes among your angel investments, and what do you think you’ll focus on at Greylock?

I think unlike a lot of other investors, I didn’t have a thesis or specific vertical that I chased [as an angel investor]. It really often is about the product and founder. There are certain areas I’m personally excited about. I’m specifically very excited about bitcoin. I’m also very interested in [virtual reality].

What are some core design lessons you learned from your time at Facebook?

The user growth team had this idea we called the a-ha moment. A lot of the stuff we worked on at Facebook was the initial 15 minutes of signing up for the site, how to onboard users, how to get someone to be a highly engaged user. We did a ton of user testing and brought in a lot of users. I watched someone struggle with the process and get every error you can think of. She got to this screen where she saw a grid of faces, and you can see her lean in and her eyes just light up. We saw a certain point where the value of that product was clearly communicated. In Facebook’s case, it was when we showed a grid of friends—here are people you might know. We decided, let’s really try to make all that [onboarding] stuff happen after that—the a-ha moment, or magic moment, or whatever you want to call it.

Would you consider the onboarding process one of the most important things for startups to focus on?

Definitely. I see this as a recurring theme with a lot of startups I work with. You want to work on the exciting parts of the app. You want to work on what you do best, what you’re building, but there are a lot of things that aren’t exciting that you need to work on—really boring stuff like nailing down text-message confirmation flow. This stuff, no one gets excited about, but it’s so essential. A lot of the stuff I worked on early at Facebook was not the most glamorous, but had the most impact when I look back on it.

What should designers know about designing for wearables?

I think a lot of the same principles apply. Look carefully at the setup process. A lot of times, there’s a complicated pairing process and an engineer will tell you why that’s the way it is. Sometimes that’s the case, but sometimes, it’s important to focus on an easy out-of-the-box experience. A lot of these principles are elementary, but applying them is the challenging part.

Article source: http://qz.com/314823/lightning-round-with-greylocks-new-designer-in-residence/

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Don’t miss these top money and investing features:

Stephen Colbert broadcasts his final show tonight, and viewers can only give “The Colbert Report” a tip of the hat for being the award-winning investing advice program it is.

Oh sure, the “repor” is satirical and edgy and, yes, the show doesn’t deal directly with investing — unless you count Colbert’s well-publicized fear of bears.

But viewers of The Colbert Report learned about money and investing from Stephen’s sound advice — more than just how the 1% of society spend their pile. Check out Victor Reklaitis’s homage to Colbert; then read Chuck Jaffe’s list of fund industry executives and companies that don’t deserve presents this holiday season. And speaking of the holidays, be sure to watch how a church choir explains the meaning of angel investing.

Just remember: Every time the closing bell rings, a trader gets his wings. And that’s The Word.

— Jonathan Burton

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Article source: http://www.marketwatch.com/news/story.asp?guid=%7B588D2638-11BD-401B-BB3C-E6CD3FC349CA%7D&siteid=rss&rss=1

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How to raise finance from business angels? As co-founder of SyndicateRoom, I secured angel investment from over 20 business angels and 1 family office. Was it easy? Absolutely not. Was it worth it? Definitely yes. And more importantly, how did I do it? A mixture of a lot of luck, serendipity, hard work and a lot of coffees. Here are the top 5 techniques I used to secure angel investment for SyndicateRoom :

  1. Meet the top business angels in your sector – these days there is no excuse not to find a way to get introduced to a well-known business angel. An entrepreneur with the required determination to successfully launch a business will have the tenacity and drive to find a way to be introduced to the top investors in their respective sectors. It may take some time and several coffees with other interesting people along the way, but if I did it, anyone can do it. LinkedIn LinkedIn is a particularly good tool to find the best path to the business angel you want. A warm introduction is far more effective than a cold call approach. I knew that the best business angels got hundreds of emails a day with business proposals so I wanted to make sure I had a chance to arrange a meeting with them. When I was setting SyndicateRoom up, one of the business angels I respected the most was (and still is) Sherry Coutu. I found a way of being introduced to Sherry and had a meeting booked with her within a week. Had I sent her an email directly I doubt she would have even replied to it.
  1. Listen. A lot. – Business angels tend to be very successful entrepreneurs that ‘have been there and done that’. They also tend to be very ‘opiniated’. Take criticism of your business personally and you will miss out on a lot more than you think. I listened to a lot of criticism about SyndicateRoom. “People will never invest online” was my favourite. Interestingly some of the business angels that didn’t invest in SyndicateRoom because they didn’t believe people would ever invest online are now some of the largest investors through SyndicateRoom into our portfolio companies. Oh the irony! But I digress. The benefit of listening to what business angels say is that more often than not they have a valid point that can be addressed. I learned from what they were saying and improved the model until it became what it is today. The vision of ‘giving our members access to the top deals that the professionals are investing their money in’ is still exactly the same as it was when I started, but the details of the ‘how’ have changed significantly. Not only did I use business angels’ (free) input to improve SR, but also because I was open to find ways to improve SR, they were open to introducing me to other business angels.
  1. Talk about what you are doing – just like most entrepreneurs, for a while I was very wary of sharing my idea with business angels in case one of them would run away with it. Guess what? Even when I shared my idea publicly, nobody gave a damn about it. Just like Eric Ries advocates in his excellent book ‘The Lean Startup’, I couldn’t even convince anybody to steal my idea. I then realised that business angels are not in the business of stealing ideas. They are in the business of investing in ideas. It’s not just good ideas that they are looking for. It’s good ideas with the people that have the passion and are able to execute them. Since starting SyndicateRoom I’ve been pitched thousands of business ideas and realised just how many wonderful ideas aren’t quite as unique as entrepreneurs think and how it is all about the people that can execute them the best. Like super-angel Jonathan Milner often tells me “I only invest in entrepreneurs that can go through walls”. As soon as I started sharing my idea openly and the word started spreading I very quickly started to build up a book of business angels interested in investing in SyndicateRoom.
  1. Network in the right circles. We are based in Cambridge, UK, which is a small but very powerful world when it comes to angel investing. One upside is that if you are able to create a good word for yourself, people will talk about you. The other upside is that anybody that doesn’t act with integrity is also quickly known in the circles and weeded out. By networking and meeting key people at different events, I managed to start building up trusted relationships with key influencers. It takes time but the effect can be spectacular and as long as one is trustworthy and acts with integrity, they are relationships that will remain for a long time. I’m still surprised and honoured at how I can just grab my phone and call almost every single one of the top private investors in Cambridge and farther afield. Why? Because I don’t do it often and when I do I’m considerate and make sure I’m not wasting their time.
  1. Finally, the most important point of them all – know your stuff. All of the above is pointless unless you know your business inside out.

Raising finance from business angels is a tough and long process but it will certainly help you create a more robust business with greater chances of success. Pick the right business angels to join your board of directors and/or your advisory board and you are will be setting solid foundations for the future of your business. We have a fantastic board of directors and advisory board that bring a wealth of experience that I cannot be thankful for enough.

10 Terms You Must Know Before Raising Venture Capital

Article source: http://www.forbes.com/sites/goncalodevasconcelos/2014/12/18/top-5-techniques-i-used-to-secure-angel-investment/

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How to raise finance from business angels? As co-founder of SyndicateRoom, I secured angel investment from over 20 business angels and 1 family office. Was it easy? Absolutely not. Was it worth it? Definitely yes. And more importantly, how did I do it? A mixture of a lot of luck, serendipity, hard work and a lot of coffees. Here are the top 5 techniques I used to secure angel investment for SyndicateRoom :

 

  1. Meet the top business angels in your sector – these days there is no excuse not to find a way to get introduced to a well-known business angel. An entrepreneur with the required determination to successfully launch a business will have the tenacity and drive to find a way to be introduced to the top investors in their respective sectors. It may take some time and several coffees with other interesting people along the way, but if I did it, anyone can do it. LinkedIn is a particularly good tool to find the best path to the business angel you want. A warm introduction is far more effective than a cold call approach. I knew that the best business angels got hundreds of emails a day with business proposals so I wanted to make sure I had a chance to arrange a meeting with them. When I was setting SyndicateRoom up, one of the business angels I respected the most was (and still is) Sherry Coutu. I found a way of being introduced to Sherry and had a meeting booked with her within a week. Had I sent her an email directly I doubt she would have even replied to it.

 

  1. Listen. A lot. – Business angels tend to be very successful entrepreneurs that ‘have been there and done that’. They also tend to be very ‘opiniated’. Take criticism of your business personally and you will miss out on a lot more than you think. I listened to a lot of criticism about SyndicateRoom. “People will never invest online” was my favourite. Interestingly some of the business angels that didn’t invest in SyndicateRoom because they didn’t believe people would ever invest online are now some of the largest investors through SyndicateRoom into our portfolio companies. Oh the irony! But I digress. The benefit of listening to what business angels say is that more often than not they have a valid point that can be addressed. I learned from what they were saying and improved the model until it became what it is today. The vision of ‘giving our members access to the top deals that the professionals are investing their money in’ is still exactly the same as it was when I started, but the details of the ‘how’ have changed significantly. Not only did I use business angels’ (free) input to improve SR, but also because I was open to find ways to improve SR, they were open to introducing me to other business angels.

 

  1. Talk about what you are doing – just like most entrepreneurs, for a while I was very wary of sharing my idea with business angels in case one of them would run away with it. Guess what? Even when I shared my idea publicly, nobody gave a damn about it. Just like Eric Ries advocates in his excellent book ‘The Lean Startup’, I couldn’t even convince anybody to steal my idea. I then realised that business angels are not in the business of stealing ideas. They are in the business of investing in ideas. It’s not just good ideas that they are looking for. It’s good ideas with the people that have the passion and are able to execute them. Since starting SyndicateRoom I’ve been pitched thousands of business ideas and realised just how many wonderful ideas aren’t quite as unique as entrepreneurs think and how it is all about the people that can execute them the best. Like super-angel Jonathan Milner often tells me “I only invest in entrepreneurs that can go through walls”. As soon as I started sharing my idea openly and the word started spreading I very quickly started to build up a book of business angels interested in investing in SyndicateRoom.

 

  1. Network in the right circles. We are based in Cambridge, UK, which is a small but very powerful world when it comes to angel investing. One upside is that if you are able to create a good word for yourself, people will talk about you. The other upside is that anybody that doesn’t act with integrity is also quickly known in the circles and weeded out. By networking and meeting key people at different events, I managed to start building up trusted relationships with key influencers. It takes time but the effect can be spectacular and as long as one is trustworthy and acts with integrity, they are relationships that will remain for a long time. I’m still surprised and honoured at how I can just grab my phone and call almost every single one of the top private investors in Cambridge and farther afield. Why? Because I don’t do it often and when I do I’m considerate and make sure I’m not wasting their time.

 

  1. Finally, the most important point of them all – know your stuff. All of the above is pointless unless you know your business inside out.

 

Raising finance from business angels is a tough and long process but it will certainly help you create a more robust business with greater chances of success. Pick the right business angels to join your board of directors and/or your advisory board and you are will be setting solid foundations for the future of your business. We have a fantastic board of directors and advisory board that bring a wealth of experience that I cannot be thankful for enough.

Article source: http://www.forbes.com/sites/goncalodevasconcelos/2014/12/18/top-5-techniques-i-used-to-secure-angel-investment/

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David Rose, entrepreneur and Founder of New York Angels, offers seven clusters of useful tips for angel investors in his new comprehensive guidebook, ‘Angel investing: the Gust guide to making money and having fun investing in startups.’ Since angel investors play an important role in the startup journey, this book will also be useful for entrepreneurs to better understand how investors assess their companies. Besides, many successful entrepreneurs themselves become angel investors along their journey.

Angel Investing

“Today, any sophisticated investor with a portfolio of alternate assets should consider direct, early-stage investments in private companies as one potential component of that portfolio,” Rose begins. Good choice and management of angel portfolios can yield annual returns of over 25% in the U.S., as compared to bank accounts (1%), bonds (3%), stocks (7%), hedge funds (10%) and top VC funds (15%), Rose claims. Every year, over 600,000 new businesses start up and hire their first employees in the U.S.

Rose’s book is packed with firsthand accounts of startup deals, lists of do’s and dont’s, graphs of company growth, and a 60-page resource section with valuation worksheets, termsheets, due diligence checklists, glossary of terms, and links to useful sites. The writing style is informative, direct and humorous (angel investing lets you have “as much fun as it is possible to have with your clothes on!”).

Angel investing, once dominated by multi-millionaire high-rollers, is now entering the mainstream, with more than $20 billion being invested annually by individual investors in the U.S. alone. Making money is no longer about sitting back and reading stock listings, but also being part owner and active participant of an exciting startup, observes Rose.

Successful angels have to be curious, studious, have an appetite for risk and be able to accept failure, begins LinkedIn founder Reid Hoffman in the Foreword; Hoffman himself was an angel investor in Facebook, Digg, Flickr, Ning, Zynga and Last.fm.

The narrative highlights some of David Rose’s successful investments (Realty Mogul, FastTac, G-Force One, Social Bicycles, LearnVest, Comixology), failures (CE Interactive) and even missed opportunities (such as Pinterest, Quirky, Sling Media). Here are some of my key takeaways from this guidebook; each chapter makes for a detailed and informative read. (See also my pick of Top 10 Books for Entrepreneurs from 2013 and 2012.)

1. Understand the basics of angel investing

With proper planning and effort, seed investors stand to gain much more than IPO investors – and also learn from young entrepreneurs, play a formative mentoring role in their growth, have fun and excitement along the way, and even have the satisfaction of giving back to society through impact investing. Angels need to have long-term views of their industries, even temperament, respect for startups and ability to learn from failure. Unfortunately, most startups fail, it is hard to predict which ones will not fail, and it takes years for them to navigate the ‘J curve’ of success.

Rose cites research which shows that an angel typically invests in 20-80 companies over a five-year period, with about $25,000 per company; they also tend to invest along with 5-10 other angels. An angel receives upto 50 pitches per month, and angel groups receive upto 100 submissions per month. While regulations vary across countries, in the U.S. an accredited investor is a person who has net assets of at least $1 million or annual income of at least $200,000.

2. Engage and assess startups

Deal flow begins with sourcing and identifying high-potential opportunities. This happens through personal connections, angel groups, meetups, business plan competitions, startup conferences, launch events, accelerators and incubators. Investors should assess the character, skills, knowledge and experience of startup founders and their teams. Passion, leadership ability, vision, market savvy, flexibility, integrity and commitment are traits to look for, Rose advises.

Is there potential for revenue within five years? What is the competitive differentiation? What is the path to product acceptance? What are the breakeven points and profit margins? How convincing is the pitch? How solid are the company’s IP and financials? These are key questions to ask, and Rose provides many examples of these queries in action.

3. Master valuations, deals and investment rounds

Between the current value of the company and its estimated value after a fixed period lie a number of metrics: Return on Investment, Internal Rate of Return, terminal value and management risk. A number of instruments can be used here, such as preferred stock and discounted convertible notes, and should be formally spelt out in shareholders’ agreements and term sheets. Much negotiation and even mediation skills will be needed during the stages of successive investment from VCs (Series A onwards) and listing.

Assessment can be done via scorecard validation methodology, Dave Berkus method, Cayenne Valuation Calculator and Risk-Factor Summation Method. Rose also cites the work of investor-author Derek Sivers: “Ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.” (See his classic and often-referenced table on the multiplier factors of ideas and execution here.)

4. Add value to the startup

Active angels do more than provide funding – they provide networks of contacts, potential customers, assist with recruitment, serve on the board of directors, and mentor or coach the management team. Lead investors will bat for the startup and bring in further investors or make follow-on investments.

Rose provides good real-life examples of how he met the founders of Social Bicycles, LearnVest and Comixology at startup events, approached them to be an investor, helped them raise additional funding and provided mentoring and access to business professionals and customers.

5. Deal with outcomes: failures and exits

Based on his personal experience as an angel investor, Rose cites research which shows that 50% of portfolio companies go out of business, 20% are sold to a larger company, 2% are bought by a later investor and a mere 0.1% make it to an IPO. Angels should look out for financial buyers within a 3-5 year time frame, or preferably a strategic buyer.

Rose cautions angels to be prepared for the heartache of unexpected events despite the best of planning, eg. a startup he invested in, CE Interactive, struggled to scale its business model, took a major hit when its biggest customer went out of business and was finally eclipsed by the 2008 recession.

6. The long term: build your reputation as an angel

Angels with long-term outlooks will map out and engage with the broader entrepreneurship financing ecosystem at the city, state, national and even global levels. Create an online profile, write a blog, engage in dialogue, attend startup events, and participate as a judge or panelist, Rose advises. Joining an angel group helps master the finer aspects of due diligence, and build knowledge sharing networks.

For example, the online forum Quora has regular participation by angels like Dave McClure, Marc Andreesen and Reid Hoffman. Brian Cohen began as a pro-bono advisor at New York Angels – and eventually became the first angel to discover Pinterest.  The Angel Capital Association and Angel Resource Institute also host useful industry events.

7. Tap into emerging trends: impact investing and online crowdfunding

Impact investing helps angels grow companies that do well and do good, i.e. they address the double bottom line of financial returns along with positive social impacts, eg. for less-privileged citizens. Crowdfunding and equity crowdfunding are emerging trends to watch, but a lot depends on regulatory conditions in countries around the world.

The angel movement is thriving and scaling thanks to the rise of meetups (eg. NY Tech Meetup), business plan competitions (eg. at NYU), startup conferences (eg. DEMO, Disrupt, SXSW, CES), accelerator demo days (eg. Y-Combinator, TechStars, LaunchPad),  online funding sites (eg. for films: Slated; consumer brands: CircleUp; European startups: Seedrs) and angel groups (eg. Mumbai Angels). “I am a committed believer in the social, economic, and personal value of angel investing,” Rose concludes.

About the author:

David S. Rose is Founder and Chairman Emeritus of New York Angels, the most active angel group in the U.S. He is a serial entrepreneur, Inc 500 CEO and a prolific angel investor, and has founded or funded over 90 high tech companies. He is the founder and CEO of Gust, a global online platform for organised professional angel investing used by over 50,000 accredited angel investors, 1,000 angel groups and venture capital funds, and 250,000 entrepreneurs. Rose graduated from Yale, Columbia and Stevens Institute of Technology.

 

Madanmohan Rao

Madanmohan Rao

Madanmohan Rao is research director at YourStory Media and editor of five book series (http://amzn.to/NpHAoE). His interests include creativity, innovation, knowledge management, and digital media. Madan is also a DJ and writer on world music and jazz. He can be followed on Twitter at @MadanRao

Article source: http://yourstory.com/2014/12/angel-investors-david-rose/

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David Rose, entrepreneur and Founder of New York Angels, offers seven clusters of useful tips for angel investors in his new comprehensive guidebook, ‘Angel investing: the Gust guide to making money and having fun investing in startups.’ Since angel investors play an important role in the startup journey, this book will also be useful for entrepreneurs to better understand how investors assess their companies. Besides, many successful entrepreneurs themselves become angel investors along their journey.

Angel Investing

“Today, any sophisticated investor with a portfolio of alternate assets should consider direct, early-stage investments in private companies as one potential component of that portfolio,” Rose begins. Good choice and management of angel portfolios can yield annual returns of over 25% in the U.S., as compared to bank accounts (1%), bonds (3%), stocks (7%), hedge funds (10%) and top VC funds (15%), Rose claims. Every year, over 600,000 new businesses start up and hire their first employees in the U.S.

Rose’s book is packed with firsthand accounts of startup deals, lists of do’s and dont’s, graphs of company growth, and a 60-page resource section with valuation worksheets, termsheets, due diligence checklists, glossary of terms, and links to useful sites. The writing style is informative, direct and humorous (angel investing lets you have “as much fun as it is possible to have with your clothes on!”).

Angel investing, once dominated by multi-millionaire high-rollers, is now entering the mainstream, with more than $20 billion being invested annually by individual investors in the U.S. alone. Making money is no longer about sitting back and reading stock listings, but also being part owner and active participant of an exciting startup, observes Rose.

Successful angels have to be curious, studious, have an appetite for risk and be able to accept failure, begins LinkedIn founder Reid Hoffman in the Foreword; Hoffman himself was an angel investor in Facebook, Digg, Flickr, Ning, Zynga and Last.fm.

The narrative highlights some of David Rose’s successful investments (Realty Mogul, FastTac, G-Force One, Social Bicycles, LearnVest, Comixology), failures (CE Interactive) and even missed opportunities (such as Pinterest, Quirky, Sling Media). Here are some of key takeaways from this guidebook; each chapter makes for a detailed and informative read. (See also my pick of Top 10 Books for Entrepreneurs from 2013 and 2012.)

1. Understand the basics of angel investing

With proper planning and effort, seed investors stand to gain much more than IPO investors – and also learn from young entrepreneurs, play a formative mentoring role in their growth, have fun and excitement along the way, and even have the satisfaction of giving back to society through impact investing. Angels need to have long-term views of their industries, even temperament, respect for startups and ability to learn from failure. Unfortunately, most startups fail, it is hard to predict which ones will not fail, and it takes years for them to navigate the ‘J curve’ of success.

Rose cites research which shows that an angel typically invests in 20-80 companies over a five-year period, with about $25,000 per company; they also tend to invest along with 5-10 other angels. An angel receives upto 50 pitches per month, and angel groups receive upto 100 submissions per month. While regulations vary across countries, in the U.S. an accredited investor is a person who has net assets of at least $1 million or annual income of at least $200,000.

2. Engage and assess startups

Deal flow begins with sourcing and identifying high-potential opportunities. This happens through personal connections, angel groups, meetups, business plan competitions, startup conferences, launch events, accelerators and incubators. Investors should assess the character, skills, knowledge and experience of startup founders and their teams. Passion, leadership ability, vision, market savvy, flexibility, integrity and commitment are traits to look for, Rose advises.

Is there potential for revenue within five years? What is the competitive differentiation? What is the path to product acceptance? What are the breakeven points and profit margins? How convincing is the pitch? How solid are the company’s IP and financials? These are key questions to ask, and Rose provides many examples of these queries in action.

3. Master valuations, deals and investment rounds

Between the current value of the company and its estimated value after a fixed period lie a number of metrics: Return on Investment, Internal Rate of Return, terminal value and management risk. A number of instruments can be used here, such as preferred stock and discounted convertible notes, and should be formally spelt out in shareholders’ agreements and term sheets. Much negotiation and even mediation skills will be needed during the stages of successive investment from VCs (Series A onwards) and listing.

Assessment can be done via scorecard validation methodology, Dave Berkus method, Cayenne Valuation Calculator and Risk-Factor Summation Method. Rose also cites the work of investor-author Derek Sivers: “Ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.” (See his classic and often-referenced table on the multiplier factors of ideas and execution here.)

4. Add value to the startup

Active angels do more than provide funding – they provide networks of contacts, potential customers, assist with recruitment, serve on the board of directors, and mentor or coach the management team. Lead investors will bat for the startup and bring in further investors or make follow-on investments.

Rose provides good real-life examples of how he met the founders of Social Bicycles, LearnVest and Comixology at startup events, approached them to be an investor, helped them raise additional funding and provided mentoring and access to business professionals and customers.

5. Deal with outcomes: failures and exits

Based on his personal experience as an angel investor, Rose cites research which shows that 50% of portfolio companies go out of business, 20% are sold to a larger company, 2% are bought by a later investor and a mere 0.1% make it to an IPO. Angels should look out for financial buyers within a 3-5 year time frame, or preferably a strategic buyer.

Rose cautions angels to be prepared for the heartache of unexpected events despite the best of planning, eg. a startup he invested in, CE Interactive, struggled to scale its business model, took a major hit when its biggest customer went out of business and was finally eclipsed by the 2008 recession.

6. The long term: build your reputation as an angel

Angels with long-term outlooks will map out and engage with the broader entrepreneurship financing ecosystem at the city, state, national and even global levels. Create an online profile, write a blog, engage in dialogue, attend startup events, and participate as a judge or panelist, Rose advises. Joining an angel group helps master the finer aspects of due diligence, and build knowledge sharing networks.

For example, the online forum Quora has regular participation by angels like Dave McClure, Marc Andreesen and Reid Hoffman. Brian Cohen began as a pro-bono advisor at New York Angels – and eventually became the first angel to discover Pinterest.  The Angel Capital Association and Angel Resource Institute also host useful industry events.

7. Tap into emerging trends: impact investing and online crowdfunding

Impact investing helps angels grow companies that do well and do good, i.e. they address the double bottom line of financial returns along with positive social impacts, eg. for less-privileged citizens. Crowdfunding and equity crowdfunding are emerging trends to watch, but a lot depends on regulatory conditions in countries around the world.

The angel movement is thriving and scaling thanks to the rise of meetups (eg. NY Tech Meetup), business plan competitions (eg. at NYU), startup conferences (eg. DEMO, Disrupt, SXSW, CES), accelerator demo days (eg. Y-Combinator, TechStars, LaunchPad),  online funding sites (eg. for films: Slated; consumer brands: CircleUp; European startups: Seedrs) and angel groups (eg. Mumbai Angels). “I am a committed believer in the social, economic, and personal value of angel investing,” Rose concludes.

About the author:

David S. Rose is Founder and Chairman Emeritus of New York Angels, the most active angel group in the U.S. He is a serial entrepreneur, Inc 500 CEO and a prolific angel investor, and has founded or funded over 90 high tech companies. He is the founder and CEO of Gust, a global online platform for organised professional angel investing used by over 50,000 accredited angel investors, 1,000 angel groups and venture capital funds, and 250,000 entrepreneurs. Rose graduated from Yale, Columbia and Stevens Institute of Technology.

 

Madanmohan Rao

Madanmohan Rao

Madanmohan Rao is research director at YourStory Media and editor of five book series (http://amzn.to/NpHAoE). His interests include creativity, innovation, knowledge management, and digital media. Madan is also a DJ and writer on world music and jazz. He can be followed on Twitter at @MadanRao

Article source: http://yourstory.com/2014/12/angel-investors-david-rose/

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