Introducing “The World’s Most Intriguing New Companies”

Here’s the lead of my story introducing a big new project and special report I’ve been working on the last few months. It’s called “The World’s Most Intriguing New Companies,” and highlights 25 of the world’s coolest startups with game-changing potential.

In addition to my story and the list, the package also includes five profiles of standouts companies on the list: Epizyme, Driptech, Layar, Phycal, and China Water & Energy. And that’s not all! We’ve also created an interactive slide show of the 25 startups, plus an online extra about another Chicago startup called CitySourced. Check it out and let us know what you think.

Fertile Ground for Startups
History shows that a certain breed of entrepreneur feeds off adverse conditions, and this recession is no exception

By Spencer E. Ante

Who needs job security? In June 2008, as the recession was moving from bad to worse, Caterina Fake gave up a comfortable, executive-level job at Yahoo! (YHOO) to launch a company. She left California and set up shop in New York City to co-found Hunch, a Web site that uses the experiences of others to help people make decisions. The 40-year-old, who had co-founded the photo-sharing site Flickr before it was acquired by Yahoo, couldn’t resist the idea of creating something new, whatever the economic headwinds. “The entrepreneurial spirit really thrives in situations of adversity,” says Fake. “The world is full of more possibility.”

Fake isn’t alone in betting on that. A crop of potentially groundbreaking companies is emerging from the wreckage of the Great Recession. No question, some will blow up, and others will fail to reach their potential. But the downturn has done little to dampen the entrepreneurial spirit. During the first half of this year, angel investors financed 24,500 new ventures, 6% more than during the same period last year, according to the Center for Venture Research. The overall amount of money going into startups has declined, but the figures suggest that this year will see the birth of roughly 50,000 companies with enough promise that someone is betting money on them. “It may be that this is the best time to start a company,” says Carl Schramm, president of the Kauffman Foundation, an organization that promotes entrepreneurship.

“VAST AND UNTAPPED”
With that backdrop, BusinessWeek set out to find the world’s most intriguing new companies. After much reporting and research, we’ve assembled a list that’s a barometer of innovation trends in the global economy, with startups that are pioneering new markets in biotechnology, clean technology, health care, and Web computing. Hunch is just one of 25 that made the final cut. Other standouts include Epizyme, a Massachusetts outfit creating cancer-fighting drugs that attack errant proteins; China Water & Energy, a Hong Kong company developing massive wind-power farms in the Chinese countryside; and Driptech, a California startup engineering low-cost irrigation systems for poor farmers around the world. “The markets that we are addressing in India and China are vast and untapped,” says Driptech’s 26-year-old founder, Peter Frykman.

Read the rest of the story and package here.

New Amazon Review: “Creative Capital is a Must Read If You’re In Business Today”

Check out a new customer review of Creative Capital, just published on Amazon.com.

Creative Capital is a Must Read If You’re In Business Today
By Carole Gunst “loves to read” (Boston, MA)

Spencer Ante has done a wonderful job writing the life story of General Georges Doriot, respected Harvard Business School professor, military general, and the father of venture capital. I had the good fortune to hear Spencer, who also writes on business for Business Week magazine, speak about Doriot’s story at the French Library in Boston before I started reading the book. His stories about the man who was so influential for U.S. business were fascinating. Here are a few of Doriot’s quotes that he pulled from the book to share with us:

* “A real courageous man is a man who does something when no one is watching him.”
* “If information is to be exchanged over whiskey, let us get rather than give it.”
* “You will get no where if you do not inspire people.”
* “Always remember that someone somewhere is making a product that wil make your product obsolete.”

From the stories about Doriot’s early introduction to entrepreneurship as the son of a Peugot engineer, to Doriot’s entry into Harvard Business School, to the importance he played with R&D during World War II which taught him how to become a venture capitalist to the part he played in the starting up of Digital Equipment Corporation, this book remains fascinating.

If you are in business today or would like to be, this is a must read from a great writer about a visionary business thinker. I think you’ll agree that Doriot really pioneered the transition of U.S. business to an economy built on entrepreneurship an innovation.

Wicked Cool Recap: Boston Book Tour Pics

Big ups to Boston. Thanks to the hospitality of the Boston French Library and the local office of the pr firm Financial Dynamics, I spent three days this week in Boston giving book talks to several groups.

Each talk was a lot of fun but the most special event happened on the evening of Thursday Sep. 24, the 110th anniversary of Georges Doriot’s birth, when I addressed about 40 friends and associates of Doriot in his old townhouse on Beacon Hill. Many thanks to Jim and Cathy Stone for hosting the event at the house, which they bought from Doriot’s estate soon after he passed away in 1987. As you will see from these photos, the house is a unique and sparkling gem.

Spencer Ante, Library Chairman Gerard Mouflett and Library Executive Director Catheline van den Branden

Guests mingling in the downstairs dining room

Jim Stone welcomes guests to his home in the second floor library

Spencer Ante giving a talk about Creative Capital

Guests listening to my talk. The Stones did not rearrange their furniture so the setting was very intimate.

The ARD Men: Francis Hughes, John Shane and James Morgan

VIew from second floor balcony overlooking the dining room

Digital Equipment’s first salesman, Ted Johnson, and current ARD head Francis Hughes

Wicked Cool: Come See Me Speak in Boston Next Week

Next week, the Spencer Ante book tour is coming to Boston for three special events.

1. I have helped to organize a great panel on Sep. 23 from 6:30pm – 9:30pm being hosted by Financial Dynamics. The timely topic of the panel: What Will Drive the Next Wave of Growth?

Edward J. Reilly, Chief Executive Officer of FD Americas is the host, & Scott Kirsner, Innovation Economy Columnist at the Boston Globe will be moderating the panel at the Taj Hotel.

The panel will discuss the collaborative role of venture capital, start-ups, the legal community, and academia in innovation, job creation and entrepreneurship. Cocktails and appetizers will be served afterwards.

Scott Kirsner will moderate a distinguished panel of experts including:

* Spencer Ante, Associate Editor at BusinessWeek and author of Creative Capital: Georges Doriot and the Birth of Venture Capital
* Bob Davis, General Partner, Highland Capital Partners
* Ed Goldfinger, Chief Financial Officer, Zipcar
* Richard Bergin, PhD, Managing Director, FTI Consulting
* Andy Goldfarb, Executive Managing Director Co-Founder, Globespan Capital Partners

2. On Sep. 24, I am giving a talk at the former home of Georges Doriot, a drop-dead gorgeous Beacon Hill townhouse now owned by Jim and Cathy Stone. I am really excited about this talk as well since a lot of the Doriot friends and family will be in attendance. This is a private event.

3. Last stop is the morning of Sep. 25 at the Boston French Library, a wonderful institution created by Georges and Edna Doriot. This event is open to the public. I will be giving a talk about the legacy of Doriot and why he remains a very relevant figure for today’s turbulent times. Tickets are $20 for members, and $30 for non-members. Click here for more info on the event.

New Amazon Customer Review – “Timely Story Brilliantly Told”

A new review was just posted to Amazon.com. Check it out. Thanks Chris!

5.0 out of 5 stars
Timely Story Brilliantly Told

September 3, 2009
By Chris Burbach (Phoenix, AZ)

I initially began reading Creative Capital to learn more about the origins and history of the venture capital industry and ultimately became enthralled with the incredible life story of General Doriot. His list of accomplishments is staggering to consider in terms of both scope and impact, but his approach to life was what stood out most. The persistence, care and dedication he demonstrated to the students he taught, his country, the country he adopted or the businesses he financed was truly inspiring. Spencer Ante does a brilliant job of telling his story and putting it into the historical context of the development of the venture capital industry.

Highly recommended to anyone with an interest in American history and is a must read for any student or practitioner of finance.

Doriot Quote of the Day

“A real courageous man is a man who does something courageous when no one is watching him.”

My Interview with Blog Talk Radio

Yesterday, Bill Brazell from Blog Talk Radio interviewed me about my book and the history and future of venture capital. Blog Talk Radio is a new Web service that broadcasts live radio programming. They are interviewing a lot of bigwigs in entertainment, politics, media, publishing, music and other industries. Martin Bregman, Gloria Borger and Seth Green were interviewed just this week.

Check out the interview here.

Listen to The Wit Network on Blog Talk Radio

Facebook’s Thiel Explains Failed Twitter Takeover

This morning, BusinessWeek published my story confirming for the first time that Facebook made a serious offer for Twitter. I’ve also got some scoopy details on the negotiations and why they failed.

Facebook’s Thiel Explains Failed Twitter Takeover
The social network intends to grow during the downturn, but Facebook’s imprecise and illiquid stock valuation limited its appeal to Twitter

Facebook remains on the lookout for acquisitions after its failed attempt to buy microblogging site Twitter, one of the company’s directors and largest investors says. “We’re still focusing on growing as much as possible,” says Peter Thiel in an interview with BusinessWeek.

In Facebook’s first public confirmation of the talks, Thiel said the parties disagreed over price and structure when they seriously considered a deal last fall. “It became pretty clear it wasn’t going to happen,” Thiel says from the mid-Manhattan office of his hedge fund Clarium Capital. “The deal would have to be done with Facebook stock. And then you have to figure out how much the stock is worth.”

Determining Facebook’s true value is a matter of heated debate. Since Facebook is a private company, there is no liquid market for its stock. When Microsoft (MSFT) bought preferred stock in the company in 2007, it valued Facebook at $15 billion. Around the same time, Facebook placed an internal valuation of the company company’s shares of common stock at about $3.7 billion, according to court documents. The Palo Alto company relied on the appraisal to value employee stock options fairly and avert possible tax problems. But since then, the valuations of most private tech startups have fallen along with stock markets.

Facebook’s Risky Strategy

In November, the blog All Things Digital reported that Facebook was in talks to acquire the fast-growing micro-blogging service Twitter for $500 million, most of it in Facebook stock.

The attempt to buy Twitter fits with Facebook’s risky strategy of pursuing user growth and product innovation over profits. Facebook is hewing to that strategy at a time when many technology companies are slashing costs and announcing layoffs. “It will either turn out to be a great strategy or a terrible strategy,” Thiel says. Larry Yu, a spokesperson for Facebook, declined to comment on Twitter and the other aspects of this story.

If Facebook is to succeed in using its stock to buy companies, it will need to do a better job at persuading targets of its worth. A person close to Twitter with knowledge of the negotiations confirms that valuation was the primary problem. Twitter management also believed and continues to believe that Twitter has tremendous momentum and that its full potential isn’t close to being realized.

Twitter Wanted Open-Market Valuation
Representatives of Twitter liked the sound of $500 million but balked when Facebook said its stock was worth $8 billion to $9 billion. Twitter’s team knew that Facebook was letting employees sell stock on the secondary market at company valuations ranging from $2 billion to $4 billion. “We said it’s not worth it,” the person says. “Don’t treat us like children.”

At that point, Facebook offered Twitter around $100 million in cash, with the rest of the deal in stock. Facebook said it would come up with the $100 million by selling more of its stock to outside investors.

Twitter agreed on one condition: that the Facebook stock it received be valued at the price company shares garnered on the open market. Facebook blinked and the deal talks ended. “They wanted to buy us but there was not much conviction,” the person says.

Click here to read the rest of the story.

Digg: Not For Sale

Today, BusinessWeek published my story on Digg, the popular news aggregation Web site.

In the piece, CEO Jay Adelson says Digg is no longer for sale and he details the company’s drive for profits amid the recession (now that it’s official and all).

Here’s the lead:

“Over the last few years, Digg has become Silicon Valley’s version of the boy who cried wolf. Like the child who warned local villagers that a wolf was about to attack his flock of sheep, potential buyers of Digg have repeatedly leaked reports that the company was about to be sold, but a sale was never consummated.

Not anymore. In an interview with BusinessWeek, Digg Chief Executive Officer Jay Adelson says the popular news aggregation Web site is no longer for sale, and the focus of the company is to build an independent business that reaches profitability as quickly as possible. That means the four-year-old startup will dial back some of its expansion plans, instead prioritizing projects that generate revenue and profit.”

Click here to read the rest of the piece.

Busy BusinessWeekers

In this week’s issue of BusinessWeek, the editors were kind enough to publish a list of BW staffers who have published books this year. Four out of the six books came out of the technology team!

Here’s a snippet of the list. Click here to see the whole shebang.

“In-House Authors
BusinessWeek writers were busy this year
These books were published by BusinessWeek staffers in 2008:

Creative Capital: Georges Doriot and the Birth of Venture Capital by Spencer E. Ante (Harvard Business Press, $35) Department Editor Ante’s profile of the Harvard B-school professor and venture-capital pioneer.

The Numerati by Stephen Baker (Houghton, Mifflin, $26) If you work in an office, shop in a supermarket, vote, surf the Internet, or consume health care, number crunchers are examining your data and figuring out how to manipulate you, as Senior Writer Baker details.

Once You’re Lucky, Twice You’re Good: The Rebirth of Silicon Valley and the Rise of Web 2.0 by Sarah Lacy (Gotham Books, $26) A portrait of the latest generation of Web companies from BusinessWeek.com columnist Lacy.”