Making Money Without

Tomorrow we’re taping our second episode of “Ask a VC” where you email in questions and I ask them. Satish Dharmaraj of Redpoint Ventures is the guest. He’s a relatively new VC, having joined Redpoint after making them a lot of money when he sold Zimbra to Yahoo for $350 million– directly without a banker. Yeah, he’s kind of a bad ass.

Dharmaraj doesn’t mince words so expect honest answers. And there are a ton of things Dharmaraj is perfect to talk about including the sell-or-not-to-sell dilemma, his thoughts on the Yahoo drama, whether his copious operating experience is or isn’t that much of an advantage to entrepreneurs he invests in, the future of open source or business software, his angel investing in India, his absurdly tricked out Prius thanks to George Barris of Batmobile fame, and of course any practical questions on pitching Redpoint. (The car is above, see a video I did about it when I was at TechTicker here.)

We’ve already gotten a good number of questions, but to add yours email askavc(at)techcrunch(dot)com.

This post originally appeared on Forbes.com, where Mashable regularly contributes articles about social media, business and technology.

Why do web startups raise money? And how? These are two questions that account for a huge corpus of tech and financial discussion. Despite the complexity involved in these questions, their answers can be condensed into an eight-word statement: Someone somewhere thought he’d make his money back.

If you consider a few notable fundraising efforts from popular web startups, you begin to see how this aforementioned hypothetical “someone” might think his investment would be prudent and even profitable. Here are five popular web startups we’ve seen raising large amounts of money since the 2008 downturn, and a quick look at how they were able to do so.

1. Groupon

Groupon offers daily discounts for local businesses; these coupons can be redeemed only when a significant number of people choose to use them. For example, Groupon recently partnered with Gap to offer shoppers $50 worth of clothing and accessories for $25.

While daily deals and critical-mass coupons are fine and dandy for retailers and consumers, Groupon also takes its cut. The company usually keeps half of the coupon price and is expected to report $400 million in revenue for 2010.

Groupon has brought in increasing interest from investors. Since its relatively modest $1 million angel round in 2007, this startup has gone on to garner a total of $173 million over the past three years, the vast majority of which was raised after the 2008 economic crash. After collecting $6.8 million during its Series A round of funding, Groupon managed to bring in $30 million during its Series B round in December 2009, which was led by Accel Partners. Its headline-making $135 million Series C was led by Digital Sky Technologies, the famous investors behind Zynga and class='blippr-nobr'>Facebookclass="blippr-nobr">Facebook.

Without question, having a revenue stream as a core part of the company’s main product is a popular feature (with VCs) of funded startups. Groupon has that covered. Aside from the value the product offers, at scale, it also is intended to generate massive amounts of revenue. Unlike some social networking apps that require partnerships and advertising dollars to support an unrelated product for end users, generating revenue is Groupon’s most basic function.

2. Zynga

Zynga, creator of popular casual games, including FarmVille and Mafia Wars, boasts a revenue model based on small end-user transactions in virtual currency, which users spend on virtual goods. Zynga has proved that microtransactions at the scale of Facebook’s platform are big business worth serious investment.

Despite violating a core tenet of web startup wisdom: Never build your business on someone else’s platform, Zynga has racked up huge rounds and equally huge valuations. All told, Zynga has taken $519 million in funding, the bulk of which was raised after December 2009. In that month, the company closed a $180 million Series C from such firms as Andreessen Horowitz, Digital Sky and others. And in June 2010, Zynga took a $300 million Series D from class='blippr-nobr'>Googleclass="blippr-nobr">Google and SoftBank. With more than 56 million Americans playing social games, it’s no wonder why investors are putting down serious money in this industry.

3. Twitterclass="blippr-nobr">Twitter

Since its launch in 2006, micro-blogging service Twitter has become a social media darling, raising a total of $160 million since its 2007 Series A. The company raised $135 million over two rounds in 2009 from such firms as Benchmark, Morgan Stanley, Union Square and others.

Notably, all this money was raised before Twitter had found any significant source of revenue. This fact bucks a major trend in investment (that VCs like to see clear revenue stream before investing), but Twitter pulled it off because of one major factor: People.

Not only was the service growing exponentially, but it also had the endorsement (and daily usage) of pop culture celebrities such as Ashton Kutcher and Justin Timberlake. But nothing topped Twitter’s Oprah appearance, a watershed moment that brought a deluge of mainstream attention and a glut of new users.

Between the escalating adoption and increasing media attention, Twitter has become an opportunity investors can’t turn down.

4. Asana

Facebook Co-Founder Dustin Moscovitz and Facebook engineering lead Justin Rosenstein teamed up after leaving Facebook to found Asana, a startup that is reportedly building project management software. It is still in early development and hasn’t launched a product yet. This is one case where the product is presumed to be a sure bet because of the past experience and intellectual caliber of its creators.

Sometimes, a startup can raise money with nothing but pure pedigree. When a handful of big tech company engineers leave the mothership to found a startup, as happens in Silicon Valley from time to time, they can often drum up a round of funding before pencil meets paper.

Over seven months in 2009, the team was able to raise $10.2 million in two rounds of funding. In this case, investors are banking on Moscovitz’s and Rosenstein’s past successes. In a way, it’s as if they are investing in Beethoven’s next symphony or Van Gogh’s next canvas (i.e. the next Facebook).

5. Ustreamclass="blippr-nobr">ustream

Finally, there’s Ustream, a live interactive broadcast platform, which raised an impressive $75 million round of funding earlier this year from SoftBank. Previously, the startup had brought in nearly $13 million between a small 2007 seed round and a 2008 Series A. That’s a huge jump.

Despite a range of competitors in the online video world, including class='blippr-nobr'>YouTubeclass="blippr-nobr">YouTube, Ustream has made its mark on the live video market. Ustream has demonstrated mass-scale success in this arena by brokering deals to show live online footage of red carpet events, celebrity press conferences and even the 2008 Presidential Inauguration.

While challenging an industry leader like YouTube isn’t usually a prudent path to funding, doing so successfully through innovative technologies and user acquisition strategies can pay off.

More Business Resources from Mashable:

- 10 Emerging Social Platforms and How Businesses Can Use Them/> - 10 Free WordPress Themes for Small Businesses/> - The Future of Ad Agencies and Social Media/> - HOW TO: Run Your Business Online with $10 and a Google Account/> - 5 New Ways Small Business Can Offer Location-Based Deals

Image courtesy of iStockphotoclass="blippr-nobr">iStockphoto, Sage78

For more Business coverage:

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Tomorrow we’re taping our second episode of “Ask a VC” where you email in questions and I ask them. Satish Dharmaraj of Redpoint Ventures is the guest. He’s a relatively new VC, having joined Redpoint after making them a lot of money when he sold Zimbra to Yahoo for $350 million– directly without a banker. Yeah, he’s kind of a bad ass.

Dharmaraj doesn’t mince words so expect honest answers. And there are a ton of things Dharmaraj is perfect to talk about including the sell-or-not-to-sell dilemma, his thoughts on the Yahoo drama, whether his copious operating experience is or isn’t that much of an advantage to entrepreneurs he invests in, the future of open source or business software, his angel investing in India, his absurdly tricked out Prius thanks to George Barris of Batmobile fame, and of course any practical questions on pitching Redpoint. (The car is above, see a video I did about it when I was at TechTicker here.)

We’ve already gotten a good number of questions, but to add yours email askavc(at)techcrunch(dot)com.

This post originally appeared on Forbes.com, where Mashable regularly contributes articles about social media, business and technology.

Why do web startups raise money? And how? These are two questions that account for a huge corpus of tech and financial discussion. Despite the complexity involved in these questions, their answers can be condensed into an eight-word statement: Someone somewhere thought he’d make his money back.

If you consider a few notable fundraising efforts from popular web startups, you begin to see how this aforementioned hypothetical “someone” might think his investment would be prudent and even profitable. Here are five popular web startups we’ve seen raising large amounts of money since the 2008 downturn, and a quick look at how they were able to do so.

1. Groupon

Groupon offers daily discounts for local businesses; these coupons can be redeemed only when a significant number of people choose to use them. For example, Groupon recently partnered with Gap to offer shoppers $50 worth of clothing and accessories for $25.

While daily deals and critical-mass coupons are fine and dandy for retailers and consumers, Groupon also takes its cut. The company usually keeps half of the coupon price and is expected to report $400 million in revenue for 2010.

Groupon has brought in increasing interest from investors. Since its relatively modest $1 million angel round in 2007, this startup has gone on to garner a total of $173 million over the past three years, the vast majority of which was raised after the 2008 economic crash. After collecting $6.8 million during its Series A round of funding, Groupon managed to bring in $30 million during its Series B round in December 2009, which was led by Accel Partners. Its headline-making $135 million Series C was led by Digital Sky Technologies, the famous investors behind Zynga and class='blippr-nobr'>Facebookclass="blippr-nobr">Facebook.

Without question, having a revenue stream as a core part of the company’s main product is a popular feature (with VCs) of funded startups. Groupon has that covered. Aside from the value the product offers, at scale, it also is intended to generate massive amounts of revenue. Unlike some social networking apps that require partnerships and advertising dollars to support an unrelated product for end users, generating revenue is Groupon’s most basic function.

2. Zynga

Zynga, creator of popular casual games, including FarmVille and Mafia Wars, boasts a revenue model based on small end-user transactions in virtual currency, which users spend on virtual goods. Zynga has proved that microtransactions at the scale of Facebook’s platform are big business worth serious investment.

Despite violating a core tenet of web startup wisdom: Never build your business on someone else’s platform, Zynga has racked up huge rounds and equally huge valuations. All told, Zynga has taken $519 million in funding, the bulk of which was raised after December 2009. In that month, the company closed a $180 million Series C from such firms as Andreessen Horowitz, Digital Sky and others. And in June 2010, Zynga took a $300 million Series D from class='blippr-nobr'>Googleclass="blippr-nobr">Google and SoftBank. With more than 56 million Americans playing social games, it’s no wonder why investors are putting down serious money in this industry.

3. Twitterclass="blippr-nobr">Twitter

Since its launch in 2006, micro-blogging service Twitter has become a social media darling, raising a total of $160 million since its 2007 Series A. The company raised $135 million over two rounds in 2009 from such firms as Benchmark, Morgan Stanley, Union Square and others.

Notably, all this money was raised before Twitter had found any significant source of revenue. This fact bucks a major trend in investment (that VCs like to see clear revenue stream before investing), but Twitter pulled it off because of one major factor: People.

Not only was the service growing exponentially, but it also had the endorsement (and daily usage) of pop culture celebrities such as Ashton Kutcher and Justin Timberlake. But nothing topped Twitter’s Oprah appearance, a watershed moment that brought a deluge of mainstream attention and a glut of new users.

Between the escalating adoption and increasing media attention, Twitter has become an opportunity investors can’t turn down.

4. Asana

Facebook Co-Founder Dustin Moscovitz and Facebook engineering lead Justin Rosenstein teamed up after leaving Facebook to found Asana, a startup that is reportedly building project management software. It is still in early development and hasn’t launched a product yet. This is one case where the product is presumed to be a sure bet because of the past experience and intellectual caliber of its creators.

Sometimes, a startup can raise money with nothing but pure pedigree. When a handful of big tech company engineers leave the mothership to found a startup, as happens in Silicon Valley from time to time, they can often drum up a round of funding before pencil meets paper.

Over seven months in 2009, the team was able to raise $10.2 million in two rounds of funding. In this case, investors are banking on Moscovitz’s and Rosenstein’s past successes. In a way, it’s as if they are investing in Beethoven’s next symphony or Van Gogh’s next canvas (i.e. the next Facebook).

5. Ustreamclass="blippr-nobr">ustream

Finally, there’s Ustream, a live interactive broadcast platform, which raised an impressive $75 million round of funding earlier this year from SoftBank. Previously, the startup had brought in nearly $13 million between a small 2007 seed round and a 2008 Series A. That’s a huge jump.

Despite a range of competitors in the online video world, including class='blippr-nobr'>YouTubeclass="blippr-nobr">YouTube, Ustream has made its mark on the live video market. Ustream has demonstrated mass-scale success in this arena by brokering deals to show live online footage of red carpet events, celebrity press conferences and even the 2008 Presidential Inauguration.

While challenging an industry leader like YouTube isn’t usually a prudent path to funding, doing so successfully through innovative technologies and user acquisition strategies can pay off.

More Business Resources from Mashable:

- 10 Emerging Social Platforms and How Businesses Can Use Them/> - 10 Free WordPress Themes for Small Businesses/> - The Future of Ad Agencies and Social Media/> - HOW TO: Run Your Business Online with $10 and a Google Account/> - 5 New Ways Small Business Can Offer Location-Based Deals

Image courtesy of iStockphotoclass="blippr-nobr">iStockphoto, Sage78

For more Business coverage:

class="f-el">class="cov-twit">Follow Mashable Businessclass="s-el">class="cov-rss">Subscribe to the Business channelclass="f-el">class="cov-fb">Become a Fan on Facebookclass="s-el">class="cov-apple">Download our free apps for iPhone and iPad

robert shumake

ChampMan media scandals &quot;would be fun&quot; <b>News</b> - Page 1 | Eurogamer.net

Read our news of ChampMan media scandals. ... Latest News. "Rebuilt" iPhone ChampMan soon . Developer Beautiful Game Studios; Publisher Square Enix; Release Date Autumn 2010; More on Championship Manager 11 → ...

Sigma releases SD1 flagship digital SLR: Digital Photography Review

Sigma releases SD1 flagship digital SLR: Photokina 2010: Sigma has announced the SD1 digital SLR, which uses a brand new 46Mp 1.5x crop Foveon X3 sensor (4800 x 3200 x 3 layers). Designed as the company's flagship camera, the SD1 has a ...

Today in automotive <b>news</b> - Beyond The Commons - Macleans.ca

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ChampMan media scandals &quot;would be fun&quot; <b>News</b> - Page 1 | Eurogamer.net

Read our news of ChampMan media scandals. ... Latest News. "Rebuilt" iPhone ChampMan soon . Developer Beautiful Game Studios; Publisher Square Enix; Release Date Autumn 2010; More on Championship Manager 11 → ...

Sigma releases SD1 flagship digital SLR: Digital Photography Review

Sigma releases SD1 flagship digital SLR: Photokina 2010: Sigma has announced the SD1 digital SLR, which uses a brand new 46Mp 1.5x crop Foveon X3 sensor (4800 x 3200 x 3 layers). Designed as the company's flagship camera, the SD1 has a ...

Today in automotive <b>news</b> - Beyond The Commons - Macleans.ca

14832311 Responseshttp%3A%2F%2Fwww2.macleans.ca%2F2010%2F09%2F20%2Ftoday-in-automotive-news%2FToday+in+automotive+news2010-09-20+15%3A11%3A07Aaron+Wherryhttp%3A%2F%2Fwww2.macleans.ca%2F%3Fp%3D148323 to “Today in automotive news” ...