We spoke to David Carter, co-founder of Amplify, serial entrepreneur and angel investor, about his accelerator, what excites him about the startup scene, and where funding is heading.
David Carter is the co-founder of the Los Angeles-based startup accelerator, Amplify. As an entrepreneur, he has founded a number of successful companies, including Vertical Technologies (acquired by Zebra), Throughstar (acquired by iManage) and S5 Wireless. Along with other top tier venture funds and angel investors, David has also invested in various startups. He serves as an advisor and mentor to students at USC and the Entrepreneurship Advisory Board at Chapman University. David can be followed on Twitter at @_davidcarter.
Tell us about your background and how you founded Amplify.
I’m a serial entrepreneur who has founded three tech companies, two of which were sold to NASDAQ listed companies. I also worked as an entrepreneur-in-residence for a Draper Fisher Jurvetson affiliated venture fund, and I have been active as an angel investor having made around 15 investments so far.
I’m somewhat new to LA, having lived here for two years and recognized LA definitely has something unique to offer. The media and entertainment industries and the ecosystems built around them are unmatched. During that time, I was introduced to Paul Bricault, who led the formation of Amplify. Paul is deeply connected to LA and has an impressive background that allows him to bridge the gap between entertainment and tech. He worked for many years at William Morris as Executive Vice President and Member of the Board of Directors, founded the Mailroom Fund and is a Venture Partner at Greycroft. So it was a natural fit for me to connect with Paul and eventually Richard Wolpert, Oded Noy, and Jeff Solomon as co-founders of Amplify,
What specific industries excite you the most?
I’m interested in mobile and businesses that are disrupting media and entertainment. There’s a lot to be done in those industries. Also, I’m extremely excited about next-gen small business finance. This space is so ripe for disruption. The internet, the recent crowdfunding bill, the loosening of regulations, and the access to cloud apps, are finally creating a system that allows for small transactions to flow efficiently. Small businesses can capitalize on this. Currently, the financial system is built to serve large corporations, not the small businesses. So I think over the next few years we’ll see more media, entertainment and venture capital leverage crowdfunding to raise capital. They will operate more as curators who deploy the capital to great projects. Fast-forward 10 years and I think the financing landscape will be so different from what it is today. You’ll be able to take some ownership in your neighborhood store, help fund them and share in the profit. This will unlock a lot of creative entrepreneurship that’s sitting dormant in society.
Is Amplify playing in this space?
Yes. One of our companies, Invested.in, provides a white label crowdfunding platform. They’re doing a fantastic job. In the funding space there are a number of established big funding sites that have been very successful, but we need more. Each can serve a specific vertical. For example, Kickstarter has distinguished itself with media and entertainment and half of their projects come from those industries. Indiegogo is similar. But Invested.in provides the backend platform for anyone to create their own funding site. It’s really quite revolutionary.
So who does Amplify like to fund?
We’ve done well with mobile and next-gen e-commerce, media, entertainment, web-service, and finance. But Amplify is not just consumer focused. One of our recent investments was for a startup that has created a bidding process for auto body shops. They’ve raised $100,000 purely off winning various business plan competitions around the country. They have a very compelling business model.
What are Amplify’s typical investment terms?
For a company with two or more cofounders, we take 8% for a $50,000 investment. If it’s a single founder, it’s $35,000 for 8%. Interestingly, a lot of companies that are now seeking funding are already in revenue, have customers and traction.
How easy is it for companies to get funding beyond the seed round?
Well competition for the Series A has increased dramatically. There are now many accelerators and angel funds who are doing seed rounds, and a large number of companies have been created over the last year or two. Meanwhile, venture capital has shrunk and so the pool of available funds for the Series A is much smaller with more companies competing and trying to raise together. I witnessed the dotcom days and it’s crash, 2008 and the current growth, and you can see how the pendulum swings. Right now it seems like it’s swung a little high but it’s not as reckless as in the past. It’s a more pragmatic approach but also a more competitive environment.