This evening Facebook launched their Open Graph app platform with over 60 partners.  We are exited that two Zelkova companies were part of the launch, Fab.com and Foodspotting.  The Open Graph platform will allow for deep app integration into Facebook helping developers improve product functionality, usability and reach.

The Foodspotting Open Graph app will allow users to easily share with their friends all the foods they love and want. Now ill be able tocheck out the recommendations of my friends right within Facebook.

The Fab.com Open Graph app will expand on the social shopping experience the Fab team is building.  Now you will be able to share theproducts you buy on Fab with your Facebook friends.  Oh and as a kicker you will earn a $10/month credit on Fab when you enable social shopping.

Kudos to Facebook for taking privacy seriously and building easy to use tools to manage these apps.

I bring this up as lately we have seen many deals where they attorneys are dictating the terms / structure of the deal, not the founders.  This issue seems to be rampant in seed rounds with first time / young entrepreneurs.

Here are a few pointers for working attorneys:

• Leverage your attorneys for information and an understanding of both sides of any term / structure, than make a business decision and tell them what you want.
• Understand every term of the agreement and its application, this will allow you to determine what matters and what doesn’t for your company.
• Use senior members at firms for education and advice, use junior members for drafting and administrative work.
• Pay your attorneys; don’t ask them to defer to future rounds.  Negotiate a fixed fee ahead of time.

Don’t get me wrong, there are some incredible attorneys out there and from what we have found these are typically the attorneys that view their job as providing information rather than making decisions.

RJ Metrics is a SaaS analytics platform that is simple to install but incredibly powerful and nimble.   RJ Metrics customers range from startups to industry leaders with hundreds of millions in revenue. Companies and investors in eCommerce, software as a service, gaming, and community us the platform to make smarter decisions, drive growth, and enhance profitability.

We first met Robert and Jake a few years back when they were launching RJ Metrics, while they weren’t fundraising they wanted to socialize the product with the venture community as they thought it was a good fit.

It became apparent to us about six months ago that RJ Metrics was something we wanted to be involved with for a few reasons.  First off,  we started using the product at Fab and we were all addicted, secondly the team has done an incredible job of landing great clients who swear by the product and lastly it’s a team that gets it.  Robert and Jake come from the venture world and understand what needs to be done to make a company work for investors, founders and employees.

You can read more about the funding on TechCrunch or the RJ Metrics Blog.

Rebecca and Kane might forgo sleep this week, which will result in an undoubtedly successful fashion show consisting of an open bar, dj, gift bags, raffles and prizes! The models and stylish garb strutting down the runway illustrate the merge between fashion and technology in NYC. Models gallivanting are mostly part of the tech scene, wearing garments lent by popular fashion sites such as Rent the Runway and Lux72. Cross your fingers I will not pull a Carrie Bradshaw and be labeled fashion road kill.

I interviewed Brian Malkerson, a member of Raise Cache’s Planning Committee, who exemplified the importance of Raise Cache. Brian reinstated the value proposition New York has over other cities: fashion and technology/innovation. He elucidated this point saying, “When the CFDA decided to launch an incubator program they chose NYC, not Silicon Valley, because all of the fashion/tech talent that NYC has to offer”. With proceeds from the show, Brian illustrated HackNY’s potential ability to “expand the pool of technical talent that is interested in startups in NYC.”

Please come celebrate creativity, brains and entrepreneurship today at the NYS Armory (Entrance on Lexington Avenue, between 25th and 26th Street). To learn more about Raise Cache or to purchase tickets, click here: http://raisecache.eventbrite.com/

A special guest, Mayor Michael Bloomberg, charismatically shared his support for Techstars as well as petitioned for NYC to be a hub for startups.

With initial roots in Boulder, CO, Techstars is a “mentorship-driven seed stage accelerator program,” which lasts three months and boasts admission to be harder than Harvard.

The TechStars team, which includes Dave Tisch and Adam Rothenberg, did  another phenomenal job mentoring the companies.  Each entrepreneur elucidated his or her ideas with humor, poise and grace. As TechStars co-founder Brad Feld said, “entrepreneurs can struggle with presenting what they do, why it matters and why people should care” but today “the presentation dynamic and caliber were off the track across the board.” Here is a quick preview of the 12 companies who presented at Demo Day.

Contently enables brands/companies to become publishers without having to hire any in-house employees. Freelance writers set up profiles on the site where they can showcase their writing and be paired with the brands they are qualified to write for.

Ordr.in has taken the fragmented local industry of online food delivery and created an open national platform. It is a restaurant platform that connects any restaurants with any clients.

Urtak is a question and answer tool, which can be added to any piece of content in order to increase audience engagement. With yes, no or I don’t care, Urtak strives to replace comments with their Q and A’s, which in turn organizes the world’s opinion.

mobintent make it easier for businesses to manage and create mobile ad campaigns. Through their technology, mobintent breaks down the barriers for advertisers enabling them successfully and smoothly run mobile campaigns.

Spontaneously is a mobile service for sharing and finding out plans based on peoples’ availability. It is the evolution of the calendar, showing you what you can do and what your friends are currently engaging in.

Piictu is a visual network where interactions happen through the exchange of pictures. Piictu is building the first mobile platform for collaborative self-expression in a generation where pictures are no longer objects of memory but of interaction.

Sidetour is a peer-to-peer marketplace for experiences. Authentic experiences are sold to real people who can experience and discover explorative activities locally.

Ambassador is a social referral platform where brands can turn customers into their own brand ambassadors. It is a social customer acquisition platform for e-commerce.

ChatID is a SAS product that retailers, brands and publishers can use to connect with their consumers all over the web. Through one API, chatID is a universal chat platform enabling businesses to communicate with any customer on any device.

Wantworthy is a shopping utility that bridges the gap between browsing and buying. It enables women to save items they like and provides them with a neutral place to make purchase decisions.

Dispatch enables users to see and manage their cloud in one place. It also makes cloud file sharing simple.

Coursekit reshapes education for the Internet age with a social network for education. Classes, homework help and other channels of distribution are available for students all in one place.

Mayor Bloomberg further fueled my passion for Silicon Alley with his growing support for NYC as a place for startups. As an entrepreneur himself, he understands the emotions associated with creating one’s own job. He claims “being an entrepreneur was the most exciting time…the first year you are enthusiastic and you don’t listen to your friends and family…the last year you can see the light at the end of the tunnel, the light wasn’t a train but it was the end of the tunnel.” One of Bloomberg’s aspirations is “when people talk about startups. I want them to talk about New York.”

After hearing the 12 companies pitch at Demo Day, I think Bloomberg’s dreams for New York are closer to reality than he may believe.

The Sandbox proves to students, they don’t attend school to obtain a job but to acquire the skills necessary to create their own. With a greater admiration for entrepreneurs, the “sexiness” of startups was elucidated with a great quote, “with a good idea, everybody says they will be the next Mark Zuckerberg.” While the startup community is often associated with youth, the sandbox is not just for kids. Men and women of all ages can grab a shovel and brainstorm on the next .com success. The 17 of the 21 teams that pitched were judged by 3 judges.

Here is an overview of the 17 companies that pitched at demo day:

ActivMusic

• A concert booking media company, which strives to revolutionize the music fan experiences by makings fans “no longer hostages at live events.”
• Fans and musicians gain value through interactive communication between one another prior to and post concerts

Collegearts.com

• An online gallery for college artists of all forms varying from music to photography
• Portfolios can be viewed, managed and submitted to professors.

Tagglynx

• A new social layer, which enables users to have discussions while browsing, shopping or researching on the web
• People can engage in real time conversations creating a more interactive twitter-like conversation in their browser sidebar.

Persona

• Users can customize the content of their contact card based on whether they met someone at a bar or at a work event. The person’s contacts are integrated into your phonebook and updated based on any contact change.

GroundSwell

• A platform for users to create social agendas where they potential plans can be uploaded and categorized as going out, staying in or studying. People can decide their course for the evening on one platform versus communicating individually with multiple people.

VenueSpy

• Venuespy provide users with a sneak peak at a venue before attending an event.
• The service is free, viral an enables venues to have their own promotional channels, which they can manage to their likings.

Cansforcauses

• Cansforcause builds solutions to empower users to re-cycle.
• Depositing incentives aim to perpetuate recycling efforts.

The Front

• The Front aims to transform abandoned stores in the Syracuse area.
• Students who wish to put their scholarship into action through revitalizing their community can do so with the Front.

OnePlace

• A place where agents and all the other tools necessary to achieve celebrity status can be managed.
• OnePlace can be considered a virtual talent agency.

Stampede.It

• Stampede.It attempts to conquer Groupon issues and powerfully combines group buying and daily deals of digital goods such as e-books and software.
• The concept lowers companies’ risks and increases users buying power.

AnimAnalysis

• AnimAnalysis attempts to improve users’ personal physiology, athletic performance and leads to a healthier lifestyle.
• Each user is identified with a specific animal in hopes to better understand the human body.  by identifying each person with an animal.

Verve

• Verve solves a transportation issue with a pre-paid door-to-door 24-hour taxi service.
• Verve provides students with an alternative to expensive taxis and modes of transportation, which can be deemed unsafe at night. Sharing sites with friends just got easier.

WriteFlick

• Users can highlight, draw and select parts of websites, which they wish to share.
• Multiple aspects of the site can be simply shared without having to copy and paste URL links in a separate browser.

Proactive Computer Services

• Proactive Computer Services, provides a variety of services all in one place.
• The services include: web design, security and project management as well as computer consulting.

DownUpDesign

• DownUpDesign is a mobile app and web development company, which constantly has “cool” projects and even created apps for some of the sites in the sandbox.
• A few of their projects include: Car Safe, which helps solve the texting while driving issue by setting the airplane mode in phones when driving 15miles/hr or more. Users incentives include accruing points, which lower your car insurance when using the ap. Kickspinner, is a shared photo gallery, which can be synched among multiple devices. Their last project CampusSnaps, lets students know what’s going on at their school.

Helios Medical Technologies

• Helios Medical Technologies designed a medical device, which concentrates on sterilization in hospitals.
• The patent pending technology S1 sterilization system prevents cross contamination of door handles using motion sensors.

IGetMoreFit

• IGetMoreFit syncs iPhones or iPod touches with four wireless fitness sensors (weight scales, heart rate monitors, foot pods and ANT+ multi-sport GPS.
• People who crave healthy lifestyles can now transform their iPhone or iPod into “the ultimate all-in-one fitness computer.”

Click here to view the video on YouTube.

While on a trip to New York, Jason got seasoned VC Jay Levy of Zelkova Ventures for a man-on-the-street talk about the state of the market, why NYC is a great place for startups and how Jay knew not to pass on Klout.

Here’s why it happens: insider pricing rounds, when financing is led by existing investors, creates a natural conflict of interest; as many times, it’s in the insiders’ best interest to inflate the values.  The inflated values allow the investors to show paper gains to their LP’s on their existing investment, which makes their LP’s happy, thereby making the GP happy.  This also makes the founders happy as it’s generally easier to raise money from existing investors, and most entrepreneurs feel a higher valuation is better, something I’ll dive into in a future post.

The sham is being perpetrated by existing investors who price follow on rounds.  To make things worse, since angels are so eager to invest right now, they are essentially ‘validating’ the high valuation.

Below is a realistic example of how the scheme works:

The Setup

A startup raises a $500k seed round on a $2m pre-money followed by a $1m round.

The Analysis

The table below shows the outcomes of raising $1m on $5m pre-money valuation and a $10m pre-money valuation

The Result

The example shows that the fund has an incentive to go with the higher valuation, as the net result of the value of the full investment is 50% higher.  Further, while not shown above the value of their 1^st investment is 100% higher by increasing the pre-money from $5m to $10m.

Unfortunately, this situation is happening pretty regularly right now, and in the long term will prove to be detrimental to founders, vc’s and angels.

Think about how often you or someone else has asked for a favor in the past day, week or month? These favors include:

• Can you help spread the word by sharing this link or retweeting this message for me?
• Can you recommend a subject matter expert to help me solve a problem?
• Can you introduce me to someone in your professional network?
• Can you help me fill or find a job?

How have you asked (or been asked) a favor? Probably one of the two ways mentioned below:

• Some people make these requests one-to-one: face to face, via a phone call or by email. While the chances of fulfillment are high due to the personal nature of the interaction, it’s not the most efficient process.
• Some people make those requests on a one-to-many basis: on Facebook, LinkedIn, Twitter and other social sites. That’s also good, because those networks are force multipliers, which spread messages faster and reach more people. On the other hand, this method is impersonal, so fewer people (per capita) are likely to fulfill that request.

Neither method of requesting or answering a favor works perfectly well. There has to be a compromise between the two systems. These requests can be made more efficiently, powerfully and still maintain a level of intimacy. The bridge is Favo.rs .

Favo.rs is the newest addition to Zelkova’s portfolio and is not another social network. It works in conjunction with existing networks allowing professionals to broadcast and fulfill each other’s help requests. Requests can be as simple as a retweet, or as important as an intro. And each time a request is granted, Favo.rs records the exchange enabling both parties to constantly see how they are building and exchanging social capital with each other.

Most significantly, however, Favo.rs facilitates building relationships between professionals who are unfamiliar with each other. I’ll use myself as an example. As an early stage VC, I have a constant stream of help requests from people I don’t know, or don’t know well. While I always try to be as helpful as possible, I also have to establish a filter for who gets priority and who doesn’t. Usually, this filter is based on a rough mental calculation of my relationship with the person who made the request, but if I don’t have any connection to the person, I am stuck.

Favo.rs eliminates being “stuck” because you don’t know how to proceed with someone you lack a relationship with. Once you join the Favo.rs beta, you’ll be able to follow my public requests and myself. I might ask you and my other followers to tweet and share this blog post, or I might ask someone to refer an expert who can help one of Zelkova’s portfolio companies. Every time you fulfill those requests for me, you’re building social capital with me. And when you have a request for me, I’ll be able to see that you’ve helped me in the past and deserve higher priority. Pretty simple, huh?

I’m really excited for Favo.rs. not only because I think it’s a great company, but also because I think it’s going to help us all be more effective at helping each other. I hope you’ll join me by signing up for early access to the Favo.rs beta now.

PS: Favo.rs will be opening up its beta in just a couple of weeks. If you signup by May 10th, you’ll get a priority invite code so you can check it out early.