The Hacker Angels announced their formation last week, nabbing what is arguably the best name for an angel investor group. The group was formed by Going Inc. founder and current AOL executive Roy Rodenstein , Delicious founder Joshua Schachter , Duck Duck Go’s Gabriel Weinberg , Hotornot’s Jim Young , and Punchfork founder Jeff Miller . Sponsor Describing themselves as hackers ” in the good sense ,” the group aims to “provide startups with targeted advice on technical questions, implementation issues, perhaps even do some coding here and there.” The group’s website makes clear that they’re not a fund per se: “This is an informal association and not a fund. If inclined, we may provide feedback, advice, mentorship, hacking, investment and/or serve as advisors or independent board members, on an individual basis.” The group hopes to make up for what Rodenstein described in a peHUB interview as a “lack of connection” between first-time entrepreneurs and the angel investor community. Weinberg echoes this when announcing the group on his blog, saying , “I believe that there are many good hacker entrepreneurs who are not getting the funding or advice they need to get traction for their startups. I also believe hackers relate well with other hackers, which is why I think the concept of hacker angels is so compelling.” In an interview with Mass High Tech’s Galen Moore, Rodenstein described the Hacker Angel strategy: “We do focus on people that are hackers and are really pushing the product forward rather than just pure concepts or people looking for co-founders to execute. The ideal scenario for us is getting in very early because we can provide a lot more support and advice. We’re comfortable with a little more high risk.” Discuss

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Today’s roundtable was a difficult one, as I had to tell an entrepreneur not to proceed with his business that is ready to launch. Shamoon Siddiqui presented MetroFlats.com, a vacation rental marketplace he plans to launch next month. He says that all the vacation rental sites out there, including Vacationrentals.com and FlipKey, are directory services, and you cannot actually book the rental through them. I immediately asked, What would keep the big vacation-listing players from quickly expanding their services to include this functionality? Nothing. I hate to discourage any entrepreneur ever, but this is a very precarious position from where to start a business. Sponsor I recommend that Shamoon take a look at the FlipKey case study on my blog to understand what FlipKey does, and how and why. And how easy it would be for big players to just insert the booking function if they had any indication from their customer base that the functionality is desired. I hope Shamoon will continue to look for another opportunity to put his time, money and talent into. Sramana Mitra is a technology entrepreneur and strategy consultant in Silicon Valley. She has founded three companies and writes a business blog, Sramana Mitra on Strategy . She has a master’s degree in electrical engineering and computer science from the Massachusetts Institute of Technology. Her Entrepreneur Journeys book series, Entrepreneur Journeys , Bootstrapping: Weapon Of Mass Reconstruction , Positioning: How To Test, Validate, and Bring Your Idea To Market and her latest volume Innovation: Need Of The Hour , as well as Vision India 2020 , are all available from Amazon. Mitra is also a columnist for Forbes and runs the 1M/1M initiative. Jonathan Weinberg started off by introducing AutoSlash.com , a site that helps consumers save money on car rentals. His system finds and systematically crunches all the various discounts and coupon codes out there to give the consumer the best rate. He is not searching the rack rates like others in this space. AutoSlash also tracks fluctuations in price and continues to offer the customer the lowest rate up until they pick up the car. Since launching 30 days ago, their traffic has risen from 50-100 visitors per day to 1,000 per day following a story about them in Budget Travel. His target audience of consumers and small business travelers as well as business travelers at mid-sized companies is way too broad at this stage. Focusing sharply on the budget traveler is really the way to go since that is where there is a lot of traction. He’ll have the bad economy on his side! Armed with the Budget Travel coverage, I suggest he does systematic outreach to all the budget travel blogs to help keep the buzz going from week to week. He can also look at SEO and developing a blog with keyword-rich content to bring in the natural search traffic. Then he can look at PPC, but that is somewhat more expensive. He should leave the small business traveler for later and stay focused on the budget traveler for now as he continues to build up momentum. And oh, by the way, financing is not an option at this stage. eNrate Indrajit was up next to present eNrate, an algorithm to find the most credible news sources, taking criticism of sources into account. He aims to catalog and rate all the journalists worldwide, based on this algorithm, and create a destination site where consumers would come for high quality news. He is presenting a reasonable and valuable service, but the problem is monetization. Especially when it comes to local news and international news, news agencies and newspaper companies have slashed so much of their staff that their coverage has become weak. As a destination site, however, it will be very expensive for Indrajit to acquire customers or monetize the service. More importantly, news is simply not commerce-related, so his idea of doing keyword-based advertising simply doesn’t work here. Someone looking to find out about a terrorist attack in Malaysia is not looking to shop simultaneously. The PPC value of what he is proposing is very low. The model for such a consumer site is a freemium one – which is also very difficult to bootstrap. My suggestion is for Indrajit to explore brokering relationships with news services and media companies. Find out how his service can serve as a solution to some of their problems in the domain of local and international news, and then follow the B-to-B model to monetization. I hope he will read the Finisar case study , a great example of a bootstrapped company using services around their core competency to finance their business for the long term. Diginamic Then Lionel Binnie presented Diginamic. He is looking to sell, install and service a touch-screen hardware and software solution at point-of-sale. Lionel has been exploring several different verticals looking for customers, ranging from retail to hotels to airports. He wants to charge a portion of the co-op dollars that large brands give retailers for local and in-store marketing. The kind of content he offers will need to be rich and comprehensive and the goal should be to replicate the personal shopper experience in the software. And this would really only work for complex products where the need for information is high. Lionel knows a software vendor who has already created the content for wine. He is wondering if wine stores may be an interesting segment. Well, if placed in a wine store, you don’t want a customer to type in a wine and only get back a bunch of ads from a set of vendors. That won’t work. He needs to provide a full solution for this segment – comprehensive database of thousands of wines. With that caveat in mind, if he can work with the vendor to build a comprehensive software for wine and combine it with his point-of-sale product, then I suggest he targets wine stores, specialty food stores and large stores with wine departments. After that rolls out, then he can look for a software provider who has the content for cheese perhaps, and then sell to cheese retailers. Go segment by segment, but be sure you are providing a full solution for each segment before you approach them. Otherwise, none will convert into business. PandaForm Up last was Ben Cheng discussing PandaForm , a just-launched form builder application to help customers create and process forms, especially those that require a lot of processing and human attention. He is targeting small businesses; they can sign up and use this system right away. As he was speaking I was searching online, confirming that the Web based form/form builder space is indeed very crowded. And since this business does not show up in my search means they are not SEO optimized for the U.S. If he wants customers in the U.S., that needs to be done. But since the horizontal form market is so crowded, I suggest he focuses on selling solutions to a specific class of customers — educational institutions, for example, which have significant application form building and processing needs, rather than selling just a horizontal form builder. If he has a specific application for a specific vertical, he can create a solution. Then all of the SEO, PPC, email marketing, etc., needs to be laser-focused on acquiring educational institutions as customers. Ben is concerned about operating out of Hong Kong and selling to the U.S., but many people do that successfully. The concern should be building up those early customers who will provide references and testimonials. That is the best way to build credibility. Find three customers to work with and really solve their problem. As you as an entrepreneur reach out to your potential customers, also do a thorough competitive analysis to see who is already providing similar solutions. Avoid going back into another overly crowded space. Whether it is in Hong Kong or Timbuktu, you have to do this thorough homework before you launch yourself into a space. You need to understand the competition. Don’t get blindsided. Early stage entrepreneurs usually have very few resources, so they need to be very targeted in the most efficient way possible. For those just starting out, before writing a line of code or investing any money of your own (or investors), please validate your value proposition. Speak to many potential customers and confirm that you have something they are willing to pay for. Ask the right questions and you will be steered to the right answers. I have compiled a list of such questions for entrepreneurs here . I ask that you please use this to get to a more thorough analysis of your business, and not end up in places with too much competition where you have to differentiate and have no defensibility. Trust me, it is a very bad place to be. I started doing my free Online Strategy Roundtables for entrepreneurs in the fall of 2008. These roundtables are the cornerstone programming of a global initiative that I have started called One Million by One Million ( 1M/1M ). Its mission is to help a million entrepreneurs globally to reach $1 million in revenue and beyond, build $1 trillion in sustainable global GDP, and create 10 million jobs. In 1M/1M, I teach the EJ Methodology which is based on my Entrepreneur Journeys research, and emphasize bootstrapping, idea validation, and crisp positioning as some of the core principles of building strong fundamentals in early stage ventures. In addition, we are offering entrepreneurs access to, investors and customers through our substantial channels. We recently launched our 1M/1M Incubation Radar series , and you can also read about several other 1M/1M entrepreneurs in my recent Forbes columns, These Companies Are Built To Enjoy and Calling All Angel Investors . Recordings of previous roundtables are all available here . You can register for the next roundtable here . Photo by homero chapa . Discuss

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In February, Portland, Oregon Mayor Sam Adams announced the city would put $500,000 towards a seed fund to help encourage regional startups. And on Friday of last week, the Portland Development Commission announced it had finally chosen the five local business leaders to help launch the fund, predicting it would be “open for business” by the fall. Sponsor Portland isn’t the only city undertaking these sorts of early-stage investments. Last month, New York City Mayor Michael Bloomberg announced his city was sponsoring an Entrepreneurial Fund, in a partnership with Firstmark Capital that had over $20 million earmarked to fund startups. Following a rather dour report from the Kauffman Foundation that placed Seattle at the bottom of major metropolitan areas for entrepreneurial activity, the Seattle-based technology blog Techflash asked its readers if Seattle should setup its own, similar early-stage fund. The majority of responses to their poll were negative: the city had better ways to spend its money. And although the economic contribution of a healthy entrepreneurial climate is something that cities want to foster, managing these investments might prove difficult. While a city like New York not only has a sizeable startup fund but has a large community of investors, it remains to be seen how a small, city-run seed fund like Portland has created will impact both the local investment and the local entrepreneurial communities. What do you think? Should cities be in the angel business? What other steps – beyond the usual “tax incentives” – can cities take in order to help foster a strong local startup community? Discuss

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New Media Ventures , the first national network of angel investors focused on creating political change, launched last week in New York. Investors in the network intend to provide seed funding to new media and tech startups that are developing “disruptive uses of technology” and, according to the press release, “have the potential to build progressive political power.” The Obama campaign is often touted as the premiere example of how social change can be affected by new technologies. From text messaging to Facebook to Twitter, these technologies were seen as key to engaging and motivating voters. But the history of Internet technologies and progressive political change certainly predates the 2008 U.S. Presidential campaign. Sponsor New Technologies for Political Change As Matt Ewing, New Media Ventures director and former field director for MoveOn.org says, “MoveOn is a good example of the type of impact we’re thinking about. Before MoveOn started (12 years ago), no one thought that online organizing could have impact on politics. The idea that people would donate online was seen as crazy. Now hundreds of millions of dollars are raised that way every year and it’s allowed candidates to get elected that wouldn’t have stood a chance if they solely relied on traditional fundraising.” In a Huffington Post article announcing the angel network, Advisory Board member Mike Mathieu writes, “Over the last three years I’ve incubated a number of projects in this space (ObamaCTO.org, CountMore.org, WalkScore.com, PredatoryLendingAssociation.com), and I have learned that real impact comes from backing passionate entrepreneurs and helping them build well-functioning organizations around their mission, not just creating innovative web sites.” According to Mathieu, more innovation in the tech sector will bring about more political change, and this notion was the impetus for forming New Media Ventures. Investors Supporting Innovation and Political Change “Our member investors know that supporting innovation is critical for the progressive movement’s ability to continue to leverage new technology and new media,” says Ewing. “We’ll be taking lessons from the best angel investors in Silicon Valley and applying the model to progressive politics and new media efforts. We’re looking for entrepreneurs with big ideas for creating progressive political change that could quickly scale with the right help.” James Rucker, another Advisory Board member says, “Our approach will allow us to work with organizations that have huge potential, but are too risky for traditional non-profit funders, and don’t come with the expected returns of venture capital funded efforts,” said James Rucker, New Media Ventures Advisory Board member and Color of Change co-founder. New Media Ventures is a pilot project of the Democracy Alliance . Discuss

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Two pieces of legislation of particular interest to the startup community continue to wind their way through Congress: Senator Lugar and Kerry’s Startup Visa Act and Senator Dodd’s Financial Reform bill. We’ve written about both here before. Sponsor Restoring American Financial Stability Act The Restoring American Financial Stability Act passed the US Senate on May 20 and now heads to conference committee to reconcile the differences between the House and the Senate versions. The investor and startup community have long been concerned about the contents of Senator Dodd’s financial reform bill, as it would erect several barriers to funding by changing the requirements for investor and business registration. In the final Senate version, some of the parts most troubling to investors and startups were removed from the bill, including the provision that would require 120-day waiting period for state regulators to review any investment deal. The new income and net worth requirements for angel investors are still in place, but these will not increase with inflation. The SEC will review accredited investors every four years. An amendment to the bill was accepted, expressly aimed to protect angel investment. Liddy Karter, chairman of the AngelCapital Association (ACA) said in a press release , the amendment “ensures that entrepreneurs will more easily be able to raise angel capital and more accredited investors can continue making the angel investments they love to make.” Startup Visa Act Senator Kerry and Lugar’s Startup Visa Act is also in committee. Introduced in February, the Startup Visa Act will help foreign-born entrepreneurs secure visas. The proposed legislation will change the current requirements that now says investors from other countries must have $1 million in capital in order to get a visa to start a business in the US. The Startup Visa Act, supported by a number of investors, includingEric Ries, Dave McClure, Shervin Pishevar, Brad Feld, Paul Kedrosky, Manu Kumar, & Fred Wilson, proposed that non-US born entrepreneurs could get a visa as long as they had funding from a US investor. Although the bill is in committee, Dave McClure did have an impromptu meeting with Secretary of State Hilary Clinton, urging her support for the legislation. Her staff, reports McClure, will follow up. As research shows, young high-growth businesses generate a substantial number of new jobs, an argument that startups and investors will be sure to make as legislators debate the outcome of these two important bills. Discuss

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