Ouch! Did you just Pinch me?

*Pinch* Messenger is the latest mobile app product from Affle to hit the market, serving Apple, Andriod, BlackBerry, Nokia, WinPhone 7, and all other phone models.

*Pinch* Messenger profess to have the following features:

• Pinches- Message using 475+ emoticons and 3D animations. Share pictures.
• People- Pinch friends everywhere.
• Places- Locate friends nearby on maps using location pins. Get directions to meet them. Register places traveled. Share social updates on the move.
• Play- Discover new dimensions to messaging with points, pins, medals on leader-boards.
• Pay Nothing- Send millions of messages without SMS/ MMS/ roaming charges.
• Cross- platform- Sends SMS to contacts that do not have Pinch client.

Review

When I was looking through the list of apps that I could possibly review for the WP7, I was very excited to see *Pinch* because I was looking for apps that I would be able to use on a daily basis. Seriously, the basic concept behind *Pinch* is amazing. *Pinch* was marketed as a messaging app that is cross-platform thus making all my contacts “pinchable”, uses 3G data so that I would not have to pay for SMS charges if I have a 3G mobile plan and it even comes with photo-sharing and location sharing functions!

It is with ill-concealed excitement that I downloaded this app and proceeded to “pinch” my friends.

After using the app for all of 60 minutes for the first time, I have made my judgement on the app. Sadly, it is not a good one. All that excitement that I felt in anticipation of finding a revolutionary messaging platform vanished. It is true what they say “the more you expect, the more disappointed you will be”. *Pinch* was literally a pain to use (pun intended). It is a product that is crippled because of the poor execution and frustrating overall user experience.

So *Pinch* is a messaging app but surprisingly, it is this main core function that I have the most problems with. The user interface for messaging is quite unfriendly. Messages are displayed in a thread format, which is increasingly becoming the new standard for smart-phone messaging, but this feature is rendered useless because once you hit the reply button, all prior messages disappear upwards and you are left staring at a measly one lined bar in which you type in your reply. I probably should mention that if you are one to lose your train of thought when messaging, you should plan your reply such that it take up just one bar length because any longer, you would lose sight of anything that you just typed. There seemed to be no way to scroll and reread the whole message before sending it too!

For the purposes of testing *Pinch* out fully, I had my friend install it on his iPhone (no bias, it just happened that he was using an iPhone) too and we communicated. I noticed that the messaging interface was different on his phone and he had gripes about it too but that is Apple and we are focusing on WP7. Sending emoticons from my phone, I felt limited by the selection and I was also disappointed that the various emoticons show up differently on different platforms. It annoys me that I do not have control over the exact content that I chose to send because the replication of the content varies. I tried to “pinch” my other line that is not connected to a 3G network and after three failed attempts, I conclude that “pinching” across platforms has its limitations.

*Pinch* Messaging is launched as a fully functional app in June this year, or so I was led to believe. My user experience could not be more different. For one, the app crashes repeatedly on me for no apparent reason. I would open the app, wait for it to take forever to load, and find myself staring at the “Start” screen of the WP7 again. Secondly, the notification number located on the Live tile purportedly shows the new updates but they are not accurate and the source of the new update is not clearly indicated. Thirdly, sending of texts and everything else also has a high probability of failing… The user experience really leaves much to be desired- my friend whom I was “pinching” actually remarked that the current *Pinch* felt more like a beta version than a finished product that is ready to be released to the general consumers.

Recommendations

• Entirely revamp the messaging interface (could make the “send” button more prominent, increase the size of the messaging bar, making sure that at least the previous message be on screen to capitalise on the thread format of messages)
• Have a separate “Updates” menu for all incoming notifications or updates
• Debug app to solve problem of frequent crashing
• Review the cross-platform “pinching” function

Verdict

Overall, *Pinch* is an excellent concept that failed to live up to its conceptualisation.

I would much rather pay for my more reliable SMS or hope fervently that Whatsapp comes to WP7 in the foreseeable future.

Side note: I was unable to give a thorough comprehensive review of this app because after the first day of usage, the app was so unstable that it was rendered not usable. I wrote a feedback to Affle and they assured me that an update would be released this week to resolve the problem. I have yet to see an update as of Wednesday, September 21.

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Roomorama settles into Asia

Roomorama is one of the major players in the peer-to-peer rental space. The New York City-based company has recently decided to expand into Asia, using Singapore as their base of operations. Roomorama is in the midst of releasing a new version of their website along with a set of new features. They also have plans to roll out an iPhone/iPad application before the end of the year.

Other than helping tourists find accommodations in the countries they are visiting, Roomorama has also just launched a guide to living and traveling like a local. The aptly named Hownottobeatourist.com service is now available for New York, London and Singapore with plans to expand to more cities in the coming months.

e27 managed to grab a few words with Roomorama co-founder and CEO Federico to find out more about the company’s move into Asia.

Some background on Roomorama’s operations to date?

Roomorama is a one-stop shop for short term accommodations worldwide where travelers can find and book places to stay easily and safely, while property managers and owners use our free software to manage availabilities and facilitate payments. Roomorama was founded in 2009 in New York City by Federico Folcia and Jia En Teo, former colleagues at Bloomberg LP. Roomorama is available in every major destination, and to date, we have more than 30,000 properties around the globe.

Tell us more about the Roomorama’s operations in Singapore

The move to Singapore is fairly new, we started our office here in May this year. The reason for our move is that we aim to become a key player in the Asia-Pacific region and we chose Singapore not only because Jia En is from here, but also because of its strategic location in Asia and the fact that Singapore is a very safe and efficient environment to run a business from. Hence, the choice to move here was quite natural.

How is the peer-to-peer rental space developing, especially with other players like Airbnb and 9flats?

This peer-to-peer model has proven to be successful and become so popular to the point that more and more clones are starting to adopt it in different parts of the world. As the industry grows, there will be different niches that will be filled by different players, and an increased consumer awareness of a different way of traveling.

Roomorama caters to a different audience than our competitors – our users are mostly working professionals and families who want a decent quality, completely private space, not an extra couch or free air mattress. Roomorama offers many more mid-range to higher end properties that are in line with the demands of our users.

What is Roomorama’s plans for the region?

We aim to become a key resource for Asian travelers, both those traveling within Asia and those looking for accommodation in the Americas, Europe and other parts of the world, because we have solid inventory everywhere.

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Breaking: Japan’s 2nd Telco KDDI Reportedly To Sell iPhone5

Nikkei Business Online is reporting [J], according to people familiar with the matter, the nation's second carrier KDDI has an arrangement with Apple on selling iPhone in Japan.

In Japan, iPhone has been exclusively provided by the 3rd carrier Softbank Mobile. It is not officially disclosed but Nikkei speculates that Softbank has been selling 7.5 million units. Half of Softbank's new subscribers are said to purchase iPhone, which push them up to the close third position despite its rather weak network.

Breaking: Japan’s 2nd Telco KDDI Reportedly To Sell iPhone5

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Oops, No One Queues for iPad 2 (3G)

Apple’s revenue from China for the 2nd quarter increased by more than six times from the same period last year, and Apple COO Tim Cook even believes “There is incredible opportunity for Apple there”.  But, things seem not going that well as everyone expected.

iPad 2 (3G) is available in Apple Store in China starting from today. As usual, Apple hired tens of safe guards standing outside the Apple Store waiting for the long queue and exciting Apple fans. The store opened at 8am (2h earlier than usual opening time), but surprisingly, there was just no queue. Only several iPad 2 (3G) were sold, reported by a local TV channel.

Reading the comments over the net, there are several reasons for Chinese to say No to Apple for the first time.

1. Too expensive. iPad2 (3G) 16G version is sold at rmb4688 which is around rmb1000 higher than iPad2 Wifi-only version;

2. No Jailbreak. People worries that the Jailbreak for this 3G version is not available yet;

3. iPad is not the only choice. Several other brands are also in the market and with cheaper price;

4. China Unicom does not come with any data plan for iPad2 (3G). Some people think it might be a cheaper option.

Related posts:

1. iPad custom duty cut by half – lower to 10%
2. $300 Only, Bandit iPad May Swarm Into The Market in May
3. Lenovo is going to launch iPad like tablet

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Rumor: Baidu Invests In Group Buying Vertical 36tuan.com

Baidu, the largest Chinese search engine is rumored to have invested in group buying vertical 36tuan.com, right after another similar service Miqi.cn announced its $1.5m Series A round of funding from DT Capital Partners

Apart from 36tuan and Miqi, Jumei.com which is competing in the same forefront has also raised US$ tens of millions from Sequoia in March of this year.

Founded by serial entrepreneur Tsinghua graduate Su Haizhen in 2010, 36tuan now claims over 1 million registered users with about 100 staff.

People are saying group buying market is seeing an imminent bubble bursting maybe by year end when most of the group buying services are dying since it is getting harder to raise money from venture capitals because investors are now more cautious over the group buying market. And many believe that eventually there will be only three major ones survive the winter.

Baidu has been aggressively invested in a disparate set of territories including e-reading (Fanshu.com), travel booking (Qunar.com), ecommerce (Yougou.com, 360buy.com, tg.com.cn, yaodian100.com), online community (jingtime.com) and housing info portal (anjuke.com).

 

Related posts:

1. Google China Still Wants to Be Local, Launched Group-Buying Aggregator Service
2. Group Buying Model In China
3. Kaixin001 To Co-operate Group Buying Service; Baidu To Launch Online Recruitment Service With New Domain Name And Branding

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Discussion on Agile Software development methods – 22 Sep

This Thursday, Agile Singapore will be holding a discussion for Agile Software development methods. This event comprises of socializing, Advanced Backlog Management, Team in Action! and an open discussion.

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Program

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7pm: Socializing
7.30pm: Advanced Backlog Management
Some practices for experienced backlog managers. Examples will be in Pivotal Tracker but should apply to many backlog management tools.
8pm: Team in Action!
Bas Vodde will share with us how some of the teams he met work.
8.30pm: Open discussion/Socializing
9pm: End

 

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Event Details

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When: Thursday, 22nd September 2011
Time: 7pm-9pm
Where: Pivotal Labs, 53A Craig Road, Singapore 089691 (Map)
Register here.

 

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Has India Inc. started to *get* new media?

[Indian Media Companies Suck @Internet and traditional brands just do not get the ‘new media’. But times they are changing.]

Most of us in the internet and mobile spaces lament how most traditional brands don’t *get* new media. Many point to how brands don’t care about measurability and results, which digital media largely swears by.

Yet, a panel in today’s ET points to the fact that this might have just started to change.

That a traditional media outlet like ET is starting to talk about engagement metrics(and not topline numbers or subjective aesthetics) – points to the fact that there is perhaps a slowly growing understanding of digital media in India.

Of course, it’ll still be a while before more conservative papers or vernacular publications start to get engagement metrics – but this is perhaps a sign that things are starting to change.

What do you think?

[Guest article by Shamanth Rao]

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Innovation Work’s Backed Start-up, Tapas Mobile, Does Social Mobile Contacts

Tapas Mobile (aka DianxinOS),  a start-up incubated in Innovation Works is working on a mobile phone address book contact management system. Basically it aims to make your contacts on your phone more sophisticated, allowing you to perform  smart contacts search, text messaging, and business card exchange function in one, and now support Android 2.2 or after.

With a contact list of 10,000 the average retrieval time is only 0.01 seconds and is supported by 17 matching algorithms to help you find what you are looking for, faster. As long as you remember any part of a contact, the address book will return all the best match options. In the picture, the example shows that entering ’1365′ will return all related contacts with any combination of the number ’1365′. This also applies to emails, notes and anything else stored in your phone.

Another key feature of Dessert Book, is a Bump like feature of sharing contacts. After shaking phones next to each other, the contact info automatically transfers after clicking “Add to contacts’.

 

 

 

 

 

Related posts:

1. Hozom, Leaves Your Phone Contacts In The Cloud
2. Innovation Works’ Start-up, Doodle Mobile Raises US$10 million in Series A Funding
3. 3rd September, Innovation Works Partners With TechNode to Welcome Startups to Jump-Start Program

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2-channellers See A Girl In Great Britain

A certain (of course anonymous, as usual) 2-channeller wrote that the shape of Great Britain islands looks for him like a girl worrying her bust size. The first reaction was "you are sick" but some followed and drew it.

The reason Manchester is emphasized is... ahem, it sounds similar with a certain body part of female in Japanese language.

via hiko2*blog [J]

2-channellers See A Girl In Great Britain

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Innovation Work’s Backed Start-up, Dessert Book, Does Social Mobile Contacts

Dessert Book,  a start-up incubated in Innovation Works is working on a mobile phone address book contact management system. Basically it aims to make your contacts on your phone more sophisticated, allowing you to perform  smart contacts search, text messaging, and business card exchange function in one, and now support Android 2.2 or after.

With a contact list of 10,000 the average retrieval time is only 0.01 seconds and is supported by 17 matching algorithms to help you find what you are looking for, faster. As long as you remember any part of a contact, the address book will return all the best match options. In the picture, the example shows that entering ’1365′ will return all related contacts with any combination of the number ’1365′. This also applies to emails, notes and anything else stored in your phone.

Another key feature of Dessert Book, is a Bump like feature of sharing contacts. After shaking phones next to each other, the contact info automatically transfers after clicking “Add to contacts’.

 

 

 

 

 

Related posts:

1. Hozom, Leaves Your Phone Contacts In The Cloud
2. 3rd September, Innovation Works Partners With TechNode to Welcome Startups to Jump-Start Program
3. Innovation Works’ Start-up, Doodle Mobile Raises US$10 million in Series A Funding

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GeekCamp Singapore 2011 – 1 Oct

Following BarcampSG7 in September comes GeekCamp 2011 in October. GeekCamp is an international network of technology-only unconferences where the participants generate the content. Based on the open-enquiry philosophy of BarCamp, GeekCamps seek to address the perceived culture clash of BarCamp by limiting discussion to purely technical matters.

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Event Details

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When: Saturday, 1st October 2011
Time: 10am-5pm
Where: Microsoft Singapore, 1 Marina Boulevard, Level 22, Singapore 018989 (Map)
Interested participants can register here and can send an email to Laurence (laurenceputra at gmail) to propose a topic with detailed synopsis, twitter handle and any relevant links.

 

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Internet is Changing Creative Industries Forever – Transmit China

Last week I went to a unique conference called Transmit China. With a focus on the creative industries, namely music and video, Transmit China brought together leading executives to discuss both interesting and challenging issues facing their businesses in the future.

Smaller is better

Rather than a large scale grandiose type of event, TransmitChina emphasises community and building close relationships. Limited to only 150 participants and held over two and a half days, the conference was made up of keynote speeches, roundtable discussions and focus groups. To stimulate both body and mind, the event was held at the very unique boutique hotel, the Commune by the Great Wall. The hotel is literally next to the Great Wall and surrounded by beautiful landscape mountains. I myself was very excited to experience the Commune and nature.

Adapt to China or leave

The Transmit conference itself originated in 2006 from Canada and made its way to China in 2008. The group was made up of an eclectic mix of band managers, concert promoters, TV producers, entrepreneurs and mobile start-ups. Since the majority of attendees were from Canada or America, I could tell many of them were searching to understand how China operates and how they needed to adapt their business to succeed here. Some had lived in China for a while but for many first timers, not familiar with China; their eyes were opened to the reality of working in China. I sensed the key lesson learnt was that you have to adapt to the Chinese culture and way of doing things to be embraced, and if you don’t like it, you shouldn’t be here. Since many were in the content distribution business, I told them that generally Chinese people don’t pay for content and I could tell they were perplexed.

Is being creative worth it?

Unlike the typical tech conference, Transmit China was centred on the entertainment industries and how emerging technologies would impact it. Of course many creative people do what they do because they love it, not because it brings them a lot of wealth. But more and more, content is being freely distributed over the internet, making it even harder for artists to claim a rightful share of earnings. This brings constant pressure to musicians and film producers to find sustainable and profitable ways to keep creating.

One of the most interesting discussions was about intellectual property. We all know, there is really no such thing as IP laws in China. In the tech start-up space, this gives rise to thousands of clones. In the entertainment world, much of it ends up on Baidu Music, Douban.fm or video streaming sites like tv.sohu or youku.com and many artists don’t receive a royalty.  Larger co-operations who need to operate with more transparency are now coming under more pressure to only distribute licensed content. But that also continues to be a difficult and messy subject.

Some argue that without free content distribution, especially over streaming sites, the majority of people would never hear of some artists. Therefore it is beneficial for artists to have their work distributed everywhere for the purpose of marketing. Once they become popular enough, they can make money through selling concert tickets and sponsorship. On the other hand, without any copyright and no ability to earn royalties, it makes life a lot harder for artists to live and get to the stage of becoming widely popular. But this brings us back to the question of why artists do it and simply, it is because being creative is in their blood.

Embrace internet disruption

The first keynote speech given at Transmit China was by Catherine Leung, GM of Music Entertainment at Baidu. Leung mainly talked about the impact of internet on the music industry.

She said that given its increasingly digital form, music is ripe for disruption and old-school music executives who are bent on holding onto forcing people to buy CD’s will lose. One music manager I talked to, expects CD’s to die next year or the year after; a grim but realistic prediction that truly forces people in the music industry to react and prepare for the future. Outside China, new music services that are changing consumption habits are Pandora, Spotify and the up and coming Rdio. In this way, Leung suggests people in the music industry must embrace internet disruption and stop fighting it.

Leung believes that technology should be used as a tool to “amplify and build great products that wows consumers.”

Here are some photos from Transmit China, kindly provided by Emily Chong of Frog Design. Thanks Emily!

 

Related posts:

1. Event: International Internet Summit 2008, Nanjing, China
2. Sina Announced Strategic Partnership With MSN China, The Setup of Chinese Internet Might Start Changing
3. Event – Global Mobile Internet Conference 2010, Beijing

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Typhoon Hitting Tokyo, Trains Stop Again

(Tokyo Amesh - rainfall amount map)

Huge typhoon No.15 is hitting Tokyo area now. Several photo reports are circulated on Japanese Twitter.

In Shibuya, fallen tree hit a taxi.

Ginza street is also dangerous.

Twitter Japanese trending topics are all typhoon related. Many companies seemed to encourage their workers to head their home earlier. The number of refugees who are unable to go back to their home may be reduced if compare with the March earthquake. However, there are still many remaining in the central Tokyo, as most train lines have to stop or get delayed.

Public transportation information service Navitime site [J] is showing how many train lines are reported delay/stop.

Yahoo! Japan's top 20 hot keywords [J] are all occupied by train line names except 13th "blackout", which is happening in few area around Tokyo.

Typhoon Hitting Tokyo, Trains Stop Again

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Virtual Gaming Items Marketplace 5173 Going Public; Xiaomi Mobile Losing Paint; Ku6 Pivoting Towards UGC Model

1. Virtual Gaming Items Marketplace 5173 Initiates IPO Process

As online gaming represents one of the largest and most profitable internet business sector in China with over 120 million people engage in online game play, the sector is still seeing fast growth, which reflects in the commonness and prevalence of virtual goods marketplaces.

5173.com is among those burgeoning sites. The marketplace which boasts over 40 million registered users has initiated its IPO process to get listed in HongKong.

For last year 5173.com brought in RMB7b ($1b) in turnover, behind only Taobao Mall ($4.6b) and 360buy.com ($1.5b) which is pretty amazing performance.

 

 

2. Xiaomi Mobile Suffers From Paint Loss

Several early-adopter of Xiaomi mobile reported that the high-profile gadget announced couple weeks ago has been suffering from paint loss alongside other prickles, even there is no scrapping or scratching.

Curated by Xiaomi Tech, a Leijun backed startup, Xiaomi mobile took the customers by storm with its unbelievable cheap price tag and stunning tech specs, and is expected to become a strong competitor to other Android phones out there in the market, including models from Meizu, Moto and Samsung.

 

3. Ku6 Pivoting Towards Video Community, Away From Hulu Model

In a wave that almost every video sites in China is moving towards Hulu model that leads to skyrocketing copyrighted content costs, Beijing-based Ku6 which has just had a layoff turmoil announced its new strategy: appealing to video community.

According to Shi Yu, the Shanda subsidiary’s new CEO, the concept of community is nothing new to Chinese internet sector, but there’s no good video community in the market yet. Ku6 just launched its newly revamped community featuring a campaign calling for people to shoot and upload home-made clips, signaling the site is again sharpen focus on UGC territory, a move away from Hulu model.

Shi also disclosed that Ku6 wouldn’t purchase copyrighted contents to compete with other video sites in movie and TV series streaming forefront in the future.

Ku6 to date has about 300 staff while one third of them will engage in the new community strategy.

 

4. 3G iPad 2 Available in China Now

3G version of iPad 2 was finally made available in China now since today. China Unicom, the iPhone distributor in China is behind the device without question.

16 GB model for 4,688 RMB ($732)

32 GB model for 5,488 RMB ($857)

64 GB model for 6,288 RMB ($982)

3G iPads is RMB 1k more expensive than its Wi-Fi only counterparts.

 

Voices

55Tuan.com Xu Maodong: We’re The Only Innovative One Out There

Xu Maodong, founder and CEO of Chinese daily deal service 55tuan.com said during an interview lately that 55tuan is the only innovative group buying site in China with localized innovations and differential competitive strategies while most of its competitors are just copying Groupon.

To flesh out his points, he disclosed that branch sites of 55Tuan are fully empowered to make their own decisions by local managers.

55Tuan founder Xu Maodong

Also, he opposed to the points of “group buying bubble is about to burst and 95% of group buying service are dying by year end”.

 

Related posts:

1. HTC Considering Buying WebOS; 360buy Goes Public Due To Short On Money?
2. Xiaomi Tech to Release Mobile Phone
3. Group Buying Model In China

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i.JAMMING session by MDA – 26 Sep

Next Monday, the Media Development Authority (MDA) will organize their next i.JAMMing session. The event will explore tech entrepreneurship opportunities in US and China, a Call For Proposal (CFP) session for apps, a reveal of iJAM Phase 2, demos, and networking.

Bill Coleman of Alsop Louie Partners will give a talk entitled “US Innovations and Startup Buzz”, while Zhang Hong-Jiang of Microsoft Asia Pacific R&D Group will speak about “Observing China’s Internet Market”. The CFP session will have 3 enterprises who will offer the following:

• Samsung – Educational Smart TV apps – Samsung will take 5 successful applicants to market! (on SGE)
• Integrated Health Information Systems (subsidiary of MOH Holdings) – apps and services for “Health Social Media Platform for Every Home”
• SyQic – apps and services for OTT store

Demos will be conducted by:

• Samsung – Smart TV
• SyQic – YoonicStore
• NUS Tsinghua (NExT) – Search & Organised User-Generated Contents)
• NUS Keio (CUTE) – Latest wearable haptic technology, TouchWare, PrimeSense (motion-sensing), and others.

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Event Details

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When: Monday, 26th Septemeber 2011
Time: 5pm-830pm
Where: Genexis Theatre/What’s Next Studio, 3 Fusionopolis Way Singapore 138633 (Map)
Register here.

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Latest: Singapore-based OrSiSo acquired by SingTel

OrSiSo, a Singapore-based company and social networking tool that aims to organize and simplify the user’s social life, has been acquired by SingTel, Singapore’s largest telco company.

We’ve just received the news from Thorben Linneberg, founder and CEO of OrSiSo.

The exact details of the acquisition are still sketchy, but we’ll post more information as they come. In the mean time, OrSiSo has put up a brief note on their website, stating that their free app is no longer available as a download at the moment.

OrSiSo is designed to make managing multiple social network accounts easier by converging them into one place. It allows users to merge their friends’ identities from various networks, and also intelligently filters updates according to levels of closeness.

Incorporated in 2008, the company has since received about US$400,000 in angel funding. Prior to starting his company, Thorben, a Denmark native, has worked for a number of years in the mobile internet and wireless technology fields.

To find out more about Thorben, his company, and the product, check out our interview with him, as well as this video interview done by INSEAD Knowledge in 2009:

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The Perils of Taking Seed Money From VC Funds

I met three interesting startup’s last week. All of them were founded by entrepreneurs in their late twenties or early thirties, who had been part of product teams in other startup’s or global tech firms. The startup’s were pre-revenue or had just signed up a few customers. Typically, in the Indian VC context, these firms would be considered too early by ‘early stage’ VC funds to do a Series A. They would be asked to come back in 6 months time when they had signed up more customers and had discernible revenue traction. However, to my surprise, all of them claimed to have termsheets or were in serious conversations with VC funds – not seed stage focused funds, but regular VC funds.  What’s even more surprising was that the quantum of funding they were offering ranged from $200K to $500K, not the usual $2 million plus that these funds like to invest. 

A few top tier VC funds have started making investments in the realm of angels/seed stage funds. When a VC fund makes a seed type investment, they are essentially purchasing a low cost option to participate in a full round if the startup shapes up well. Unlike an angel investor or a seed fund, a VC fund’s economics don’t work on a  $200 K investment; their economics work on making much larger investments in each of their portfolio firms. So how does this matter to a startup as long as they get the money, right? Maybe not, let me explain.

In most cases when a VC fund makes a seed investment, they contractually tie in an option to lead the next round, which is typically in the $2 to $5 mil range. If the fund exercises this option, the startup loses out on talking to other funds and discovering the best possible valuation and terms. If the fund does not to exercise the option, other funds will be very wary to investing in the startup. Their view will be that if the fund who did the seed round and has an inside view of the startup does not want invest, surely there must be something amiss.

A few VC funds who make seed investments mention that they do not tie in an option on the next round for precisely this reason. Nevertheless, with or without a specific option to invest, if the fund does not participate for whatever reason, other VC’s will wonder what’s going on. 

On the other hand when a startup takes money from an angel or seed stage fund, there is no expectation that they will participate in a follow on round. Their model is based on investing a small amount really early and guiding the startup through to a stage where they are ready for a VC fund to come in. 

For long we’ve bemoaned the lack of adequate seed stage funding in India. This is clearly changing now with the more angel investors and seed stage funds springing up everyday. From an entrepreneur’s perspective, funding at every stage is critical. However, if entrepreneurs have alternatives, they must think carefully before taking seed money from a VC fund. 

[This article has been reproduced from Deepak's blog http://viedeablog.wordpress.com/. Image credit: Schteeve2010/Flickr]

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