Fhoster executive summary

Comment

Comment by Antonio Leonforte on January 5, 2010 at 4:10am

Hi Massimo, thank you for your interest in fhoster.com.

>> Why didn't you have already moved your operation (business and marketing) in the Valley?

We have not moved business development and marketing in the Valley for the very simple reason that we still have little to move in that regard :-) We are still completing the development of the platform, and we also have to run through (at least) six months of beta operations.

Cloud-based development & hosting platforms are extremely complex software systems, whose development took all our competitors 10M+ USD of VC money, 3+ years of development and several months to beta-test. These kind of platforms are way more complex than the average SaaS product commonly delivered by small internet startups.

Before moving to the US and start looking for serious money (10M USD or so) we need to have a reasonably stable product, possibly tested in the domestic market, and of course a real company "around" the current R&D team (marketing, sales, customer care, quality control, etc.). On top of this, we clearly need enough money to burn at the US branch.


>> I suppose you already tried to raise some money from investors in the US

When I started working on the project (sept 2006) I basically have not even tried to raise money in the US directly, because at that time I was looking for a relatively big "seed" (300K€), and in order to have such a seed from a US business angel you need to incorporate in the US and stay there, possibly close to the angel's headquarters.

In Italy I had (and I still have) the possibility to involve brilliant students from two different universities, and I also had a lot of logistic advantages (synergies with my other two companies) helping me in cutting down our burn-rate. Moving to the US would have shortened our runaway to less than six months, while staying in Italy I managed to keep the project alive until July 2008 when we finally have been seed-funded by an Italian Angel (240K€).

Once seed-funded, I clearly had the option to move to the valley. But then the financial crisis struck, and finding VC money got very hard even for US-based startup, let alone Italian ones. I decided to stay in Italy, keep our burn-rate as low as possible, be as efficient as possible, and let the team work until the end of this downturn.

Now we still have money for about 10 month, but the platform is now almost ready, and it's really impressive. You can create how many colorful slides as you want, but nothing compares to the effect of turning in real time a simple intuitive drawing into a complete, perfectly working java application than can be immediately used on the web. Demos beat slides hands-off :-)

So now I think we might have some chances to get a SeriesA, in the Valley, but the money he have currently is not that much, and moving to the US would certainly shorten our runaway considerably, maybe less than six months... not enough in my opinion.

What I'm doing now is looking for a bridge funding (let's say 400-500K€) from an Italian VC allowing us to run beta-testing here in Italy and to look for a US-based VC with enough runaway ahead of us.

Let me know if you have any suggestions, and once again, thank you for your interest.
Antonio.

Comment by Massimo Sgrelli on January 5, 2010 at 1:07am

Hi Antonio, You've implemented an Interesting application platform builder. Apart from the cost effectiveness of being in Italy with you company, why didn't you have already moved your operation (business and marketing) in the Valley? I'm just curious. Your product seems to have a good model to get there and I don't think you can get the money you need to scale in Italy. I suppose you already tried to raise some money from investors in the US - I have seen your company has been founded in 2006. Do you have any useful experience to share about this?