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Venture capital - Steven Cox | San Diego, CA

Steven Cox – TakeLessons Company Update at San Diego Venture Group Pitchfest

By At Work, Start Up San Diego, TakeLessons.com, Venture Capital, Videos No Comments

Steven Cox, CEO of TakeLessons and winner of 2010 San Diego Venture Group Pitchfest gives an update one year later on the progress the company has made since winning last year.

Transcription:

…Here’s a very simple message for our teachers and that is: you go teach and we will curate the absolute best instructors throughout the nation.

In fact, we hire about 5% of the instructors that apply to work for us as a contractor. We end up curating the top 5% based on an algorithm that we’ve written, as well as personal interviews that we assess each and every one of their character traits.

For the customers,we  provide safe, certified instructors for them. We’ve build online tools that make the site very unique that you can’t find anywhere else in the nation. We offer 100% money back guarantee, so anyone can go out and try lessons and if you don’t like it, just give us a call back and one of our friendly counselors will refund your money.

In essence, what’s happening is the business is going really, really well.

So, I’d like to give you an update on what’s happened. We were looking for a 3 million dollar raise as of December of last year, so we started in January and we took a total of 29 meetings, most of those were in the Bay area firms, we also talked to a couple San Diego firms, talked to Brian in the LA area. From there, this has kind of been the trait. So, in 2006 we had a seed round of $200,000, we did a round in 2008, followed that up in 2010 with $795,000 and last year we closed on our first institutional round for 6 million dollars.

Our lead investor on that was CrossLink Capital. Eric Chin is now a board member,  and it was our very first institutional raise, and I can say that he has been an exceptional board member.  We’ve now had two board meetings and they went pretty well. They had a lot of good information that they personally helped with out with, as a CEO, and they really opened some doors. Also in the round, we had Softtech Venture Capital, which has funded a couple of pretty good companies, and we are happy to be a part of that group. Also Maynard Webb, the ex-CEO of eBay, also came on board as an investor, and we are proud to have him, as we are looking to grow our marketplaces. We are very proud to get these folks into ground.

Employee growth: Let’s talk a little bit about how we’ve done since 2010. When we presented we were at 37 employees. As of today, in San Diego, we have 92, so we are growing. We are now located downtown [San Diego] and it feels really good to be able to provide great jobs for people, but also make the positive lasting impact on both our employees, as well as our customers. Next year we are going to be on a hiring spree. We expect by the end of the next year to be at around 155 to 165 people… so if you are looking for a job, please contact this table right here.

Quarterly revenues: when I presented last year, this is where we were on our quarterly revenue chart [show chart] and this year we will continue to grow. So, we have doubled in revenue this size off a pretty good base. Again, the capital really helped the team and everything we have been able to deliver quite well.

We struck a deal last year with Best Buy Musical Instruments. They have opened what is basically like a guitar center, inside over 100 of their stores, and we are now running the music lessons area for them. In fact, you can walk into a Best Buy, buy a guitar, and also take music lessons right there in the facilities. They are using all of our software and all of our instructors, in order to do that.

I think David, is actually a customer of ours –is that right? Down in Chula Vista? Perfect, thank you very much.

The Best Buy store roll out: we started at 32 stores, then we went to 103 stores, now you can walk into any single Best Buy store throughout the nation and buy a lesson pack and we will teach those lessons in your home. So that was just completed and we are announcing that here, this week, that now we are in every Best Buy store across the nation. It was a big roll-out and it took about a year and a half and we are really proud.

For 2012, what we are looking to do is once again double our revenues. Just as important as revenues, we also want to grow our people. We’ve never had the opportunity to really invest back into our people, with training and education and developing the culture the way that we want to. We think that this year we are going to be able to do that, and it feels really, really powerful and really good to be able to do that.

Also, one of our goals is to be in the top 5 companies to work for in San Diego. That is just as important to us as the development of the revenue side. So, this is what we are going to do this year.

I’d like to also give a big shout out to our “internal team”. It’s the folk who have been with us since day one:

-Randy Socel with DLA Piper

-Barney and Barney

-Wells Fargo and CoAmerica Bank have been awesome partners.

-Steve Martini from Quality First Commercial has kept us out of a lot of bad deals and gotten us into a lot of good commercial deals. So, we really appreciate you, Steve.

-All of our accounting firm team. [Round of applause]

So, finally all I would like to say is, I cannot tell you how much I truly appreciate the opportunity just from TakeLessions, to be able to come up here and present in front of the group. I’m sure all three of the contestants tonight feel the same way. I really wanted to encourage each and every one of you – the accounting firms, the law firms, the venture capitalists—we really need your support. Over the past three months I’ve been in probably 4 start-up gatherings. And over those past 4 gatherings, there was one venture guy that showed up, and I think we can do better than that. I think we can do better to support the scene. We are doing really well, but there is always room for improvement.
We just did a slide here, which show that there are 87 start-ups right here on this screen. It’s blossoming. We are seeing this every day. People contacting us asking, “hey, how do we get started,” “hey where do I go from here,” “who should I do my banking with,” “which venture guy should I reach out to…” We think that the scene is awesome.

You know, when we were doing our funding, the number one issue that CrossLink had was, “is there enough talent in San Diego. Can we pull in extra talent from San Diego in order to grow this business?” And really, what I would say is that that’s up to us here in this room. It’s not just up to the start-ups, the venture guys, but if we all work together, what I’d love to see—mainly because I don’t want to move to the bay area, because no one wants to live in the bay area, over San Diego— we’ve got an opportunity to grow this thing, as a group.

So, what I wanted to do was challenge each and every one of you, to look around and say, “how can I get more involved in the San Diego scene?” The San Diego Venture Group has pushed us off to a great start and we really appreciate the opportunity, but it’s time to step up our game.

I want to encourage you to raise the game and make San Diego awesome. Thanks so much!

 

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TakeLessons Raises $6 Million Venture Round Led by Crosslink Capital

By At Work, TakeLessons.com, Venture Capital No Comments

Full-Service Music and Voice Lessons Provider Leverages Internet to Unite Students and Music Teachers

SAN DIEGO–(BUSINESS WIRE)–TakeLessons, a full-service music and voice lessons provider offering private lessons in over 2,800 cities across the U.S., today announced that it has raised $6 million in funding led by Crosslink Capital, with other investors including SofTech VC and other prominent angel investors. Founded in 2006 by Internet entrepreneur and avid musician Steven Cox, San Diego-based TakeLessons helps music students connect with a Certified TakeLessons™ instructor that most precisely fit their needs regardless of age or skill level. Eric Chin, partner at Crosslink Capital, will join the Board of Directors as part of the transaction.

“TakeLessons was founded out of a personal experience. A friend was searching for a guitar teacher for her 7-year old daughter and didn’t know where to look. An Internet search turned up a list of teachers, but no way to compare them or to see if they were experienced, professional, and safe to come into her home,” noted TakeLessons founder and CEO, Steven Cox. “That’s when I realized there was an opportunity to use the Internet to establish a national brand that would stand behind the customer, offer a safe, exceptional service, and help artists make a living doing what they love.”

Scheduling and payment is handled by the TakeLessons platform, which then pays the teachers, letting both students and teachers concentrate on the lessons, while the company handles the administrative functions.

“The moment we heard about TakeLessons we were intrigued by its concept,” said Eric Chin, partner at Crosslink Capital. “Our research convinced us this was a business idea and model that has almost unlimited potential in the world of music and well beyond. Meeting Steven and his team sealed the deal for us. They’re as passionate about this business and its future as it gets. We’re looking forward to working with them to grow this brand.”

TakeLessons currently offers students access to a roster of teachers in 35 music classes, including voice lessons, piano, drum, guitar, singing, and saxophone. The company also offers courses in less common instruments, such as harp, mandolin, ukulele, harmonica and Flamenco guitar, as well as DJ lessons, music recording workshops, songwriting, speaking voice and music performance.

TakeLessons has a meticulous, multi-step screening process for its teachers. Fewer than eight percent of teaching applicants make it through the selection process and receive the Certified TakeLessons™ Instructor designation. Students are asked for feedback after each lesson, and teachers that continually receive mediocre or poor report cards are dropped from the lineup.

TakeLessons recently partnered with electronics and technology giant, Best Buy, to offer music lessons inside their stores. As of June, TakeLessons teaches in over 50 Best Buy stores nationwide, with more stores to be announced in the fall.

About TakeLessons

Founded in 2006 to help people discover their creativity and pursue their passions, TakeLessons is America's leading full-service music and voice lessons provider. With lessons taught by Certified TakeLessons™ instructors in thousands of cities across the US, TakeLessons makes it easy for students to start living their dreams through music. TakeLessons also offers turnkey music programs for schools, government agencies, and community centers, as well as at-work lessons programs for corporate clients and their employees. Visit the company at http://takelessons.com.

About Crosslink Capital

Crosslink Capital is a leading stage-independent venture capital and growth equity firm with over $2 billion in assets. Crosslink, which traces its roots back to 1989, was among the first and largest investment firms in the U.S. to integrate public and private growth/technology investing in three families of funds: venture capital funds, long/short hedge funds and a unique hybrid crossover fund. This strategy allows Crosslink to partner with its portfolio companies on a long-term basis. With more than 20 years behind it, Crosslink Capital has invested in over 100 private equity portfolio companies, at the early, mid, and late stages including Pandora (NYSE: P), Ancestry.com (NASDAQ: ACOM), Omniture (acquired by Adobe Systems), Equinix (NASDAQ:EQIX), Virage Logic (NASDAQ: VIRL), Carbonite, BlueArc, Force10, Intematix, SeaMicro, and Yipes (acquired by Reliance Communications). For more information on Crosslink, visit http://www.crosslinkcapital.com

 

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Seeking Venture Funding? Have a Clear Understanding of your Financials

By At Work, Venture Capital No Comments

Recently, I've discovered the blog of Robert Ochtel. He's an author and a serial entrepreneur with over 25 years experience. He's also raised over $50 million for his businesses, and started VentureBlue, a national Angel network. And, he's just up the road in Carlsbad, CA.

Robert wrote a post explaining why entrepreneurs should be comforatble and intimately involved in the company financials. Most VC's hail from business schools and if they have not ran a company themselves, they do know how to analyze financial statements. So it becomes paramout that the entrepreneur be able to explain the projections and the assumptions underlying them.

Startup Financing CycleImage via Wikipedia

Don't defer your financials to someone else. You can have mentors help you with it, but it's important that you, as the CEO, understand the key variables that shape your business. By doing so, you can understand why your projections were off (which, in most cases, they will be).

"When presenting to venture capitalists, the CEO of your start-up company needs to be an expert in all aspects of your company, including its financial statements. It is not a good idea, as the CEO of your start-up, to defer the financial statement related questions to your CFO or another third party. As the CEO, you are the one where the “buck stops”, so venture capitalists expect you to be able answer any and all questions regarding your start-up company’s financial statements. Therefore, as an entrepreneur you need to study your company’s financial statements from an investor’s point of view, including being able to recite the underlying assumptions of your financial statements. If you cannot do this, you will not get far with the venture capitalists and your ultimate goal of securing funding."

Read Robert's post here

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Do Web Entrepreneurs Still Need Venture Capitalists?

By At Work, Start-Ups, Venture Capital No Comments

Image representing New York Times as depicted ...Image via CrunchBase

There's an interesting article and comment thread going on over at the New York Times on whether web entrepreneurs need VC's like they did ten years ago.

I see both sides of the argument. It's true that costs to build have plummeted, and a couple guys can knock out an iPhone app in a couple weeks. But, to scale in a consumer-centric offering where there is competition, it takes money. And the worst thing you can do is build up a team, launch a product, and not be able to see it to fruition because you don't have the cash necessary to build a following.

There's a hotel being built near my home (I live in downtown San Diego). It has taken them over a year of building – and I'm sure at least and additional 1-2 years of planning – just to get the place where it can produce revenue. In contrast, the city threw up a giant tent for housing homeless people in about two weeks. Do you see the difference? One has much more revenue potential – and that one also requires more capital.

"As the cost of starting a Web company decreases, thanks to cloud
computing
services and technology that entrepreneurs can rent instead
of buy, many founders can finance a new company without the help of
venture capitalists, using their savings, money from family and friends
and credit card debt, Mr. Hendershott writes. More often, they are
choosing to sell small, immature companies instead of taking the
longer, riskier path of developing a business that could one day go
public. That makes venture capital less relevant, he concludes.

“Potentially, the venture model for finding, developing and vetting new Web-based businesses breaks down,” he writes.

The venture capital model evolved to start and expand
capital-intensive semiconductor companies. “Without resources beyond
the reach of most entrepreneurs it simply wasn’t possible to create a
new semiconductor company, or even an Internet company,” Mr.
Hendershott writes. Now, Web start-ups are routinely started for less
than $50,000.

One of the key roles of venture capital, Mr. Hendershott argues, is
providing the money needed to prove that a new technology works and
that a market for the technology exists. During this period, start-ups
rely on outside capital because they are not making any money for
themselves.That period may no longer be necessary."

 

Read the whole article here.

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Struggle Builds Character

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Image representing Josh Kopelman as depicted i...Image via CrunchBase

Josh Kopelman with First Round Capital has a simple, yet true post today on Entrepreneurship. He mentions a couple First Round portfolio companies where the CEO's/Founders really had to struggle through hard times in order to make it. It is through the difficulties that we see what we're made of, and how much we are truly committed. When your own skin is in the game, you think and act like a true owner. You know that the success or failure of your personal wealth depends on your ability to think, act, iterate, and win.

At TakeLessons, the founders worked for either little or zero pay for over two years before we landed on a business model that worked. Yes, it hurt, but I wouldn't trade it for anything. It allowed us to drop our burn rate and really focus on driving value that a customer would pay for.

Our team struggled together, fought together, and stood side-by-side each other during the darkest hours. It is through the fire and struggle that we forged the sword. This courage led us to a motto of "Certainty in the face of fear", and it has become one of our company core values.

You know the founder and the team is here to stay when they are willing to sacrifice for the good of the overall company. This is something that shows character, belief, and perseverance – and I'm happy to have shared that experience with such an awesome group of people.  

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Need a Venture Capital Term Sheet? Here’s a FREE One.

By At Work, Venture Capital No Comments

Image representing Wilson Sonsini Goodrich & R...Image via CrunchBase

For
all my fellow entrepreneurs: Here is a FREE term sheet generator for
equity invesments. This tool will generate a venture financing term
sheet based on your responses to an online questionnaire. Sponsored by
Wilson Sonsini Goodrich & Rosati, one of the the premier legal
advisor to technology and growth enterprises worldwide.

From the site:

This tool will generate a venture financing term sheet based on your
responses to an online questionnaire. It also has an informational
component, with basic tutorials and annotations on financing terms.
This term sheet generator is a modified version of a tool that we use
internally, which comprises one part of a suite of document automation
tools that we use to generate start-up and venture financing-related
documents.

Because it has been designed as a generic tool that
takes into account a number of options, this version of the term sheet
generator is fairly expansive and includes significantly more detail
than would likely be found in a customized application.

WSGR Term Sheet Generator

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