By now you’ve probably seen that 500 Startups Accelerator has a new class of startups, its sixth. And it’s got a ton of international folks taking part and that is fucking awesome. You know what’s not so awesome? The video that accompanied its announcement.

This video, like those which came before it, was put together by the startups themselves. It’s a spoof on Macklemore’s Thrift Shop, which has been done before. And yes, it’s 2013 and startups continue to torture us with their horrible rapping, but whatever. My problem isn’t with concept behind the video, but with the content of the message included within.

Get over the jokey nature of the spoof and listen to the lyrics closely and you’re faced with an unintentionally cynical view of the startup ecosystem and today’s frothy early-stage investment climate.

At the heart of all of this is the chorus:

“I’m gonna raise some funds / Only got twenty dollars in my pocket / I – I – I’m raising, looking for millions / This is fucking awesome.”

Note, the goal here is not to build lasting companies. There’s some talk about creating products that are the future, that will be used by everyone and your grandma, but those lyrics are drowned out by incessant demands for more and more cash.

The most damning part of the spoof is the implication that the main goal of these startups is to raise seed funding and then a Series A, which will increase the paper value of the company for their investors. Or, worse, selling quick to a big player like Facebook, Google, or, god forbid, Yahoo.

Sure, VCs do care about returns, but I’m willing to bet that “All I care about is makin’ my investors green” is not a mantra on which lasting companies are built. Nor is “give me your money, I’ll double your money” or “follow us on Angel List, if you don’t you won’t make shit.”

There’s also the question of the role of the Accelerator itself. If Paul Graham is being criticized for saying YC’s Demo Day makes bad companies look good, what does one say about 500 Startups when it blatantly revels in the fact that the core mission of its startups seems to be cashing checks?

I’ve got respect for the 500 Startups crew and applaud the founders for putting a video together on a short deadline. But these lyrics make me wonder about the toxic startup culture that produces such a thing.

As one of my colleagues wrote on our internal message board: “500 Startups, and not a single person to say, ‘Hey guys, maybe this music video isn’t a good idea.’”

Here are the lyrics, a blatant glorification of wealth accrual to rival The Great Gatsby:

I’m gonna raise some funds
Only got twenty dollars in my pocket
I – I – I’m raising, looking for some millions
This is fucking awesome

[Verse 1:]
Nah, walk up to a meeting like, “What up? I got big traction”
My hockey stick’s higher than scoble’s amsterdam vacation
market size fit, users on their seat, punching cards in
cahingin-caching

Rollin in’, with my team, creating products that will be
the future but all i care is makin my inve stors green
Ima close my round now, Ima close my round now,
No for real I’m closing – ask your friends – can I get their checks now?

give me you money, ill double your money,
show me your market illl double your market,
your mommy your daddy , your cousin your aunty
everybody will be using my product

[2X]
I’m gonna raise some funds
Only got twenty dollars in my pocket
I – I – I’m raising, looking for some millions
This is fucking awesome

[BRIDGE]
Hey Tech Crunch write us up
So we can blow this up
Don’t dare to get us wrong
We are 500 strong

Hey seed funds check us out
Do it quick, or you’ll all miss out
follow us on Angel List
If you don’t you won’t make shit

[2X]
I’m gonna raise some funds
Only got twenty dollars in my pocket
I – I – I’m raising, looking for some millions
This is fucking awesome

Article courtesy of TechCrunch

Daily deals company LivingSocial continues to face challenges in the market. In the last quarter it posted sales of $135 million, up 23% on a year ago, but it also swung to a net loss of $50 million, from net income of $156 million in Q1 2012. The numbers were revealed in a 10-Q filing from one of its key investors, Amazon, in line with its Q1 earnings reported on Thursday.

The filing also shows that Amazon was the majority investor in the $110 million round earlier this year. Amazon put in $56 million of that sum.

“Additionally, in Q1 2013 we made a $56 million investment in LivingSocial that we have recorded as a cost method investment,” it notes.

LivingSocial’s operating loss, meanwhile, was down to about half the size of last year, at $44 million. The Washington Business Journal cites a source that notes that LivingSocial has reduced its operating cash burn to single-digit millions to continue that trend. The company has been making an effort to cut expenses; in November it laid of 10% of its staff, equivalent to about 400 people.

E-commerce giant Amazon has a 29% equity stake in the company, it noted in the SEC filing. It also writes in the 10-Q that the book value of its equity-method investment was $36 million at the end of March. The losses at LivingSocial had a $17 million negative impact on Amazon.

Overall, Amazon saw revenues of $16 billion, falling just short of analyst expectations of $16.2 billion, with a bleak outlook for the quarter ahead, with its aggressive, thin-margin strategy leading it to an operating loss of up to $340 million. Right now, its stock is trading nearly 7% down.

The market for daily deals sites is less than healthy right now. Rival Groupon in February also reported a worse-than-expected loss and then lost its founder and CEO Andrew Mason in the wake of the news, and now it’s working on a pivot to become more of a multi-purpose local commerce player.

LivingSocial, which has been around since 2007, has raised an eye-watering $918 million in the last six years — and what that much sunk into the company, you can see why existing investors are key to keep it from falling over. CEO Tim O’Shaughnessy noted in February that its most recent $110 million round of fundraising was indeed a “down round”, valuing the company at around $1.5 billion, lower than in its last fundraise. But it was not an emergency debt infusion, he maintained: at least some of the investors took equity in the company as part of the deal.

Article courtesy of TechCrunch

Actian is on a buying spree. The big data management company announced today the acquisition of ParAccel, the data analytics company that has $64 million in funding from Amazon and other investors. Earlier this month, Actian acquired Pervasive Software, a data integration company based in Austin.

Actian provides data integration and a a data analytics database called Vectorwise with a particular emphasis on Hadoop. Its Hadoop connectors hook into Hadoop, pull out relevant data in real time and integrate it accordingly. ParAccel also has a data analytics database.

ParAccel has made a mark with its analytics database. It is used by Amazon Redshift, the service that acts as a data warehouse in the cloud. ParAccel, as of December, has more than 60 customers.

Actian CTO Mike Hoskins said the company is profitable, giving it an opportunity to build a big data portfolio. “When you look at our combined capabilities, including Versant, Pervasive and now ParAccel, we have global reach in many fast-growing markets and annualized revenues north of $150 million,” said Hoskins in an email interview. Hoskins had before served as CTO at Pervasive.

The “Internet of Things,” with its volumes of data, both traditional and machine-generated, are growing exponentially, Hoskins said. Companies that can gain insights with data, across multiple sources, have a significant advantage. With the combined companies, Actian can scale a company’s data across commodity hardware, capturing data from different directions and running analytics on that data.

Actian’s acquisitions show how data integration and analytics represent a potent combination. The question is can Actian actually integrate the technologies to become a top data analytics vendor.

Article courtesy of TechCrunch

More developments on the unsolicited Dish offer to buy Sprint for $25.5 billion, first announced one week ago. Sprint announced that it has formed a Special Committee, from independent directors, to review and evaluate the deal, and weigh up whether it is “reasonably likely” that Softbank will increase its original offer of $20.5 billion, first made last year with the support of Sprint.

Sprint says that the committee will include Larry C. Glasscock, James H. Hance, Jr., V. Janet Hill, William R. Nuti, and Rodney O’Neal. Glasscock will serve as its chairman.

So far, Softbank has not been especially vocal in its desire to meet or exceed Dish Network’s offer for Sprint, and neither has Sprint. In fact, on Friday the pair asked the Federal Communications Commission to continue with its investigation of the deal (now pegged at $20.1 billion, says Reuters), an essential part of the process to get it cleared. Dish had asked for that review to be suspended in light of its counter-offer. Reuters notes that the FCC review is already 140 days into its 180-day expected length.

Dish is keen to press ahead to finally add a long-desired mobile offering to its portfolio. Not only does it already own spectrum in this area, but as Dish laid out in a presentation to analysts, press and investors, its management believes that mobile will increasingly become a medium and platform for consuming video, and so it wants to make sure that it has a piece of that action.

Sprint had 55 million customers in the U.S. on its wireless networks, making it the third-biggest operator in the U.S. Dish is the country’s third-biggest pay-TV provider.

The questions now are whether investors will be more interested in Softbank’s strategic offer or Dish’s, whether Softbank offers more money, and if not, whether investors are more interested the newest offer because it is higher.

The full text of Sprint’s release below.

Sprint Forms Special Committee of Independent Directors to Review Unsolicited Proposal From DISH Network Corp.

OVERLAND PARK, Kan.–(BUSINESS WIRE)–Sprint Nextel (NYSE: S) today announced the Board of Directors has formed a Special Committee of independent directors to review and carefully evaluate the proposal received from DISH with its financial and legal advisors. The Special Committee plans to evaluate the proposal and additional information that the committee has requested from DISH and provide its assessment to the full Board in due course whether the proposal is, or is reasonably likely to lead to, a Superior Offer (as defined in the Agreement and Plan of Merger with SoftBank Corp.). Neither the Board nor Sprint intends to comment further at this time.

The Special Committee consists of Larry C. Glasscock, James H. Hance, Jr., V. Janet Hill, William R. Nuti, and Rodney O’Neal. Mr. Glasscock will serve as Chairman of the Special Committee.

The special committee has retained BofA Merrill Lynch to act as its financial advisor, and Shearman & Sterling LLP as its legal counsel.

Sprint advises shareholders that they need not take any action at this time in response to DISH’s proposal pending review by Sprint’s Special Committee.

Article courtesy of TechCrunch

Mosaic, a startup allowing people to invest in solar projects, announced today that it has received regulatory approval for its next wave of crowdfunding efforts in California, worth a total of $100 million in investment.

The site opened to the public back in January with three projects that were fully backed in less than 24 hours. In total, the company says that it has raised $1.1 million from more than 1,000 investors to fund 12 rooftop solar power plants. Co-founder and President Billy Parish added that after Mosaic made the announcement this morning, it launched a project for that needed $157,000 in funding, and it raised the amount in six hours.

Mosaic investors choose the projects that they want to back, and they can invest as a little as $25. Once those projects start earning revenue, the investors are paid back with interest. The company estimates that investors will see a 4.5 percent return on average.

Each project on Mosaic has to be approved by regulators, Parish said, but getting that approval is “less time/cost intensive now.” As for that $100 million in just-approved projects, Parish said we can expect more to be listed on the Mosaic site soon.

And here’s a new promotional video that Mosaic released today.

Article courtesy of TechCrunch

Editor’s Note: Semil Shah is a contributor to TechCrunch. You can follow him on Twitter at @semil.

Everyone wants more transparency. It is part of a deep, fundamental trend. In government. In the workplace. Inside large systems like health care. And, more recently, around early-stage startup metrics and investment data. The crowd wants more transparency. They want to know more about metrics, revenues, and stats, and they want to know more about how investment dollars are allocated. Yet, the result of this shift raises concerns about privacy. In this world of imperfect, asymmetric information, combined with the desire among participants to build up, invest in, and report on the industry itself, frustrations can mount easily because, somewhere in the recess of our minds, the game feels slightly rigged in the other person’s favor, and the light of sunshine offers a promise of transparency to perhaps root out those bad apples and, just perhaps, inject an ounce of fairness, comfort, and peace of mind in an otherwise shady world.

In this real tension, we find many nuances.

For companies, unless they’re growing as fast as Pinterest or booking revenue as fast as Bloomreach, there’s little incentive to be fully transparent publicly disclose metrics. Doing so may impact future fundraising efforts, strain relationships with existing investors, hamper potential partnerships, and inform competitors of an opening. Remaining relatively quiet is one of the key benefits of being a small, closely-held private company.

For investors, transparency may be an even dicier proposition. First, companies they invest in may want to remain stealth or not have their investors made public. In these situations, it is the founders drive privacy — not the investors. Second, some investors may prefer to keep their moves private so as to not give their own competitors actionable information, especially in a climate where competition among funds within a contracting industry is growing fiercer. By law, investment funds are required to make filings with regulatory agencies, but those laws do not include, for example, listing out limited partners and other details many would like to know. Many people are also simultaneously investors in many funds at multiple stages, compounding the sensitivity.

So, here we are. Many want — in fact, at times, demand — that all of this data be made public to identify, tag, and call out the early-stage companies and investors who are not active, who are not what quite what they say they are. Investors may be growing tired of companies who craft and broadcast vanity metrics, and founders may be growing tired of converting their investor spreadsheets into a never-ending cascading waterfall of pointless investment pitches that waste time. Investors are in pursuit of perfect information when considering pulling out the checkbook, and every minute a founder spends pitching an investor who likely won’t pull the trigger because they’re generally disinterested, are phishing for information, or may not have any gunpowder left.

We have forgotten one dimension. We must investigate what fundamentally drives all of this to begin with: It is our collective curiosity to know more during a time in society where demand transparency is rising and at loggerheads with keeping some information private.

Nearly everyone in the ecosystem participates in the making of, analyzing of, or reporting on the news. Nearly everyone has a desire to know more about “who” funded “what” and at “what price.” Founders are lured to coordinating PR around their funding announcements, helped by an industry devoted to this and a network graph of relationships which can make dreams sing above the noise to target the right set of potential partners, the next key hires, and even the next investor. By the same token, investors love to be mentioned in these announcements, their brands gently stitched into the threads of the story. Both, ironically, work in concert, revealing what is material but oftentimes — as is currently their right — cloaking the specifics. The result is speculation masked as information. Add the real-time nature of Twitter to the mix, and perception distorts any signal frequency into reality.

People are keeping score, if even in the back of their mind, of who is following who, who is investing in who, who has real growth, who has real money, who is walking dead, who won’t be able to raise their next round, who won’t be able to raise their next fund, and all the other aspects and currencies of what makes the Valley’s parlor game so dynamic and opaque. I believe in more transparency on a fundamental level and am not an apologist for shadowiness, but I do recognize that part of the draw of private enterprise is, well, privacy.

The big fault line here is between transparency versus privacy. The web continues to make imperfect markets more efficient, and it is only rational that in these imperfect markets, rational actors will want as much information as possible before transacting. The startup world, in this context, is just another market, one that has traditionally been kept largely private and is slowly opening up thanks to new platforms, blogging, and (ironically) private dashboards created by actors to try to use data to make sense of the madness. The cost of this transparency is privacy, but not just for private companies and firms — but also perhaps for people, because a person’s reputation in our industry is tied so closely to one’s place of work, the drive for transparency might mean that individuals, in addition to firms and startups, may have to give up more privacy than they bargain for.

Photo Credit: midorisyu / Creative Commons Flickr

Article courtesy of TechCrunch

Y Combinator founder Paul Graham just published a blog post suggesting a new way to handle handshake deals, i.e. verbal commitments for investments and other transactions.

That kind of commitment can be a necessary prelude to a more formal agreement. Graham writes: “Things can happen fast in the startup world … so both investors and founders need a way to reserve space in a transaction.” However, he notes that these deals also fall through:

Handshake deals are not unique to Silicon Valley of course. They tend to arise wherever trust is sufficiently high and speed is sufficiently important. Diamond dealers apparently use them a lot.

Unfortunately, things don’t work as smoothly in Silicon Valley as among diamond dealers. This is not a closed community of pros who deal with one another day after day. Many participants in the funding market are noobs, and some are dishonest.

To try to avoid confusion, or at least to clarify who is at fault when a deal falls through, Graham is proposing “the handshake deal protocol.” It starts with a concrete offer, with an amount to be invested, a valuation or valuation cap, and an optional discount, followed by these steps:

1. The investor says “I’m in for .”
2. The startup says “Ok, you’re in for .”
3. The startup sends the investor an email or text message saying “This is to confirm you’re in for .”
4. The investor replies “yes.”

Didn’t follow the steps? Then you don’t have a handshake deal. Graham said that the Y Combinator team is starting to implement this, and that he’s hoping it spreads throughout the Valley.

To me, it seems very Silicon Valley to try to standardize an informal process. It sounds like some investors benefit from that ambiguity, so individual entrepreneurs might not have the power to resist. YC, on the other hand, could make a difference. By creating a clear process and a (digital) paper trail, the incubator can now track whether investors are breaking their verbal agreements, and if they are, those investors might find that they’re no longer as welcome at Demo Day.

And some investors may just be glad that the protocol doesn’t involve any real handshakes.

Article courtesy of TechCrunch

Startupi, a site covering the Brazilian startup scene, has raised a $300,000 seed round of its own.

The team was pitched to me as the “TechCrunch of Brazil,” and in fact it has attracted the backing of Roi Carthy, who covers Israeli startups for TechCrunch. (Carthy invested through his firm Initial Capital, which backs early-stage Israeli and Brazilian companies.) Other investors in the round include Redpoint eVentures, a partnership between Redpoint Ventures and BV Capital’s eVentures.

“Covering Israeli startups at TechCrunch for five and a half years, I can attest to the importance of having a leading force and voice in a startup ecosystem,” Carthy told me via email. “In Brazil, no one embodies this more than the tireless and passionate team of Startupi.”

The site was founded in 2008 by journalist Diego Remus and New York angel investor Michael Nicklas to make up for the lack of media coverage on Brazilian startups. There’s now a four-person team, including Remus, entrepreneur Bob Wollheim, tech journalist Amanda Demetrio, and former coworking space owner/multimedia consultant Ricardo Lima. (Demetrio and Lima are both recent hires, thanks to the new round.)

Wollheim said that Startupi currently sees about 100,000 unique visitors per month, and that it has plans to triple that number. The company also runs its own events like Startupi Camp and Startupi Con. (Like the rest of Startupi, those events pages are in Portuguese.)

Here’s the full list of investors:

• Redpoint e.ventures,
• Initial Capital
• Trindade Investimentos,
• Mountain do Brasil,
• e.Bricks,
• Demiurgus,
• Aceleratech,
• Kravla Partners,
• In Hsieh, co-founder of Baby.com.br,
• Cassio Spina, founder of Anjos do Brasil association, and other angels of this group.

Article courtesy of TechCrunch

Fitness technology and hardware startup Fitbit is raising north of $30 million in growth capital at a $300 million-plus valuation, according to multiple sources. The company last raised $12 million in January 2012 from Foundry Group, True Ventures, SoftTech VC and Felicis Ventures. It’s unclear who the investors are in this round.

Fitbit, which was a TechCrunch 50 finalist in 2008, offers a number of devices that track weight, nutrition, exercise, sleeping schedules and other health related data for users.

The company originally launched the Fitbit Tracker, which has now evolved into the One Wireless Activity and Sleep Tracker. This device clips onto clothing or slips into a pocket and captures information about daily health activities, such as steps taken, distance traveled, calories burned, exercise intensity levels and sleep quality. Fitbit’s wi-fi enabled scale, the Aria, will transmit both weight and body fat measurements wirelessly to your FitBit account.

In the past year, Fitbit launched a more lightweight version of the tracker called the Zip, which measures steps, distance, and calories burned. And most recently, the company debuted the Flex Flex Wristband, which is similar in form to the Jawbone UP or Nike Fuelband, and also tracks steps, distance, calories burned, active minutes, hours slept and quality of sleep.

While there is no shortage of health and fitness trackers that have emerged in the past few years, Fitbit was one of the first. So the company has a leg up on some of the competition when it comes to manufacturing, ironing out the kinks, developing companion products and more. And we’re told the company is making meaningful revenue these days, justifying its heftier valuation.

Article courtesy of TechCrunch

Motif Investing, a vehicle that allows you to invest in ideas, is now allowing individuals, organizations and brands to create and share their own collections of stocks or exchange-traded funds online—and, soon, make money when other investors buy them.

As we’ve written in the past, Motif was founded last year to give individuals a new way to invest based on themes. Instead of choosing to buy stock in specific companies, Motif allows investors to invest in different portfolios of stocks, each called a “motif,” that are centered around everyday ideas. For example, motifs can be built around themes and ideas ranging from cloud computing to mobile Internet.

Until now, Motif’s customers have been able to purchase pre-built “motifs”– portfolios of stocks, bonds or ETFs linked by common themes such as tablet computing, inflation or home improvement. These were assembled by Motif’s in-house research team. While investors could customize those motifs to their liking, they did not have the ability to build their own bespoke motifs from scratch until now.

The “Build Your Own” feature now allows users to build their own vehicles around ideas. Companies in finance and other industries can also build custom motifs that highlight their brands.

Motif will also create an app store of sports for created motifs, which will be categorized as well. The price to purchase your own motif is $9.95, the same as a traditional motif. And later this spring Motif will begin allowing customers to buy others’ created motifs as well; and when that happens, the motifs’ creators will be eligible for compensation through a royalty payment.

Article courtesy of TechCrunch