One company, Yollege, was particularly notable, given the founder's pitch. According to Brian Ascher, venture capitalist of Venrock, who was our guest host (yet again!), Yollege CEO and founder Mike Kim deserves an A-+ for his pitch. Ezra Roizen (Vator Box regular and digital media investment banker) liked the music selection.
Yollege is a college review site. It's a Yelp for colleges, whereby college students can write reviews about the best bars, best fraternities, or best classes, etc.
We were all very favorable about the company's prospects and the service. Here's some of the advice, commentary and observations given by Roizen and Ascher.
- The pitch was clear, concise, poised and excellent
- Execution and creating a trusted brand will be key
- Scale will be a challenge (as it is with many startups) and the company has to create a "Black Swan" event (Black Swan is a book about the impact of the highly improbable)
- Focus on a few colleges. Get things going in one ecosystem; create a great experience and roll out to other colleges from there. This is what Facebook and Yelp did
- Find campus organizations and sports' teams to be written about. Create a "contest-like" effort to put a bunch of reviews about your school so it appears favorable to the incoming students. It could really help in recruiting
- Scrape content, like Rush schedules, and prime the pump
- To get a VC, like Ascher, to fund your business, the key isn't being profitable. VCs want to see acceleration, momentum, and adoption. They'll want to see that this is the go-to source for college reviews
- Stay lean and prove out your concept before raising (a lot) money
There's no funding hisory available for Yollege. But the company has a complete and growing management team and has closed an angel round.
To get a feel for market and exit opportunities, Liquid Scenarios looked to see if any competitors had successfully closed venture funding in the space recently. Next, we looked at the market dynamics of their business model, which the founder describes as part ads and part sponsorship of user-reviewed content. The most successful trajectory of review-driven sites, with some emphasis on local sponsorships and advertising is Yelp.
Yelp recently closed a $15 million round at a pre-money valuation of $200 million. We changed dates to apply to the round sizes and valuaitons of Yelp's first two rounds to Yollege. And, we built a financing and exit model, assuming a light Series A round of $1 million by early 2009. At a $2 million pre-money valuation and a Series B round of $5 million, priced at $7 to $10 million. If the company sells for something in the range of Yelps Series C pre-money valuation, then each of Yollege's investors could do better on a cash-on-cash basis than a selling at a valuation similar to Yelp, if it was sold for two times its Series D rumored pricing.
With the former CFO of Yelp on their team, Yollege's prospects for a good exit from this niche are probably superior to the many firms trying to pursue it.
That's the Liquid Scenarios Minute
(Programming Note: We are now focusing on one company per Vator Box segment. Past companies highlighted, in which Venrock's Ascher was our guest host were Glam Media, Buzznet and Lyricfind. Be sure to stay tune for our upcoming episodes with Google's Marissa Mayer, EBay's director of strategy, Erik Stuart, and Zynga founder and CEO Mark Pincus as our guest hosts. If you'd like to be one of the highlighted companies, send an email to [email protected])