It may surprise you to learn that Silicon Valley isn’t the only startup hotbed in the U.S. In between Silicon Valley and Route 128 there are many pockets of growth and expansion in the startup world. We take a look at where startups are growing and where they are burning out.

It’s hard to understand why investors impose heavy Board structure and regulation on seed and early-stage startups. If no two startups are created the same, then why does that assumption apply to Boards? And why square-peg a round hole? Startups and founders need time to exercise creative freedom at the seed stage. Boards have a tendency to formalize their thinking which we think (more often than not) is detrimental.

As entrepreneurs, we’ve found that the best Boards are Agile Boards. In many cases, an Agile Advisory Board is all that’s needed to establish “value creation” and “alignment” between founders and investors/advisors. This hands-on, mentorship-styled approach is often the key to creating transparency and progress in early-stage starts. Save the Boards for when the startups need them the most — when they scale.

This presentation outlines the opportunity with the Agile Advisory Board (at the seed- and early-stage). Overall, we find that the traditional boards at the seed and early-stage are often counter-productive. Traditional board structures at the seed and early-stage are often described to us as:

• Top-down and tyrannical
• Less “Agile” with latent feedback loops
• Lack strategic value
• Dysfunctional arrogance
• Often “panicky” & too revenue-focused
• Often focused on past progress and not future-minded
• Not aligned with entrepreneurial realities

Founders are requesting a new board format, one that is Agile and Lean, and provides the following:

• “Agile” and real-time feedback loops
• Bottom-up accountability
• Strategic to the business mindset
• Educated members to enable decisions
• A focus that is more on customers (not revenue)
• A mentality that asks, “What do we need to do next?”
• Members who’ve been in the entrepreneurs shoes

Ultimate value creation between founders and investors are often satisfied through non-planned interactive loops that happen when help is needed in real-time (or close to real-time). Hence, the Agile nature. The Agile process is about short feedback loops.

The Agile process remedies the broken software development life-cycle and provides a good framework for investor/founder relationships. This approach is really about getting information to investors and advisors faster, and back to founders.

Startups ebb and flow, just as the information in those startups ebbs and flows, especially outside the walls of each startup. Being transparent with founders establishes trust and enables the best information to be disseminated. Remember, not all information is good, but the worst information to receive from a founder is not bad information, but that of surprise.

Traditional boards (at the seed and early-stage) are becoming outdated. For startups at the seed and early stage, the Agile Board will be the Board of the future.

Earlier this week, Inc. Magazine’s Lindsay Blakely wrote a great article on how to win a tech start-up competition after she spent a couple of days at the 2012 Launch Festival, the tech start-up competition in San Francisco founded by entrepreneur and investor Jason Calacanis. At LAUNCH, more than 40 start-ups competed for more than $1 million in prizes and seed capital. She did a fantastic job interviewing investors on what they like and don’t like when watching these on-stage pitches, so we want to extend this theme on delivering better startup stage pitches.

After seeing hundreds of stage/demo pitches, there seems to be a common approach to how not to suck when presenting, and more importantly, get an edge up.

With 5 minutes on stage (typical at any startup launch conference) you have ample time to tell your story and gain interest.  We’ve noticed that most companies who tell their story in 4 minutes or less have a better reaction and – even better - an easier product to understand.  This is key today.

Presenters good at delivering a concise story that flows all follow a fairly similar format.

First, tee up the company with the elevator pitch (or one-liner) which gives the audience context.  One “boom” sentence that addresses the big idea helps show a somewhat proven and established market.

Next, identify the problem you are addressing in the market. The vision or market identified in the elevator pitch is ripe for dislocation.  Show conventional incumbent problems, market confusion or stagnant innovation through high-level market data, explanation of bad user experiences and/or adoption issues, or other methods to show the current market is primed for a new solution.

Take that problem to your customer use-case.  Describe your ideal customer and how many of them there are in the market.  Give the audience the size of the problem and what the market opportunity truly is.

Then launch into your solution or product which addresses this massive problem.  Show – live demo if you can – the new experience, workflows etc. and how you fix this problem. You want to be able to state with confidence “our company is the answer to this problem.”

Inevitably, once you’ve demonstrated a big problem, big market and a great solution, you will need to address how you will get distribution for this solution. If you don’t address it during your presentation then most likely a judge will ask, so address it. Show how you plan to acquire users or customers via your channels (sources of distribution). Although these are mainly hypothesis statements, you’ll show that you’ve thought about it and it’s important.  Avoid at all costs the ”build it and they will come” mentality.

Move quickly to monetization.  State “our business model is …”  or “we plan to scale revenue by…”

Finally, it’s important to show that you have experience in this domain to build audience confidence.  Craft short bio intros in a way that suggests to the audience that you and your team are tailor-made for the opportunities you are targeting.

Of note, addressing competition is not a must but adds an extra layer of context.

Venture51 participated in their first Launch Festival last week as a sponsor and investor. The conference was a total success for startups and proved to be one of the best (if not the best) platforms for launching initial products, version 2 products and attracting investors. Jason Calacanis has taken the startup demo competitions to a whole new level by getting tier 1 Angels and VCs to pledge over a million dollars in startup prize money. Wow!

When we arrived at the LAUNCH Festival on March 6th, there was over $1M in investment money pledged. Thanks to members of the Grand Jury who had not previously committed money — and existing investors upping their amounts — that number climbed past $1.4M at the closing ceremonies on March 8th. Investors included: TechStars ($118k), AngelPad ($120k), Venture51 ($51k), Charles River Ventures ($100k), MailChimp ($100k) and VegasTech. Angels supporting the event: Brad Gerstner ($100k), Kevin Rose ($50k), Steve Chen ($50k), Tim Young ($50k), Cyan Banister ($50k) and Bill Lee ($100k).

The LAUNCH Festival 2012 winners are in. Six in the 1.0 competition, five in the 2.0 competition, and one overall winner from the DEMO Pit.

Here are a few by category:

• Best Overall 1.0 winner – Space Monkey at $276k (a Venture51 company)
• Best Design 1.0 winner – Minbox is at $318k
• Best Technology 1.0 winner – Captricity at $125k
• Best Overall 2.0 winner – Alltuition at $75k
• Best Business Model 1.0 winner – Appstack at $75k.

Congrats to all the startups and entrepreneurs who participated in this event and we look forward to next year!

Last week, our friends at The Designer Fund (disclosure: we are investors) moved the needle again to bring design to the forefront of the startup experience. Some might argue that design has always been at the forefront of startup which is true for some.

By our observations, there is a shortage of true startup designers. True startup designers are versed in user research (customer development), information architecture (IA), interaction design (IxD), visual design, and storytelling (copy writing and messaging). They also possess back-end skills and have a thorough understanding of the technology stack that the product is being built on. Just as importantly, they get the big picture and realize that user experiences are built around business models as well, including marketing, distribution, customer support, sales, business development and operations.

We interact with founders in and out of our portfolio everyday. Top of mind for them, is building a better product/customer experience. However, they struggle with finding and hiring true startup designers. Mainly because these designers are scarce, either they don’t posses the total skill-set they’re seeking, or they are too risk-adversed to take the leap into startup.

We also hear the other side of the argument where building design into the product before proving value is premature. That makes no sense. This point of view says that design isn’t part of the value creation. There are many companies that built around experiences first in order to provide value to an existing or nascent market (Mint, Instagram, Tumblr, Path, Vimeo, Pinterest, Etsy, and Flipboard to name a few). When we invested in The Designer Fund, their value prop was very easy for us to understand:

1. Create awareness in designers that, for them to take their value to the next level, they must posses the right mix of skills to add value to a startup. And when they get that bench depth, they’re ready to make that leap into startup.
2. Help them start their own companies or help pair them with the right startup who is desperately looking for a startup designer (as 90% of them are)

Did you know that billions of dollars worth of value have been created by tech startups with designer co-founders? Check out this interactive infographic from The Designer Fund which is a great step to amplify the impact of designers with various backgrounds in the context of early-stage tech startups.

As they, we, and many others unpack this new thesis, they’re also getting out of the building to interview every designer founder they can find who’s made a venture-backed tech startup. The collection of interviews will be published as a non-profit book (called Designer Founders) that will be free for students with the goal to synthesize reoccurring patterns and lessons to inspire the next generation of entrepreneurial designers.

The bottom-line, The Designer Fund is helping to foster a more frictionless environment for founders to recruit or find startup designers, or for designers themselves to start their own companies. Amen to that!

User-centered design for the agile process is creating a new generation of startups. Design is no longer considered tactical in startup. Instead, it is recognized as a strategic component of the startup process by the tech mainstream. While it’s generally been strategic, it’s only recently that the perception has caught up with the reality (consider Apple, IDEO, Target, Design Within Reach & Coca Cola). This new breed is whole-minded; leveraging the right brain to create experiences and the left to analyze the experiential data in order to iterate and improve.

Today’s startup designers are not just building visuals in Photoshop or Fireworks anymore. They are experts in user research (customer development), information architecture (IA), interaction design (IxD), visual design and storytelling (copy writing and messaging). They also posses back-end skills and have a thorough understanding of the technology stack that the product is being built on. Just as importantly, they get the big picture and realize that user experiences are built around business models as well including marketing, distribution, customer support, sales, business development and operations.

At Venture51, we’re high-centered on design/user experience-driven startups. Part of the core strategy is to align with the best design founders globally and expose their expertise to this unique opportunity in the high-tech startup ecosystem. It’s not a matter of if or even when these changes will take off; it’s here now, and for the foreseeable future we are betting big on this design-driven thesis. This new frontier creates a competitive edge we like to refer to as the Unfair Design Advantage.

To support our design-driven thesis, we recently made an investment in The Designer Fund. The Designer Fund is a community of designers who invest in designer founders through mentorship, angel funding, and access to our network. Enrique Allen (the Designer Fund Founder) has compiled an exceptional group of investors/mentors like 500 Startups, YC , i/o Ventures, AngelPad, Google Ventures Startup Lab, Rock Health, WebFWD, Kapor Capital, Harrison Metal, SoftTech VC, Quest VP, KPCB, Andreessen Horowitz and Khosla Ventures. We are honored to be considered as part of this founding group, but even more excited to help drive this design thesis into the startup fabric of tomorrow.

Portfolio company ecomom shared the first in a series of infographics on news that may shock, anger, and/or affirm beliefs that you’ve held thus far about conventional products in your home with the data visualization masters over at Column Five.

Here’s the Surprise Toxins In Your Home:

Portfolio company InboxQ analyzed millions of Twitter user profiles and spun up an Infographic with the data visualization masters over at Column Five.

Here’s America According to twitter. Oh yah, the Bird City (home to Venture51) made it!

We are pleased to announce the creation of our new fund, aimed purely at investing in the best new startups in the Information Technology space. Our focus is on the seed- and early-stages where we’ll provide initial funding ranging from $51K to $500K.

We’re very excited to announce our first portfolio companies. Since our closing we’ve made 7 investments. They are:

1. Graphic.ly
2. EcoMom
3. Life360
4. WebMynd
5. InboxQ
6. Daily Worth
7. Etoro

Along with partnering with great companies we’re also investing in promising, like-minded funds. This strengthens our investment platform by leveraging due diligence and improving access. READ MORE »