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McNair Center Weekly Roundup

Entrepreneurship Weekly Roundup: 12/02/2016

Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Entrepreneurship and Innovation news.

Here is what you need to know about entrepreneurship this week:

Keep Austin Entrepreneurial

Eliza Martin, Research Assistant, McNair Center for Entrepreneurship and Innovation

In 2016, Austin was ranked as the number one U.S. city for startup activity by the Kauffman Foundation. Austin’s entrepreneurial ecosystem began in the 1970s and 1980s, and was originally focused on computer and semiconductor manufacturing.

Austin’s “Silicon Hills” has diversified into “more than the computer chip and semiconductor industry that first enabled its growth.” The annual South by Southwest Festival draws thousands of tech startups to the city and provides excellent networking opportunities for entrepreneurs. The University of Texas at Austin adds thousands of skilled employees to the city’s labor force each year. Additionally, UT Austin’s boasts the Austin Technology Incubator, a startup-focused incubator run by the university’s IC2 Institute.

Austin provides entrepreneurs with supportive policy infrastructure, skilled and energetic laborers and access to valuable mentorship opportunities. If efforts to grow Austin’s economy continue on their current path, the city will be well poised to solidify its presence as a thriving entrepreneurial ecosystem.

Overtime Rules in Limbo: What Businesses Should Do Now

Jeremy Quittner, Reporter, Fortune

Last week, a federal judge judge in Texas granted a preliminary injunction against the Department of Labor’s new overtime rules that were set to go into effect on December 1st. The new overtime rules would have increased the threshold salary for overtime workers to $47,476 from $23,600. Many small business owners, acting in preparation for the new rule, made the difficult financial decision to switch salaried workers to hourly status.

The preliminary injunction still must go through an additional 60 day period of court hearings before it becomes an official injunction. Additionally, the Obama administration’s Department of Labor could still appeal the judge’s decision to the U.S. Court of Appeals for the 5th circuit. It is not yet clear if the administration will challenge the judge’s decision. Even if the decision is appealed, success on appeal is doubtful; in the court’s recent history, the U.S. Court of Appeals for the 5th Circuit has tended to challenge the Obama administration.

McNair Center’s Catherine Kirby previously examined the effects of new overtime labor laws on small businesses in her blog post Small Business and Overtime Regulation.

One simple way billionaire investor Peter Thiel identifies game-changing startups

Eugene Kim, Reporter, Business Insider

Peter Thiel, serial VC investor and founder of PayPal, is known for his profitable investments in successful billion dollar startups, such as Facebook, Palantir, Stripe and SoFi. Business Insider’s Kim reports possible insights into Thiel’s keen eye for return on investment.

In an interview at VC firm Khosla Ventures’ KV CEO Summit, Thiel recently said, “I think in some ways the really good companies often couldn’t even be articulated…we didn’t quite have the right words. Or maybe they were articulated but were articulated in terms of categories that were actually misleading.” Thiel cautioned investors away from startups that rely on buzzwords, such as big data or cloud computing, in their pitches. Thiel said, “…when you hear those words, you need to think fraud and run away as fast as you can. It’s like a tell that you’re bluffing, that there’s nothing unique about the business.”

White House expands platforms for inclusive entrepreneurship

Kate Conger, Reporter, TechCrunch

The White House recently announced “new and expanded plans to improve diversity and inclusion within the startup economy.” The plans are focused on promoting diversity in higher education, investment and entrepreneurship. The initiatives reflect the Obama Administration’s commitment to improving minority representation in universities, investment firms and tech companies. By focusing the initiatives within the private sector, these efforts will hopefully continue after his departure from office.

More than 200 universities, all members of The American Society for Engineering Education, have signed a pledge to promote diversity in their engineering programs. Additionally, more than 30 VC firms and accelerators signed a pledge to diversify access to seed and early stage capital for underrepresented entrepreneurs and reveal information regarding their portfolios’ diversity. Furthermore, 46 tech companies, including Xerox, have joined the Tech Inclusion Pledge, demonstrating a commitment to publicly publish recruitment goals and diversity metrics.

Tom Kalil, deputy director for technology and innovation at the White House Office of Science and Technology Policy, reportedly told TechCrunch there is existing data that indicates diverse firms are more diverse are more likely to be successful. According to Kalil, “A lot of innovation comes from diversity, people with different backgrounds.”

Data science startup Civis Analytics raises $22 million

Ken Yeung, Contributor, VentureBeat

Civis Analytics recently announced that it bagged $22 million in its latest Series A funding round. Civis Analytics was born out of President Obama’s 2012 reelection campaign. Though originally focused on political campaigns, the data science company’s cloud-based platform provides data analytics tools and methodologies  to organizations focused in areas such as health care, media and education. Since its inception, the startup has relied on revenues, rather than funding, to support its operations. However, the startup announced its recent funding will go toward hiring more engineers and data scientists.

Civis Analytics CEO, Dan Wagner states the importance of data analysis to business success: “Everyone knows that they need to be using data, but most don’t know where to start. Or, if they are using data, they aren’t necessarily asking and answering the right questions.”

Stripe Investment Makes Cofounder The World’s Youngest Self-Made Billionaire

Ryan Mac, Reporter, Forbes

Brothers Patrick and John Collison are cofounders of San Francisco-based startup Stripe. Stripe is a tech company that enables private individuals and companies to engage in transactions via the internet and on mobile apps. MIT and Harvard dropouts, respectively, Patrick and John Collison recently joined the ranks of the world’s youngest self-made billionaires. Stripe recently announced a successful funding round, which doubled the startup’s valuation to $9.2 billion. CapitalG and General Catalyst Partners jointly invested $150 million in Stripe during its latest funding round.

Despite their early success, the Collision brothers are still hungry for more; Patrick Collison told Forbes in January of 2014 that, “Heartening as the success to date has been, we are so early in accomplishing the goals that we set out for ourselves. If anyone here believes that Stripe has already made it, that would be hugely problematic for us.”

QA with Kauffman’s Victor Hwang on entrepreneurship in the heartland

Ryan Pendell, Contributor, Silicon Prairie News

Victor Hwang, Vice President of Kauffman Foundation, and Phil Wickham, Executive Chairman of Kauffman Fellows set out on a road trip through America’s Midwest earlier this month to “take the pulse of entrepreneurship in America’s “middle.” Despite a nationwide political narrative that depicts the Midwest in a state of slumping stagnation, caught between booming coastal economies, Hwang and Wickham report that Midwestern entrepreneurs are actively seeking out business solutions to improve the quality of life within their communities. Since the benefits of the tech boom have been focused on the coasts, Hwang and Wickham cite the biggest challenges to Midwestern entrepreneurs as access to capital.

According to Hwang, the need to build infrastructure and capital should be considered both a challenge and an opportunity for Midwestern entrepreneurs going forward. Hwang expressed optimism for the future of the Midwestern economy, claiming that the region’s culture of “civic mindedness, that willingness to pitch in, that willingness to take risks and help others reach their ambitions” is still alive.

Policy Changes Needed to Unlock Employment and Entrepreneurial Opportunity for 100 Million Americans with Criminal Records, Kauffman Research Shows

Ewing Marion Kauffman Foundation

According to a report recently published by the Kauffman Foundation, rethinking America’s “occupational licensing policy could counter recidivism, encourage entrepreneurship and boost the American economy.” Currently, occupational licensing requirements prevent individuals with a criminal history from securing licenses that could open the door to financial stability and self-sufficiency. Many occupations that require occupational licenses are on low-skilled and high-skilled professions; increased labor participation, productivity and entrepreneurship by released inmates within these fields could therefore produce benefits for the overall economy. According to the Kauffman Foundation’s study, over 60 percent of inmates released each year from state or federal prison are still unemployed after one year of their release.

The Kauffman Foundation’s Emily Fetsch notes that the high levels of recidivism and unemployment among ex-convicts indicate a fundamental issue with the country’s occupational licensing policy: “Hundreds of professions that require occupational licenses could provide paths to economic independence for those formerly incarcerated, except for the fact that their criminal histories alone may ban them from receiving licenses, even if their convictions had no relevancy to the job.”

Fetsch recommends reforms to occupational licensing policy that would exclude only criminal defendants who pose a a public threat or when convictions are recent and relevant to the context of an occupation. Additionally, Fetsch proposes offering the formerly incarcerated opportunities to earn rehabilitation or restoration certificates, thereby preventing inmates from automatic disqualification for consideration of occupational licenses solely on the basis of their arrest. Lastly, Fetsch contemplates disposing of occupational licensing requirements altogether, expressing skepticism for the regulation’s effects in promoting public safety and health.

An Incubator for (Former) Drug Dealers

Maura Ewing, Reporter, Bloomberg

“Amid calls for more job training, less automatic background searching and other changes that would make it easier for ex-felons to become employees” Bloomberg’s Ewing reports on an alternative perspective solution on the fight to curb recidivism and unemployment  among the formerly incarcerated: encouraging them to start their own businesses.

The public and private sphere should continue to push programs that support formerly incarcerated individuals, as well as tackle the structural problems that face these prisoners as they re-enter society. However, Ewing asserts that more emphasis should be placed on the potential returns on fostering entrepreneurship among this commonly dismissed population.

Defy Ventures, a nonprofit incubator based in New York, certainly achieved success in this regard by transforming ex-convicts into entrepreneurs. Over the past six years, Defy Ventures has trained upwards of 500 released felons and successfully incubated over 150 companies. What’s more, the recidivism rate among the incubator’s alumni within five years post release is an astonishing 3 percent, compared to the national average of 76 percent. Defy Venture’s efficacy in curbing recidivism rates suggests that future initiatives to support released prisoners should be focused on entrepreneurship.

Ewing’s article tells the story of another incubator underway in Hartford. The incubator, TRAP House, focuses on supporting former drug dealers as they start new, legal companies. The incubator’s name makes a clever reference to slang for drug-stash locations and is “short for transforming, reinvesting and prospering.”

Happy Holidays from the McNair Center for Entrepreneurship and Innovation. The Entrepreneurship Weekly Roundup will return in January.

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McNair Center Weekly Roundup

Entrepreneurship Weekly Roundup: 11/18/2016

Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Entrepreneurship and Innovation news.

Here is what you need to know about entrepreneurship this week:

Nationalism is not putting a damper on this trillion-dollar sector

Elaine Pofeldt, Contributor, CNBC.com

CNBC Contributor Elain Pofeldt observes that the United States and Europe are witnessing a rise in nationalist and anti-globalization sentiment. She cites Mr. Trump’s election and the Brexit referendum as evidence. The trend may reflect a global desire to redistribute market and government benefits domestically – and a disapproval of corporations that send wages abroad and profits to the already wealthy.

In this uncertain climate, one economic principle remains key: Entrepreneurship fosters economic growth.

The Kauffman Foundation’s recently released Global Entrepreneurship Index emphasizes the importance of entrepreneurship to economic growth. This annual index rates countries on the health and quality of their entrepreneurial ecosystems. There is a strong correlation between a country’s GDP and its technological advancements. Governments should support a strong entrepreneurial ecosystem if they are truly serious about encouraging the country’s economic growth.

Currently the U.S. ranks number one on the index. The index suggests that the strength of the U.S. entrepreneurial environment lies in a strong perception for opportunity. One area of opportunity that U.S. entrepreneurs are increasingly tapping into are the regulated sectors, such as health care, energy and education.

Social entrepreneurs is also on the rise. Jonathan Ortmans, a senior fellow at the Kauffman Foundation, notes how this relates to national policy: “We’re now seeing a much larger number of public-sector leaders — government at the national and local level — jumping in and asking, `How do we tackle this and build stronger entrepreneurial ecosystems?'”

The Role of Entrepreneurship in Job Creation and Economic Growth

Margarita Hakobyan, Contributor, Huffington Post

Huffington Post’s Hakobyan emphasizes the role of entrepreneurship in job creation and economic growth. According to a report released by the Small Business Administration in 2012, small businesses created 60 percent of new jobs in the previous decade.

New businesses challenge existing markets and encourage competition by offering new or improved products. Successful entrants often steer customers away from existing companies. Disruptions in the market consequently force existing companies to innovate or watch their market share diminish.

Although the manufacturing sector suffered job losses from advancements in automation and other technologies, its productivity and scale have both risen considerably.

Manufacturing is an exception – many market disruptions create jobs. For example, Netflix, dismantled the video rental industry but created jobs by feeding a demand for large-scale processing of DVDs and maintenance of the grocery store kiosks that sell these DVDs.

Small businesses can also contribute to economic growth through their flexibility and diversity. Flexibility allows startups to react quickly to market conditions. Startups can meet consumer demands faster than established corporations because large companies often must follow long administrative processes before implementing reforms.

Venture Capital Firm Navigates Uncharted Course to Success

Michael J. de la Merced, Reporter, New York Times

The Times’ Merced reports on venture capital firm, Spark Capital. The firm is known for early investment in promising startups like Twitter, Tumblr, Slack and Oculus.

Spark is also wading into uncertain industries. It recently invested in Cruise Automation, a San Francisco-based startup that develops software for self-driving cars. At a time when Google and Uber declared self-driving vehicles “among their top research priorities,” the success of less funded and less established startups competing to break into the same market seemed doubtful. Big industry players already dominated the research on self-automated cars, so most VC firms turned to alternative ventures within less-explored markets. Despite the industry’s conventional wisdom, Cruise Automation was sold to General Motors for $1 billion within months.

Spark adopts a nontraditional process for investment decisions that focuses on products rather than markets. Instead of specializing in certain industries or markets, partners at Spark can bring any prospective venture to the table. Investors then debate the merits of pursuing the opportunity until a consensus among the partners is reached. Spark accredits its most successful decisions to an “appreciation for good product design.”

In total, Spark manages $3 billion in investment funds. Its fifth venture fund will have a first-close target of $400 million.

Ever Wanted to Back a Start-Up? Indiegogo Opens the Door to Small Investors

Stacy Cowley, Reporter, The New York Times

Indiegogo is a popular crowdfunding site that enables small venture capitalists to invest personal money into promising and creative ventures. The major crowdfunding site is the first to take advantage of a new securities rule, which allows “ordinary investors to risk up to a few thousands dollars a year backing private companies.”

Before the rule was passed, only accredited investors, or those with an annual income greater than $200,000 or net worth of $1 million, could invest personal funds in these riskier ventures. With the passage of the new rule, crowdfunding backers can own equity stakes in the companies they invest in.

The new rule addresses an issue raised during Oculus’ acquisition by Facebook. Oculus raised millions of dollars on crowdfunding sites during its early investment stages. The startup used the investments raised by crowdfunding backers to prove to venture capitalists that there was a market demand for its products. Investors poured money into the company, and Facebook subsequently acquired Oculus. The firm’s original crowdfunding backers reaped no gains; angel and venture capital investors took home the profits.

The Reason Silicon Valley Beat Out Boston for VC Dominance

Anil Gupta and Haiyan Wang, Contributors, Harvard Business Review

The Boston-Cambridge and Bay Area have histories in technology entrepreneurship and venture capital (VC). However, since the 1990s, Silicon Valley has consistently snatched a larger share of all VC investments in the US than its Northeastern counterpart. New England’s share in VC investments plateaued at roughly 10 percent. Meanwhile, the Bay Area’s share of VC investments has grown from 22.6 percent to just over 50 percent.

HBR’s Gupta and Wang identify cultural factors and state-level policies as possible explanations for the divergence between the two coastal VC hubs. For example, Massachusetts, unlike California, allows businesses to include noncompete covenants in their employment contracts. Noncompete covenants offer company loyalty, but they can also remove the need for fast-paced innovation that many Silicon Valley entrepreneurs face.

Additionally, New England and Silicon Valley differ in the type of investors and companies that they attract. The Northeast dominates in the life sciences; in the first three quarters of 2016, 60 percent of New England investments involved ventures focused on biotechnology and medical devices. Silicon Valley, on the other hand, is home to many of the startups that develop platform technologies integral to the digital age.

According to Gupta and Wang, California’s stronghold on the digital and tech industry has resulted in a “growing agglomeration effect.” Increasingly, entrepreneurs are migrating to or launching their businesses in the Bay Area to gain access to these synergies that come from being immersed in the world’s greatest entrepreneurship ecosystem.

And in startup news…

Womply bags $30M to Help Small Businesses Harness Data

Tomio Geron, Reporter, The Wall Street Journal

San Francisco-based Womply raised $30 million in its most recent round of financing, bringing its funding total up to $50 million since 2011.

The startup’s platform offers a “web-based suite of software tools” that allows small businesses to analyze performance data on sales, marketing, consumer behavior, revenue and online reputation.

Womply serves a diverse set of clients, ranging from salons to legal firms, but focuses on supporting service-oriented small business. The startup allows small businesses to gain valuable insights into their performance and consumer base. President Cory Capoccia says Womply is helping small businesses increase their efficacy “by “building technology to help grow, protect and simplify running small businesses.”

Rice Entrepreneurs

Spotlight on Rice Entrepreneurs: East-West Tea

Carlin Cherry, Research Assistant, McNair Center for Entrepreneurship and Innovation

East-West Tea is a student-run business that sells boba tea to Rice University students. Initially developed as a project for an undergraduate marketing class, East-West launched operations last month. The McNair Center’s Carlin Cherry interviews operations manager Andrew Maust.

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McNair Center Weekly Roundup

Entrepreneurship Weekly Roundup: 11/11/2016

Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Innovation and Entrepreneurship news.

Here is what you need to know about entrepreneurship this week:

Small Businesses Can Expect Policy Changes Under Trump

The Associated Press

Entrepreneurs might expect policy shifts under a Trump presidency. Trump has released his plan for his first 100 days in office. However, much uncertainty over his policies and objectives remains. The battle over health care and immigration reform, taxes, regulation, the federal minimum wage, trade deals and federal contracts will be fought in a Republican-led congress that has not always agreed with the President-elect’s proposals.

David Levin, CEO of the American Sustainable Business Council, expressed the concern of many small business owners in the US: “What we don’t know is whether or not there is a sincere interest in supporting small and medium-size enterprises in this country — rebuilding Main Street, rebuilding manufacturing.”

With Election Over, Small Firms Look to Hire, Invest

Ruth Simon, Author, Wall Street Journal

With the uncertainty of the election partly resolved, some small business owners have said that they are ready to begin investing and hiring. According to a recent Vistage Worldwide poll of 380 small business owners, 49 percent of respondents said that the election of the outcome had improved their outlook for the economy. Nearly 20 percent stated that the election results encouraged them to increase their hiring or capital investment. Many point to the prospect of lower taxes and healthcare costs as sources for their optimism.

Not all business owners surveyed viewed the election’s outcome positively. 35 percent responded that their outlook for the economy had worsened. Roughly 20 percent planned on decreasing hiring and investment. Many are wary of Trump’s tough position on immigration, which could make the search for high-skilled workers more costly.

Black-Owned Businesses Face Credit Gap

Ruth Simon and Paul Overberg, Authors, The Wall Street Journal

According to data from the U.S. Census Bureau’s 2014 Survey of Entrepreneurs, black entrepreneurs are less likely to ask for capital when they need it. When they do ask, black entrepreneurs are not as likely to receive the full amount that they requested.

Black entrepreneurs in 2014 were three times more likely than white entrepreneurs to say that they were in need of additional financing but opted not to apply for it. Compared with 74 percent of white entrepreneurs, only 46 percent of black entrepreneurs received the full amount of funding that they had requested.

Simon cites challenges in access to capital and funding as obstacles for black entrepreneurs who are trying to grow their businesses. According to Alicia Robb, a senior fellow from the Ewing Marion Kauffman Foundation, “Across the board, blacks have higher denial rates, even after controlling for credit and wealth.”

How Lucrative Startups Can Avoid Disruption as They Grow

Jason Albanese, Contributor, Inc.

Jason Albanese, CEO and founder of Centric Digital, offers advice to startups looking to be the next Google or Facebook by redefining their industry. Revolutionary startups are often some of the most lucrative and successful in their field.

Market-shaking startups frequently fail to maximize their potential because market and operational disruptions often go hand in hand. Disruptive startups need to take time to grow at their own pace. Entrepreneurs cannot afford to rush the incubation period.

Most market ecosystems eventually find a new equilibrium; Airbnb and Uber recently experienced this within their industries. Albanese recommends that market-shifters foster and embrace change within company culture. Adaptivity, creativity and agility are instrumental in introducing and surviving a market disruption.

6 Strategic Business Practices For Freelance Entrepreneurs

Sam Cohen, Contributor, Huffington Post

The life of a freelance entrepreneur is uncertain and irregular. For example, daily operations lack the typical structure and comfort level that most industry jobs offer. On the other hand, self-employed entrepreneurs get to set their own work schedules and define the rules and best practices for their companies.

Despite the obvious discrepancy between freelance entrepreneurship and corporate culture, Sam Cohen recommends that entrepreneurs borrow business practices, such as building up cash reserves and establishing a performance review process, from bigger industry players.

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McNair Center Weekly Roundup

Entrepreneurship Weekly Roundup: 11/04/2016

Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Innovation and Entrepreneurship news.

Here is what you need to know about entrepreneurship this week:

Clocking In: Small Business and Overtime Regulation

Catherine Kirby, Research Assistant, McNair Center for Entrepreneurship and Innovation

In December, new US Department of Labor regulations on overtime pay eligibility will come into effect. These regulations will drastically increase the minimum salary for exemptions to overtime from $23,660 to $47,476. McNair Center’s Kirby discusses the pros and cons of the new overtime labor law. Her analysis offers insight on how to mitigate the increased costs to employers while promoting the benefits to low-income salaried workers.

  • The pros: Estimates forecast that the new regulations will create jobs in addition to providing compensation for employees working over 40 hours a week.
  • The cons: New regulations come with new costs for employers. Requiring employers to keep track of attendance and hours of more employees could be costly, especially for small businesses.
  • Policy recommendations: The Department of Labor could implement the regulations in phased increments rather than in one single shock. The government could lower small business taxes to reduce the regulatory burden.

Immigrants and Entrepreneurship

Dylan Dickens, Research Assistant, McNair Center for Entrepreneurship and Innovation

Many U.S. immigrants start businesses. Immigrant entrepreneurs are a diverse and growing group; immigrant entrepreneurs also have greatly varying levels of education. While immigrant entrepreneurs tend to live in larger states such as Texas and California, they compete for business in every U.S. state. The type of work immigrant entrepreneurs engage in is extremely varied. Partly as consequence of this, on average immigrant entrepreneurs outperform their native counterparts and are more skilled at finding market gaps by fulfilling unmet demand. Overall, McNair Center’s Dickens proposes that recent research supports the claim that immigration bolsters entrepreneurship in the US.

10 Marketplace KPIs That Matter

Andrei Brasoveanu, Author, Mattermark

Brasoveanu’s article summarizes the top ten Key Performance Indicators (KPIs) that every entrepreneur should closely monitor when building a market for their product.  Markets ultimately determine how every good and service in the economy is “discovered, priced and delivered.” KPIs, such as return on investment, growth and and burn rate, offer powerful and important insights for entrepreneurs. According to Brasoveanu, KPIs are effective and efficient marketplace metrics for getting startups on track to visualizing and contextualizing their success.

kpis

Scientists Working Outside Their Fields Are More Likely to Become Entrepreneurs

Brianna Stenard, Assistant Professor of Management and Entrepreneurship at the Stetson School of Business and Economics at Mercer University, Harvard Business Review

Highly skilled scientists and engineers are increasingly taking jobs that are outside of, or only slightly related, to their STEM degrees. Weak labor conditions in some STEM fields are partly to blame, but largely, the educational mismatch among scientists is voluntary. Stenard’s research indicates that many employees trained in the STEM fields take jobs outside of their field to acquire technical and managerial skills. Voluntarily mismatched scientists are nearly 50 percent more likely to become entrepreneurs.

Rather than bemoan an apparent oversupply of highly skilled scientists and engineers, Stenard recommends that policy makers implement initiatives that encourage technology entrepreneurship among these mismatched experts. Following a similar vein, Stenard proposes that universities should also consider adopting measures that equip STEM students with the “nontechnical skills…particularly valuable in entrepreneurship.”

And in startup news…

Airbnb’s Terms of Service just blocked a racial discrimination case

Russell Brandom, Reporter, The Verge

On Tuesday, Airbnb successfully blocked a class-action lawsuit that challenges the company’s platform on the basis of systematic racial discrimination. However, thanks to an arbitration clause in the company’s terms of service, the case will go through individual arbitration, and Airbnb will avoid a pricey and public lawsuit. The company recently added a nondiscrimination policy to its terms of service and has apparently taken measures to elimination discrimination from its network of hosts. When approached by the Verge on this issue, an Airbnb representative insisted that “Discrimination has no place in the Airbnb community.”

Palantir Prevails in Lawsuit Over U.S. Army Contracting Practices

Rolfe Winkler, Reporter, The Wall Street Journal

Another California-based startup recently won big in the courtroom, as data-mining software firm, Palantir, prevailed in its lawsuit against the US Army in the Court of Federal Claims. Palantir Technologies, Inc. ranks among Silicon’s Valley’s “most highly valued private companies” and was valued at $20 billion in a late funding round in 2015. The company specializes in big data analysis and offers its services to large commercial customers and government agencies within the intelligence community,. The court’s decision means that Palantir is now eligible for a federal contract that would award up to $200 million for work relating to the Army’s Distributed Common Ground System.
At the 2016 Wall Street Journal  Global Technology Conference, Palantir Chief Executive Alex Karp revealed that his company was positioned to go public.

GIF Site Giphy Is Valued at $600 Million

Rolfe Winkler, Reporter, The Wall Street Journal

Founded in 2013, Giphy, Inc. serves as a search engine and database for Graphical Interchange Format files(GIFs). GIFs are the “short, looping video files” that have most likely taken over your, or your teenager’s, Facebook News Feed. Thanks to Giphy, GIFs have surged in popularity and are now ubiquitous on social media sites and group-messaging platforms, such as Facebook messenger, Twitter, and Groupme. Giphy’s Chief Operating Officer Adam Leibsohn summarizes the company’s platform as a ”search engine…for the messenger generation.“
Giphy recently released an update stating that the company currently serves more than one billion GIFs per day, that are in turn watched by over 100 million users daily. This New York startup’s obvious popularity has not gone unnoticed by investors; Giphy raised $72 million in equity funding from venture capitalists during its most recent funding round, which brings the company’s  cash total to $150 million.

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McNair Center Weekly Roundup

Entrepreneurship Weekly Roundup: 10/28/2016

 Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Innovation and Entrepreneurship news.

Here is what you need to know about entrepreneurship this week:

Big Problems for Small Practices

Catherine Kirby, Research Assistant, McNair Center for Entrepreneurship and Innovation

Kirby examines the effects of the Affordable Care Act on entrepreneurship within health care. U.S. health care regulations currently hinder entrepreneurship among healthcare professionals, particularly for doctors seeking to establish private practices.
Kirby recommends that the U.S. implement policy changes that would better foster entrepreneurship among physicians. Measures like restructuring reimbursement rates and improving quality of care requirements would reduce the burdens that many private practices face and enable physicians to start small medical practices.

U.S. early stage investment holds up, late stage plunges

Joanna Glasner and Gené Teare, Contributors, CrunchBase

Venture capital investment slowed in the third quarter. Glasner and Teare write that estimates relying on end-of-quarter data may overstate declines in early stage investment.
Crunchbase compares its own projected funding totals with reported round count totals for the third quarter. Quarterly projected funds show bullish early stage investment. When factoring in projections, Crunchbase’s report for the third quarter finds that U.S. startups continue to enjoy high levels of strategic, seed and venture capital investment during seed and early stage rounds. However, there is a steep decline in late stage investment, with fewer companies raising late stage rounds and investors pouring less money into Series C and later rounds.

Startups get bought not sold

Ken Elefant, managing director at Intel Capital, PE Hub

Many entrepreneurs focus, sometimes shortsightedly, on the dream of reaching an IPO. As a result, start-ups often fail to develop important relationships with corporate investors. According to data from Dealogic, only five U.S.-based tech companies went public in the first eight months of 2016. To avoid going out of business or selling at a fire-sale price, Elefant recommends that entrepreneurs develop strong relationships with corporate investors early on so that a later search for an acquisition offer does not turn into a last-ditch attempt to save a sinking ship.
Corporate investors invest in companies for three reasons: to gain access to a technology, to break into other markets and to acquire. For start-ups, relationships with corporate investors offer viability and credibility. Additionally, these relationships provide development, support,  feedback and access to corporate engagement and funds. For companies that might not be on track for an IPO, strong relationships with corporate investors can lay the groundwork for an acquisition.

‘Shark Tank for Students’ Re-Defines Entrepreneurship

Christopher Putvinski, SAPVoice, Forbes

Putvinski focuses on a new television series, The Social Innovation Series. This “Shark Tank or a Y Combinator for students” asks aspiring entrepreneurs to address problems in health or wellness in their own communities.
The show grants $1,000 to students with promising and innovative ideas and a grand prize of $10,000 and the title of “SAP Teen Innovator” to the student with the winning idea.

How Blind Hiring Can Make Your Company More Inclusive

Frida Polli, Mattermark


In an editorial for Mattermark, Polli writes on how diverse companies outperform their non-diverse counterparts. Increasing diversity among employees not only promotes a more fair and equitable workplace environment but also offers a high return on investment for companies. See the McKinsey & Company Report on how diversity improves company performance. Polli suggests that “blind auditioning” is a possible solution for the lack of diversity in companies’ workforces. Using advanced analytics and assessment technologies, companies can ensure predictability and eliminate bias in their pre-hiring assessments of applicants. According to Polli, “improving diversity isn’t just the right thing to do, it’s the smart thing to do.”

And in startup news…

Google buys eye-tracking VR firm Eyelock

Grant Gross, Senior Editor for IDG News Service

Eyefluence is a California-based startup focused on eye-interaction technologies in Virtual Reality (VR) and Augmented Reality (AR) headsets. Serial entrepreneurs Jim Marggraff and David Stiehr founded Eyefluence in 2013.
Google acquired the startup on Tuesday. The acquisition reflects Google’s growing interest in VR and AR technology. The deal further shows the growing potential of VR and AR for entrepreneurs interested in building successful tech startups.

Wavefront gathers $52 mil Series B

Iris Dorbian, Author, PE Hub

Another California-based tech-based startup, Wavefront, recently reported raising $52 billion in Series B funding. Investors include big names such as Sequoia Capital, Sutter Hill Ventures and Tenaya Capital.
Wavefront develops metrics monitoring services for cloud and modern application environments. Wavefront offers invaluable services to leaders in the software industry that rely on Cloud technology, such as Workday, Box, Lyft, Microsoft, Intuit and Groupon.