1Mby1M Incubation Radar 2014: Guesswork

Guesswork is a machine learning platform that predicts customer intent. It helps CRM and e-commerce companies use this knowledge to personalize product recommendations. Founded in 2013, the platform was launched this week and has three large OEM deals in the pipeline.

Guesswork was founded by Mani Doraisamy and Boobesh Ramalingam who have known each other since college days and have worked together for five years. They both have more than 14 years of experience in building technology platforms. Prior to founding Guesswork, Mani had co-founded OrangeScape where he created two rules engine platforms on the cloud – Visual PaaS and Kissflow. While building an app for understanding and responding automatically to customer feedback, they found that machine learning was ineffective – at least during the initial stages. They solved this problem by creating a rules engine layer on top of the machine learning algorithm and thus was born the idea for Guesswork.
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1M/1M Premium Company Freshdesk Raises $31 Million From Tiger Global and Google Ventures

We just did a roundup of the CloudCRM space, covering Zendesk’s successful IPO and predicting that the space is heating up, and more acquisitions will follow. Our premium company Freshdesk is definitely a key target!

Today, Freshdesk announces its new round of funding of $31 million led by Tiger Global, with Google Ventures and their original investors, Accel Partners, following. This brings their net funding to $44 million. The latest round is priced at $250 million. The company currently has 23,000 customers.

As always, big funding news creates big media coverage. Here’s what they’ve got so far: NYT, TechCrunch, VentureBeat, Forbes, Wall Street Journal, and quite a few others. I cannot emphasize how important this company is to underscore and celebrate India’s quest to build global software companies.

Here’s our prior coverage of the company:

The Million Dollar Club: Freshdesk

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1Mby1M Deal Radar 2014: Happy Grasshopper, Safety Harbor, Florida

Happy Grasshopper is an email marketing company that focuses on providing fun, engaging content to help salespeople and small businesses build and nurture their relationships with leads and past customers. Founded in October 2010 by serial and parallel entrepreneur Dan Stewart, Happy Grasshopper is growing rapidly as it maintains its distinction as a company that sends emails to communicate, not broadcast.

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10 Avoidable Mistakes First-Time Entrepreneurs Make Repeatedly

Over 600,000 companies go out of business every year in the US alone. Infant Entrepreneur Mortality is a massive problem. Here are 10 avoidable mistakes first-time entrepreneurs make repeatedly:

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YCombinator’s Further Evolution Into A Seed Fund

YCombinator has just announced that it will replace its $17k for 7% pre-seed equity investment with a $120k for 7% seed investment deal. From the WSJ:

Previously Y Combinator’s standard deal was about $17,000 for 7% of the company, plus an $80,000 note from a group of venture investors and firms eventually known as YCVC, which most recently included Andreessen Horowitz, General Catalyst, Maverick Capital and Khosla Ventures.

So, startups will now get $120,000 from Y Combinator, instead of $97,000 from a combination of Y Combinator and select venture firms. That means the implicit valuation for YC startups rises to about $1.7 million from the previous $1.4 million (YC might deviate from the standard deal “in exceptional cases,” presumably for an ultra-hot startup that merited a higher valuation).

The $120,000 will come directly from YC and a fund it manages that has limited partners, though the accelerator itself has no limited partners, Altman said.

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India’s Technology Product Story Gets Major Boost With Autism App Startup Avaz Getting Funded

TechCrunch just broke the story of Chennai, India-based Innovation Labs, maker of autism app Avaz, getting funded by Mumbai Angels and Inventus Capital. The company, led by Ajit Narayanan, has been in the 1M/1M program for the last three years, and has pivoted from being a device and services company to an app venture. Ajit himself has many awards to his name, not the least of which is a Technology Review 35 under 35, as well as a TED talk explaining FreeSpeech, a visual communication language that is a core innovation from the company.

We are thrilled for many reasons.

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The Funding of Avaz: Some Reflections

Crowdfunding Startups: Opportunities and Bottlenecks

There has been a bit of action for a while now in the crowdfunding world, and certain startups have been able to get themselves off the ground using the Kickstarter / Indiegogo style sites. By and large, these types of financings have gone to companies that are building physical products, digital games, etc. Fundings have also happened for some causes, films, books and art projects that are typically not businesses. Equity crowdfunding has been signed into law in the US through the JOBS Act, but it awaits the SECs directives on the precise rules governing the system. In Europe, it is legal and already in practice. Hopefully, other parts of the world will also start seeing the infrastructure develop shortly.

For our domain of focus, the primary concern is financing digital startups: technology and technology-enabled services. Typically, these are difficult to assess, high-risk companies, and amateur investors from the “crowd” are unlikely to be able to perform adequate due diligence to have a sophisticated investment thesis.

However, there is one category of investors who will have an excellent vantage point from which to assess new ventures.
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