The unfundable world-changing startup

Some startups are just unfundable but are developing things that change the world. In Barcelona I’ve found one. It won’t be my last, especially since venture capital is a LOT harder to get lately. I’ve been hearing a lot about deals that are falling through because the VCs are lowering valuations by a lot. As Ron Conway told me a few weeks ago it is a buyer’s market for VC now and they can pretty much demand anything they want.

But, this startup probably wouldn’t get funded in usual times. It’s sad, too, because it’s a technology that I really want. In fact, I want it to much that I videoed the founder showing it off so you can get excited about it too.

So, what is it? It’s a database that acts like a wiki. Sounds lame, right? But that’s why it’s unfundable. You need to spend some time with it to get why this is a world changing technology. The inventor, Terry Jones, has been working on it for 11 years. It is very significant new technology. Here, watch Terry on four videos:

Part I. 10 minutes.
Part II. 26 minutes.
Part III. 18 minutes.
Part IV. 11 minutes.

Terry’s blog is here. His company is called “Fluid Info.”

The videos got a long conversation going over on FriendFeed.

Fluid Info will be released in early 2009.

So, why is it unfundable?

1. It’s too general. VC’s don’t like to fund things that really will end up competing with Google or Microsoft. That’s too massive of a challenge and, despite their protestations to the contrary, VCs generally only invest in things that are more defendable than a general “take on Oracle and Microsoft and Google” approach.
2. Terry doesn’t have a team of stars. VCs tell me they say no thousands of times per year. What gets them to say yes? When there’s a team of stars that they’ve worked with before. Terry is just a visionary, to build a business the VC way you need to have a finance guy, a guy who is good at PR, someone who has done it before that can make the VCs feel comfortable. And, you need someone who is expert at the business model being proposed (ie, done it before).
3. Terry doesn’t have adoption. It hasn’t been deployed. He doesn’t have millions of users. VCs are now pretty much only funding things that are seeing sizeable growth and have some track record.
4. The technology is too hard to explain. After watching these videos for an hour you’ll be as excited as I am, but that’s too long. VCs want to understand the real proposition and pain point that it’s solving in a minute or two. Any longer and they’ll just say no.
5. He lives in a place far away from most VCs (most VCs are still in Silicon Valley, or Tel Aviv, Israel, Shanghai, China, London, Tokyo — it’s hard to find VCs outside of those places). That still is a barrier because most early-stage investors, like Jeff Clavier, tell me they will only fund things that are easy for him to drive to. That might be unfair in the age of Twitter and Skype, but a lot of funding events happen because of personal relationships and it’s hard to have those relationships happen when the visionary lives thousands of miles away.

Anyway, I can’t wait to use Terry’s new database and congratulate him on seeing his dream through. How many people would have given up? Hint: visionaries don’t give up on their vision just because they hear “no” a few times.

It’s why I’m very happy I got to spend a few hours over the past couple of days with him. Oh, and thanks to Tim O’Reilly for introducing us on Twitter.

Layoffs and, um, funding?

TechCrunch started a page to keep track of layoffs in the startup world.

Me? I’m seeing tons of depressing news hitting our economy. That’s what I get for watching CNBC and reading TechMeme.

But, there were a group of companies funded this week too and there are plenty of jobs open. It sure is an interesting time to watch the startup community right now.

How would you report this ongoing story? Several over on FriendFeed want bloggers to avoid overcovering the bad news and, instead, focus on the positive news. What do you think?

Who is doing the best at covering the economic times hitting startups? My top vote is for VentureBeat.

All VC activity has NOT stopped

A word of hope to entrepreneurs:

I just learned of another Web company that just got funded and will announce such on Tuesday. So, even after the worst week in the stock market in history and a pretty darn tough economy coming toward us, entrepreneurs are still getting funded.

Some things, though. The company getting funded has pretty sizeable adoption curves (millions of customers) and is in a hot market space and has a good business plan with a reasonable chance of making money.

That matches what Bob Ackerman, founder of Allegis Capital told me (that good VCs will fund good companies even if the world goes to hell).

Add into that the merger and acquisition activity that I’m hearing about over the next couple of weeks and some people are setting themselves up very well to survive the storm.

Anyone else have good news? We need more.

2,000 "no's" a year

Allegis Capital says no to 2,000 companies a year. Since I was on stage at TechCrunch 50 seeing a bunch of startups, I wanted to have a conversation with one of the top venture capitalists in the world. Here’s the founder of Allegis Capital, Bob Ackerman, who gives me a 34-minute rundown of his view of what’s happening in the capital markets today.

My best question? “How do you earn a no?” After all, his firm says no 2,000 times a year. His answers are fun (that part of the interview starts at about 19 minutes into the video). After the camera was off he told me the best way to earn a no is not to try at all.

If you’re thinking of starting a company you should listen to this video, it’ll help you get your plans ready so you don’t hear “no” when you ask for capital.

I also ask him why, when companies like SmugMug are doing well and haven’t taken venture funds, should I take VC at all to build my company?

Oh, and don’t miss why he turned down Akamai. That’s a hillarious story, starts at about 25 minutes into the video.