Startups are (still) making weird name choices

If the latest seed-funded startups have their way, this is what your future will look like.

You’ll find your mortgage through a company named Morty, refill your contact lenses with Waldo and get your cannabis news from Herb. (Which is not to be confused with Bud, the startup that handles your banking.)

Later, you can use Cake Technologies to pay the bar tab, cover fertility treatments with Carrot Fertility and get your workers’ compensation through Pie Insurance.

Afterward, rent your neighbor’s stuff with Fat Lama, manage your cloud services with LunchBadger and network your way to a better career with Purple Squirrel.

Notice any patterns here? Yes, first names, foods and animals have been quite popular lately with founders choosing startup names.

Those are a few of the top naming trends Crunchbase News identified in our latest perusal of seed-stage startups. The project involved parsing through names of more than 1,000 startups that raised seed rounds of $200,000 and up in the past nine months.

This data crunch was an update (see our methodology section below) to a prior overview of the often bizarre naming trends that startups follow. At that time, we found top trends included putting AI into your name, using popular first names and employing creative misspellings of common words.

Most of these things are still popular in startup naming, but some more than others. Adding AI at the end of a name, for instance, is still common, but seems to be waning some. Creative misspellings are still getting done, but less frequently.

Meanwhile, other naming styles are getting more fashionable. Below, we take a look at what’s hot now and what might be in vogue next.

First names and nerdy names

The first-name trend seems to be intensifying, diversifying and creeping into more sectors. Last year, we started noticing a proliferation of chatbot startups using first names. More recently, the first-name trend has pervaded insurance, cannabis, fintech and a whole lot of other spaces.

First names that startups are using are getting nerdier and less common. Morty, for example, is commonly short for Mortimer, which peaked in popularity in the 1880s. It was most recently ranked No. 12,982 on the list of most common baby names. Then there’s Fritz, a learning software developer with a name that also hit its peak in the late 1800s. Last year it ranked No. 4,732.

Another mini-trend that we’d like to see expand is the use of startup names based on textures.

This is a stark contrast with the chatbot crowd. They tended to go with popular monikers, like Ava, Aiden and Riley, that rank high on the latest baby name lists. Some of the more offbeat names, however, do tie into their sectors. Herb has been used as slang for marijuana. Morty, for instance, shares a first syllable with mortgage.

It’s also noteworthy that many startups go with single-word names. This is a shift from the old school practice of combining a first name with another word, as in well-known brands like Trader Joe’s and Sam’s Club.

Food names

Startups also like naming themselves after foods lately. Of course, this isn’t an entirely new phenomenon, and it has worked well before. Apple named itself after a fruit and later became the world’s most valuable technology company.

It should be noted that the food names we refer to here are for companies that, like Apple, have nothing to do with the food industry. Carrot Fertility, which raised $3.6 million in seed funding last fall, for example, offers insurance policies for employers to help cover costs of workers’ fertility treatments. MoBagel is a data science startup. Parsley Health provides primary care. The list goes on.

One of the nice things about naming yourself after a food is that these are general purpose nouns that don’t seem to raise a lot of copyright issues. Vegetables and baked goods aren’t going to sue you for misappropriating their names.

Animal names

Animal names are also good from a trademark perspective. Plus, with an animal name you can also create a cute logo featuring the creature.

Those may be some of the reasons why animal names are also in vogue lately with startups developing both consumer-facing and backend technologies. The formula is also pretty straightforward: pick an animal and then add another descriptive word.

There are plenty of textures out there that don’t have a funded startup associated with them, including spongy, slimy, gelatinous, puffy, gloppy, stringy, pasty, hairy and fluffy.

Of course, for most of the animal-monikered startups, mascots have nothing to do with the underlying businesses. MortgageHippo obviously doesn’t expect hippopotamuses to use its mortgage tool, and Purple Squirrel doesn’t cater to furry-tailed job seekers.

That said, we do worry about the animal kingdom theme getting a bit overused. For instance, MortgageHippo and Hippo Insurance were both funded in the past couple of years.

Other mini-trends we saw and liked

Another interesting trend is that many startups hopping on the fashionable name bandwagon are in the insurance sector. We’ve seen a huge spike in insurance startup funding over the past couple of years, with many upstarts looking to re-architect the industry to appeal to millennial consumers. They have names like Oscar, Lemonade and The Zebra.

Much of this activity is being bankrolled by the largest insurance companies, most of which are a century old and tend to have dull names that sound like, well, insurance companies. So don’t be surprised if the trendy new insurer is actually part-owned by the old boring one your parents complained about.

Another mini-trend that we’d like to see expand is the use of startup names based on textures. In the past year, both Fuzzy and Mush raised good-sized seed rounds.

It’s not too late to get in on this trend, either. An analysis of Crunchbase funding archives reveals there are plenty of textures out there that don’t have a funded startup associated with them, including spongy, slimy, gelatinous, puffy, gloppy, stringy, pasty, hairy and fluffy, to name a few.

Methodology

We altered the methodology for this naming piece since the last one. Previously, we looked at startups based on founding date. This time, we looked based on closed seed rounds of $200,000 or more in the past year for companies founded in 2015 or later.

Read more: https://techcrunch.com/2018/02/10/startups-are-still-making-weird-name-choices/

Raise softly and deliver a big exit

In the world of venture capital, the prospect of a successful “exit” looms large in the minds of investors. A VC’s business model is less about the money that goes into a startup than it is about what comes out. It’s true that most companies fail to exit gracefully, and of those that do, surprisingly few exit by going public. The majority of exits take place through mergers and acquisitions (M&A).

For most investors of this ilk, it’s not always the size of the exit that matters; rather, the focus is placed on the ratio of exit valuation to invested capital (VIC). Crunchbase Newshas previously covered exits that delivered high VIC ratios — or those that brought “the biggest bang” for the proverbial buck — and we’ve found that mobile and related sectors are particularly fertile ground for high-VIC M&A events.

But there are a couple of more general questions to be asked and answered than in those articles. For instance, from the standpoint of VIC multiples, are larger exits better? And are companies that have raised less venture funding more likely to generate higher multiples? These answers can be found.

But before getting into the weeds, let’s clear out some reminders and disclaimers. We’re not answering the question “Are startups with less venture funding more or less likely to exit?” Crunchbase News has already taken a stab at that question and found that, unless a startup raised less than around $9 million in venture funding, there isn’t a strong correlation between total capital raised and likelihood of being acquired. And like that previous foray into exit data, we’re only looking at mergers and acquisitions because there’s a larger sample set to be found.

If you’re interested in what kind of data we used for this analysis, skip to the end of the post for notes on methodology. If not, read on for answers.

Big exits are better exits for multiples

When it comes to acquisitions, in general, bigger is better if the goal is to deliver a high ratio of valuation to invested capital.

The chart below displays VIC multiple data on the vertical axis and the acquisition value on the horizontal axis. Keep in mind that this chart uses a logarithmic scale (e.g. based on powers of 10) on both axes to include the very broad range of results.

Based on the 225 acquisition events in this data set, there is a positive and statistically significant correlation between the final acquisition price and VIC ratios.

A correlation such as this shouldn’t come as a surprise. The vast majority of companies don’t raise more than a few tens of millions of dollars, and 99 percent of U.S. companies raise less than around $160 million, as Crunchbase News found last May.

So, for most companies, acquisition values over about $50 million are more likely to generate higher multiples. A well-known example would be a company like Nervana, which had raised approximately $24.4 million across three rounds, according to Crunchbase data. Nervana was then acquired by Intel in August 2016 for $350 million, producing a VIC ratio of around 14.34x.

Of course, the tendency for bigger exits to generate bigger returns is just a rough rule of thumb, and there are plenty of cases where big exits don’t correspond to big multiples. Here are two examples:

These latter two examples offer a convenient segue to the penultimate section. There, we’ll explore the relationship between how much money a startup raises, and its ratio of valuation to invested capital at time of exit.

Smaller war chests deliver bigger exits

Dollar Shave Club and Earnest are examples of companies that raised more than $100 million in funding but ended up delivering exits less than the vaunted 10x multiple that most venture investors seem to target. So is it the case that companies with less VC cash lining their pockets tend to deliver higher VIC multiples when they exit? The answer, in short, is yes.

In the chart below, you can find a plot of total equity funding measured against VIC ratios at exit, again using a logarithmic scale for the X and Y axes.

Out of our sample of 225 acquisitions, we find a slight but statistically significant negative correlation between the amount of equity funding a startup has raised and the final VIC ratio.

And here, too, the results shouldn’t be that surprising. After all, as we saw in earlier examples, a lot of venture funding can weigh down a company’s chances of getting a big exit. It’s easier for a startup with $1 million in venture funding to be acquired for $10 million than it is for a company with $100 million in VC backing to exit for $1 billion plus.

Of those companies that managed to raise a lot of money and generate an outsized VIC multiple, many of them are in the life sciences. Again, this isn’t surprising, considering that sectors like biotech, pharmaceuticals and medical devices are incredibly capital-intensive in the U.S. due to long trial periods and the high cost of regulatory compliance. Unlike the mobile sector, where a small amount of capital can go a long way, it usually takes a lot of money to create something of serious value in the life sciences.

Multiples matter, but most exits are still good exits

The goal of investing is to get more money out than you put in. This is true for investors ranging from pre-seed syndicates all the way up to massive sovereign wealth funds. If we want to characterize any exit with less than a 1.0 VIC ratio as “bad” and everything above 1.0 is “good,” then most of the exits in our data set, specifically 88 percent of them, are good. Of course, there’s some sampling and survivorship bias that probably leans in favor of the good side. But regardless, most companies will deliver more value than was put into them, assuming they can find the exit.

But assuming a company does find a buyer, we’ve found some factors correlated to higher VIC multiples. Bigger deals correspond to bigger multiples, and companies with less capital raised can often deliver bigger returns to investors.

So while venturing out, it’s always important to keep an eye on the exit.

Methodology: A dive into exit data

There are a number of places we could have started our analysis, and we opted for a fairly conservative approach. Using data from Crunchbase, we started with the set of all U.S.-based companies founded between 2003 and today. (This is what Crunchbase Newshas been calling “the Unicorn Era,” in homage to Aileen Lee’s original definition for the new breed of billion-dollar private companies.)

To ensure that we’re working with the fullest-possible funding record, we filtered out all companies that didn’t raise funds at the “seed or angel stage.” We further filtered out companies that have missing round data. (For example, having a known Series A round, a known Series C round, but missing any record of a Series B round.) Startups that raised equity funding rounds with no dollar-volume figure associated with it were also excluded.

We finally merged this set of companies with Crunchbase’s acquisition data to ultimately produce a table of acquired companies, the amount of equity funding they raised prior to acquisition, the name of the company that bought the startup and the amount of money paid in the deal. Again, by starting with acquired companies for which Crunchbase has relatively complete funding records, the resulting set of 225 M&A events, while small, is more likely to produce a more robust and defensible set of findings.

Illustration: Li-Anne Dias

Read more: https://techcrunch.com/2018/02/10/raise-softly-and-deliver-a-big-exit/

5 essential pieces of advice from a successful serial entrepreneur

Image: aidan fitzpatrick

What’s the perfect recipe for success? This question has been puzzled over by entrepreneurs since the dawn of trade. What with factors like luck, money, competition, and the ever-evolving customer all set to provide obstacles, the odds are often stacked against potential entrepreneurs. But what about those who choose to undergo this challenge time and again: the unicorn-like serial entrepreneur? What are their secrets?

Mashable sat down with one such serial entrepreneur on October 17 to discuss success, failure, and the road along the way. Aidan Fitzpatrick, founder and CEO at Reincubate, joined us for the UK premiere of MashaBiz: a Facebook Live show that gets to the heart of business.

Fitzpatrick got his start as a software engineer. Having lost his personal information on upgrading to iOS2, he set about building an iPhone Backup Extractor, which has helped more than 3 million people recover their important photos, videos and app data. Fast forward to today, and Reincubate is helping businesses around the world build value in their data — Fitzpatrick’s entrepreneurial flair definitely seems to centre around helping others. Fitzpatrick was included in City A.M.’s list of the UK’s top 100 entrepreneurs, and this year was marked as one of Workspace’s top 20 influential entrepreneurs to watch.

MashaBiz meets Aidan Fitzpatrick

Here are five key takeaways from our chat with Aidan Fitzpatrick:

It takes a village

Fitzpatrick admits he owes much of his success to the advice and support of others. Recognising that you cannot be the expert on every area of your business is the first step towards building something that will actually flourish. Surrounding yourself with those experts is essential to keeping you focused on the areas you are most equipped to manage.

Not all advice is good advice

Tipping the scales on our first point, Fitzpatrick pointed out that when you’re starting out there will be a host of people offering their “expert” opinion, which is not always in the best interest of the business. From friends and family to misguided advisors, it’s important for you to recognise which advice is actually useful to you, and shelve the less useful views.

Make it your passion

Can you commit to giving the next ten years of your life to this venture? According to Fitzpatrick, almost all “overnight” successes actually span at least a decade, so having the drive to battle on through years of hard work and setbacks is an imperative attribute for all serial entrepreneurs.

Take care of yourself first

Resilience is key in any business journey. The stress of launching and leading one business alone can take its toll on mental and physical health, and can affect your relationships with the people around you. Ensuring you take good care of your own well being is integral to the health of your business. Practising meditation and getting regular exercise can help relieve the stress of the workplace. And while the lines between work and personal matters will certainly blur, taking time to reflect outside of the business sphere is a great way to re-centre yourself. 

Keep clear goals in mind

Focus. It’s easy to get involved in “busy” work rather than optimising your time to do what needs to be done in the most effective way possible. Again, surrounding yourself with a team of likeminded people with a range of skills that you don’t possess is a great way to stay on track towards your goals.

Read more: http://mashable.com/2017/10/25/serial-entrepreneurship-advice/

Google.org, BlackRock and others commit $2.2 million to Fast Forwards nonprofit tech accelerator

As impact investing gains traction in the market, a new accelerator for tech nonprofits calledFast Forwardhas raised $2.2 million in philanthropic funding from the nonprofit arms of some of the worlds largest companies and financial services firms.

BlackRock, Google.org, Comcast NBCUniversal, and AT&T joined Zendesk, Twilio.org, Hewlett Packard Enterprise, the Nasiri and Rita Allen Foundations and the Omidyar Network in the financing. The not-for-profit accelerator said that the funds would be used to continue to build products that apply technology to the nonprofit world.

While industry has the benefit of access to the latest technologies, the philanthropic world has lagged behind. Fast Forward has set itself up with a mission to help launch products and services that address the needs of the nonprofit sector.

The accelerator has launched programs likethe first Job Board exclusively for tech nonprofit jobs, board positions, and volunteer opportunities; the Global Tech Nonprofit Community; and the first tech nonprofit summit, Accelerate Good Global, according to a statement.

So far, the accelerator has worked with 23 alumni companies, which have raised $28 million in follow-on funding to support projects that have influenced 18 million people, according to a statement.

Corporate participants in the program include HPE, and Bloomberg in addition to the investors listed above.

We are excited to continue supporting Fast Forward and their mission of using technology to solve pressing social problems, said Jody Kochansky, head of BlackRocks Aladdin Product Group, in a statement.

BlackRock began as a startup itself, combining industry expertise with the power of new technologies. Having the advice and guidance of experienced professionals can be the deciding factor in a startups success, Kochansky said in a statement. By dedicating our resources and the expertise of our employees to Fast Forwards Summer Accelerator, we have the opportunity to help a new crop of startups develop solutions for some of the most significant problems in our communities.

Services companies in Fast Forwards latest batch include:

  • Beyond 12 a mentorship service for first-generation college students

  • Concrn an alternative to the 911 dispatch service

  • IssueVoter a nonpartisan information service for political issues

  • LibreTaxi an open-source ridesharing app for remote communities

  • MindRight an SMS-based coaching service for teenage mental health and support

  • MyHealthEd a text-based sex education application for middle schoolers

  • Online SOS an automated support service for victims of online harassment

  • Onward an employer-directed benefit platform to help low-wage workers in times of financial instability

  • Raheem.AI a chatbot to rate and report police interactions

  • Kevin Barenblat and Shannon Farley launched Fast Forward in 2014 to apply the lean startup and minimum viable product model to technologies applied to the non-profit sector.

    The nine companies in Fast Forwards latest cohort will receive a $25,000 grant, mentorship from vetted veterans of the business and non-profit world, and introductions to other non-profit founders and financiers, according to a statement from the organization.

    Fast Forward participants build their services during a three-month program that culminates in two demo days one in San Francisco and one in Silicon Valley, where founders will be able to pitch their ideas to philanthropic donors to raise additional capital.

Read more: https://techcrunch.com/2017/06/30/google-org-blackrock-and-others-commit-2-2-million-to-fast-forwards-nonprofit-tech-accelerator/