A compilation of important news from the startup world:
How B of A’s Billion-Dollar Tech Cuts Could Fuel Startups
Like other big banks, Bank of America wants to get nimbler and more innovative. But it is weighed down by the same problem they all are: a vast worldwide technological architecture that costs billions of dollars a year to run.So, in order to bring new technology in, B of A decided to cut some legacy out.”Innovation is not just about adoption,” David Reilly, the bank’s chief technology officer, said in an interview last week at the FinTech Innovation Lab Demo Day in New York, which Bank of America co-sponsored. “You’ve got to retire the old stuff and get rid of the addressable expense.”The bank’s budget for technology and operations in 2016 is $17 billion. The IT infrastructure part of that, which Reilly oversees, is down $1 billion since 2012, he said. The bank also has a $3 billion innovation budget. There isn’t a one-to-one correlation between tech savings and growth in innovation spending, but the cost-cutting efforts help.Reilly’s team uses Gartner benchmarks to track what its peers spend on infrastructure assets (networks, servers, storage, desktops, etc.) and to figure out where to make changes.”I compare all that addressable expense to my competitors at a level of granularity that shows me, maybe in the server space my problem is depreciation,” he said.
How MADE.COM went from niche startup to global company
Startups could find far worse sources of advice than UK ‘scaleup’ MADE.COM. MADE.COM launched in London with four founders in 2010. Six years later it has 160 employees and operates in seven countries, with a growth rate of 50 percent last year, according to cofounder Ning Li. The company has a simple pitch. It allows people to buy attractive, niche furniture online at much lower cost than usual as goods are sourced directly from the manufacturer, thus cutting out the middle man and a great deal of expense. It’s an idea which Li says he originally devised. “Companies like M&S have a lot of experience and expertise, yet when they tried to go to France they failed. It’s certainly no easier for a smaller startup,” Li says. Despite the risks, MADE.COM had a number of advantages: the fact it is online only, can pursue an agile ‘test and see how it goes’ strategy and has a diverse, international team, according to Li.It has now successfully broadened its reach from the UK to include Ireland, France, Italy, Germany, Belgium and the Netherlands.One of the main barriers to expansion abroad is not language but culture, in his view. However Li believes culture is becoming increasingly homogenised among the customers MADE.COM targets.
The State Of The Startup Accelerator Industry
According to new findings in the Global Accelerator Report 2015 recently issued by Gust and Fundacity, in 2015 more than $191MM was invested into more than 8,800 startups across five major regions, including the United States and Canada, Latin America, Europe, the Middle East, and Asia and Oceania.Throughout the world a new startup accelerator industry is taking hold, providingentrepreneurs with the resources and capital necessary to turn their startups into successful businesses. In the ten years since the first accelerator model was developed and implemented in Cambridge by Y Combinator, the industry now claims a global presence of around 400 accelerators. In the United States and Canada, the growth in the accelerator industry peaked in 2012 but continues to grow by double digits every year. Today, Europe leads with the most accelerator programs and bucked a global trend of slower accelerator growth. The accelerator industry is also expanding rapidly in unexpected regions such as Latin America, where a mix of private and public capital is fueling a surge in startups and accelerators.
France launches initiative to attract tech startups from Southeast Asia
SOUTHEAST Asian startups will have the opportunity to compete for relocation to France, thanks to the French Tech Ticket competition launched by the French government, which is now entering its second season.The French Tech Ticket competition aims to absorb entrepreneurs from across the globe for a year. 70 winning early-stage tech startups are chosen to to be hosted in one of 41 incubators in France.The 12-month program offers the winning startups training and financial assistance from early-stage startup to fully-blown business, and even helps them get on the “fast-track” for a French resident permit.Successful applicants will also receive €45,000 (US$49,835) per project with no loss of equity, a tailored program of masterclasses and events, a dedicated workspace within the assigned partner incubators, and a “Soft Landing Pack”, which is meant to help foreign entrepreneurs relocate to France.Last year, a total of 1,372 contestants submitted 722 projects, out of which 23 startups were born. 50 entrepreneurs moved to Paris to join one of the competitions partner incubations, reports ReadWrite. Startups dealing in big data, financial technology (fintech), and the Internet of Things (IoT) are of particular interest to the French Tech Ticket competition, said Muriel Pénicaud, chief executive officer of Business France and French Ambassador for international investment.
What Brexit Means for Tech Startups
The world economy is again being tested by an unexpected shock following Britain’s vote to exit the European Union. The pound sterling and stock markets globally have been hammered. What does it mean for technology startups and venture capital, which can sometimes appear virtually immune from macroeconomic forces? On one level, it is simple: the Brexit vote means companies large and small are in for a period of uncertainty. And such times are bad for the kinds of speculative investments that are the lifeblood of startups. In some respects, the tech industry has been preparing itself for an event like this for a while. Scarred by the big crash of 2000, many who were in the industry then have a muscle memory for what can follow. Venture investors like Benchmark’s Bill Gurley have been sounding the alarm for some time on outsize valuations, clearly trying to tap the brakes on an overly exuberant funding environment. Most at risk will be multibillion-dollar late-stage funding rounds, like those that Uber Technologies Inc. seems to score every few months. That is what happened during last decade’s financial crisis, when money for late-stage startups fell most precipitously.
Blackboard Works with Dreamit to Speed Ed Tech Startups
Two companies focused on education technology are teaming up to help kickstart more new companies into the category. Dreamit, a business accelerator long in healthcare and more recently in ed tech, will be working with Blackboard to support its earliest cohorts.Dreamit formally kicked off its new focus on ed tech in March 2016 with the announcement that it intended to help accelerate the efforts of both start-ups and existing firms that want to scale, through a combination of classroom training, networking, customer access and advisory board guidance.One of Dreamit’s advisors is Katie Blot, Blackboard’s senior vice president of global strategy, marketing, and business line management.Now Blackboard will be playing a larger role. In July, startups from Dreamit’s first ed tech cohort will present in an innovation showcase at Blackboard’s annual user conference, taking place in Las Vegas July 12-14. “Blackboard’s partnership with Dreamit will not only provide support for ed tech innovators who are daring to change the trajectory of our educational system, but also encourage diverse thinking and idea generation across the industry,” said Lily Ladd, vice president of corporate strategy at Blackboard, in a prepared statement.
Clinton’s tech policy includes student loan relief for startups
Presumptive Democratic presidential nominee Hillary Clinton revealed a more detailed tech policy today, a plan that includes high-speed internet for every household over the next four years, cybersecurity, net neutrality and more. Those tenets have already been discussed, but the more recent developments include student loan help for entrepreneurs and funding for STEM education. Clinton wants to allow entrepreneurs to defer student loans with no interest and no payments for up to three years while they work through the startup phase. She also wants to offer a similar benefit to the first 10-20 employees of a new company, not just the founders. For folks who open businesses in “distressed communities” or “provide measurable social impact,” Clinton wants to forgive $17,500 worth of student loan debt after five years.The candidate also has big plants for STEM education, too. She proposes doubling the funding for the Obama Administration’s “Computer Science Education for All,” including scaling computer science education grant programs. Clinton also aims to train 50,000 computer science teachers in the next 10 years alongside grants that can be used to “redesign” high schools to focus more on STEM education.
Veteran-Run Startups at Eastern Foundry Get an Inside Track to Funding
A new partnership will give companies at government tech startup incubator Eastern Foundry an inside track to potential funding. EF has a new partnership with Charlotte-based investment firm Task Force Capital Management, an investor in veteran-owned startups.”Eastern Foundry companies will get access to TFX and TFX will be a bigger name because of it,” EF co-founder and TFX investor Andrew Chang told DC Inno in an interview ahead of the deal announcement. “It’s not saying that TFX can only invest in our companies, but they’ll be our kind of go-to guys.”The mutual benefit for the incubator and investment fund could lead to some important jumps for the startups they work with. Not every company at EF is veteran-owned, but there are more than enough to make TFX of interest to a lot of members. And the investment isn’t just theoretical, TFX was part of a funding round for EF member Stabilitas that closed about six weeks ago.“Our team is eager to support Eastern Foundry and it’s mission to forge innovation in thegovernment,” TFX founder Brandon Shelton said in an emailed statement. “There are thousands of veteran-owned companies creating brilliant solutions to our country’s toughest problems.”
John Lewis announces finalists for tech startup accelerator programme JLAB
The creators of Marty the Robot, a programmable walking droid that helps kids to learn about coding, are among five tech startups chosen by John Lewis to participate in the third edition of the retailer’s accelerator programme JLAB. Paul Coby, IT director at John Lewis, said: “John Lewis aims to be at the forefront of innovation, and JLAB is how we engage with the vibrant UK startup scene. The next twelve weeks will be a great period of development for the finalists, as they rapidly hone their products under guidance from John Lewis mentors and industry experts.” L Marks’ chairman, Stuart Marks, called JLAB a “proven example of successful collaboration between large and small business.” The entrants, he said, would get “unprecedented access to John Lewis’s retail expertise, working together to exchange ideas and create a product or service that has real commercial application.”
MHN 2016: Kleiner Perkins, Hearst Health Ventures share tips for startups assessing provider, payer partners
At the MobiHealthNews 2016 event in San Francisco earlier this month, two investors shared tips for health tech startups assessing their first deployments with providers and payers. Kleiner Perkins’ Lynne Chou O’Keefe and Hearst Health Ventures’ Ellen Koskinas also offered up the names of some of the best early partners for health tech startups, pointed to a few areas of interest to their funds, and commented on the overall funding environment.O’Keefe noted that Kleiner Perkins has a long history of investments in healthcare, starting with its first fund in the 1970s and its investments in Genentech. Kleiner is better known for the investments it has made in digital companies like Google and Nest. “We have two funds that apply to digital health specifically,” she said. “An early stage fund, which is a $450 million fund, anywhere from seed to Series A. We have a late stage fund, which is a $750 million fund, where we do digital growth deals, and can write check sizes around $20 million and up. So we can really invest across stage in digital health. We have been really active: We have about 11 portfolio companies in the space. More recently some of the companies you might have heard of include: Teladoc, which went public last year, was one of our companies. So was MyFitnessPal, more in the health and wellness space, which was acquired by Under Armour [last year].” Koskinas explained that Hearst Health Ventures is a unit of Hearst Corporation, and as such is a fund focused on both returns as well as strategic opportunities with Hearst’s healthcare businesses. Those four business include First Data Bank, Zynx Health, MCG and Homecare Homebase.