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With money in their pockets and change on their minds, some 700 angel investors flocked to the Angel Capital Association Summit in San Francisco this week.

Alexander Klein/Agence France-Presse/Getty Images

Along with macro issues like best practices for syndicating rounds and navigating the Series A crunch, attendees buzzed about the JOBS Act, new funding platforms and other recent changes to the $20 billion a year marketplace of private investing. One of the most popular panels however, focused on a topic that’s always been near and dear to investors: exits.

“We don’t know if we’re investors until the exit occurs–until then we’re merely donors,” said Ohio TechAngel Funds Founder John Huston, eliciting laughter and some wistful sighs in the packed conference room. The panel–“8 Steps to Lucrative Exits”–was one of five devoted to the topic, with Huston suggesting all angel investors set up a process for achieving an exit before they ever enter a deal.

Huston focused entirely on exits through acquisition–a topic worthy of tutelage given the sluggishness of late. According to a recent report by Dow Jones VentureSource, M&A activity declined 44% during the first quarter of 2013 compared with the previous quarter, with the most recent quarter being the lowest since the first quarter of 2009. Huston advised investors to set exit expectations with founders from the onset and build the company for acquisition–not shareholder value.

“If you are on the board then it’s incumbent upon you to drive the exit. All the other angels are counting on you,” he said, adding that if VCs are on the cap table “then you’re neutered unless you drove the VC selection process.”

He said simply growing revenue, although nice, was too slow a process to incite high bids.

To maximize buyer value he suggested compiling a hit list of the top five strategic acquirers based on their willingness and ability to do a deal. Determining which customers they’d like to secure [and then beating them to it] and mapping their organization chart to sell the deal should also be part of the process, he said.

“Your goal is to move the strategic acquirers from greed to fear mode which is ‘Wow, I sure hope my biggest competitors doesn’t acquire them first.’ We only hire bankers [to run the sale process] if we are convinced they can do this and run the process with multiple bids,” Huston said.

Greg Sitters, managing director of New Zealand-based Sparkbox Venture Group, said he began using a similar process about four years ago and has had four of his 40 companies exit so far. Striking a balance between growing each company with additional capital and securing a solid exit has been key.

He said: “If we can get companies to exit without VCs than that’s what we’re trying to do.”

Teresa Esser, managing director of Winsconsin-based angel group Silicon Pastures, said her group is constantly trying to bring more of a science to the exit process.

“This entire conference is really helpful with information and inspiration,” she said. “It’s motivational in reminding us that we are a $20 billion marketplace.”

Write to Lizette Chapman at lizette.chapman@dowjones.com. Follow her on Twitter at @zettewil

Venture Capital Dispatch

An inside look from VentureWire at high-tech start-ups and their investors.

 

The Daily Startup: VCs Buy In to Mobile Game Maker Supercell

 

Top stories in today’s VentureWire:

 

dailystartup_D_20090806101628.jpgArt by Mike Lucas

 

Eager to own a slice of the wildly profitable Finnish mobile game maker Supercell, venture investors have purchased existing shares totaling $130 million at a $770 million valuation. Index Ventures led the deal with participation from Institutional Venture Partners and Atomico. Founded in 2011, SuperCell is currently the highest-grossing iOS game developer with “Clash of Clans” and “Hay Day” now bringing in $2.5 million of revenue daily.

 

Enlighted raised $20 million in Series C funding led by Rockport Capital for its lighting-controls technology, as it operates in a quickly changing market where the price for lighting emitting diodes is declining. The company makes sensors and software that is installed in commercial spaces and that helps decide when to dim lights. A newer application of the technology would also allow the sensors to measure temperature and occupancy, and control not just lighting but also air conditioning.

 

Also in today’s VentureWire, Reduxio Systems has raised a $9 million Series A round led by Jerusalem Venture Partners and Carmel Ventures. Reduxio is developing storage systems that make use of both flash memory and hard drives…Smart-home startup Zonoff has secured a $3.8 million Series A round for software that makes all kinds of smart-home devices work smoothly together and makes them easier to set up and control…and Crowdtilt has raised $12 million in Series A funding led by Andreessen Horowitz to bring a new twist to crowdfunding. Crowdtilt’s apps give groups an easy way to fund their own initiatives, rather than asking for money from strangers online.

 

(VentureWire is a daily newsletter with comprehensive analysis of all the investments, deals and personnel moves involving startups and their venture backers. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)

 

Elsewhere around the Web:

 

Launching mobile game apps is getting expensive. Case in point: ZeptoLab says it will spend about $1 million to launch “Cut the Rope: Time Travel” but it spent almost nothing to promote the first “Cut the Rope” game’s release in 2010, The Wall Street Journal reports. What has changed is the mobile games business, which is now so competitive that word-of-mouth marketing is no longer enough.

 

 Jon Flint, a founder of venture firm Polaris Partners, got into the hair-care business after his stylist suggested that he take a meeting with a colleague in New York who wanted to start a company. Flint and his partners turned to MIT”s Robert Langer to come up with innovative products. Flint talks with WSJ about the company that resulted, Living Proof, which is co-owned by actress Jennifer Aniston.

 

Silicon Valley startups are increasingly hiring testing companies to vet apps before releasing them to the public, WSJ reports.

Angel investing shifted slightly in 2012

Halo Report: Silicon Valley Bank, CB Insights, Angel resource Institute

Silicon Valley hosts the country’s most active venture capital firms but has only one of the top 10 angel groups from 2012, in terms of the number of deals done.

Senior Technology Reporter- Silicon Valley Business Journal

Amid reports of an angel funding boom that threatens to become a Series A crunch, a new report shows early stage investing in 2012 was relatively calm.

The median deal size shrank slightly to $600,000 from $625,000 the year before. Valuations of the companies funded held steady at $2.5 million.

Those aren’t numbers you might expect to see from an overheating market

Meanwhile, only one of the top 10 angel groups that did the most deals in the country last year is based in Silicon Valley — Sand Hill Angels which ranked No. 6.

Here are some other trends found in the annual Halo Report from Silicon Valley Bank, CB Insights and the Angel Resource Institute released on Tuesday, just before the three-day Angel Capital Association Summit kicks off in San Francisco on Wednesday.

— Shift from the hubs: California and New England, which account for two-thirds of venture investing, aren’t as dominant in angel fundings. The regions accounted for about 31 percent of angel deals in 2012, down from 35 percent the year before. The big gainers were the Southwest (13.3 percent in 2012 from 11.4 percent the year before) and the Northwest (9.3 percent vs. 7.8 percent).

— Life science drops: Life science investing sent from 25 percent of deals in 2011 to 21 percent of deals in 2012. The biggest jump was in mobile and telecom deals, which grew to 13.3 percent from 9.3 percent. In terms of money, Internet startups were No. 1 with 27.3 percent and mobile/telecom was No. 2 with 26.5 percent.

Amid reports of an angel funding boom that threatens to become a Series A crunch, a new report shows early stage investing in 2012 was relatively calm.

The median deal size shrank slightly to $600,000 from $625,000 the year before. Valuations of the companies funded held steady at $2.5 million.

Those aren’t numbers you might expect to see from an overheating market.

Meanwhile, only one of the top 10 angel groups that did the most deals in the country last year is based in Silicon Valley — Sand Hill Angels which ranked No. 6.

Here are some other trends found in the annual Halo Report from Silicon Valley Bank, CB Insights and the Angel Resource Institute released on Tuesday, just before the three-day Angel Capital Association Summit kicks off in San Francisco on Wednesday.

— Shift from the hubs: California and New England, which account for two-thirds of venture investing, aren’t as dominant in angel fundings. The regions accounted for about 31 percent of angel deals in 2012, down from 35 percent the year before. The big gainers were the Southwest (13.3 percent in 2012 from 11.4 percent the year before) and the Northwest (9.3 percent vs. 7.8 percent).

— Life science drops: Life science investing sent from 25 percent of deals in 2011 to 21 percent of deals in 2012. The biggest jump was in mobile and telecom deals, which grew to 13.3 percent from 9.3 percent. In terms of money, Internet startups were No. 1 with 27.3 percent and mobile/telecom was No. 2 with 26.5 percent.

— More co-invested deals: The number of fundings where angels co-invest with other types of investors, such as venture firms, in growing dramatically. It made up just 41.4 percent of deals in 2010 but was up to 69.3 percent last year. But the median round size of a co-invested funding actually dropped in that same time frame, going from $3.58 million in 2010 to $2.97 million.

— Revenue first: Most startups that got money in 2012 (63 percent) also had revenue to show before the angels opened their wallets.

— Convertibles are in: The number of deals involving convertible debt, essentially a loan that turns into equity at later rounds, rose. It made up 11 percent of deals in 2012, nearly double the share of the year before.

Cromwell Schubarth is the Senior Technology Reporter at the Business Journal. His phone number is 408.299.1823.

CAMARO 2012

Example: When skipping a stone, a flat, smooth rock is what rolls.

By Greg Barbera

Yes, we live in a modern age full of smartphones and YouTube tutorials, but there still is no substitute for hands-on learning through participation and repetition. After all, father-son bonding through oral traditions goes back to the dawn of time. My boys love to hear about how I spent my time as a kid in a pre-cable, pre-internet, pre-gaming world. And they love even more hearing about the skills I learned in my youth.

1. How to Skip a Stone: There are two key elements to successful stone skipping: the rock and the throw. Ideally, the rock should be flat and smooth on both sides. I personally favor a rock that looks like a paper football (triangular). Once you’ve found your rock, you’ll need to master the throw. Grip the rock between your forefinger and thumb. Aim to throw the rock straight, facing out from your palm, so its flight is perpendicular to the water’s surface. Flick your wrist on release (like you would a baseball), and watch your rock skip! Ten skips is impressive; anything over 20 is exceptional.

2. How to Climb a Tree: Much like skipping stones, how you choose your tree is crucial. Novices should select a tree in which they can reach up and grasp a branch while still standing on the ground. They will also want to make sure branches are within arm’s reach once they’re off the ground. An expert tree-climber will take the Tarzan approach and hug the tree’s trunk tightly while placing his feet heel-to-toe until he has reached his first branch. Most important: Make sure any and every branch will be able to support your weight. A good tip: If the branch is the size of your arm, stick as close as possible to the tree’s center where the branch and tree connect. A branch the size of your thigh or bigger should be able to hold you sufficiently farther away from the tree’s core.

3. How to Do Laundry: Teaching your son to wash his own clothes will go a long way. Different clothes can require different handling. These days, most washing machines are as complicated as your DVR remote, but there are two basic rules of thumb: 1) Wash whites in hot water; and 2) Wash colors in cold water.

4. How to Scale a Fence: You never know when you’ll need this skill—it might even be in a dream!—so it’s a good one to have. Fences come in different shapes and sizes. Wooden split-rail fences are best conquered by grasping the top rail with both hands and then stepping on the bottom rail with your lead foot. Lean back with your body weight and then explode up off your foot. Shift your shoulders and hips—in parallel formation—over the top rail. Your momentum will get you over. As you cross the top rail, let go with your hands, and bring your feet together as you land. As with trees, the best techniques for other types of fences will depend on what you can reach and how much weight it can support. Always make sure there’s a place for at least one hand and one foot on the fence at all times for optimal support of your body.

5. How to Cook a Meal: Like laundry, cooking doesn’t have to be as intimidating or confusing as some people make it seem. If you can read, you can cook. Seriously. All you have to do is follow the recipe. Two important things to remember: 1) Salt and pepper are your best friends (they will bring out the flavor of almost any food); and 2) Cook to taste (too often people don’t eat something because they don’t like the way it tastes). So if you can make a grilled cheese, then you can make a quesadilla. Try adding some of your favorite meats or veggies to a quesadilla to spice it up. And if you can boil water, you can make pasta.

For both work and play—holding down the home front and hitting the road—Silverado helps you get life done.

The trademarks mentioned in this story are held by their respective owners.

Greg Barbera of DadCentric is a dad blogger, beer magazine editor and the singer/bass player for the punk band Chest Pains. He lives in Chapel Hill, North Carolina. You can follow him on twitter @gregeboy, Tumblr, Facebook and Blogger.

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Leading App Developer Cupcake Digital Releases

Wubbzy’s Space Adventure, First in a Series of Spanish Language Enhanced Story Experiences

NEW YORK, NY (April 8, 2013) – Wubbzy’s Space Adventure, the first of Cupcake Digital’s popular enhanced story apps to give consumers the option of toggling between English and Spanish with the simple touch of a button, is now available on iTunes, Google Play, Amazon and for NOOK for $1.99, or as a free upgrade for those who have already downloaded the English-only version. It is an important initiative for the company to provide these story experiences for young children and parents who want high-quality apps in Spanish. By giving parents this choice, the company is meeting several objectives: supporting the needs of parents who want to experience the apps in their native tongue, providing a tool for bilingual parents who want their kids to practice Spanish and giving children a way to practice some basic language skills.  The Spanish narration and individually highlighted words in the app are designed specifically for teaching the basics of spelling and vocabulary and could be used to practice the language.

“We are incredibly excited to share our wonderful array of apps in Spanish,” said Brad Powers, Chairman of Cupcake Digital. “My wife is Hispanic and we had the idea that an app available in English and Spanish might be a good way to get my son excited about the language. When I was searching for Spanish language apps for him, I found there was very limited to no availability for the kinds of apps he would like. We recognized a need, and felt it was a choice we wanted to give consumers. We have made it our goal that every one of our story apps will be followed closely by a Spanish version, and we look forward to making them available in other languages as well.”

Wow! Wow! features include:

·      Now bi-lingual (English and Spanish): Being able to hear the same story in two languages allows for natural language acquisition through hearing a familiar story in another language

·      Three reading modes: Just a Book, Read to Me and Read & Play

·      Fun mini-games within the story

·      Three original sing-a-long music videos taken from the popular EmmyÒ Award-winning series

·      Coloring pages with scenes straight from the story

·      A Grown-Up’s Corner to guide parents, teachers and caregivers in discussing the story with kids

Wubbzy’s vibrant and exciting adventures in other top-rated apps will soon be available in Spanish, including Wubbzy’s Pirate Treasure, Wubbzy’s Train Adventure and Wubbzy’s Dinosaur Adventure and others. Wubbzy and friends are also interacting with Spanish-speaking fans on Facebook, Twitter and Pinterest as iWubbzy, iDaizy, iWidget and iWalden.

English Trailer with Intro:
http://www.youtube.com/watch?v=7pbdWVxM9Lw

Spanish Trailer with intro:
http://www.youtube.com/watch?v=YEOIJWBmjqs

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About Cupcake Digital

Cupcake Digital, Inc. was established in June 2012 with the intent of transforming children’s entertainment properties into deluxe story experiences infused with educational elements.    Its first venture into digital applications was based on the EmmyÒ Award-winning television series “Wow! Wow! Wubbzy!Ò”  These apps immediately rose to # 1 and # 3 among children’s book apps on Amazon and iTunes respectively.  Since then, every subsequent children’s app created by Cupcake Digital has achieved a top 10 ranking on Amazon.  Headquartered in NYC, Cupcake Digital was founded by proven professionals in the fields of technology, family entertainment, publishing and brand marketing.  In October of 2012, Cupcake Digital received its first round of private funding and has since gone on to partner with additional major children’s entertainment properties.  For more information about Cupcake Digital Inc., please visit www.cupcakedigital.com.