AngelPad, the startup incubator launched by seven ex-Googlers in August 2010, is taking a look back at how far it’s come in the months since and the lessons they’ve learned along the way. So far, AngelPad has helped 37 companies get off the ground, but it wasn’t until this year that things really got going: 29 of those 37 startups emerged from AngelPad’s incubator in 2011 alone.
Out of the 37 companies, 31 have received funding, totaling just over $25 million.
According to one of AngelPad’s founders, Thomas Korte, the average funding amount for its startups is around $750,000. Of course, he admits that averages don’t always give the most accurate picture since a few highs and lows can distort things. MoPub, for example, is on the high-end, having raised over $7 million. There were a couple of others with high numbers over a million, too, Korte says.
But the vast majority of the startups have raised somewhere in the $500K – $1 million range, and 10 AngelPad companies have raised over $1 million each in 2011. Also, among a handful of acquisition offers, only one took the bait: Hopscotch sold to Sosh. However, both companies were so young, it was really more of a teaming up on their parts.
Not all companies make it, though. AngelPad has seen three companies fail out of the 37 launched – something that Korte says was not due to lack of funding or traction. “In early stage startups, the number one reason for failure is the founder relationship, he explains, “all three failed because of a founder breakup.” He says the program now looks at the founders applying to see how long they’ve known each other, if they’ve worked together and what sort of issues they’ve overcome in the past.
There are few other insights the AngelPad team gained over the past year and half of operation. One is that founders need to have an extremely large vision. “And not an artificially inflated vision, but truly a great vision of what you want to do,” says Korte. “That’s when a lot of investors, and people who want to work for you, and even advisors, get excited about your company.”
But a vision alone is not enough. You also have to have the first tangible steps. Korte says he often sees startups with the tangible steps and a smaller vision, or people with a huge vision, and no tangible steps as to how to achieve it. You have to have both those things together.
He also stressed that growing a company takes time. It seems an obvious point, but in today’s instant gratification age (and corresponding news cycle, ahem), what’s often not reported is how long it took for a company to achieve its success, funding, or whatever other metric is being touted. “We don’t see how much work or how much time has gone into it – we don’t see how many iterations it took, how many years it took, how long it’s being going on,” says Korte. And it’s a problem that’s affecting everyone. “Investors become impatient, founders become impatient, employees become impatient…but building great companies takes time.”
Finally, Korte says that AngelPad learned that even a small amount of money early on can have a big impact on how founders approach the product. It takes the pressure of raising money off founders’ shoulders, allowing them to focus not on impressing VC’s with what’s being built, but more on building the product itself. Of course, AngelPad knows this impact first-hand: this summer, two VC firms ponied up $50K each, providing each startup with an additional $100K – something that will continue in the new year.
As for what’s next for 2012? With any hope, it’s more of the same. The incubator plans to start interviewing companies in January for the session starting in March. Applications are closing on January 1st, so if you’re a startup thinking of applying, time is almost up. Get busy.