Note: Fundraising is only one part of building a successful business. I don’t like to belabour this topic but given the amount of despondence amongst European startups, it’s relevant timing to offer a positive example
Over the last couple of years, particularly in the recent downturn, I have been hearing the lament from European entrepreneurs that there is not enough capital in Europe, that US investors don’t invest in European startups, that European VCs aren’t investing in early stage, and should they just bite the bullet and move to the Valley. This outlook certainly isn’t helped by talks and posts from the Valley super advocates like Mike Maples recently at the Future of FundingFuture of Funding conference and Paul Graham at FOWA a couple years back. They point out very valid pluses for the Valley but realistically it doesn’t provide a course of action for all of us keen to build startups in Europe, Asia, Africa, or elsewhere.
It’s easy to whinge and engage in self-pity but frankly the facts prove otherwise. There are an increasing number of examples that prove things are picking up very quickly outside the Valley. Sure, the examples are fewer and it’s difficult work, but this should be the starting point from which we continue to buld. Otherwise, all we end up doing is feeding the vicious cycle that leads to more lamenting.
Much more productive is the approach firms such as USV, Founders Collective, and Betaworks have taken with their commitment to making NYC more like the Valley rather than trying to compete or outdo the Valley.
We’ve always taken a similar view in building up Seedcamp. When we established Seedcamp, a short 2.5 years ago, we put in place a model that tries to break borders while leveraging the best of technology and cultural developments that overcome the European fragmentation.
Here’s what we have seen work well:
1) Draw out and mix talent – The networked model with pan European events that culminate through some bigger events at central hubs like London, Paris, Berlin is crucial in identifying far flung talent and bringing the best entrepreneurs together 2) Mentorship early – Encouraging (oh and sometimes pushing) close working relationships with mentors very early on has led to building much stronger businesses much earlier on and in some cases major strategy shifts without wasting too much time and money 3) Work often in the US – We actively encourage startups to spend quality time in the US, learning about the startup mindset there and of course to establish the all important customer, partner, and investor relationships. This means frequent, long trips to the US and engendering a feeling in the entrepreneurs to want to do this
The reasons all of this works so much better now than 10 or 20 years ago are several but a few I think really important are 1) Fewer cultural barriers – Startup culture is very similar whether you are in Poznan, London, Helsinki, Barcelona, NYC, Boston, or the Valley. We only have American TV and the likes of Techcrunch, Mashable, ReadWriteWeb to thank for this 2) Technological advances – whether it’s networking, skype, workflow sharing, teleconferencing, etc it’s literally and digitally brought everyone closer 3) Ease of travel – as much as traveling sucks these days, the actual ease, cost, and legal feasibility of travel continues to bring us closer together
So, with all of that, we are definitely seeing a change in the past few years, accelerating in the last 1 year: 1) US Angels, Entrepreneurs, and VCs are paying very close attention to startups that Seedcamp brings to see them in the Valley, NYC, and soon Boston. In the case of ERPLY, they are funding them very quickly as well 2) The US folks are coming over to Europe whether it’s Geeks on a Plane, Seedsummit, LeWeb, etc 3) Given you need to show traction to get VC attention, its easy to show this whether in Europe or the US 4) Much more cross-border flow. US and European investors are working and investing together across borders. Both groups are encouraging their startups to work across borders 5) Zemanta, ERPLY, Skimlinks, Zendesk all raised money from entrepreneurs, angels, and VCs from both sides of the Atlantic. And those are just the startups I know well. Here’s a bit more from Saul on the topic
Final words on a course of action…. Stop complaining and start figuring out how to leverage these massively useful changes and your uniqueness to achieve what you want. Because it is happening with loads of companies that have done just that. They don’t complain they just keep generating progress and momentum.