24 9 / 2012
My take backs from Seedcamp Week 2012 last week
As I did in the last 4 years I was mentoring at Seedcamp in London and I took some learnings back with me which I wanted to share with the community - for those who are interested. ￼
But first things first - the main information for those who haven’t heard about Seedcamp Week before:
- Think about it as a normal pitch event - but for a whole week
- Think about 12 startups presenting at a pitch event - but those startups from 8 different European countries.
- Think about meeting some successful entrepreneurs - just those are the founding members of Paypal, Spotify, Wonga, Zendesk.
- Think about leading marketing managers of Internet companies - just those of facebook, Google, Nokia, Microsoft, Amazon.
- Think about some VCs in a room - just those represent $20 billion worth of funds from Sequoia, KBCP, Index, Accel, SV Bank, Redpoint, BDMI.
- Think about presentations on various topics - just it was CIO of Olympic Games, Adviser to the PM of UK, 3 CEOs taking their company to IPO.
Just a quick list of sources for the general information on this event can be found here:
List of this years startups:
Videos of summaries of each day of the week:
Some postings on Instagram, tumblr and twitter:
Interview with CEO of Seedcamp by Wall Street Journal:
A bit of history of the last 5 years of seedcamp:
So as you can imagine this was intense networking and mentoring for the startups and the mentors. Talking to all sides of the startup ecosystem during this three days for me there were reoccurring topics and opinions which I will definitely remind throughout the next 12 months:
New York is the new place to go for founders
We all thought it needs to be Silicon Valley to be and grow your startup - guess what? it isn’t anymore. Founders want their companies to be where their customers are. They want to focus on revenues - we come to this later - and for most companies in spaces of e-commerce, media, advertising, mobility this is NYC today. Fundraising is still important for startups, but founders can travel and VCs will travel too if your startup is just hot enough. The goal for founders is to make their company as interesting as possible for investors and therefore make the VCs travel to them rather then founders have to hunt them down for money. Another positive effect of this: If the company attracts interest from VCs the valuation discussion is much easier than the other way around. Another pro for NYC is the time difference to Europe. Founders think it is more important to stay close to Europe - either they want to keep in touch with their developers at home - Baltics, Belarus, Ukraine are still the cheapest place to source your engeneers - or they believe Europe is an important market because of its financial strengths of consumers compared to the US at the moment.
Its B2B to be in - because reach platforms are build and done.
We all had our eyes on B2C business models over the last three years: eBay, Amazon, facebook, Google, Twitter, foursquare, Instagram, Pandora, - lets face it: those times are over for newbies. Founders and investors turn their focus away from those plans and startups. You ask why? Because it takes money (tons of money) and time to build those consumer aggregating platforms. And today we have a lot - but we don’t have tons of money anymore neither we do have time to build large audiences. So take the existing ones and leverage their opportunities - but don’t tell us there is this new big thing to be build and you know how to do it - You won’t and nobody believes you if you say so. So there is only one way to go: go business customers. Enable vertical industries to better support their clients to make them pay for those products. Those few companies at Seedcamp would not have big chances to gain success and will most likely pivot to a more b2b shaped biz model in the future. Those who offer a clear way to enable a small medium business to gain new customers or to operate on a lower cost level than today got the attention in the room. This can be repairy, a garage management ERP system in the cloud with customer interaction via SMS and Smartphones. It can be Antavo, a lead generation tool for SMEs to interact with potential customers via all channels from Web, Mobile and facebook. It can be Qminder, a queue management tool for small shops and e-government initiatives at city halls. All of those companies uses facebook, linkedin and twitter to communicate and interact - but none tries to build another platform. This building platform ship has sailed - for good.
Revenue is the best argument - for everything
It is cheap to get IT infrastructure and services today: Amazon E3 for computing, office IT (Gmail, Google Calendar, Google Drive - yes, dropbox is out of the plans), Designers platforms, Onet for sourcing freelancers, Quora and Angel list to get answers and tools, facebook groups to get connected with your local startup community. It hasn’t been easier nor cheaper to start a startup. But here comes the catch: a company which does not need huge amounts of cash to start and maintain operations has no excuse not to generate revenues very soon - profit (positive EBIT) comes later. This will also cause the need to present a prototype of your product to the investors at the first presentation. As nice and shiny the pitches are today - no money will be invested before the companies have not shown their product can be used in a selected user group. Even better: having customers (meaning: a user who pays for a service = customer). e.g. poq studios offers small mobile shops for not main street fashion shops having 15 customers today. Qminder have customers in five continents today which are small shops (barbers, coffee shops, etc) using their tool to manage queues of customers and estimate waiting time for them. It is this main trend which turns startups away from locating to the Valley today but to NYC instead. Qminder’s most successful customers are those small diners and coffee shops in New York used by Wall Street bankers on their way downtown.
Another proof of this last bullet point could be seen as well: We missed a lot of founders and entrepreneurs in London this week. Usually it is a great get together with some night out drinks after the mentoring. This time those were small circles grabbing dinner around the corner and rushing home to get some work done at their airbnb places. Most of the founders hadn’t had time for a trip to London - they were very busy to gain that revenues and get product developing finished in time.
They feel the heat coming up in the market:
Successful fundraising needs results from the past - not shiny presentations about the future.