The Era of the Entrepreneur!

Written on 1st November 2008                                                                                                              8 COMMENTS
Boris Veldhuijzen van Zanten, Serial Internet Entrepreneur

Without VCs many start-ups wouldn’t have a chance. Unfortunately with VCs many entrepreneurs also don’t have a chance. There will always be a power struggle between investors and entrepreneurs. Sure, they have a common goal: make the company successful. But unfortunately they also have a goal that is completely opposed to each others goals: they both want to make as much money as possible. If that means screwing each other out of some, so be it. Unfortunately, again, the entrepreneur is usually the one with less power in the relationship and so more likely to be screwed, if there is screwing to be done.

Last week Scott Rafer wrote a guest post with his ideas on the current economic crisis and what it means for entrepreneurs. One quote stuck with me:

“Instead, the Valley is delivering grimy voyeurism from ‘A-list bloggers’ or transient opportunism from VCs seeking to negotiate better inside deals with their portfolio companies over the next six months.”

Yep, what that says is that there is screwing to be done and if you are an entrepreneur there is a good chance that some venture capitalist has his cross hairs aimed at your ass.

So how can you defend yourself if you are starting your company? Here are some tips:

1: Be Independent

Yeah, easier said than done. And true in any situation. Still, try to stay away from the “We need 1 million upfront to build our infrastructure” ideas and focus on stuff you can build out of your basement. Once you have traction (cashflow & users) then talk to investors. You will be in a better position to make demands.

2: Think Different

Every VC out there is currently blogging, talking and tweeting about how bad the economy is and how we should all stock up on money if we can and accept any deal we can get. Very friendly advice indeed! Fact is, entrepreneurs are counter-cyclical thinkers. If there is an economic slump we of all people should be seeing opportunities! In a bull market anyone can make it. This is our finest hour and don’t let those blood sucking parasites tell you otherwise!

3: Be Prepared

When you are talking to a VC they will always make it seem like they want to buy a part of your company. Switch that thing around! Don’t be too cocky about it but think of it this way: you are buying a part of their money and are using your company to pay for it. It is a simple trick but will make your perspective completely different when talking to them.

4: Be Patient

With everybody else panicking now is the time for you to relax. Observe what is happening in your industry and who will panic first. Basically this market is now a huge game of chicken: who is going to fold first? Grow your company, concentrate on cashflow and focus on the future.

5: Ignore Everyone

Ignore all the naysayers around you. Don’t matter if they are bloggers, investors or family. You have a company with a product that people want. Focus on that! Unless you have a lot of shareholders you are the only individual who is truly independent. No pink slips for you because you are your own boss! Cover your ears, keep your eyes on the road and blow those competitors who only have eyes for their stock portfolios out of the water!

Economic crisis? Bring it on! This is the era of the entrepreneur and nothing can stop us!

economy, entrepreneur, era, investors

8 Comments »

The Power of Elegance in Design.

Written on 30th May 2008                                                                                                              0 COMMENTS
Steven Carrol, Next Web WebTipr France

A few years ago it was fashionable to make fancy Flash sites that had high impact upon visiting them, fancy graphics, cartoonish displays with an arty feel. But personally speaking I don’t go back to see these sites ever again, do you?

I’m the same with movies, once I’ve seen one, I generally won’t watch it again until I have forgotten it’s plot. Thankfully that fashion seems to have passed, albeit for a few corporates who haven’t quite caught up yet.

Today we have Web 2.0 fashion. Most of us upstarts competing in this arena have aspirations for either a sellout or to grow viral traffic into the millions so that advertising can fuel growth. This time around the fashion is very sleek and polished offerings, plenty of Ajax, lovely curvy corners, with as much javascript thrown in as possible.

For all the classy styles with the fancy drop-downs, the clean looks, Ajax signup pages, there is a distant lack of ‘retention content’, but that is not the point.
The point I want to make is about proving a concept before wasting thousands on classy designs that in many cases will never be seen by more than a handful of beta testers or the developers themselves.

(more…)

application, design, investors, Start-ups

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Credit crisis or not: it’s a fantastic time to build a start-up

Written on 19th March 2008                                                                                                              5 COMMENTS
Ernst-Jan Pfauth, editor in chief

Mike Butcher from TechCrunch UK started the second panel as a depressed man. The credit crisis not just affects the world’s economy, but also the mood of one of Europe’s best bloggers. Luckily there were four investors at Plugg to cheer him up a bit.

Paul Fisher from Advent Venture Partners noted that lots of the start-ups have an advertised-based business model. And online advertising is still growing. Moreover, there’s a continued roll-out of broadband, specifically in Eastern Europe. He also said it’s a challenging time for VC’s: “Talent is a lot more expensive now”. So an important issue, according to Fisher, is that start-up expect more than VC’s.

Julie Meyer (Ariadne Capital) sees the crisis as a way to seperate the women from the girls and the men from the boys. The one’s that really want a start-up will pursue. So she sees it as some kind of filer. “It forces entrepreneurs to be a Fiat Punto instead of a Mercedes S class. Discipline is important now”. Reshma Sohoni from SeedCamp agreed with her: “Companies are now more careful with cash burn and costs”.

So in a few years, people will ask successful entrepreneurs: “What’s your secret?!” Those guys will then probably say: “Wel, we started in Q1 of 2008 and learned to start a company in an efficient way.”

The investors convinced Butcher. I even heard him saying a remarkable thing, something you would expect from a optimist instead of a guy who just lost his faith in world economy: “Yes, it’s a fantastic time to build a start-up.”

investors, mike butcher, panel, plugg2008, vc, venture capitalist

5 Comments »

European and American VC’s, please partner up

Written on 6th February 2008                                                                                                              3 COMMENTS
Ernst-Jan Pfauth, editor in chief

Last year, start-ups had a hard time seducing European venture capital firms to invest in their companies. VentureBeat reports that the VC’s are backing the fewest companies on record since research group VentureSource began tracking investments in 1999.

Only 897 companies were able to woo investors. Yet when they did, it certainly paid of. Since when European VC’s do invest, they are putting in higher bets than they did previously. They invest an amount of 4.56 billion euro in total, a two percent rise from 2006.

It’s the fourth year of consecutive increase in the amount of money, yet this has not necessarily has to be a positive thing. Since VentureSource says that in Europe it’s more difficult to turn a company into a profitable business. Therefore VC’s have to keep investing to make sure that the start-ups become success stories.

The statistics of the European market for mergers and IPOs are a bit horrifying. In 2006 89 venture-backed companies went public, in 2007 this number dropped to 38. Moreover, mergers and acquisitions deals fell 38 percent to 136. Again, VentureSource can draw a sad conclusion: it’s the lowest figure of the past ten years.

The US economy seems to be in trouble, with the growing threat of a recession, yet the merger market was pretty strong.

Although this article is discussing differences between European and American markets, I reckon we should think in terms of best of both worlds. There’s more risk capital available in America and they have a better exit environment. But most American companies stick to their (huge) local market and their own language. European entrepreneurs and VC’s are more used to be working with language barriers, but less risk capital is available.

When we combine these two markets, the available cash, the network of the VC’s and the knowledge and talent of entrepreneurs,, chances of success are bigger. European investors already often look for an American partner in the series B. Let’s keep that up. On the web the world is flat, the only barrier we still have to take is language.

Europe, investors, ipo, m&a, market, venture capitalists

3 Comments »