Dixon has founded 2 successful Internet companies in New York over the last 4 years. Dissatisfied with the venture capital market, however, he has now teamed up with friends and fellow angel investors, Eric Paley and David Frankel, to create Founder Collective, which aims to fund startup tech firms.

Tech Startups Are Underfunded

Dixon says that he wants to do what he wished was available when he started out as an entrepreneur. The tech segment, he believes, is highly under-funded, an oversight that Dixon hopes to correct. Unlike firms filled with VCs with zero real-life operational experience, this new venture among capitalists is run by people who have themselves been entrepreneurs and know exactly what is needed by startups.

The problem, as Founder Collective sees it, is that there has been a trend towards bigger and bigger funds over the past decade. This has consequently led to multimillion dollar funds that need to make huge investments. This, in turn, means that VCs can focus only on the more well-established companies.

Founder Collective Focuses on Seed

What Dixon and his friends decided to do, as a result, was to raise a small fund of US$40 million that would focus on technology startups. Based in Cambridge, Founder Collective has 2 full-time managing directors — Paley and Frankel. Dixon and his other partners, Mark Gerson, Zach Klein, Bill Trenchard and Micah Rosenbloom, will continue as the CEOs of their own firms and come in as sponsors on specific deals.

Founder Collective aims to specifically focus on seed-stage funding. This means that rigorous checks on the entrepreneur will be crucial, although Dixon acknowledges that one really cannot predict the future after all.

What holds all the partners together is their common interest in companies at the early stages. The phase of team building, product development, and financing can be the most exciting time in the life of a company. Oh well, some people bungee jump…whatever gets the adrenalin going.

“We get to work with energetic, passionate, thoughtful young entrepreneurs, who just need a little guidance,” Dixon says. “We all enjoy the process of building companies ourselves — or helping other people to do it.”

Founder Collective has so far made 9 investments between US$50,000 and US$700,000, including New York-based Hot Potato and art gallery and website 20×200.

The Force Behind The Start

Apart from Felser, the other forces behind The Start Project are Polaris Venture Partners and the founders of 83 Degrees.

Josh Felser: An angel investor and a founding partner in Freestyle Capital, an early stage venture fund focused on the Internet and technology sectors. Felser also co-founded Crackle, the Internet video community that was acquired by Sony in 2006 for US$65 million. Felser is on the board of directors of The Start Project and his role is to help with overall strategy and recruiting.

Polaris Venture Partners: A partnership of investors and technology executives, which invests in seed, first round and early stage technology and life science businesses. Polaris is offering The Start Project office space and it will have a first look option to invest in the new firms supported by the business incubator.

TechCrunch reports, “Cofounder Narendra Rocherolle says that his team loves identifying trends and building applications, but they need a way to turn those ideas and products into companies. This new partnership (The Start Project), which he says is still a work in progress, will give them the platform they need to build companies around those products.”

83 Degrees: A team that has built several successful companies, including Webshots, a photo sharing site that was ultimately sold for US$150 million. 83 Degrees has also founded 30 Boxes and Power Twitter.

GigaOM writes:

At The Start Project, Rocherolle is going to be drumming up ideas. And unlike incubators in the past, the company isn’t going to be taking in outside ideas to incubate.

Instead, the Mill Valley, California-based company plans to drum up a half-dozen new ideas every year, of which two or more will be spun out as independent companies and raise venture capital, Rocherolle said. Polaris Ventures will have first dibs on these independent companies for investment.

The article comments, “That’s eventually going to be the key challenge for The Start Project. It’s hard enough to come up with a big, venture-backed idea every three years – coming up with two or more such companies each year is going to be as challenging as repeating back-to-back Super Bowls.”

What remains to be seen is how nimble The Start Project can be. Its success would depend to a large extent on how quickly and effectively it can react and adjust to the changing market and economic conditions.

1.  The Armies of One

He’s the CEO, CFO, CTO, CMO, and C-whatever-O of the company. He’s positive that no one can do a better job than him so he insists on handling everything from admin and programming to accounting and business development — all by himself. He’s even his own female assistant. When you call and a female with a manly voice named Gladys answers the phone asking whether you’d like to leave a message, yes, it’s him.

2.  Far, Far Away From Civilization

So what if there aren’t any other people within several hundred miles in where he works? Experts, qualified employees, and supportive and reliable infrastructure are overrated. You should be glad that he’s also far, far away from the bars and clubs and all ‘em distracting temptations.

3.  Smart and Flawless

He’s so smart he doesn’t need to accept the lowly advice of others. Why can’t you understand that his original idea will succeed regardless of flaws and lack of market demand? Evolution is for idiots like Google.

4. Big Ambition, Big Dreams

He’s ambitious and he’s got big dreams. Of course he wouldn’t restrict himself to a target market. Target anyone that walks and increase the market size. Wow he’s absolutely on to something.

5. Keeping the Cool

He’s got a great idea but he’s only half enthusiastic about his venture. Wonderful! You sure don’t want an entrepreneur who can’t stop talking about his business and quit his day job because he’s so engaged with his new company. A lukewarm founder would work better with your bedtime schedule – at least he won’t be calling you in the middle of the night telling you about his industry-disrupting innovations.

So what do you think? Wanna chip in our fund to invest in bet on startup gods like that? It’ll be one heck of a ride!

Start-ups are similar – few boundaries, a huge horizon, and a future that is enticingly undefined. However, start-ups are not all “wild west”, free from the watchful eye of regulators. As an angel investor you might like the unknown, but don’t forget that mandates, laws, and regulations will become a reality sooner or later.

One of those regulations is the Sarbanes-Oxley Act, commonly referred to as “SOX”.

What is SOX?

As a result of numerous corporate scandals, including the well-known debacles of Enron and Worldcom, investor confidence was shaken badly. So, in 2002, the Sarbanes-Oxley Act was created to embed a clearer set of oversight and accountability rules into the financial and accounting practices of publicly listed corporations.

Briefly, SOX rules include:

• Greater definitions around business relationships with third parties, particularly with regard to conflict of interest between the auditors and analysts.
• Improved reporting and disclosure, specifically with what is reported on financial statements and when; and improved controls and procedures for auditing.
• More strongly enforced policies about responsibility and accountability. For example, senior executives could be held legally and financially liable for their company’s financial statements.

SOX compliance is monitored and mandated by the US Securities and Exchange Commission (SEC), and by the Public Company Accounting Oversight Board (PCAOB), which was created as part of the Sarbanes-Oxley Act.

How will it affect your investments?

Since SOX is focused on US-based (or US-listed) publicly traded companies, you may not encounter SOX regulations in the very beginning of your work with privately owned and/or non-US-based (or listed) companies.

However, the company you’re investing in will have goals for the future which may include going public in the US (either as a US-based or US-listed company), and SOX regulations will become very real for you then.

At that point, you will need to make sure that the accounting firm you have in place is complying with the conflict-of-interest rules of SOX. And switching firms at this point might be challenging. So choose your accounting firm and clearly define their role early in the relationships with an eye for becoming publicly traded.

And, make sure you trust the executives of the company. (This might seem obvious but a long history of corporate malfeasance is support that this should be mentioned again). If you don’t trust the senior executives now to make ethical decisions, you could play a part in the legal or financial liability should any illegal acts surface in the future.

Finally, review your reporting practices now. While SOX compliance might seem like a long way off, embedding some of their best practices now will set you up for an easy and cost-efficient transition in the future when the company achieves its goals.

References

• U.S. Securities and Exchange Commission
• Public Company Accounting Oversight Board

Cloud computing offers an interesting debate for angel investors as it represents considerable growth patterns in times of a weak economy. The challenge is that while the growth has been healthy, returns have been seen more in terms of money savings and increases in value to companies that deploy open source solutions.

Most investors have yet to recoup the $3.2 billion already invested in the industry. And, while cloud computing and virtualization have found a comfortable place in the market, the lack of visibility and control the infrastructure delivers have kept the technology at bay throughout nearly 80% of the enterprise. A new launch may be changing the game and creating its own market niche in the process. [1]

New Opportunity

HyTrust Inc. has now launched with a mandate to enable the virtualization of enterprise critical production applications through ensuring operational readiness of the virtual infrastructure. For those not versed in technology speak, the company hopes to bring the virtual infrastructure to a whole new level, allowing even critical applications to run on a cloud. [2]

So, why is this launch a good thing for both companies and potential investors? In light of a tighter economy and even as we move into a recovery, IT executives are struggling with large budget cuts without a reduction in expectations. As a result, they are searching for ways to maximize the funding they do have, and virtualization provides a low cost solution.

The Market Significance

Considering that virtualization has been a market focus for nearly a decade, the HyTrust launch could easily get lost in the shuffle of new companies offering cloud solutions. But those who follow this market will recognize a significant differentiation.

Cloud computing does offer flexibility and scalability without large capital investments, but it also delivers an enhanced risk as information is shared and stored outside the firewalls of the enterprise. This makes some IT executives nervous and as a result, much of the virtualization deployed within the enterprise has been relegated to those areas where this risk had a lesser impact on the company.

The HyTrust Appliance is designed to address this issue, providing the visibility and control that IT directors want, along with the benefits that virtualization was designed to deliver. Until now, virtual infrastructures could not promise security and operational readiness that would match that of the physical environment or what is expected in regulatory compliance.

Growing Demand

Technology has always been an interesting area for investors as it provides excitement and constant change. The challenge continues to be found in identifying those opportunities that are sustainable and can actually deliver on the promise of a return.

Consider the “Top 10 Strategic Technology Areas for 2009″ issued by Gartner analysts Carl Claunch and Dave Cearley. In this report, the authors highlight virtualization and cloud computing as the #1 and #2 areas of focus. These technologies are expected to provide important strategic advantages over the next three years.

Industry research firm, IDC supports these assumptions, predicting that the virtualization software market will reach $3.5 billion by 2011. The services market is expected to be $11.7 billion. With such promise, it is those companies that provide the greatest security and control in addition to flexibility that will lead the market until standards are in place. [2]

The Market Promise

In light of the demand in the market, if you are still unclear as to what promise cloud computing holds for your investments, consider the insight provided by Gamiel Gran, vice president of business development at Sierra Ventures. In a CNet News report, he told James Urquhart that cloud computing is a catalyst for broader thinking of innovation. Remember that innovation dislocates incumbents and unlocks new variations of opportunities. [3]

Gran believes that there is a major, multi-trillion dollar IT transformational wave occurring and we are still on the very tip of the innovative solutions that are possible. Even as enterprises of all sizes and locations have fully leveraged virtualization, only about 15-20% of their application resources have been put on this path. That leaves significant opportunity still within the enterprise – the key is to hone in on the remaining percentage and capture it.

It appears that HyTrust has done just that, understanding that the obstacles preventing complete virtualization and cloud computing for the enterprise have largely been due to a lack of visibility and control. This limited the ability of the enterprise to monitor their operations and react to changes. In tackling this aspect of the market, HyTrust is likely to enjoy rapid success.

Notes:

1. Open-source VC investments: Time for payback

2. HyTrust Launches; Brings New Level of Compliance and Control to Virtual Infrastructure

3. Maybe “cloud-computing” hasn’t lost its VC luster

While Macau gets geared to achieve these milestones, this has been possible only because the investors and stakeholders of the region’s resorts and casinos have been dedicated to making a mark in the gaming and entertainment industries. Take for instance Melco Crown Entertainment, a developer, owner and operator of casinos and resorts in Macau. On December 19, 2006, Melco Crown Entertainment was listed on the Nasdaq as Melco PBL Entertainment (Macau) Ltd and under the ticker symbol “MPEL.” The company raised approximately US$1.5 billion in its IPO, ranking the fourth largest IPO in the US in that year. Earlier this year, Melco PBL Entertainment changed its name to Melco Crown Entertainment Limited.

The company inaugurated its first property, Crown Macau, last year. The Crown Macau is today the world’s largest casino in terms of betting volume. In February, the Crown’s gambling revenues were almost HK$50 billion, representing 23% of Macau’s VIP gambling proceeds. Melco has gone on to signing a deal with Macau’s most profitable junket group to only gamble at the Crown Macau, grabbing the lion’s share of Macau’s VIP market.

Melco’s business also includes the Mocha Clubs (www.mochaclubs.com), which has more than a thousand gaming machines in 7 different locations. The Mocha Clubs represents Macau’s largest business of electronic gaming machines that are not casino based. And Melco has colossal plans. Its City of Dreams, which is located in the northeast part of the Cotai Strip, promises to be a truly unique experience and a “must-see” in Macau.

With casinos and resorts here surpassing all global benchmarks and grabbing the headlines, it won’t be surprising to see private investors and venture capitalists continuing to flock to Macau.

The nation is dealing with dangerous levels of air and water pollution. When in 2006 China shockingly witnessed 842 pollution accidents, the State Environmental Protection Administration (SEPA) set an aggressive national target of reducing major pollutant emissions by 10% through 2010, or 2% per annum. Not surprisingly, the Chinese government has made controlling China’s pollution problem as one of its top priorities. There are predominantly 2 ways in which the government can control pollution. The first is via a regulatory path, whereby the government sets limits to emission and similar regulations. Secondly, the government is investing billions of dollars into “clean tech” companies.

The 1970s and 1980s witnessed the popularization of “green tech.” The latest “clean tech” concept is green tech and more. From an investor’s point of view, clean tech (or cleantech) offers attractive returns. Clean tech is economically viable and, therefore, sustainable.

With both regulation and government initiative supporting the development of clean tech, various companies, venture capitalists and private investors are targeting this new arena to pad their coffers. China’s wind turbine manufacturing industry has grown exponentially over the past couple of years. The National Development and Reform Commission (NDRC) had earlier set a target of 5GW of cumulative wind installations by 2010. China has already exceeded this and the target has been revised to reach 30 GW by 2012.

Qingdao Land of State Power Environment Engineering Co Ltd (QGLD) is one of the first Chinese companies to jump onto the clean tech bandwagon. The company manufactures wind energy turbines and equipment used to clean water and gas emissions from power stations. QGLD produced its initial large scale turbines (capacity of 1.5 MW) in October 2006. These were produced for use in a wind farm in Inner Mongolia and were developed based on the company’s proprietary technology. QGLD also took massive strides in the power plant water-recycling and gas desulphurization sectors and become one of the leaders in terms of sales.

In April this year, Aureos China Fund (ACF) invested US$5 million in QGLD. ACF is a fund established by Mauritius-based Aureos Capital, which is a leading private equity fund management company specializing in investing expansion and buyout capital in small- to mid-cap businesses.

Despite all the development, China’s clean tech sector is still in its nascent stages. However, with the Asian Dragon’s continued strong growth, this sector is likely to remain attractive for investors and entrepreneurs for some time to come.

Last year, Macau overtook Las Vegas as the world’s most lucrative gambling market. On the face of it, Macau’s gaming industry seems similar to that of Las Vegas. But there is an inherent difference. While almost 60% of the total revenues are generated from slot machines in Las Vegas, the figure is less than 5% for Macau. This trend is of particular interest to investors like Macau’s gaming tycoon Stanley Ho, who spends millions of dollars building and redesigning casinos. Also impacted by this trend are the many slot machine makers.

Why do Macau gamblers not have the same soft spot for slot machines as seen in Las Vegas? One explanation could lie in the cultures of the 2 societies. The largest percentage of tourists to Macau is from Asia, a region that promotes community feeling. Hence, community games like baccarat (a card game played on real tables) are a rage here. There is also a perception that slot machines are tampered with to prevent gamblers from winning large sums of money. Moreover, themes popular in the US may not be appealing enough for Asian gamers.

In response to this trend, some casino operators have replaced slot machines with tables for games like baccarat and roulette. This is despite the fact that slot machines are more profitable for casino operators than games played at tables, in the face of surging labor costs.

Slot machine makers have not given up. Machines are being designed to appeal to Asian tourists, with images of dragons and instructions in Chinese. Moreover, slot machine makers have introduced electronic versions of popular table games as well as games liked to celebrities like Bruce Lee and Jackie Chan.

Through technology and innovation, slot machine makers are trying to grab a larger share of Macao’s $15 billion gaming industry. All said and done, Macau’s casino industry continues to boom and slot machine revenues are growing steadily. Macau still represents the most attractive expansion opportunity for slot machine makers.

I mean, look at the statistics… they’re nothing less than incredible. At the end of last year, there were 210 million Internet users in the country, according to the China Internet Network Information Centre. That’s only 5 million short of the US figures. And the pace at which China is adding new users is 10 times that in the US. In 2007, the global mobile phone output surged to 1.141 billion units and Mainland China accounted for more than 50% of this figure.

To tap on these trends, Intel Corp is zooming in on China. In April, the leading chipmaker launched its second venture capital fund for the region. Through Intel Capital China Technology Fund II, the US-based company has plans of investing US$500 million over the forthcoming 3 to 5 years. The fund aims to focus on startups in the fields of wireless broadband, media, telecommunications and “clean technology.”

China is not new to the chip giant. It has been investing in Chinese companies since 1998. Intel had established a venture capital fund targeting the Asian nation in 2005. The fund invested US$200 million in about 28 technology companies that were developing innovative hardware, software and services. Some of this fund’s most lucrative investments include Kingsoft, Actions Semiconductor and Neusoft Group.

The latest fund would invest in larger rounds. It would even consider being the lead investor in some companies. Moreover, this fund is the largest that Intel’s global investment arm, Intel Capital, has allocated for any single country.

Among the latest fund’s initial investments are Holdfast Online Technology and Newauto Video Technology. Holdfast Online Technology is known for its software that allows gamers to compete with each other over a wide area network. Newauto Video Technology develops and markets video equipment, networking software and system integrations for TV stations in China.

Intel is not alone in betting on technology in China. With the revolution in digital communication taking China by storm, the Asian dragon is ready to set the world on fire.

However, the former Portuguese colony was a whole new ballgame. His ideas of duplicating his successful junket model in Macau were met with resistance. But there was no stopping Chow. Did you expect scorn to dampen the spirits of a man who would not be discouraged by the economic slump of the 1990s? While most entrepreneurs ran for cover during this period, Chow stood strong in the line of fire. This is when he started work on the ultra-luxurious Landmark building. In 2003, the highly successful Landmark Hotel was inaugurated. The hotel’s lavish casino, the Legend Club, attracts the crème de la crème of the Asian gambling industry.

“Enterprising” is an apt adjective for Chow. The Macau Fisherman’s Wharf, the first theme park in the region, is further proof of that. Themes like Dynasty Wharf, East Meets West and Legend Wharf are as fascinating as they sound. Rides, discos and slot machines add to the enthralling experience.

Chow really knew how to do it in style. Legend Development Co. Ltd., owned by the business tycoon, was the first company in Asia to purchase a Legacy Executive aircraft. With that, the Macau property mogul gained a foothold in the corporate aviation business.

Early last year, Chow announced an investment of $100 million to build a colossal entertainment park on the island of Santa Maria. The park, along with its plush casino, fancy restaurants, nightclubs and hotels, is scheduled to be completed next year. David Chow has promised an investment of another $300 million in the future in major infrastructure projects in Praia.

Although Chow has huge investments in other parts of the world, his heart beats for Macau. He is as passionate about Macau as he is about the businesses he heads. He has made a mark as a local politician, an entrepreneur and an investor. David Chow Kam-Fai is the name behind many legendary feats.