This guest post is written by Lucy Stonehill, Founder & CEO of BridgeU – who drive better higher education decisions for international students, secondary schools & universities. Lucy joined Seedcamp for the twice-yearly US Trip, meeting investors and tech companies across the USA.
Heading into the US Trip, I wasn’t really sure what to expect. Although I’ve lived on both coasts of the US at one point or another, I hadn’t properly anticipated the difference in feel and attitude between the startup ecosystems in NY, Boston and San Francisco, respectively.
New York investors, like Big Applers more generally, are very honest in their feedback and direct in their delivery. Certain investors push entrepreneurs by poking holes in their investment cases and by questioning their assumptions, whereas other investors push entrepreneurs by stretching the entrepreneur’s vision in a way that tests the validity and scope of her company’s potential. Probably from an investor-vetting perspective, both of these two strategies are equally as valuable, but the latter definitely strikes me as more characteristic of west coast investors.
In Boston, we stopped at Harvard Business School to sit down with Professor Tom Nicholas for a couple of hours to speak about the venture capital industry and how it has (or hasn’t) evolved over the course of the past few decades. A few learnings stick with me a couple of weeks later…
Choose your VC carefully
An extraordinarily disproportionate share of the “returns” – something like 97% – produced by venture-backed companies are attributable to a few, very top tier VC funds. This implies a few important things: that success breeds success, that entrepreneurs can be picky (read: snobby), and that the right VC funds with the right VC talent can have a tremendously positive impact on a young company.
Investing is an art, not a science
While certain individuals (like Arthur Rock, in whose “Centre for Entrepreneurship’’ our lecture took place) retrospectively appear to be brilliant investors, there is no science that can explain the art of investing. On the one hand, this should be highly disconcerting to entrepreneurs, as the lack of scientific methodology reduces the chance of achieving a meritocratic fundraising environment. On the other hand, it proves even more that raising money for entrepreneurs is a lot about luck, building a connection with a certain investor/investment team, and playing the numbers to your favour.
European vs US venture capital
At HBS, we also talked about the difference in venture scenes between Europe and the US — somewhat of a hot topic as Europe’s tech-ecosystem evolves and matures. We spoke about the danger of drip-feeding investment in Europe — the phenomenon whereby government and/or private funds provide European entrepreneurs and start-ups with enough capital to subsist on for a few months, but not enough to grow fat and fast on. In the US, after all, Seed capital typically means $1-3 million, not $1-300k. Their view is that it takes big failures to see big successes.
Travelling from coast to coast, pitching investors who are truly thought leaders, receiving advice from European success stories like Y-Plan’s Rytis Vitkauskas, and basking in the Palo Alto sun was wild, amazing, inspiring, and definitely exhausting. But, it wasn’t all ra-ra-USA. Whether we realise it or not, we are uniquely positioned in Europe as we have a truly global view of what it means, and probably what it takes, to disrupt large industries.
The size of the American market is both a blessing and a curse. It means that American start-ups can and do survive by taking into consideration only the American market. In Europe, we build businesses and nurture our ideas with global expansion in mind from day one. Some investors the in US — some of the ones we spoke with on our trip — also have this view, and they’re bullish on Europe as a result. They believe that investing in the future means acknowledging that the future may look different from this side of the Atlantic.