This is different.

ATDC is almost thirty years old. (We're going to have a thirty-year birthday bash next year; be sure to come!) And, throughout most of ATDC's history, it's been a very exclusive club. We usually get a couple of hundred applications a year, and usually accept about a dozen into membership.

That's a lousy way to make friends... since, by definition, we're telling a couple of hundred entrepreneurs per year that they're not good enough to be in our club.

But it's a great way to validate that the applicants who survive the process are solid companies. Companies worth investing in. Maybe even companies worth catching an airplane from Boston or California to invest in. The ATDC "seal of approval" meant that a company was automatically worth visiting when a VC was coming to town to see what was cooking in Atlanta.

And that model served ATDC well for a long time. Since there were never more than a few dozen members at any one time, the ATDC staff could provide some serious personal service to the entrepreneurs: Consulting. Coaching. Making connections. And, since this was such a high-touch model, it was nice to squeeze everyone in as neighbors... originally the O'Keefe building, then the "storage warehouse" on Tenth Street, and finally a set of three top-notch facilities. ATDC currently manages the second floor of the Centergy building, a set of life sciences "wet labs" in the ES&T building, and a corner of the Georgia Tech Savannah facility.

Then the market changed. Lots has been written about this elsewhere, and I assume you've read it... but everyone in the angel/venture capital chain took one step to the right, then sat down. It became a lot harder for a new company to attract VC money. At the same time, in certain sectors, it became much less necessary to attract VC money. For Internet deals: borrow every dime you can, write code like crazy, push the infrastructure up into the cloud, live on ramen noodles until you get someone, somewhere, to pay for something, then finance growth out of cash flow until investors (or acquirors) come looking for you. No VC required. Heck, maybe no offices required. If you're in the cloud, you're not keeping your servers under lock and key, and if you don't need a PBX (hello, Skype and cellphones)... you can run a pretty substantial operation via laptops and coffee shops.

Then you factor in Atlanta traffic. ATDC has always had "remote members"—in fact, today, about 40% of ATDC's members are not bricks-and-mortar tenants—but, honestly, they've always been second-class citizens. They don't get the same intense hands-on experience as the tenant companies. But if you live in Suwanee, or Alpharetta, or Kennesaw, the idea of driving to Midtown every day can be pretty soul-killing. (Not to mention if you live in Newnan, or Gainesville, or Bainbridge! More about that later.)

So, over the last few years, the ATDC model of "run 'em through a gauntlet and only the best will survive" has become less relevant. Some companies—some good companies—have chosen to bypass the gauntlet and simply not apply.

VentureLab

Let's switch gears and talk about VentureLab. I've been running VentureLab for a little over four years now. It's a different model. First off, VentureLab only works with technologies belonging to Georgia Tech. (There are minor exceptions for student projects, but not enough to affect this argument.)

So the "gauntlet" to get in is different... at the time of admission, VentureLab tries to determine if any startup could exist in your target space, not if yours is the potential winner. That's very different. If we decide that there's room for a startup, everything is focused around assembling the resources to build a successful one... business plan, management team, seed capital... all those things that companies already needed to have to survive the ATDC admission process. It's not a coincidence that the VentureLab exit criteria looked a lot like the ATDC entrance criteria.

Too many of you have heard me tell my tired joke that "If ATDC is an incubator, then VentureLab is pre-natal care." And it works. But... it's high-quality, high-cost pre-natal care that you can't have. (Unless you're based on Georgia Tech intellectual property.) Look at the quadrants below.

If you have Georgia Tech intellectual property, VentureLab would work with you at the earliest seed/concept stage. (We're not just talking pre-revenue... we're talking pre-incorporation and pre-patent-application!) And, if you survived to the relative maturity of "early-stage" (I'm stealing definitions from Lance Weatherby's blog here), you'd be a great candidate for ATDC.

But if you're weren't based on GT intellectual property? Look above, at that vacuum in the lower left.

Nature abhors a vacuum, and innumerable groups, linkages, and organizations have sprung up to help fill this one. (That link is to a blog post talking about those groups, and an animated version of that incredibly cluttered chart in the lower left.)

Today's announcement changes all that. We're not trying to take the place of any of those organizations—they're the symbol of a thriving Atlanta startup ecosystem, and we're not arrogant enough to think we're smarter than the crowd. But we are going to make ATDC available as an umbrella... if any of those organizations can benefit from using ATDC as a clearinghouse, or a sponsor, or just a place to meet—let me know.

(The VentureLab function for Georgia Tech startups doesn't go away... and neither do the employees... and neither does the GRA VentureLab money. It's now just one more program managed by ATDC.)

SBIR Assistance Program

I'm already nearing 1000 words, so I'll keep this short. How many of you are even aware of the Federal government's mandate that the eleven most profligate Federal agencies need to devote 2.5% of their R&D spending to small companies? Companies like yours?

How many of you have ever applied for it?

How many of you would even know where to look?

The state of Georgia pays for a free SBIR Assistance Program (which also helps with STTRs; don't ask) that has helped dozens of companies land tens of millions of dollars in Federal grants and contracts. But you've never called them, have you? Now, by merging this program into ATDC, every member will get asked "Have you looked at the latest solicitations? Any of them sound interesting? Need some help figuring out how to submit a proposal?"

Getting some of your taxes back from Uncle Sam with no loss of equity, and no incurring of debt. What could be better?

Scale

This post is already too long, and I'll come back to some of these topics in the future. But the challenge for the new expanded ATDC will be all about scale. Budgets are tight. We can't provide the same high-touch consulting services to 400 companies that we can to 40. And we certainly can't offer startup-friendly real estate deals to ten times as many companies; you won't all fit in our space!

We have some good ideas about this, but it will mean leveraging community involvement as a force multiplier. Some of you reading this will be helping out other entrepreneurs younger or less-experienced than you. Some of you already do this. Some of you will be asked to start.

And some of you won't be in Midtown Atlanta. By figuring out how to decouple our services from our real estate, we'll be figuring out how to offer access to ATDC in places other than Midtown (and Savannah). We'll want to see ATDC "circles" in Gwinnett, and Alpharetta, and Athens, and anywhere else in the state where there's sufficient entrepreneurial activity to justify it. Stay tuned for more information on how this will work. I can tell you right now—we'll need your help.

Whether you're a first-time entrepreneur needing someone to talk to, or you've already exited three companies and are willing to help the next generation, or somewhere in between... If you're a Georgia entrepreneur and this sounds interesting, please visit the new ATDC Web site at http://bit.ly/svYw6 and sign up!

Disclaimer

There's a professional disclaimer on this site, but I should probably repeat it here:

Any material posted on this site or other personal sites reflects my personal opinion and does not necessarily represent the position of Georgia Tech, the University System of Georgia, or the State of Georgia.

But, for those of you who are asking "Why are we doing this?"... you've just read my answer.

ATDC, one of the nation's largest, longest running, and best-known university-based technology accelerators, is expanding its mission. ATDC has been merged with Georgia Tech's VentureLab and with the Georgia SBIR Assistance Program. By pooling resources, the new ATDC has increased the staff available to serve its expanded mission of helping Georgia entrepreneurs launch and build successful technology companies. The change will allow ATDC to greatly extend its reach to serve more technology companies along multiple growth paths and at all stages of development.

Founded in 1980, ATDC has helped create millions of dollars in tax revenues by graduating more than 120 companies, which together have raised more than a billion dollars in outside financing. However, according to Stephen Fleming, vice provost at Georgia Tech, "the startup market has changed dramatically over the past few years. Many startup companies do not want or need to pursue venture funding. Some are not even seeking traditional office space. ATDC's new initiatives directly address the demands of today's startup environment."

ATDC will open its membership to all technology entrepreneurs in Georgia, from those at the earliest conception stage to the well-established, venture-fundable companies. "We're interested in any technology business opportunity" said David Sung, one of ATDC's startup catalysts and a former partner with H.I.G. Ventures. "There are many ways ATDC can help startups, from business coaching and providing networking opportunities to financing through angel investment, government grants and contracts, corporate partnerships, and classic bootstrapping. We will support all entrepreneurs, whatever path they may take, through their entire growth process."

ATDC will continue to offer traditional "bricks-and-mortar" incubation space on entrepreneur-friendly terms, both in midtown Atlanta and Savannah. The center will be expanding its recent SeedSpace offering of small single-office leases in Technology Square for the earliest entrepreneurs and will provide a variety of co-working spaces to promote casual interaction among entrepreneurs. Recognizing the sprawl of the Atlanta metro area, ATDC will offer programs outside the Perimeter where dense clusters of entrepreneurs can benefit from its services. ATDC will also take full advantage of social media to build connections with entrepreneurs across the entire state of Georgia.

Since 1999, the state-funded ATDC Seed Capital Fund has made equity investments in Georgia startup companies alongside angel investors and traditional venture firms. With this new merger, ATDC will also manage the Georgia Tech Edison Fund, an innovative investment fund established in 2007 which draws its resources from charitable donors who are interested in helping expand the entrepreneurial ecosystem surrounding Georgia Tech.

"ATDC has always been a focal point for entrepreneurship in Georgia" said Sig Mosley, president of Imlay Investments and member of ATDC's board of advisors. "With these moves, ATDC now is aligned to support the specific needs of the new startup environment. The open door policy is a strong, positive shift and reinforces ATDC's leadership role in the startup community not just within the Atlanta metro area, but throughout the entire state."

The merger of the three units will bring together a broader knowledge base to provide comprehensive services to Georgia's technology entrepreneurs.

"By working at the very earliest stage with university spinouts—not just pre-revenue but pre-incorporation—we have learned a great deal about the coaching required by brand-new entrepreneurial teams that are still establishing their business model" said Roberto Casas, previously assistant director of Georgia Tech's VentureLab. "To date, we've focused on startups based on Georgia Tech intellectual property. By merging with ATDC, we'll be able to offer similar services to any Georgia startup, whether connected to Georgia Tech or not."

ATDC, the former Georgia Tech VentureLab, and the SBIR Assistance program are part of the Enterprise Innovation Institute (EI2) at Georgia Tech, which helps Georgia enterprises improve their competitiveness through the application of science, technology and innovation. Stephen Fleming, the former head of Georgia Tech VentureLab, was recently promoted to vice provost of Georgia Tech overseeing all of EI2. He will serve as the initial director of the new ATDC.

"Despite the economic downturn, it's still a great time to build a startup company in Georgia" said Fleming. "The last four years have seen an explosion of groups and organizations supporting the early-stage entrepreneur. With this expansion, we're rebooting the franchise of ATDC as the hub of technology entrepreneurship in Georgia. We hope to work with everyone, at any stage, along any path, to accelerate more technology startups and weave them into the economic fabric of Georgia."

All employees of ATDC, Georgia Tech VentureLab, and the SBIR Assistance Program will be retained in the consolidation. The new ATDC organization will continue to assist Georgia Tech faculty members and other research staff in forming new companies, and will continue to provide assistance to any Georgia small business seeking SBIR funding.

About ATDC
ATDC helps Georgia entrepreneurs launch and build successful technology companies. Founded in 1980, the Advanced Technology Development Center has provided business incubation and acceleration services to hundreds of Georgia startups—most of which are not based on Georgia Tech research, but which benefit from the close proximity to the university. ATDC currently has three facilities; two at Georgia Tech's main campus in Atlanta, and one at Georgia Tech's satellite campus in Savannah.

About SBIR Assistance Program of Georgia
The state of Georgia has one of the nation's leading SBIR/STTR assistance programs which, since being established in 2005, has educated and helped hundreds of Georgia entrepreneurs access these sources of federal funds. With the program's direct assistance, 150 companies have submitted one or more proposals resulting in more than $30 million in federal awards. By merging into ATDC, the program will be able to interact with more entrepreneurs across the state, including those who may have never considered applying for federal grants, and bring more of these awards into Georgia's startup ecosystem.

About VentureLab
In 2001, Georgia Tech became a founding member of VentureLab, a program of the Georgia Research Alliance (GRA). VentureLab helps build spinout companies around cutting-edge university research. With its emphasis on technologically-grounded business analysis, access to early-stage funds, and recruitment of experienced management, Georgia Tech's VentureLab has launched more than two dozen successful companies and serves as a model for other universities seeking to commercialize their discoveries. GRA's VentureLab Program now extends to four other research universities in Georgia; with an investment of some $13 million from GRA, more than 150 Georgia-based startups have been created around university intellectual property in the state. GRA also recently launched a new venture fund to make equity investments into these spinout companies.

If you're a Georgia entrepreneur and this sounds interesting, please visit the new ATDC Web site at http://bit.ly/svYw6 and sign up!

(Click for full-size image.)

Those of you at the Atlanta CEO Exchange this evening may have seen the lapel button I was wearing. It generated a lot of attention.

If you've been paying attention to the buzz around Atlanta, it's been almost a year since Jeff Haynie moved west, and left us his farewell message as to "What’s wrong with the Atlanta startup ecosystem and how to fix it."

If you haven't been paying attention to the conversation, here's a quick guide to catching up:

• Jeff Haynie
• Urvaksh Karkaria
• Scott Burkett
• Lance Weatherby
• Sanjay Parekh
• Russell Jurney
• Paul Graham
• Greg Foster
• Fred Wilson

Okay... ever since Hayes Microcomputer went bust, there's been great wailing and gnashing of teeth about how Atlanta isn't Silicon Valley. In my previous role as a venture capitalist, as my not-quite previous role running VentureLab, and in my brand-new role as the chief of economic development for Georgia Tech, one of the questions I'm most frequently asked is "How can we make Atlanta the next Silicon Valley?"

Not to put too fine a point on it -- but that's a foolish question. Silicon Valley is a unique aberration... a confluence of people, ideas, cash, and culture that will probably never be duplicated. And it's futile to try.

But, for most entrepreneurs and most companies, it's also irrelevant. Build a fabulous product that delights customers while solving a real problem, and geography is irrelevant. To quote Fred Wilson from his post above, "You can build a great startup in any of the dozen to two dozen startup hotbeds around the world. Pick a place you want to live and work and possibly raise a family. And then get busy."

Atlantans, repeat after me:

• We're not Silicon Valley.
• We don't want to be Silicon Valley.
• We don't need to be Silicon Valley.

If you agree, stop me and ask for a "Not The Valley" lapel button. If anybody wants them, I'll print stickers, too. And, if you disagree... well, I grew up in Atlanta, and Delta has been my hometown airline for my entire life. For me, they'll never have a slogan as memorable as this one from the 1960s and 1970s:

Delta is ready when you are.

For a month or so now, I've been enjoying my newest toy. It's a Wentz electric bike... which is a bicycle with a built-in motor assist.

I need to get more exercise. I know that. And two years ago, I moved to a house about a mile from the office, so it seems logical that I should ride my bicycle. And, sometimes, I did. But I would normally find an excuse not to.

Then I started looking at electric bicycles. They come in all levels and price ranges, including some that will run all day completely without pedalling. That's not what I needed. I just wanted a little bit of extra "oomph" so that I could get up and down the local hills without too much sweat.

(To the exercise purists: yes, sweat is good. But not when wearing a business suit and headed for a day of meetings, okay? Let's be practical here.)

I live at the top of a hill with a 6% grade, and I have to coast down it then climb another 6% grade to get across Peachtree Street. (Ever looked at Downtown/Midtown Atlanta from the air? Peachtree runs right along the ridgetop.) So, yes, getting to and from the office is "uphill both ways."

I asked at my local bicycle shop; they don't carry electrics, but they knew someone who did. Ken Altshuler runs Electric Bike South, which has the Georgia/Florida distributorship for Wentz electric bikes. And he lives one neighborhood over in Virginia-Highlands. Right now, he's selling them mail-order and out of his garage.

My wife and I went over for a test drive, and I was immediately hooked.

It's not like a motorcycle (or even a moped). You still have to pedal, except on dead-level ground (and there's not much of that in Atlanta). But as soon as you pedal a revolution or two—or twist the throttle grip—the rear-wheel motor kicks in and helps. It's hard to describe... but it makes that 6% grade feel like a 3% grade. Result: less stress, less strain, less sweat.

And there's another benefit that I haven't seen written up anywhere. Something you would never notice in a car, but definitely notice on a bike, is how many of the roads in Atlanta are seriously crowned (bumped up in the middle) to improve drainage to the edges. If you're stopped for a red light (yes, I stop for red lights on a bike, unlike many of the damfools around me), then you're pedalling from a dead stop up a slope from zero speed... and, if you forgot to downshift before stopping, you're in the wrong gear. You wobble. Wobbling is unsafe.

With the e-bike, you just twist the throttle as you step off, and the motor gives you a bit of forward momentum until your pedalling catches up. I think that's safer than a regular bike.

There are purists who hate electric bikes. Lots of reasons: they're heavy. They're complicated. They have fenders. They're "cheating."

Yep. All those things are true.

But, to me, results matter. And my Trek commuter bike was gathering cobwebs. I've ridden my Wentz e-bike to work every non-rainy day since I bought it.

Commuting

This model of Wentz bike comes with a rear carrier. I wanted a basket. Instead of buying an expensive bicycle basket, I went to Home Depot. $17 for a ClosetMaid wire basket, a dozen cable ties, and voilà! A sturdy rear basket able to carry my twenty-pound oversized briefcase. A couple of bungee cords, and it's suitable for grocery shopping as well.

Range on the standard lithium battery is more than adequate for errands in Midtown Atlanta. The Web site claims twenty miles between charges; I know that I can make three round trips to the office (six miles) before the five-segment gauge drops to only having four segments lit.

And it's built like a tank (and nearly as heavy), so potholes and rain grates and other urban hazards aren't a concern. The style is called "step through," which means it doesn't have a top tube as in the traditional diamond-frame bike. To anyone raised in this country in the last fifty years, that means "girl's bike." That bothered me for about five minutes, until I realized how much easier it is to mount and dismount. (Especially after I added my monster rear basket! Flinging my right leg over that would probably dislocate my left knee!)

Basically: the diamond-frame you are used to is lighter and more efficient. The step-through design requires a massively heavy front frame piece to keep the whole bike from flexing. This is solved by adding metal. So you need more weight of bicycle to carry the same weight of passenger. I'm not going to go racing, or pedal across the country, so I don't care. Oh, and while we're adding metal, there's a chain guard to keep my pants leg out of the front sprocket. And there's a sturdy motorcycle-style kickstand that holds the bike vertical, so you're not leaning it over when parking. Think Gelandewagen, not Ferrari.

It comes with a headlight and taillight (both LED-based) that run off the main battery. If I did a lot of night riding, I'd probably investigate something brighter with a more consistent illumination pattern, but this is fine for what I do. The wiring connections from the factory are lousy: friction-fit connectors that easily jostle loose. But a few minutes with a soldering iron and some heat-shrink tubing fixed that. And all the running gear parts (except the hub motor) are standard enough that your bicycle shop won't be scared to service it.

Travelling

This is a big, heavy bicycle (63 pounds, including removable battery). I could probably get one onto an SUV roof rack, but it wouldn't be fun. And two of them would probably exceed your roof's weight limit, anyhow. The front wheel requires tools to remove, so you can't do the quick-release thing to stuff it in the back of your car. Basically, if you're going to take it somewhere else, you need to have a minivan/SUV/pickup big enough to swallow it whole, or a trailer-hitch carrier. (Or you buy the Wentz folding model instead, which fits in the trunk of most cars.)

That being said... we were up in the Nantahala National Forest a couple of weekends ago, and I really wished we had had a way to bring my electric bike!

If you're interested in trying one out for yourself, email Ken and tell him I sent you. And remember to wear your helmet!

Sometimes, it makes sense to sit back for a moment and reflect on how much things have changed in four years. For those of you who were part of the Atlanta entrepreneurial community, think back to May of 2005. Pretty different, wasn’t it?

You can see the final version of my "Entrepreneurial Atlanta" chart below. But you don't get the real impact until you click on the slide and watch the animated version.

Click here to animate the slides!

If you'd just like the PDF, you can download that here.

No surprise to anyone who's active in the startup community... investment in early stage companies is down but not out. Deals are still getting done. And the most savvy investors realize that prices of early-stage equities are as cheap now as they will be for a long long time... it's a good time to buy.

(That's not the greatest news for the entrepreneurs, but don't let it stop you. Waiting for valuations to go up just means you're letting your competitors run unopposed.)

The most interesting discussion so far was led by Basil Peters. He's crunched a lot of numbers in writing his book "Early Exits" and come up with some non-intuitive conclusions.

Premises

First, check his premises:

1. Venture economics dictate that VC funds must have a certain number of home runs to make up for the number of deals that simply go broke.
2. The average size of a venture fund has grown from $100M to $350M in ten years. That means the home runs have to be bigger... as a rule of thumb, you probably need to exit at $200M to "move the needle."
3. The angel market has matured so that syndicates of angels can now invest $3-5 million over the life of a deal.
4. The rise of cloud computing, SaaS, Asterisk, BPO, and other outsourcing services means that many companies now require an order of magnitude less capital than they did a decade ago. (Not true for biotech, but certainly true for software startups!)
5. The IPO market for venture-backed companies is dead. Thank you, Sarbanes-Oxley.
6. 92% of U.S. M&A exits are for less than $20 million.
7. Related: The number of potential acquirors is much larger for a $20M purchase than a $200M purchase. As Basil relayed, a Fortune 500 friend of his said "I can get a $20M deal approved at the divisional level. A $200M deal requires the board of directors, and that's not going to happen right now."

Any issues on that list? Any one of them is probably worth a blog post, but it's hard to argue with any of them as representative of the current situation in 2009.

And one item that Basil didn't point out, but it's probably in his book:

• The death of the IPO market means that participating-preferred shareholders (meaning VCs with liquidation preferences) will get a disproportionate amount of cash out of an M&A transaction.

Alright, toss all that in a pot and simmer. What do you come up with?

The interests of angel investors and venture capital investors are inexorably diverging.

That's a big deal. It has the potential to change the dynamics of the entire early-stage investment market.

I'm typing this sitting in an ACA session on the current angel market. The angel and VC markets have always been synergistic, and somewhat intertwined. Getting a VC to invest in your early-stage firm has always been a "seal of approval" for your angel investment, and 62% of angel deals last year attracted VC funding. Some angel groups won't invest in a company if they can't convince themselves that the deal will attract VC money. A lot of senior or emeritus VCs are active individual angels. Now, VCs are even inviting top-end angel groups to join their Series A syndicates.

And Basil claims that it's all headed for divorce.

Venture Fund Economics

The economics of a venture fund are pushing them towards deals where they can put at least $5M to work. Do the math: a 10X exit means the VC equity has to be worth $50M; if they own a quarter of the company, that means a $200M acquisition. And deals are taking longer... the DLA Piper presentation emphasized that average holding period from Series A to liquidity has grown from barely two years during the Bubble to over eight years today.

Ten-year funds aren't ten-year funds anymore. The average ten-year fund doesn't wind up until Year 14, and a non-trivial fraction last until Year 18 or even longer.

Time is the enemy of VC firms. The longer you hold the equity, the higher multiple you need to hit your IRR target (and venture firms live and die by IRR). Waiting until Year Seven for a 10X exit that you expected in Year Five means your portfolio IRR can drop from 35% to 20%. That may be the difference between raising a new fund and being invited to explore other career opportunities.

So all the forces are pushing VC firms to do bigger deals, that consume more capital, that deliver the potential for ever-higher multiples. 10X may not be enough... maybe your target now needs to be 20X, or 30X. You're swinging for the fences every time.

If you're an angel investor, this may not be a good idea.

If you can put $2M into an angel investment over two rounds and sell your stake in Year 3 for $6M... that's only a 3X multiple, but a a 54% rate of return! If you own a third of the company, that means an $18M acquisition... as mentioned above, that can be done as the divisional level at many, many large companies.

No substantial VC is going to be interested in a deal that sells for $18 million. "Doesn't move their needle." "Failure to launch." If they have one of these in their portfolio, its counted as a failure.

But if you're an angel investor, investing your personal capital, that's a darned good deal! It's not going to let you retire to Cayman Brac, but it's certainly going to pay for some nice trips and toys.

And for those of us concerned about economic development and technology-investment ecosystems... the funds from that exit are available for reinvestment in the next deal much more quickly! Once the angel is back from a three-week golf trip or dive trip or whatever, he or she has substantial liquidity available, and is likely to want to do another deal, and another... and probably in the same local market. By contrast, the VC fund exit, whenever that occurs, gets distributed back to their institutional LPs. With all the chaos on Wall Street, who knows when, or if, that money will ever make it back to the local market?

Conflict

The conflict arises if you are the angel investor looking at a potential $18M acquisition, but you've taken VC money. As seen above, the VC is pre-programmed to need a $200M exit. The VC syndicate is going to control the board, and they're likely to "double down"... rather than taking the early exit, they'll plow in more money (most VCs have plenty of money), maybe try to roll up a competitor, and build that $200M exit. If they miss, the deal goes into their list of writeoffs. And it's probably too late to go back and make that $18M sale that was available four or five years earlier. That potential acquiror has moved on.

Basil quoted a study by Robert Wiltbank of Willamette University (funded by our indispensable friends at the Kauffman Foundation). He looked at a large historical database, and compared results for companies that only received angel investment versus companies that received a mix of angel and VC dollars.

When angel investments attracted VC dollars, the overall number of exits in the 5X to 10X range increased by about 8%. That's good.

But the number of exits in the 1X to 5X range fell by nearly 20%. That's bad.

And the number of complete failures increased by about 12%. That's terrible. How many of those companies would have had solid "base hits" exits if the venture investors had not been swinging for the fences?

Impact on Entrepreneurs

So if you're an entrepreneur... what does all this mean for you?

It depends. (The answer to almost any reasonably complex question is usually "It depends.")

If you're discovering pharmaceuticals or building medical devices, nothing changes. Structural issues in your market, such as FDA approval, will continue to drive you towards raising large amounts of venture capital from VC firms.

If you're developing a new Web 2.0 service... you might want to think about an angel-only strategy. Your likelihood of a profitable exit goes up, even though the likelihood of being on the cover of Wired goes down. Make enough money to fund the next company yourself... and that one might get you on the cover!

And if you're in another sector... well, it depends. Cleantech deals are looking more and more like biotech (heroic amounts of capital, long holding periods). Some software deals may begin look like SaaS deals, where you can run them on a relative shoestring. It's certainly worth understanding these dynamics before you start mixing streams of angel capital with venture capital.

Venkman said "Don't cross the streams!" It's still good advice.

I sent him a list of "must-have" iPhone applications, he tweeted about it, and now people are asking what's on my list.

I don't claim any special insight or wisdom here, but having spent more than the purchase price of my iPhone in the iTunes Apps Store over the last five months, this is what works for me.

First off, my first Home screen. (Which, in case you didn't know it, is now easily accessible from any of the nine possible Home screens... press the "Home" button once to get to the grid of applications, then press it again to go to the first screen on the grid. So this is where you should put the stuff you use most often.)

Apple standard

Seven of my "first Home" applications, plus two on the menu bar at the bottom of the screen, are Apple standard: Text, Photos, Maps, Camera, Phone, Clock, Settings, Email, and Safari. Enough said about those.

Ten more of the standard apps didn't make the cut, and they're relegated to another screen: iPod, iTunes, App Store, Stocks, Contacts, YouTube, Notes, Weather, Calendar, and Calculator.

The first four of those I use only rarely; your mileage may vary. Contacts usually gets launched from the Phone application, and YouTube usually gets launched from within Safari, so they don't get top billing. The last four have been replaced by more capable third-party apps (see below).

Free Apps

• Google Mobile App — if you haven't tried it yet, you don't know what you're missing. Ought to be burned into every iPhone's ROM.
• GTLogin — only relevant if you're on the Georgia Tech campus. If you're on campus, and haven't downloaded GTlogin, make that your next step.
• WeatherBug — way more detail than Apple's (admittedly pretty) app. Now uses the GPS to know your current location!
• Zenbe — One of a zillion to-do list managers. This one is simple, free, and syncs nicely with the Web client.
• Evernote — I can't understand how this app can be free. A vastly more powerful replacement for the Notes app, but this can include photos, voice recordings, etc. Automatic OCR of photographs is incredibly cool; I suspect some low-wage English-speakers in India or China are chained to their workstations to type whatever they read in your photos, but I honestly don't know. Synchronizes with an equally powerful client on your Mac or PC (or on the Web). A recent release permits local storage, so that you can access favorite notes offline. I don't think I scratch the surface of Evernote, but it's wonderful.
• Quotations — Alright, I'm biased, because I wrote this one. It's a Web app, not a standalone App Store app, but I like it. It's free! Try it at http://tr.im/ipquote!

Commercial Apps

• Twittelator Pro — There are at least half a dozen Twitter clients for the iPhone; I've paid for at least four of them. I like the feature set of Twittelator Pro, it's fast, it's stable, and the developer added two features because I asked nicely. Instant brand loyalty! Well worth five bucks.
• PCalc — Sorry, but my brain only works in RPN. Comes from being a Georgia Tech student in the late 1970s and early 1980s. I've downloaded at least five RPN calculators for the iPhone, have paid for a couple, and I keep coming back to PCalc. (I've used PCalc on my Mac for years. I was so confident in James Thomson's abilities that I actually paid $10 for PCalc on July 10th, even though I didn't get my iPhone 3G until the next day! Yes, I paid for software that I couldn't install or run. It's that good.)
• SplashID — I use a new randomly-generated password for every Website that I visit. So I need a secure place to keep them. I have paid for both 1Password and SplashID. Both have their good points. At the moment, the $10 SplashID retains its slot on my first Home page, while 1Password is on the second page. Take that for what it's worth.
• Favorites — A simple $2 application that lets you store 4, 9, or 16 photographs, then associate phone, SMS, and email addresses with each. A single tap connects you; a double-tap lets you choose your connection. This should have been built into the iPhone OS.
• SaiSuke — I have my entire life loaded into multiple Google Calendars. Before SaiSuke was released, I had a complicated sync path (Google Calendar to Spanning Sync to iCal to Mobile Me to iPhone); any failures along the way would cause my iPhone to have out-of-date information. Since those "failures" included simple things like my Mac being turned off or asleep, this wasn't reliable. Now, SaiSuke is a native iPhone app that is a Google Calendar client! One wireless connection, one button press, and items created on my laptop and items created on my iPhone are in sync. I expect Apple to eventually duplicate this functionality, but for now, SaiSuke is well worth $10.

eBook Readers

I have found myself reading a lot of eBooks on my iPhone. I have four readers installed:

• Stanza
• eReader
• BookZ
• BookshelfLT

All four have advantages and disadvantages. Stanza has the most responsive developer. eReader is the only choice for encrypted books from eReader.com and Fictionwise.com. I could probably survive with just those two. BookZ has some nicer control options, and BookshelfLT integrates best with the Baen online library.

Other Goodies

Other apps that are too good to ignore, but who didn't fit into my first Home screen—in alphabetical order:

• AcidSolitaire
• Bloomberg
• CastCatcher
• CubicMan
• Dynolicious
• FiveDice
• Flixster
• Google Earth
• GoSky Watch
• i.TV
• Infopedia
• Instapaper
• Loopt
• MotionX Poker
• Pandora
• Q Contacts
• ShoZu
• SmugShot
• SonicLighter
• SplashShopper
• Thereminator
• YPmobile (although, honestly, Google Mobile probably replaces this now)

Most of these are cheap or free.

So, that's my list. What's yours?

July 2009 Update

Six months later, I've made a few changes.

Georgia Tech has improved its GTwireless login (letting you have the option of logging in a device only once every fifteen days), and the students responsible for GTLogin have apparently moved on to other things.

Stanza can now read encrypted eReader files, so I don't need the standalone eReader app anymore.

I am now using Tweetie instead of Twittelator Pro (although both apps are very good, as is BirdFeed... you really can't go wrong with any of them).

As suggested by Richard Evans in comments, I'm now using The Weather Channel app instead of WeatherBug.

Although I remain a huge fan of PCalc, the folks at Infinity Softworks have pushed it off of my home screen with FastFigures.

And, of course, the big change is that Google Calendars can now sync with the native iPhone Calendar using ActiveSync; this makes SaiSuke unnecessary.

I wonder what will happen in the next six months?

Alright, I'm actively courting codgerhood here, but I don't like rap. Or hip-hop. Or whatever else the young whippersnappers call "music."

But I just spent ten bucks on a rap CD (well, partially rap), and I love it!

If you've been to a Georgia Tech football game this season, you've seen the music video for "A Perfect Option" up on the big screen. That's the second video by a pair of recent GT graduates who call themselves The GTGs (after their campus email addresses); the first was "Take the M-Train." (Which I have seen seriously discussed by Gary Schuster, and which took up a good chunk of the College of Engineering advisory board last spring!)

I may not be the biggest fan of their musical style, but the kids are undeniably talented. (Listen to some of the other tracks on "Look to your Left, Look to your Right" and you'll see that they really do display some musical ability!) But the point of this album isn't the music quality, it's the lyrics.

Anybody who has ever been a Tech student, or known a Tech student (or married a Tech student!), will understand The Ratio:

Sir, if you got a daughter

Throw her in some white and gold

And put her on the campus

To help us raise the ratio

And "Take the M-Train" raises valid points about engineering students switching to management:

Why would ya take the harder route when there’s an easy way?

See what all tha fuss about, we callin’ it tha M-Train

Those engineers are gonna pout, you’ll be their bosses one day

It’s where all the ladies are hidin’ out

We’re callin’ it tha M-Train

Now, the GTGs have published a CD, containing these and other songs, two of the videos, and some hysterical phone calls for George P. Burdell. If you were ever a Tech student, you'll understand why I almost drove off the road laughing at Track 4!

They position themselves as "Music for the Georgia Tech Community," and that's exactly right. Talent and audacity like this should be encouraged. Go ahead, spend ten bucks on their CD. Buy a second copy at a stocking stuffer for a GT person in your life. You'll be glad you did!

Over a hundred years we been on Grant Field

Bobby Dodd, John Heisman, yo they all been here

Under the shadow of the tower

Whistle blowin' every hour

When that Wreck rolls out

You feel that Yellow Jacket Power!