Separating The Wheat From The Chaff
- Details Posted Feb 13, 2012
By Patrick Burke
One of the more difficult aspects in deciding to finance a startup is distinguishing a valuable idea from one that is sure to fade.
Due diligence can be a daunting, dissecting business plans and a startup’s hard data is time-consuming, and substantial time and effort are often invested in a concept or product that was flawed from the outset.
When asked what convinced them to invest, successful investors will often point to certain markers in the business or product idea they've backed that represented a market opportunity and the innovation to exploit it.
The following takes a look at several startups and established players that recently received funding, and why their investors chose to back them.
Concordia Coffee Systems
Bellevue, Wash.-based Concordia Coffee Systems recently received more than$6 million in financing to help the company expand internationally. Concordia manufactures self-serve commercial espresso systems. Several well-known Seattle angels joined this round of financing, which was led by private-equity fund Marker Hill Capital.
"This capital will be used to ramp up our international business and to fund the market roll out of our new line of coffee systems globally so we can now bring our outstanding coffee to the whole world," said Concordia Coffee System CEO and Chairman of the Board David Isett in a press release.
Robert Franch, Marker Hill Capital's chairman, joins the company's board of directors.
"Concordia Coffee Systems has the winning combination that Marker Hill values in our investments: patented disruptive technology, a strong operational team, and strong business expansion opportunities both domestically and internationally," Franch said in a press release.
Romotive
Romotive, maker of a smartphone-based toy robot called “Romo,” recently closed a $1.5 million first round of funding, three times what the company set out to raise. Backers include several prominent angel investors, Zappos founder Tony Hsieh, the Stanford University endowment, Lerer Ventures and David Cohen of TechStars, according to CNET.
"We think that as people let their imaginations loose with Romo, they will discover unbelievably cool applications for him," said CEO Keller Rinaudo, co-founder and CEO of Romotive.
The startup was having trouble generating interest, but help came from an unlikely source: the 7-year-old son of former Microsoft exec Bharat Shyam. During a meeting between the Romotive team and potential investor Shyam, the younger Shyam happened to be playing with the robot nearby and having a blast. Shyam wrote out a check for $50,000.
"Romo was just a delight, and the founding team is so passionate," Shyam told CNET.
Ridejoy
Ridejoy recently received $1.3 million in seed funding from venture capitalists and angel investors, led by Freestyle Capital and followed by Lerer Ventures, Start Fund, SV Angel, Founder Collective and Y Combinator.
Ridejoy is a social ridesharing community that matches riders and drivers taking long distance roadtrips.
"At Ridejoy, we're passionate about changing how Americans view travel," said Kalvin Wang, co-founder of Ridejoy, in a press release. "We're designing our social ridesharing community to be friendlier and more convenient than driving alone, flying or taking the bus.”
Freestyle co-founder Dave Samuel weighed in on the startup’s potential.
"We are excited to partner with Ridejoy and become an active passenger on its social ridesharing journey," Samuel said in a press release. "Economic factors and social trends are driving the movement toward collaborative consumption - a multibillion dollar ‘sharing’ industry that is still in its infancy.”