When Fred Wilson, managing partner with Union Square Ventures, prefaces a statement as potentially controversial, most people in the room tend to lean forward for a listen. Last night’s New York Enterprise Technology Meetup was no exception.
Wilson, an early backer of Twitter and current investor in Return Path and MongoDB’s developer 10gen, spoke to the group about the types of companies he tends to invest in and why he wants to see enterprise technology grow among New York startups. After talking about what piques his interest, Wilson took questions from the audience, leading to a comment that sent a ripple through the room.
While discussing big vendors in enterprise software, Wilson talked up the need for new ideas from startups. But disruption in the space is not without challenges, he added.
“If I could short the entire big, fat, old, cynical, rip-off artist enterprise software business, I would,” he said. “They’re not innovating. There’s nothing that those big companies do that’s really any good. The caveat is it takes forever to rip out those systems.” The half-life of enterprise software, he said, is often longer than desired, making it difficult for new, replacement technology to gain a foothold.
Wilson said he came to the event to encourage the growth of the enterprise software community in New York. He told the entrepreneurs packed into the offices of Cooley they were welcome to pitch Union Square Ventures—with a few stipulations. For instance, companies establishing data networks need to do more than manipulate easily accessed information. “If your software is just pulling data from your internal systems or publicly available data sets, that’s not a data network,” he said.
His speech came at the tail end of a night that featured demos from companies native to New York as well as out-of-towners. The New York Enterprise Technology Meetup, founded in November 2011 by Jonathan Lehr, is one of several local groups that highlight the growing enterprise technology community in the city.
Last night, Atlanta-based JouleX showed its platform for managing energy consumption for enterprises, such as soft drink companies monitoring wirelessly connected vending machines across country. Tracx, the sole New York-based company, demoed its social media management dashboard that crunches data drawn from consumer intent into real-time insights for enterprises. SoMoLend, a Cincinnati-based company, presented its debt-based crowdfunding platform that will take advantage of the JOBS Act.
Candace Klein, founder and CEO of SoMoLend, said her company uses crowdfunding to fill a gap in small-business lending. About $25 million worth of capital has been requested through SoMoLend’s platform and about $5 million has been lent since its founding last year. Offers for loans can be made by institutions as well as qualified individuals. Klein said she helped author a small portion—38 words—of the JOBS Act and heads a taskforce that meets with the Securities and Exchange Commission and the Financial Industry Regulatory Authority to create a regulatory framework for this market.
SoMoLend includes what Klein called a “suitability analysis” of investments, particularly for individuals, before loan offers can be made. “There’s a five-minute survey that every investor must complete with us,” Klein said. Furthermore, potential lenders must take a quiz with random questions about the specific companies they want to offer loans to. “We require that [they] read the business plan,” Klein said.
That screening process drew praise from Wilson, who believes such a gut check
