In my previous post, I covered the funding aspect of entrepreneurship, but there’s more to innovation than money. To achieve the trifecta of startup success (money, talent, ideas), a vibrant startup community can make the difference between success and failure. In this Google I/O session, “It’s a Startup World“, moderated by my talented colleague Bridgette Sexton, a panel of international startup community leaders shared some of the best practices from their experience. The panel included Erik Hersman (Kenya ,founder of iHub), Eden Shochat (Israel, founder of Face.com, VC at Genesis, founder of The Junction), Jon Bradford (UK/Ireland, founder of Springboard), Jeffery Paine (Singapore, Golden Gate Ventures) and Jehan Ara (Pakistan). Below are the highlights from the panel as well as some interesting audience questions.
Bridgette: Eden, what made you start the junction?
- Eden– we have mandatory service in the army (18-21). It created awesome companies, but the army doesn’t do ecommerce, or much mobile, which are now the biggest growth engines in startups. When I moved to VC, I found out that there were no good consumer internet startups. They were sporadic. The Junctionwas a prototype. We ask applicants 3 questions:
- Are you working on the venture full time
- Is the entire team going to work together?
- are you willing to spend 10% working on other people’s startup.
- The junction is all about creating a pay it forward model. We don’t care about short term revenue. We ask nothing from the companies, we just want them to help each other. In a B2C
- Jon -London has 250 nationalities, the next one on the list is New York with 150. We attract great global talent. I very strongly believe that no geographic region has a monopoly on entrepreneurship. The valley is full with fellow travelers, it’s a big advantage as you have to create critical mass to have a successful cluster.
- Jeff – we look at mobile, consumer Internet, games and SaaS. Singapore is a developed country, and we’re right smack in the middle of developing countries. The challenges are many for Singaporean entrepreneurs: they tend to think very small and very local. We are missing a layer of mentors that ‘been there, done that’, not 10 years ago though. Cause technology changes very fast. We need current role models. My last investment is an enterprise company from Malaysia that went global from day one. There’s pressure to make money fast to survive quickly, so innovation takes a second seat.
- Eric – we had a vibrant tech culture, but there was no central space. we have 8,000 members now, in Nairobi. How are you going to measure success? “if we put enough smart people in the room good things will happen’. You have to experiment in a market like this, because you don’t know what will work. Some of them got funding, when you’re in a nacent market, you’re builidng the market. For us it’s about bringing people together. Testing if we can apply the accelerator model from the Bay Area to Africa.
- Eden – I wanted to add the purpose of The Junction – team building. The most important thing for every entrepreneur is to be able to convince the team of what they should do before they have funding. Geekcon brings people together to build stuff. The purpose is to build useless projects.
- Jehan – in Pakistan, we have 120 million mobile subscribers. The scale of users is just much bigger. The P@SHA SIF Fund that we run, is a social entrepreneurship fund. With very little sums of money, $2,000 per company that passed the screening process, we are able to support various teams with a very small amount of money. Startups that target Pakistan can tap into a huge audience, with a relatively low investment, say $10,000. We started with unique projects to the local market with the first projects we funded. An Audible in Urdu (the national language), a marketplace for handmade leather shoes and Bloodline, a blood transfusion community, which is a big need in hospitals.
- Jon – I used to do a lot of seed investment. when I wrote people a big cheque, they stressed out on metrics from day 1. When I wrote people small cheuques, the first thing they do, is go talk to a customers. In Bulgaria, where I’m involved in a new fund, it’s a desert. There’s lots of entrepreneurship and little funding. So in the next 3 years, we’re going to fund 200 teams to take forward their ideas of products. The approach is throwing a lot of shit on the wall and seeing what sticks. I call it the entrepreneurial compost team. Just because you failed, it doesn’t make you bad. You’re retaining the knowledge of your previous experience. We want to embrace cultures that embrace that attitude, where it’s ok to fail.
Bridgette:- In Israel there’s lot of money. you have opportunity to get series A, why seed?
- Eden – the way that VC works, is that you have to deploy quite a lot of capital. If you run a $100 m fund, you are expected to create $300 million. The VC typically owns 25% of the value of its portfolio, so he needs to exceed $1.2 billion in exits to be able to enjoy the carry of the fund. So the amounts that a VC has to deploy have to be fairly big for the investment to matter to the fund’s bottom line. I’ll give you an example. A startup that made Internet based insoles, for shoes. The guy needed $100,000. The amount of money that I made as a VC is insignificant, even if he sells the company for $10 million. I think the model needs to be different. VCs should reduce the cost of entrepreneurship and make sure that people fail fast – if the idea succeeds, we can get you the money. Don’t take anything, give them the value they need to build a company ($20K, office space,) create a community.