What Industries Are Hot Right Now?
By Lauren Keyson and Dana Stevens
Lauren Keyson: We are here at Joe Rubin’s Angel & VC Conference at The Players Club, in Gramercy Park S. He is the managing director and co-founder of FundingPost. What industries are the VC’s looking at these days? What are people interested in this year? What’s hot?
Joe Rubin: I guess it depends on what kind of investor you are and what types of deals you invest in. However, at this specific conference is the Series A Venture Conference. We’re seeing a lot of companies with traction, traction revenue/users, experiencing just high growth. This is not an industry specific event ‘though we’re tending to see, as venture capital goes, a lot of companies in the tech arena. So, we see some people in mobile, in web, the Internet of Things, Software as a Service (SaaS), you know, the usual stuff that Series A Venture Capital firms look at. However, we do see some things that are out of the ordinary that are not those specific deals that are also pretty interesting. I’ve just seen a consumer product here that’s got millions of products sold all over shelves. We have some very cool looking, non-tech companies joining the mix. We see some in the food and beverage space: we have one that’s a natural foods, we have one that’s in battery technology that extends the life of cell phone batteries and laptop batteries and wearables batteries. So, not your traditional sort of stuff but something that’s just gaining a lot of traction, that’s experiencing growth, that’s looking for a round of capital.
Lauren : Give your definition of ‘Series A’
Rubin: The letter is kind of almost irrelevant because people can sort of position the letter to be however they want it to be, based off of when they actually want to raise the capital. But, it’s sort of your first institutional round of capital. It’s what we’re looking at here.
Lauren: So this would be the very beginning entrepreneur?
Rubin: Well, no, we’re seeing companies here that have raised a million or so, $100,000, from VC and Angel rounds and things like that. And, now they’re looking for more of an institutional venture capital firm to raise capital for them.
Lauren: I know that you’re an Angel Investor yourself, what would you invest in right this second if you had unlimited money, you could invest in any company you wanted? You can talk about a company or a sector.
Rubin: Hmmm, Good question. You know I am seeing some amazing companies in the software space, amazing companies in the mobile space. Like I said, Internet of Things, just some really cool, cool technologies: cell phone technologies, battery technologies – on the hardware side. And, of course consumer products as well. Customer apps, Customer-facing apps. There are just a, you know, as an Angel Investor as a Venture Capitalist as well, we’re in due diligence with an amazingly very cool but simple company right now. One of the things I always… I’m sorry, I can’t give any details on the company but one of the things I always like to see is a simple deal; something that I can understand in like four seconds and go, “Damn, that’s so simple and easy to understand and so brilliant that I can’t believe nobody’s done this before.” They’re doing it well, they’ve done a great job launching it, they’ve fine-tuned it to be an incredibly easy-to-use system and we love it. And, we’re in due diligence right now to make sure it is what they say it is, of course, but that’s the type of deals we like to see.
Lauren: I’ve had a lot of people come talk to me about their projects and new companies. Some seem really, really cool. Why aren’t they getting funding?
Rubin: Well, “seem really cool”, on the surface, is unfortunately not the only point that gets tested, has to be checked off for an investor. It is, it’s certainly one factor <being really cool> but there’s many other factors: managements, market, traction, how far they’ve along they’ve gotten. You know, do they have a business in it? I see a lot of things that seem really cool but unfortunately are not venture “backable” businesses. They need to have a venture-capable return: you need to have, it has to be able to return the types of money that investors need to get in order to round off their portfolio. You need to have a solid team that has experience and knows what they’re doing. You know, there are plenty of cool ideas, in fact one of the investor quotes I’ve probably been using this for twelve years now, is “The path of failed companies is littered with great ideas.” And, I’ve seen so many great ideas but there’s no business around it or there’s no execution around it.
Lauren: An Initial cool idea and they got funding but now, no one is funding them. What’s that about?
Rubin: Well, if they got some initial funding, that’s the whole Series A contract, so you get that initial round of Angel Capital where there’s a lot of it, and then less money for the second stage. So, you have to sort of make the cut, you know, or you get thrown off the island, right? There’s just not enough chairs there. You have to take that traction, you have to take that money that you got from an Angel and then become a rock star. And, if you don’t there’s plenty of other people who did, and those are the ones who are going to get the Series A capital.