It’s an election year, which means it is time for debates, caucuses, and campaign fundraising. This year, President Obama is going beyond the hefty check and taking donations using tech-darling Square.

“Whether you’re a Republican or a Democrat, running for president or local assembly, Square makes it easier than ever for candidates, organizations and volunteers to fundraise for their cause,” said a Square spokesperson.

Square allows businesses to accept credit card payments through their mobile phones. It does this through a small, square card reader, which attaches to the phone through its audio jack and connects to its iOS or Android application. Both the app and the card reader are free; Square makes its money through transaction fees. Much of Square’s adoption has been from smaller businesses that may not have the point-of-sale systems needed to accept credit cards.

Aside from taking away the necessity of check-out hardware, Square is also inherently mobile and can accept payments wherever you are. That’s what makes this so enticing for campaigns.

President Obama will travel all throughout America looking for voters and donations during this election season. Known for his townhall metting, the President will undoubtedly be headed to small cities to connect with the America outside of Washington. Having this system will help his staff quickly collect donations. Another benefit of Square’s mobility is that dedicated donation stations won’t be necessary — donation-takers could walk through the crowd and accept money on the spot.

According to a Square spokesperson, the company does not plan to have any other branding other than its card readers at Obama’s campaign events. The company assures us that it is ready to take on the increased cash flow, and says it handled over $2 billion in transactions during its first year.

President Obama will also be holding a Google+ hangout Monday at 5:30pm eastern standard time.

via TechCrunch, President Obama photo via Shutterstock

Sources say the firm could be looking for up to $1.5 billion — an amount that would almost double the amount of current funds it has under management. Currently, the firm holds three funds totally $1.75 billion.

Two anonymous sources told the New York Times the funding from this alleged new raise would be divided into a $900 million fund and a $600 million fund.

The firm launched in 2009. Andreessen Horowitz last raised funding in October 2011, when it gathered $900 million for a third fund.

While Andreessen managed to scrape together a total of $1.1 billion in funding in 2011, most VCs had a lackluster year for fundraising.

With 135 U.S. venture capital funds raising $16.2 billion, representing a 12 percent decline in the number of funds raised this past year, analysts have been saying the recession is still very much in effect. Altogether, funds raised by VCs during 2011 came in at just more than half of the 2008 total. In particular, early- and multi-stage funds suffered last year.

Recent Andreessen Horowitz investments include participation in a $24 million round in Tidemark, a cloud-enterprise app shop; a $49 million round in Bluetooth headset-maker Jawbone; participation in a $1.5 million round for Everyme, a mobile/social address book app; and participation in Fab.com’s $40 million Series B for design-focused flash sales.

The firm also pledged to give $50,000 to every Y Combinator startup. The incubator has been increasing its semi-annual class size to more than 60 startups per class, so that will cost the firm around $6 million or more annually.

The new Flagship Ventures Fund IV L.P. was set at $250 million, but investors exceeded that amount. Investors included all types of organizations from foundations to corporations to individuals, including a few new limited partners that had not contributed to previous funds.

Flagship’s portfolio companies seem to be tackling big, human-scale problems from energy to epidemics, and the firm has seen exits that match that ambition. Some of its more notable exits include Adnexus Therapeutics, which was sold for $430 million to Bristol-Myers Squibb; Morphotek, which was acquired for $325 million by Japanese big pharma company Eisai; and Hypnion, which was bought by Lilly for an undisclosed sum.

“We are quite pleased by the market’s reaction to our fourth fund,” said Flagship CEO and managing partner Noubar Afeyan in a release.

“Despite the difficult environment for fundraising, especially for early-stage venture firms, we received strong support from our prior investors, as well as from several new important limited partners. We believe that the firm’s investment strategy and … history of building valuable, transformative companies are well aligned with the world’s ever increasing reliance on innovation, entrepreneurship and value creation.”

Indeed, VC fundraising had a lackluster year in 2011, according to Dow Jones analysts. On average, a U.S.-based venture capital firm in 2011 was only able to raise around $120 million.

Flagship’s last fund, which launched in pre-economic-meltdown 2007 with a healthy $235 million raise, fed a portfolio of 24 ventures such as Joule Unlimited, which aims to solve the global energy crisis with a biofuel alternative, and Selecta, which produces nanotechnology-powered vaccines.

Counting the new fund, Flagship now manages more than $900 million of early-stage capital and has cultivated a portfolio of more than 65 companies. Also, 25 of those companies came from inside Flagship itself via the firm’s in-house venture creation group, VentureLabs.

In addition to continuing its investment in early-stage companies, Flagship will use part of the new fund to invest in later-stage companies.

The site’s fundraising efforts for the year have ended, and the Wikimedia Foundation (the non-profit behind Wikipedia) was able to gather a record $20 million during the drive.

“We’ve hit our target. Thanks to you,” writes Wikimedia Foundation executive director Sue Gardner in a post this morning.

“Over the past few months, more than one million people have come together from all over the world to keep Wikipedia and its sister sites alive and flourishing for another year.”

These one million donors come from nearly every country in the world, the foundation said in a statement. Wikimedia Foundation’s communications chief, Jay Walsh, also wrote that this fundraiser was the foundation’s all-time most successful campaign ever.

“The number of Wikimedia Foundation donors has increased ten-fold since 2008, and the total dollar amount raised in the campaign has risen to over $20 million from $4.5 million,” Walsh continued.

The $20 million generated by the 2011 fundraising campaign will be used by the foundation to purchase and install new Wikipedia servers and other hardware. It will also be used to develop new site features, expand Wikipedia’s mobile services, add to the foundation’s legal defense fund and support Wikipedia’s large and worldwide community of volunteers.

The foundation’s total budgeted spending for the 2011-2012 year is $28.3 million. While most of that sum was raised through the on-site Wikipedia fundraising banners, the rest will come in the form of grants from institutions and smaller donations from individuals throughout the year.

The Wikimedia Foundation first began its crowdfunding operations in 2003. To date, it claims it is the only major website supported by its users rather than by advertising.

This famous introduction by Charles Dickens sums up what entrepreneurs seeking startup capital are facing in 2012.

On the one hand, banks still aren’t lending. And with the debt crisis looming over Europe and political uncertainty here in the U.S., there’s an increased perception of risk for early-stage investors.

However, record low interest rates, stagnant public stock markets and real estate, and weakening commodities prices offer investors few alternatives to achieve decent returns. This creates an opportunity for entrepreneurs in spite of all the challenges.

What does this mean if you’re an entrepreneur hoping to raise money during the new year? It means there is hope, even if there isn’t a huge margin of error.

Here are six important tips to hit the ground running with your financing efforts.

Structure your raise right.

External financing for startups usually comes from friends and family, individual (non-institutional) angel investors, early-stage funds or some combination of these sources.

As you’re planning for your raise, make sure you’re structuring a deal that’s appropriate for your prospective investors. Terms you should be concerned about include how much you’re raising, whether the deal is equity or debt, what kind of rights the investors will be given, and the valuation.

Be sure you’re working with an experienced attorney, because mistakes in structuring a raise can have serious repercussions down the road. And don’t be too aggressive on valuation; it’s better to leave something on the table than price yourself out of a raise altogether.

Prepare key documents.

A brief slide deck summarizing your business is a must-have before starting due diligence. Make sure it describes the problem your company is solving, the addressable market, your progress, competitors, your team, and other relevant information. Slides are generally preferred over a written business plan for tech startups nowadays, but you should confirm if this is true for your industry.

Financial projections are important to demonstrate that you understand how key inputs impact your business model; it’s best to keep them simple and focus on the “big picture” rather than budgeting minutiae.

I’d also recommend including a capitalization table and a term sheet to provide to prospective investors who express interest.

Put your network to work.

Entrepreneurs often tell me they don’t know anyone who can help them with their capital raise. When I press them further, nine times out of 10 that turns out to be wrong.

Anyone who’s been in the business world for a few years has met investors, advisors, and other influencers who can play a role in syndicating a capital raise. But you can’t get what you don’t ask for.

Successful entrepreneurs make sure their contacts know what they’re working on and ask for help when they need it. Besides investors whom you know directly, ask your contacts for introductions; if they know you and respect you, they’ll generally be happy to make them.

Meet new people.

While four out of five leads will probably come from networking, it helps to meet new people as you look for investors.

Sign up for industry newsletters and read local blogs so you’re aware of networking events. Introduce yourself to speakers and panelists who might be a good fit; try asking for their advice and see if they’d be willing to meet you for coffee before giving them the “hard sale.”

Try meeting people through online sites, including LinkedIn (try out their groups and engage in discussions), Facebook (BranchOut lets you sort Facebook connections by profession), and CapLinked (my company, which lets you search for investment-related professionals by industry and role).

Don’t break the law.

There’s a lot of euphoria out there now about the potential for crowd-funding to ease restrictions on obtaining startup capital. But nothing has yet been signed into law yet.

For now, make sure you’re familiar with Regulation D, which governs who can invest in a private company. Reg D also puts strict limits on public advertising for private investment opportunities, so be sure that you’re not soliciting investments on a public medium such as Twitter or your blog.

Start the process now.

Raising capital generally takes longer than most new entrepreneurs think. Networking to get in front of investors is a lengthy process, and investors will often take a long time to give you a definitive answer.

So the sooner you get started, the better. Find a lawyer, dust off your Rolodex, and start working on that slide deck now.

Also consider setting up a deal room on CapLinked to make document management easier, and include your company’s advisors in the entire process.

Raising capital in 2012 is by no means a hopeless endeavor, but it will take hard work and persistence. Get started now—and good luck!

A serial entrepreneur, Eric M. Jackson is the CEO and co-founder of CapLinked, an online service that gives companies and investors tools to network, manage a capital raise or asset sale, and exchange updates. Eric previously served as PayPal’s first marketing director and is author of the award-winning book The PayPal Wars.

Every now and then, we hear from a female startup founder who says she’s having a hard time raising money. She can’t quite figure out if it’s her idea or her slide deck or — and no one wants to think this — if it’s simply the fact that she’s a woman pitching an idea to a roomful of male investors.

We recently invited Comcast Ventures‘ Amy Banse into the VentureBeat studio to discuss the phenomenon of subtle sexism in the world of venture capital. After all, who better to ask for advice about female founders fundraising than a female VC?

Banse also talks about trends in startups — especially technology-focused startups — and gender. We got to discuss the controversial topic of women doing startups in “girly” categories such as beauty sites or dating sites and whether that’s reinforcing negative norms about what women can and cannot do or understand.

Stay tuned for all nine minutes of a fascinating conversation with a wildly intelligent, experienced lady… and a cornball reporter, too.

Every now and then, we hear from a female startup-founder who says she’s having a hard time raising money. She can’t quite figure out if it’s her idea or her slide deck or — and no one wants to think this — if it’s simply the fact that she’s a woman pitching an idea to a roomful of male investors.

Women 2.0 CEO and co-founder Shaherose Charania came into VentureBeat’s studio to chat about a few issues experienced by a lot of female founders, not the least of which is experiencing subtle sexism during fundraising.

Charania also names a few names — VCs who enjoy working with women and make a point of including female-founded companies in their investment portfolios.

Khosla said he will invest half of the new fund into clean technology companies, according to a report by the Wall Street Journal. The firm will continue to make early-stage investments in technology companies like group-texting service GroupMe. The new fund puts Khosla Ventures among the top five firms in terms of the amount of money venture capitalists have raised this year.

Clean technology investing has hit a few hiccups lately, with investments in cleantech companies slowing in the second quarter this year. PayPal co-founder Peter Thiel said clean technology was a “disaster” on stage at TechCrunch Disrupt 2011 earlier this year.

The amount of money invested in clean technology projects fell 10 percent to $1.83 billion compared to $2.03 billion in the second quarter of 2010. Algae-based biofuel maker Solazyme raised $227 million from its initial public offering in June, 2011, while biofuel maker KiOR raised $150 million in its initial public offering in May, 2011. Smart grid developer Silver Spring Networks only plans to raise $150 million in its upcoming initial public offering.

Those amounts are low compared to business social network LinkedIn, which raised more than $350 million without flinching. That company also picked up a market cap of nearly $10 billion before the sell-off wiped out more than $3 billion in value. Two other Web 2.0 companies, Groupon and Zynga, already filed to go public. Groupon wants to raise up to $750 million, while Zynga wants to raise up to $1 billion.

When Khosla left storied venture capital firm Kleiner Perkins Caufield & Byers in 2004 to invest in clean technology startups, he swung for the fences. Khosla was known for taking a “portfolio” approach to cleantech investing by dropping money in just about every potential part of the budding sector, from biofuels to smart grid companies.

His firm has also invested in some information tech companies like group texting service GroupMe. Khosla himself is an investor in payments service Square, and Khosla Ventures has a partnership with the Designer Fund. But those investments were focused on the team — not the product and not for the sake of making a deal, Khosla said.

[Photo credit: Matthew Lynley]

Fundraisers are everywhere. Coworkers sell their children’s wrapping paper, the quintessential, “Will you pledge for every mile I run?” It seems there are so many causes, but fundraising remains a dinosaur – an old and huge problem.

“Organizing is a profession,” said Chris Lundberg, chief executive of Salsa Labs. “There are professional organizers who are very good, they get people elected, but [Salsa] has Web 2.0 techniques.”

Salsa Labs is an online management tool for anyone looking to raise money. You can get access to their personal dashboard through a login to the cloud. From there, you can organize volunteers, manage donations, create email blasts and SMS campaigns, write officials and more. The dashboard also syncs to your website for easy back-end management.

Salsa provides an application programming interface (API), so that developers can tailor the organizing experience to a particular group’s needs. And users can enhance the Salsa experience with third party applications. Click2Call Jalapeño is an example. The service uses Twilio’s telephony network to connect participants to anyone’s phone number using voice over IP. Click2Call allows organizers to set budget limits, create and save scripts, and keep record and notes on all calls made.

Salsa plans to use the funding to extend its third-party network as well as reach new markets. Funding will also be used to expand its product line, including donor tracking, social customer relationships management, and a mobile app.

The company also plans to make quite a few new hires. ”We’re going to be tapping about 135 people over the next year, “said Lundberg. The company will be opening an office in Reston, Va., and expanding its Austin, Texas office.

Currently, Salsa has over 2,000 clients using the service. California governor Jerry Brown used the service for his 2010 campaign. Salsa was founded in 2004 and has survived on its own profits until this round from Edison Ventures. The company has 50 employees and is headquartered in Washington, DC.

Emergence Capital Partners is known for investing in enterprise companies like cloud storage provider Box.net and online enterprise social network Yammer. It also invested in file transfer service YouSendIt.

The firm was an investor in customer relationship management (CRM) software provider Salesforce.com, which went on to become a publicly-traded company and now has a market cap of more than $20 billion. It also invested in SuccessFactors (another publicly-traded company with a market cap of more than $2 billion) and ad-serving company DoubleClick (bought by search giant Google for more than $3 billion in 2008).

VentureBeat has contacted the firm for confirmation and additional details about the fund.

The number fell by nearly a quarter, from 48 firms in the second quarter of 2010 to 37 firms in the second quarter this year, according to data compiled by the National Venture Capital Association and Thomson Reuters.

A total of 76 venture capital firms raised money in the first half this year, down 15 percent from the first half of 2010 when 89 venture capital firms raised money. 162 venture capital firms raised money in 2010, which is still down compared to 233 firms in 2007 and 212 firms in 2008.

The amount of money raised for venture capital funds grew 28 percent, up from $2.1 billion to $2.7 billion. The amount of money raised in the first quarter also beat the first quarter of 2010, with firms raising $7.6 billion — up 87 percent from $4.03 billion in the first quarter of 2010. Venture capital firms have raised $10.2 billion so far this year, up 67 percent when compared to the first half of the year in 2010.

Venture capital firm Accel Partners, which has invested in both Facebook and Groupon, accounted for most of the money raised in the second quarter this year. The firm raised $1.35 billion for its eleventh venture capital fund and second growth fund, it announced earlier in June. Compared to that, the largest new venture capital fund was only $120 million — raised by New York’s Level Equity Growth Partners.

The second quarter of this year saw 24 follow-on venture capital funds raising money and 13 new venture capital funds created.

Obama’s second pilgrimage in two months to tech magnates here will no doubt help the coffers of his second presidential campaign. It shows that Obama is willing to invest time in a region that is always up for grabs when it comes to siding with Democratic or Republican candidates. If he wins Silicon Valley over, he can get his picture taken with young Zuck, be associated with cool companies and win the youth vote. That was one of the strategies that put him into the White House in the first place.

Is it a little arrogant to think that Silicon Valley could get the next President of the United States elected? Of course. But the thinking is right, and the close association with the President ought to do wonders for tech policy causes. Those include a wide range of issues, including communications spectrum policy, Net Neutrality, clean energy, restrictive immigration laws for tech talent, cyber security, the dearth of engineers in the U.S., and business taxes. If Obama tells the tech industry what it wants to hear on those issues, Silicon Valley will be more liberal than ever.

Benioff’s dinner raised more than $2 million for the Democratic National Committee and Obama’s re-election campaign. Benioff said, “He gets tech and we need to work with him.”

The tech execs are climbing over each other to have the privilege of having their moment with Obama.

According to USA Today, Benioff’s dinner included guests such as Evan Goldberg, co-founder of cloud-computing firm NetSuite; Yelp CEO Jeremy Stoppelman; Drew Houston, CEO of online-storage vendor Dropbox; Craigslist founder Craig Newmark, angel investor Ron Conway and venture capitalist Sandy Robertson. Stevie Wonder sang to the crowd. About 60 people paid $35,800 each to dine at Benioff’s. With results like that, you can bet that Obama will be back.

“I’m not a political person. I don’t consider myself a Democrat or Republican, but I am an American,” said Benioff. “But I do like the president. He’s had a rough couple years and done a good job.”

Benioff said the idea for the fundraiser came from a “political operative.” Whoever it was, the timing was good. Good times have come to Silicon Valley, and if we’re in the midst of another tech bubble, as some have argued, then Obama better raise his funds while the going is good, before the next crash.

“I’ve got a lot of friends in this room,” Obama said. “Some of you are involved in startups. Well, I was a startup not so very long ago … So many of you took a chance on me, and it was not at all likely I was going to win.”

The survey, commissioned by the Palo Alto office of Dorsey & Whitney, an international law firm, challenges many preconceived notions of what entrepreneurs find attractive.

Angel investors — wealthy individuals chiefly investing their own money — came out on top as the most popular source of funds. And the most important criteria were speed of investment and an understanding of the business’s financing needs — both ranked as important by more than 90 percent of survey respondents.

In other words, today’s entrepreneurs want just enough money, delivered right when the business needs it.

Another critical issue: An investor who knows the startup’s industry well was rated as somewhat important or very important by 85 percent of respondents.

Nearly half of respondents, on the other hand, said a prior relationship with the investor was not important. And three in four ranked having a top-tier investor with an established brand name as either not important or only somewhat important.

Ted Hollifield, a partner at Dorsey & Whitney, called the funding environment for tech startups “hypercompetitive.” He’s not kidding: The tension between old-school angel investors, newcomers to the scene, and traditional venture capitalists broke out into the open recently, with the likes of Google investor Ron Conway and PayPal alum Dave McClure (pictured above) engaging in name-calling in emails, tweets, and blog posts.

A memo to McClure and Conway: The Dorsey & Whitney survey shows that entrepreneurs don’t care about your Techmeme mentions. They just want their money. And fast.

The investments range from cleantech to cloud computing and semiconductors — all areas Intel is probably beginning to branch out into, since the company is hoping to put chips in just about everything in existence. The announcements are timed to the Intel Developer Forum, which started yesterday with a keynote speech by Intel chief executive Paul Otellini (pictured).

The four companies receiving funding include: Provo, Utah-based Adaptive Computing — which provides cloud-computing and data-center software; Santa Clara-based Ciranova, a chip designer; San Francisco-based Joyent, a provider of cloud computing infrastructure that Intel Capital had formerly invested in; and San Francisco-based Nexant, which provides software to help with energy efficiency and clean energy solutions. Joyent received $15 million of the funding round, while the rest was undisclosed.

The funding comes as part of the $3.5 billion effort launched in February by multiple venture capital firms led by Intel Capital to help provide jobs for college graduates interested in working in the tech field.

Since 1991, Intel Capital has invested more than $9.5 billion in more than 1,050 companies — located in 47 countries.

Menlo owns 9.37 million shares  of the highly sought-after cloud storage provider 3Par — or 15 percent of the company. Those shares are now valued at $33 each after 3Par accepted a $2.4 billion buyout offer from Hewlett-Packard, according to the report. That would make Menlo’s share of the company around $309 million.

3Par entered the spotlight when it was the subject of a bidding war between HP and Dell. Both companies were looking to pay top dollar to acquire the cloud storage provider — with 3Par finally accepting a $2.4 billion bid from HP over Dell’s $2 billion bid.

Menlo Ventures manages more than $4 billion in funding. The last capital fund the company raised was valued at $1.2 billion in 2005, according to Bloomberg.

3Par has raised over $183 million since its founding in 1999, with backing by Integral Capital Partners, Alliance Bernstein, Open Field Capital, Mayfield Fund, Worldview Technology Partners, Menlo Ventures, and Van Wagoner Capital Management. It went public in 2007, even though it was losing money at the time.

The fundraising effort comes at a time of weak showings for the IPO market. The amount of money raised by venture capital funds declined by about half — to $1.9 billion — in the second quarter of 2010 compared to the first quarter.

Now, they seem to have a pretty good fix on it: Inflection is poised to announce it has raised $30 million in its first round of funding, led by Matrix Partners and Sutter Hill Ventures, for the launch of its second foray into public-records search engines.

Inflection’s PeopleSmart.com, which will launch Thursday, focuses on public records of living individuals — names, addresses and the likes. All the data is aggregated from public records, social media and contact information. (Archives.com focused on a more scattershot approach of all public records.)

The service is sold in two ways: one-time purchases from $1.95 to $39.95, and a continuing subscription for as little as $2.95 a month. Matthew Monahan (above, right) said the one-shot purchase model wasn’t the most “sexy,” because he wanted to retain customers over the long term, not cater to one-off searches. An annual subscription with full access to background reports costs $35.40, and the Monahans hope to lower that price over time and offer more services.

One of those in the works is a court-runner service, which users can request specific court documents for legal proceedings and the like. Monahan said Inflection can bypass a lot of the extra governmental costs and charge users $20 to deliver the documents in an average of about 38 hours.

About 50 percent of the users already active on Archives.com are subscribing members with a good number of annual renewal rates, said Josh Hannah, a general partner at Matrix.

Based on Inflection’s previous success, Hannah said he didn’t expect it to raise more money — at least in the immediate future.

“Despite it being a very large check, $30 million series A funding, not for a second were we worried they were going on a spending spree,” he said. “It’s very possible we hardly touch the cash we put in, they’re a profitable business that was only getting more profitable.”

While privacy is typically a sore point for some of these data-oriented public record search engines, Matthew said PeopleSmart.com offers a simplified opt-out method. Even then, the percent of users who opt out  is usually in the single digits, he said. Any information integrated from a social network is also linked directly to the network instead of housed in-house.

Inflection was founded in 2006 while Brian Monahan was still at Harvard developing the idea, he said. The two eventually moved out to Palo Alto in January 2007, where they now host 40 of their 75 employees. Its main competitors include publicly traded Ancestry.com. Intelius, another rival, acquired a smaller people-search site, Spock.com, in 2009.

Andreessen’s timing is excellent. His firm beat fierce rivals and would-be acquirers to back Foursquare, the fast-growing location-based service, in a $20 million round. Another portfolio company, Skype, just filed to go public, after Andreessen negotiated a complex deal to spin the company out of eBay (where Andreessen is a board member). He’s also on the board of Facebook and an advisor to Twitter.

In short, he has a hot hand right now. With the industry facing a deadly dearth of lucrative exits, the pension funds and other big investors who put money into venture-capital funds pay attention to firms’ ability to win eye-catching deals. And Andreessen Horowitz has certainly shown that.

The question, though, is what he’ll invest in. Andreessen Horowitz’s ambitions run the gamut of venture capital, from the trendy seed investments in raw startups to private-equity style deals like Skype. Those larger deals require more capital. But even storied Silicon Valley investors like Sequoia Capital have run into trouble expanding beyond their core competencies. And when Andreessen started, he promised his investments would average around $500,000.

His thinking has obviously changed since then. Last year, he told AllThingsD’s Kara Swisher, who earlier reported rumors of Andreessen Horowitz’s interest in raising a new fund, “Sometimes having a huge checkbook is a good thing.”

Here’s the scary thing about Andreessen’s move. When Ning, a social network he’d backed, raised $60 million in 2008, he described it as preparation for “nuclear winter.” Sure enough, the global economy tanked. (So did Ning, incidentally, but not because of the recession.)

If Andreessen is raising money now, does that mean he sees trouble down the road — a double-dip recession, or a collapse in the venture-capital market? That might be a question his investors should ask.

1000Memories

The company lets users create a simple, yet informative page for people to come and remember a loved one. The main page launches with just the person’s name and a giant picture of them provided by the creator of the page. The company provides an example of one of the founders’ great uncles on the main website, found here. From there, users can choose to leave comments, post photos, tell stories, sign a guest book or see if any projects have been started.

The projects option is one of the more fascinating aspects of 1000Memories — and where WePay now plays an important role. Creators of a page can start a project in memory of a loved one, which may range from setting up a foundation to raising money for charities. 1000Memories sets up each project with a free WePay account, where visitors can easily donate using a credit or bank card. For example, one page has created a project called the John Krettek III Foundation, which is working to give patients Apple iPads during their treatment and healing processes in hospitals. With WePay, the project has already raised $450 in a short time period and hopes to raise more from friends and family visiting the page.

There is no shortage of websites providing people with a way to raise funds for charities or foundations, including celebrity-backed Crowdrise or YourCause.com — not to mention the variety of memorial sites that exist, such as Respectance or Remembered Forever. However, 1000Memories appears to be the only one combining the ability to create an online memorial as well as raise money for a foundation or cause in a loved one’s memory. It’s a combination that could give the company an edge on the competition.

The San Francisco-based company, founded in 2010, has received $15,000 in funding from Y Combinator.

Betaworks just led a $3 million second round in U.K.’s TweetDeck, a social media dashboard that helps user track status update activity across multiple networks. TweetDeck was one of the earliest companies to build third-party clients for reading tweets and it’s the second-most popular way to tweet behind Twitter’s own website, according to TwitStat. The new round should help the company keep or grow that lead. It comes on top of $2 million the company raised last fall.

It also shows that some investors are doubling down on Twitter-dependent startups despite the angst the company triggered last month when it bought popular Twitter iPhone app Tweetie. That move raised concern that Twitter would ultimately crowd out third-party developers.

The round comes as TweetDeck just launched a new version of the software that now supports updates from Foursquare and Google Buzz. Users can post to Google’s social network directly without running into Twitter’s character limits and add location data. Like with TweetDeck’s Facebook functionality, users can also comment and like other friends’ updates. The new client also lets users mute updates from specific users or that contain specific keywords they don’t want to hear about.

The company builds storefronts for retailers on Facebook so users can buy products directly on the social network, instead of having to click through to a new web site. It has built more than 20,000 storefronts since launching last November. The company wouldn’t disclose the volume of sales it was facilitating except to say that it was supporting “thousands and thousands of dollars” of sales.

Chief executive Christian Taylor said businesses lose customers when they make those customers click away from Facebook and that Payvment’s storefronts improve conversion rates and make it easier to reach new clients, since friends share products with each other. To retain customers, Payvment lets businesses offer discounts to people who “Fan” their Facebook Pages.

The other part of Payvment’s technology that Taylor says is unique is that it unifies all of its 20,000 storefronts through a single shopping cart, so if a user wants to buy sweatshirts from one store and coffee makers from another, they don’t necessarily have to check-out twice.

Crowdrise gives anyone with an Internet connection the ability to create a fundraising campaign for a particular cause. Each campaign sets a fundraising goal and tracks the progress in real-time on an individual campaign page on the website. Several campaigns that appear on the site include “Kick Alzheimer’s in the Ass Project!” and “Scholarships for Cancer Survivors“

Once a campaign is created, the creator or “host” then asks for donations using Facebook, Twitter, and email to let their social network know how it can help the associated cause. Any amount can be donated at anytime. Each campaign also offers the ability to join that cause and help fundraise through their own social networks.

Several fundraising sites exist already that let anyone create campaigns and leverage their social networks for donations, including YourCause.com and GlobalGiving. (Readers might also think of microfinancing site Kiva, but that’s for loans, not donations.) Crowdrise may have a leg up on the competition. Besides star power like Edward Norton (pictured above in box office bomb Death to Smoochy), along with Will Ferrell, Seth Rogen, Jonah Hill, Paul Rudd and Russell Brand — all of which have created campaigns — the service also incentives giving and participation by awarding points to users. Top point earners will have their pick of donated products like an Apple Macbook Pro or North Face jacket. Prizes will be awarded on July 31.

Invested.in hopes to make the hardest part of starting a business a little easier.

It’s a funding platform that lets people promote their ideas to friends and connections via social media in an attempt to collect funding for a project. Users first describe a project in detail, set a funding goal, and describe the potential returns. They can then promote the project using existing social networks like Facebook and Twitter. People interested in investing, can pay into the fund with a credit card (although the investor is free to withdraw those funds at any time before the full funding goal is reached). Once the goal is reached, the investee is free to take the accumulated funds and begin the project.

The caveat is that, because Invested.in isn’t a bank, the company urges investees to be creative with their returns — that is, they suggest paying investers back with products, services or special offers. So this seems to be a model that’s better designed for socially-oriented or artistic ideas. One example, pictured below, asks for funding to back a feature-length film about a gay actor and activist who meet and explore the fickle nature of fame and its ties to the gay community. The writer and director, Rob Williams, pledges a copy of the DVD and a special thank you for people who give at least $20 to the effort.

The site tries to maintain some freedom for potential investors or donors. People who give or invest can take out their money at any time before a project is finished and transfer it to another effort.

The company is privately funded and is looking to close a first venture-backed round soon.

I meet lots of web entrepreneurs who tell me they want to raise venture capital. Most of these people are first time entrepreneurs and they just assume that once they’ve got an idea, the next thing to do is raise venture capital. That’s naive.

I always ask myself is, “is this person/company ready to raise money?” and 99 times out of 100 the answer is “no”.

Now, as a disclaimer, I have never raised venture capital and my company (FreshBooks) has no institutional backing. That said, I have raised money and I do spend a lot of time thinking about capital. I also handle a lot of calls from VCs who would like to invest in FreshBooks. Bottom line: Take my advice as you will.

That said, when is the time to raise venture capital?

When: You don’t need the money

This may seem counter-intuitive on a whole bunch of levels, but the time to raise money is when you don’t need it. What I mean by “don’t need it” is you can carry on without it, or you have alternatives (like other people who want to invest, or a house you will mortgage).

Many entrepreneurs don’t understand the value of finding their way without VC money or they think they need the money more than they actually do. Some believe they need it sooner than they do. And some think all of these things.

The result is they spend a lot of time too early in their businesses lifecycle focused on serving VCs instead of serving their customers. Raising money is a negotiation. You need options when you are sitting at the bargaining table – you need a path without capital, a legitimate path.

When: You have a product

Don’t talk to a VC until you have a product. There are exceptions to every rule, but unless you have built a successful business before, or your business requires millions and millions of dollars to build V1 of your product (think microchips), don’t talk to VCs before you have a working product or prototype.

I’ve met entrepreneurs who tell me, “I’ve got this great idea, I’m going to start shopping it around to VCs.” Thanks to the web, it’s incredibly cheap to build a business. VCs know this too and their role in building businesses has changed since the first internet bubble. Back then entrepreneurs with ideas needed VCs to pay for infrastructure and servers and bandwidth – these things used to be expensive –today they are not.

The consequence is that VCs have no incentive to fund ideas. They can wait till later in the process of building a business. And it’s important that they do because they want to be sure…

When: You know your customer better than anyone

I personally believe this is the most misunderstood milestone on the path to raising venture capital for both VCs and entrepreneurs. If you know your customers, or perhaps you’ve scratched your own itch and you ARE your customer, you are now enormously valuable to yourself and anyone who is going to invest in you.

The difference between VCs and entrepreneurs is customers: entrepreneurs have them, VCs don’t. Knowledge of your customer is what is going to make you a better strategic decision maker and product designer than your VCs could ever hope to be. Remember Facebook Beacon? From what I gather, CEO Mark Zuckerberg was against it because he knew his customer. To the VCs, though… well, let’s just say Beacon looked great on paper.

Knowing your customer better than anyone is valuable. You should use it as a bargaining chip when it does come time to negotiate, but you have to invest in it. You need to phone your users and take them out to lunch. It doesn’t come fast or easy. So build your product and get to know your customers. 100 conversations (not emails!) is a good start. If you fear resistance, email them an invite to speak with the founder of the service they are using about their experience. Your early adopters will be all over that.

When: You have traction

If you have a product and you know your customers better than anyone, you are on your path to traction. But if people don’t become repeat users of your site or service, then you need to make sure they do.

Do your customers refer you? Do you have early adopters who champion you? Do people write you up in blogs or on twitter of their own free will? Repeatedly? Do people actually pay for your service? Those are signs of traction. VCs have enough good opportunities in front of them that they can choose from companies that have traction – you better make sure you do, and your friends using the service does not count.

When: You know what you’re getting yourself into

Don’t raise money if you think it means you’re going to stay in control. Raising money is the first step on the path to loss of control – know that. It starts with equity and a board seat.

Iif you raise money once, you’ll likely raise money three times. If that’s the case, you might like the terms at round one, but have you thought about the terms at rounds two and three? If you have and you like your place at that stage of the race, proceed. If not, don’t. Ask yourself: Do I want to build something big or do I want control. If you want control, you’re going to be very unhappy with the VC path, so do the gut check before you proceed.

Image by Tracy O via Flickr.

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Once we were up and running, we made a commitment: To help other entrepreneurs whenever possible; to share our stories and advice; and to try to help them avoid the bumps and dead-ends we experienced.

I’ve gone through three startups now. I’ve raised over $49 million in venture capital and witnessed countless rejections from investors. I’ve gone through the joyous experience of raising too much capital, trying to do too much and target too many markets, facing corporate bankruptcy and closing our $7.5 million Series B at the last hour (which led us to the road of profitability). I’ve also raised too little capital when we could have raised more and suffered those consequences.

The following is a presentation I have given several times before focusing on the basics of the startup and raising capital process.

Establish Your Team

What sort of headcount do you need for Web startup?  Are two or three people enough? How about a new graphic chip company? Will five to seven people suffice? The trick is to research the competition and ask advice from experts.

Don’t ever rush to fill a needed spot on your team.  Remember, each founder or new hire is critical during the early stages.  “A” talent attracts “A” people for your company, while “B” talent attracts “C” people for your company.

Additional resource: “Building the Perfect Team”

Get Things in Order

Bad team chemistry is the downfall of many startups.  If you don’t trust your partner and his or her skills, then don’t start the company with them.

Remember, too, that the equity split might be different among founders due to differences in experience, when each person joined full-time and significant IP creation. Just because you’re partners doesn’t mean a 50/50 split is the way to go.

Additional resource: LegalZoom.com

Packaging Your Startup

If you’re Jim Clark or Marc Andreessen, feel free to ignore this slide’s last two bullet points. Otherwise…

Megan Fox does not need an Armani dress to look good. She can go without makeup, wear sweats and an old painters cap and have men drooling.  Marc Andreessen has a similar effect in the VC world.

The rest of us (whether that’s first-time or regular entrepreneurs) need the full make-up job — with credible experts, big name executive advisors, top tier law firms and blue chip customers — to highlight us from the startup crowd.

Think through what your team needs to get things done.  If, for example, you’re a twenty-something manager at a record label starting an online music venture who still needs a wider network into the music industry, get a C-level music executive as an advisor to help you out.

Additional resources:

• “Advisorship” by Ross Mayfield
• “Building An Advisory Board for Your Startup”

How Much Do You Need?

You can do a simple or detailed analysis of your expenditures for product/service development, salaries, general and administrative expenses and marketing. How deep you go with this is up to you – but the analysis needs to take place regardless.

Obviously, startup costs vary greatly depending on industry. Just remember to have enough runway to raise your next round and not lose momentum.  Also, expect unexpected costs. Adding a 30 percent buffer to your financial projection can be a lifesaver.

Who is Your Ideal Investor?

Some points are obvious.  Don’t pitch a VC that has never invested in online games if you are starting an online gaming company.

Research potential investor’s portfolio, too. Yes, it’s about the race to execution but why give your competitors intelligence?  I’ve had VCs who forgot to tell me about their competing investment, and I’ve seen their company take paragraphs directly from our business plan.  I’ve had a corporate VC meet and ask for our documents, then close an investment in our competitor three weeks later. Doesn’t due diligence alone take a few weeks?  “Shady” and “unethical” are not absent from the world of venture capital.

How to Think About Valuation

So you negotiate and agree upon a pre-money valuation of $4 million with some VC for their $2 million investment.  This means you have a post-money valuation of $6 million.  2 divided by 6 is 33.3 percent, so the founders gave up a third of their company. Keep a close eye on the math.

How to Think About Valuation

That dilution discussed above doesn’t stop at the 33 percent level, either. Most VCs will demand a 20 percent stock option pool. You can push back if you believe your company’s growth projections doesn’t warrant that amount of the pool, but it’s not easy.

Be aware of how your valuation is affected since most company shares are diluted before the new investors.  A 20 percent stock option pool here will create 1.2 million shares and an adjusted valuation of $4.8 million. If you’re Marc Andreessen, you can have 1.5 million new shares issued after the VC money comes in for the creation of a 20 percent stock option pool and an adjusted valuation of $7.5 million.

Additional resources:

• “Venture Capital Deal Algebra” by Brad Feld
• “The Option Pool Shuffle” by Venture Hacks

Pitching Your Startup

Sometimes it’s actually better to underpromise and overdeliver (especially in the early rounds) because the company is still developing.  Many successful startups change their business models mid-stream. Remember that good leadership recognizes when the ship needs to change course. Founders that don’t acknowledge this often find themselves back at port.

Last Food for Thought

Regarding the first point, there are startups who turned away capital in early 2008 and when the economic collapse occurred they were wishing they had taken it.  Now they are looking at down rounds or closing shop.

That said, there is a dangerous gray area where startups can raise too much and get fat and unfocused. Just because you have the money, don’t veer off course.

A business plan is good on several levels. Initially, it helps develop your knowledge of your space, competitors and operational planning. It also helps you prepare for the fundraising future.

For most early-stage fundraising, you need a 10-20 slide deck, demo or live product (when relevant).  For capital-intensive startups (e.g. biodiesel, solar automobiles) and rounds after your Series A, then a business plan becomes essential to the fundraising process.