The Most Promising Startups For our annual survey of the most promising technology entrepreneurs, Bloomberg Businessweek's editors and writers weighed input from venture capitalists, angel investors, and other representatives of startups. We also relied on an ongoing direct dialogue with readers and startup founders and on the expertise of our editorial staff. Each slide lists the company name, executives aged 30 and under, a business description, and the wisest funding decision that executives feel they have made.
LearnVest Entrepreneur: Alexa von Tobel, 27
Funding: $1.1 million in seed funding; $4.5 million from Accel Partners announced in 2010
In 2006, Alexa von Tobel was about to graduate from Harvard to work as a trader at Morgan Stanley. Eager to learn about personal finance, which she had never studied, von Tobel found few sources that started with the basics. In 2008, she took a leave of absence from Harvard Business School to create LearnVest, a website designed to help women gain control of their finances. The site helps users find tips and tools for creating and sticking to a budget. They can also enroll in online "boot camps" on personal finance basics, getting out of debt, cutting costs, and building wealth.
Wisest funding decision: "Investing my own money to start LearnVest. Using my own savings taught me real discipline around spending money for the company," she says. "When every dollar needs to go as far as possible, you are really focused on what's critical for the business. Even after we raised $4.5 million from Accel Venture Partners, I practiced the same discipline."
Meraki Entrepreneur: Sanjit Biswas, 29
Funding: $40 million from Google, Sequoia Capital, and DAG Ventures
From an apartment in Cambridge, Mass., Sanjit Biswas founded Meraki in May 2006 while he was a PhD student at the Massachusetts Institute of Technology. He wanted to create something that would let anyone deploy a large-scale wireless network within minutes, and had originally planned to sell routers out of the basement as a side business. Biswas and co-founder John Bicket didn't need to resort to that, however, as they sparked sufficient interest in Meraki to warrant working on the concept full-time.
Wisest funding decision: Raising money when it wasn't necessary. "When we did raise money, it was clearly for acceleration and not survival," Biswas says. Venture capitalists that noticed gave the company great terms, he says.
Wealthfront Entrepreneur: Dan Carroll, 29
Funding: About $10 million from DAG Ventures, Marc Andreessen, and other angel investors
Dan Carroll, who has invested in stocks since age 15, founded Wealthfront in 2007 to advance transparency in investing. At the time, "no one was looking out for the small investor," he says. Carroll wanted to give talented investors easy access to wealth management that was once available only to affluent individuals. "The industry hasn't seen any innovation in 25 years," he says. "Wealthfront wants to change that."
Wisest funding decision: Having a rolodex of well-connected venture capitalists, Carroll says. "Their experience building companies, connections, and insights proved very helpful, [speaking] as a first-time entrepreneur navigating the muddy waters of building a company."
Tutorspree Entrepreneur: Aaron Harris, 26, Ryan Bednar, 25, and Josh Abrams, 27
Funding: About $1 million from investors such as Y Combinator; more funding being raised now
Aaron Harris founded Tutorspree to ensure that students would have access to the same sort of academic help that got him into Harvard. Finding good tutoring was a "word-of-mouth driven, luck-based process" in high school, he says. An increasingly competitive academic atmosphere is driving kids to achieve more, but schools are cutting budgets and teaching jobs. Harris and his co-founders think they can fill that gap.
Wisest funding decision: Paying more attention to the people who were doing the funding than to the size of the checks they were writing. Harris specifically looked for funders who could provide advice on how to patch holes in the company's strategy. "If you don't focus your efforts, you'll end up spinning your wheels endlessly, without actually helping your company," he says.
Alex Rampell, 29
$30 million from Battery Ventures, Index Ventures, and other investors
Chief Executive Officer Alex Rampell has been running his own businesses since the age of 10. He founded his latest startup, TrialPay, in 2006 to offer consumers free virtual goods, such as game coins, for shopping at online stores of retailers such as Gap (GPS
), Netflix (NFLX
), and Petco. (Rampell says he learned over the years that consumers don't want to pay for virtual goods.) With TrialPay receiving a commission from each sale, it expects to double revenues to more than $50 million this year. The company has 120 employees.
Wisest funding decision:
"The only wisdom of early funding is getting the right investors," Rampell says. "You don't want people who'll pepper you with bad ideas; you want people who will support and help you move in the right direction."
GroupMe Entrepreneurs: Jared Hecht, 24; Steve Martocci, 29
Funding: $11.5 million from Khosla Ventures, General Catalyst, First Round Capital, SV Angel, and other investors
Co-founders Steve Martocci and Jared Hecht—who met at concerts of favorite bands Phish and Disco Biscuits—came up with the idea for GroupMe in May 2010, when Hecht's fiancé complained that there was no good way to communicate with friends at music festivals. At a tech conference several days later, the pair built a prototype of a group text-messaging service in just 24 hours. They launched the service in September. Today, GroupMe is sending more than 2 million messages a day and is on track to send 100 million messages in June. It's used by rocker Bon Jovi and by TV shows Oxygen's Bad Girls Club, and MTV's Randy Jackson Presents: America's Best Dance Crew.
Wisest funding decision: "We knew absolutely nothing about how telcos work," Hecht says. "For us, it was incredibly important to get someone who had expertise with that."
"If you are an East Coaster, make sure you have a West Coaster in the round," says Martocci. "There's so much opportunity here—and people, they can make introductions."
Automattic/WordPress Entrepreneur: Matt Mullenweg, 27
Funding: $30.6 million from Polaris Ventures, True Ventures, Radar Partners, and New York Times
While writing a personal blog on politics and jazz, Mullenweg found just how difficult it was to set up a blog. So in 2003 he founded Automattic, the company behind WordPress, a free, easy-to-use blogging service that's employed by the likes of news sites AllThingsD and VentureBeat, tennis star Andy Roddick, and music service Spotify. Today, WordPress powers 12 percent of the Web, with 40,000 new blogs created daily.
Wisest funding decision: "From the very beginning, I chose partners who'd be able to scale with us," Mullenweg says. "We raised $1 million in the first round. With the second round, we raised enough to really focus on the business and not have to fund-raise."
Quora Entrepreneurs: Adam D'Angelo, 26, and Charlie Cheever, 29, co-founders
Funding: Benchmark Capital, amount not disclosed
The founders worked together at social networking service Facebook, with Adam D'Angelo as chief technology officer and Charlie Cheever leading Facebook Connect. Quora, founded in 2009, is a question-and-answer site that focuses on providing new information on such heady subjects as astrophysics and private-equity investing, along with more common topics such as the difference between butterscotch and caramel. The Palo Alto (Calif.), company has attracted fans that include Larry Summers, former director of the National Economic Council, and investor Marc Andreessen.
Wisest funding decision: "We've only raised one round of funding from Benchmark Capital. We've been very happy with them."
Hearsay Entrepreneurs: Clara Shih, 29; Steve Garrity, 29
Funding: $3.1 million from Sequoia Capital, YouTube co-founder Steve Chen, Twitter Vice-President Michael Abbott, Facebook design head Aaron Sittig, and CitySearch co-founder Thomas Layton
Clara Shih and Steve Garrity started Hearsay two years ago in Shih's San Francisco apartment. While writing a book about the use of social networking as a marketing tool, Shih discovered that the Fortune 500 companies she was talking to needed strategic help. She and Garrity decided to provide it.
Wisest funding decision: Taking money from Sequoia. "These guys know what they are doing," Shih says.
WePay Entrepreneurs: Rich Aberman, 26; Bill Clerico, 25
Funding: $9.2 million from Highland Capital Partners, August Capital, Y Combinator, and angels that include Ron Conway's SV Angel, Dave McClure, and PayPal co-founder Max Levchin
Rich Aberman was an unhappy law student and Bill Clerico was a dissatisfied investment banker. During and after school, they were both active in organizations, collecting money for events and causes. The process was cumbersome and they believed it could be improved. They started WePay to "scratch our own itch," Aberman says.
Wisest funding decision: Accepting a small amount of money from Y Combinator and moving to the West Coast, they say.
Jake Mintz, 28; David Lieb, 30
$20 million from Andreessen Horowitz, Sequoia Capital, Y Combinator, and angels that include Ron Conway, Aydin Senkut, and Ram Shriram
David Lieb came up with the idea for Bump while he and Jake Mintz were attending business school at the University of Chicago. Lieb wanted to make exchanging contact information as easy as bumping two phones together. The Bump app has been downloaded 32 million times, letting users of Apple (AAPL
)- and Google (GOOG
)-powered devices share photos, messages, applications, money, and more.
Wisest funding decision:
Participating in Y Combinator in summer 2009 for the network, advice, and mentorship the program provided, they say.
Greplin Entrepreneurs: Daniel Gross, 19; Robby Walker, 27
Funding: $4.8 million from Sequoia Capital, Paul Buchheit, Bret Taylor, Ron Conway, and Keith Rabois
Greplin is building the other half of search. The company's software lets customers search such personal applications as Gmail messages, Facebook posts, Dropbox files, LinkedIn contacts, and Salesforce.com accounts. "We have a very small team and billions of documents in our search engine index," Gross says.
Wisest funding decision: Taking funding only from investors who add more value than "just plain cash," says Gross.
ADstruc Entrepreneur: John Laramie, 26
Funding: $1.1 million from investors that include Draper Fisher Jurvetson and RRE Ventures
John Laramie, chief executive of ADstruc, came up with the idea of using the Internet to buy and sell billboard ads more efficiently after scouting such advertising on a bicycle. Launched in 2010, ADstruc's website features billboard spots from across the country, including New York—where it's based—and Oakland, Calif.
Wisest funding decision: Going with investors who have experience in the ad-tech world. "We were fortunate enough to have a lot of interest from top-tier investors and DFJ and RRE stood out," says Laramie.
OnSwipe Entrepreneur: Jason Baptiste, 25
Funding: $1 million from investors, including Spark Capital, Betaworks, SV Angel, and ENIAC Ventures
Chief Executive Officer Jason Baptiste co-founded New York-based OnSwipe in 2010 to make it easier for publishers to put content on smartphones and tablets. OnSwipe eliminates the need to build multiple applications for different devices. Baptiste, a blogger, also co-founded Cloudomatic, a Web-based software store acquired earlier this year by Zferral, which manages online-sales referrals.
Wisest funding decision: Finding investors who understand how media and technology work together. "We clicked with Spark," Baptiste says. "They truly get the intersection of media and the Internet and software and what that looks like—and that's the whole thesis of our company."
(Corrects the age of Jason Baptiste)
Hipmunk Entrepreneurs: Adam Goldstein, 23; Steve Huffman, 27
Funding: $5.2 million from investors, including Y Combinator, Ignition Partners, and SV Angel
Adam Goldstein and Steve Huffman entered the market for online-airfare sales in August with Hipmunk, a search engine that weeds out long trips and out-of-the-way connections, ranking results based on convenience. Goldstein is a recent Massachusetts Institute of Technology graduate and Huffman previously co-founded social news site Reddit.
Wisest funding decision: Taking seed money from Y Combinator. "They're the Harvard or MIT of Silicon Valley," Goldstein says.
Andrew Mason, 30
Since founding Groupon in 2008, Andrew Mason has made it the largest coupon site. Having spurned a $6 billion buyout offer from Google (GOOG
) last year, Chicago-based Groupon raised almost $1 billion of funding in January. The company, which employs 7,000 employees, may generate as much as $4 billion in revenue this year and is weighing a public offering that could set its value as high as $25 billion.
Wisest funding decision:
Mason joked about the more than $1 billion that Groupon has raised: "Deciding to completely bootstrap Groupon and never taking any money from investors."
Dave Morin, 30
$11.2 million from investors that include Kleiner Perkins Caufield & Byers and Index Ventures
Facebook veteran and competitive downhill skier Dave Morin started private social network Path last year, partly as a reaction to the approach of his former employer. Unlike Facebook, which lets a user broadcast posts and photos broadly, Path limits information to a small group of online friends. Earlier in his career, Path co-founder and Chief Executive Officer Morin, a native of Montana, worked in marketing at Apple (AAPL) and helped create the platform that enables developers to build applications for Facebook. Path is available as an iPhone app and a version for Google's (GOOG
) Android software is coming soon.
Wisest funding decision:
"Taking our first check from [angel investor] Ron Conway and working with Kleiner Perkins and Index for our Series A" round, says Morin.
Kevin Systrom, 27; Mike Krieger, 25
$7.5 million from Benchmark Capital, Baseline Ventures, and angels that include Chris Sacca and Jack Dorsey
iPhone photos don't always look great. So Kevin Systrom, a former Google (GOOG
) product marketing manager, and Mike Krieger, who interned at Microsoft (MSFT
), founded Instagram to build an app that imbues the photos with a vintage luster that can make them more enticing and satisfying to share. The word Instagram is an amalgam of Instamatic camera and telegram and so far, 4 million users have snapped up the app.
Wisest funding decision:
"To optimize for the people we wanted to work with," Systrom says. Instagram sought out Matt Cohler, a Benchmark general partner and Facebook veteran, "because of his experience helping build a social networking company," he says. "His expertise was perfect for what we were trying to accomplish."
Disqus Entrepreneur: Daniel Ha, 25
Funding: $14.5 million from investors, including Union Square Ventures, North Bridge Venture Partners, Y Combinator, and angels that include Aydin Senkut
Opening a website to online comments can be painful because it opens the door to spammers, harassers, and drivel. Daniel Ha co-founded Disqus in 2007 as an antidote to all that while studying computer science at University of California, Davis. Disqus helps website operators curate comments for quick approval or denial, while formatting to render them more readable. Websites for Wired, Time, and President Barack Obama's reelection campaign have signed up.
Wisest funding decision: Finding a venture capitalist who loved the product. In 2007, "right after launching Disqus, we decided to go try to raise investment," says Ha, who left Davis to work on Discus full time. "I went through a few uninspired investor meetings … none really used the product. A couple of months later, I met up with one of our earliest, fanatic users: Fred Wilson of Union Square Ventures, who ended up leading our first VC round."
LivingSocial Entrepreneur: Tim O'Shaughnessy, 29
Funding: $632 million from Steve Case, Grotech Ventures, U.S. Venture Partners, Revolution, Lightspeed Venture Partners, Amazon.com, and T. Rowe Price
Chief Executive Officer Tim O'Shaughnessy started what is now LivingSocial in 2007 along with colleagues from AOL co-founder Steve Case's Revolution Health. It began as a maker of applications for Facebook and got off the ground with a service it acquired called BuyYourFriendADrink.com, where O'Shaughnessy and his team worked with beverage companies and restaurants so people could buy friends coupons for free drinks. From there it morphed into the online coupon service that's now used by millions of people as it challenges market leader Groupon.
Wisest funding decision: Taking $5 million in startup funding in 2008 from Grotech Ventures and Case, money that gave the company a chance to prove it could establish a viable business, and further established Case as a mentor.