Perspective, Pontification and Propoganda about Entrepreneurship and Venture Capital, brought to you by David Hornik of Lobby Capital.

« Congratulations to Mike Arrington and the TechCrunch Team | Main | 2011: Year of the Tech IPO! »

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Cultureslurp

Great observations David. As an American living here in Europe (Barcelona) I can attest to everything you mention. I would also add this... more than capital, Europe needs more EXITS! The life cycle of: fund > grow > exit > return > fund again just doesn't exist here and is a major component of why there is a capital crisis, as you mention, and why investors put there money in revenue-stage businesses and don't roll the dice on innovation.

Philip Smith

David, spot on! I've been working in the Valley with startups coming here from Spain, Italy, UK - all over Europe really - and the big reason they're here is the (lack of) funding to get an idea off the ground, and then the (lack of) ecosystem to help nurture, grow and develop from there.

Even the vague initiatives of easy government loans to get going in places like Spain backfire because the few early stage VC's look at that money as a way to put in LESS themselves and have LESS dilution, instead of leveraging the heck out of it. That has happened to at least one Barcelona company I work with.

Another, a SAAS company also from Barcelona, is very proud of their 20% EBITDA on a $3m revenue expectation, almost doubling from the prior year. But if you look deeper the real issue is that by not reinvesting the profits in hiring and sales they are missing the opportunity to seize a market by the scruff of the neck and make it theirs. In fact they need to take VC money to really press the pedal down. As you well know, profits in a rapidly growing SAAS business get deferred as you reinvest in gaining more new accounts, renewals etc. But there is no ecosystem or experience there to guide and mentor the Spanish founders in that thought process. And its hard to provide that guidance from here (the Valley) ...

Urgh! So much potential ....

Joris Keijzer

Thank you for your thoughts. I certainly agree with it. I would add that in addition to the traditional advisory role, European mentors also need to guide start-ups in their internationalisation. As you have seen, there is not one unified Europe, with one value system or even one language.

So scaling up a business in Europe is therefore already much more of a challenge in terms of localization, marketing, logistics, legal. That may well be the reason that there are not as many highly publicized exits, which in turn do not draw the capital and nurturing eco system that is boosting the valley.

Philip Petersen

Hi David,
I can only agree and we spoke about this issue when we met briefly at the SVC2UK events (which were great, by the way). And within the tech sector it is even worse if you are not focused on consumer internet / mobile / social networks.

Aside from the lack of early stage capital there is also a cultural difference between the UK and Silicon Valley, as I see it, and the SVC2UK events really highlighted that for me. Whilst profitable exits are definitely needed for a range of good reasons such as generating returns for investors and cash for recycling into other ventures etc, as "Cultureslurp" comments above, they are not the only thing. In fact I seem to remember you and other panellists saying that the entrepreneur should not start a conversation with a potential investor by talking about the exit; instead, he/she should talk about how big the opportunity is and how an enduring, scalable, big, profitable business is going to be created with the investment. Contrast that with the approach that many UK early stage investors take asking about the exit potential first. (As borne out by panel of some UK B2B software angels talking at an event in London I attended immediately after SVC2UK)

I know it is not as simple as "SV right and Europe wrong" but the paucity of early stage capital, and the associated conservatism, is undoubtedly frustrating and it impedes timely progress. Perhaps the likes of "Seedsummit.org" will help.

Meanwhile, as an entrepreneur, there is no choice - you have to keep pushing ahead and innovating and networking.

Beto Juarez

David,

Great comments. I can't help but think that there is plenty of capital in Europe, but it still afraid of touching early stage companies. The real question is what other policy initiatives can governments take to have the private sector have more risk appetite in entrepreneurship and not financial speculation.

-Beto

Milan Accommodation

yes,Great start ups will leads you to great ends....

Cristina Soviany

Hi David,

I completely agree with you. It is tremendously difficult for European entrepreneurs to raise capital in the early stage, and in the rare cases one succeeds with raising some seed money, there is no further support or advice. Going to VC's for an early-stage is almost impossible in Europe. There is a tremendous difference between Europe and US with respect to startup building process and time.

Nick Pelling

Hi David,

A really spot-on post! Here's my TechCrunch post on the same depressing subject (but seen from a UK entrepreneur's viewpoint):- http://eu.techcrunch.com/2010/12/20/top-ten-uk-startup-finance-myths-imho/

Best regards, ....Nick Pelling....

Infrared Camera

Photo shoot too beautiful

Janet

Great post, I have to say I agree with alot of what your saying. I look forward to more posts.

christian-louboutin-sale

"When talking about the famous footwear brand, the Christian louboutin will must be the first topic. Christian louboutin was found in 1992 and became well known soon with its fine materials and fashion style. There are many famous stars are fans of Christian louboutin shoes. As not every woman could afford the high price of louboutin shoes, you can go to the christian louboutin sale site to get cheap Christian louboutin shoes."

ukzsoiqpazy

5DzgZ0 adjlxivfgghv, [url=http://spwtgvjinlaq.com/]spwtgvjinlaq[/url], [link=http://qxajxhqyhunj.com/]qxajxhqyhunj[/link], http://desdbjbibnae.com/

Shop taobao

je veux regarde la chaine manga tv et merci.*_*


casino

I really impressed on your this amazing observation, its a really great thought,Nice article. It is truly a really great post. I noticed all your important points. Thanks!

English taobao

Um...like the style of your writing.*_*

bhp warszawa

very interesting article, i always want to write my own blog
regards

UGG Sale

There's lots of great stuff cooking. But European entrepreneurs face some real challenges when it comes to building their businesses and those challenges threaten to deeply retard the success rate of startups overseas.

OC Appraiser

Europe is a different beast, it's difficult enough in our current economic climate here in America. The one nice thing is that when money is being lost or gained, it's changing hands, and that means you can find it. Some of Europe seems mighty stale in that regard and their just isn't the confidence or movement of investments to fund start-ups.

peter griffiths

David
I started, developed and sold a software services company based in the UK but doing business across Europe and I have a slightly different take on the matter. I know that the view that entrepreneurs are starved of capital is a widely held view but IMHO in B2B at least it is not the limiting factor. I would suggest that the biggest problem is the stiff cultural resistance faced by startups selling to large companies. The propensity of buyers in such large companies to buy from small companies is markedly lower than it is in the US. When I started doing business in the US I flat out couldn't believe the difference. (The irony of this is that the same buyer will often willingly buy from a small US company operating in Europe!) This results in a still longer still more expensive sales cycle and such a delay is crippling for early stage companies. Needless to say, it becomes still harder to demonstrate the kind of proof of traction so loved by those holding the $$$. I believe that money is available to entrepreneurs in Europe, it may be more difficult but a true entrepreneur will find it. What is MUCH harder is to deal with a culture that makes creating sales momentum like kicking a dead whale up a beach.

Supra TK Society

I'm not sure I agree on the idea of South Durham as a "dumping ground" for such projects. I tend to think the presence of Southpoint has made residential more desirable around it, not less.

Coach outlet

Life was quiet and simple

Christian Louboutin

The best thing is to keep cool~

Supra Shoes

We all enhance people's quality of life and the pursuit of a new life concept noble, elegant, romantic and warm atmosphere, its transmission is a new philosophy of life.

Supra Footwear

Because in my opinion, the language should be really beautiful, beautiful, and be able to physical and mental pleasure.

supra shoes

Because in my opinion, the language should be really beautiful, beautiful, and be able to physical and mental pleasure.

mbt walking shoes

This article is very interesting, I like it. I will always come to visit after.I would recommend to friends more.

chanel J12 watches

I visit europ too, and I find that lots of the goods they sell ,they wear, they eat are from China, I'm chinese, so happy to see this

Tory Burch shoes

There's always full of temptation. Like the monkey to break off the corn that, see good and threw his arms, see good and threw his arms, finally, stay in the arms of actually is a minimal.

supra footwear

a lot of building materials bazaar can be hit fold, the choice is decorated in the winter the meeting is a lot of more economic .

mbt shoes

To be truly happy is a question of how we begin and not of how we end, of what we want and not of what we have.

Ken Griffey Shoes

Such a good writing, or by I saw for the first time. I'm quite happy, you are a good writer

Nike Air Pippen

Thank you for the article, I saw after the enlightened, my idea like you, just not good at expression

Adidas Jeremy Scott

At Christmas and always, may peace and love fill your heart, beauty fill your world, and contentment and joy fill your days.

Gucci Outlet

All things are difficult before they are easy.

Asics Onitsuka Tiger

Readability is quite high, I like it very much.

Cheap Air Jordan

It is an equal failing to trust everybody and trust nobody.

Disocunt Jordan Shoes

It is a good tongue that says no ill, and a better heart that thinks none.

Tiffany & Co Outlet Jewellery

It can be inferred that you lack confidence in a victory over your rivals from the fact that you’re irritable against them.

Soccer Shoes

Thank your for sharing your wonderful article. I very agree with your views from here.

seo services company

I really enjoy simply reading all of your weblogs. Simply wanted to inform you that you have people like me who appreciate your work.

christian shoes

“Married” is only four sentences long, but it captures the entire process of grief. “The Forgotten Dialect Of The Heart” was written even later in his career and combines the elements of the first two into what I believe is a mature, accessible style

nike shoes 2011

his career and combines the elements of the first two into what I believe is a mature, accessible style

New Era Caps

This article is very good. I'd like it.

birkenstock shoes

"You, how can this ah, was die of shame to see it!" is two-Jun and Liu Fei warmth of Things, each state Zhongchang, charming and touching when, suddenly, in the video halls of Finally, came a

pos system

his career and combines the elements of the first two into what I believe is a mature, accessible style

Christian Louboutin Outlet

Really appreciate this post. It’s hard to sort the good from the bad sometimes, but I think you’ve nailed it!

air max 2009

is career and combines the elements of the first two into what I believe is a mature, accessible style

Griffey Shoes 2011

The nomination of the winner depends on the capability and spirit of the personality to finish the race.I like the post very much as it .

Digital Cameras Canon

I'm really impressed with your surprising finding, it is really a good idea, Nice article. It's really a very good response. I noticed that all your important points. Thank you!

mbt sale

That was my thought,too.

North Face Outlet

her chin, forcing her own view. Deep, bottomless dark, chilling, this is the first Houqing Ning eyes to see the Emperor is a feeling, but she was not afraid, eyes wide open in the Muslim silence is the

food safety certification

Great job on the site, it looks outstanding. I am going to save it and will make sure to check often

supra tk society shoes

you are a good man

New Balance 993

As an American living here in Europe (Barcelona) I can attest to everything you mention. I would also add this... more than capital, Europe needs more EXITS! The life cycle of: fund > grow > exit > return > fund again just doesn't exist here and is a major component of why there is a capital crisis, as you mention, and why investors put there money in revenue-stage businesses and don't roll the dice on innovation.

Discount New Balance

a lot of building materials bazaar can be hit fold, the choice is decorated in the winter the meeting is a lot of more economic .

quickly sell your house

I must say, I thought this was a pretty interesting read when it comes to this topic. Liked the material. . . . .

ufc 129 tickets

Great post from an expert and it will be a great knowledge to us and thank you very much for sharing this valuable information with us.

Nike Hyperdunk

Another, a SAAS company also from Barcelona, is very proud of their 20% EBITDA on a $3m revenue expectation, almost doubling from the prior year. But if you look deeper the real issue is that by not reinvesting the profits in hiring and sales they are missing the opportunity to seize a market by the scruff of the neck and make it theirs. In fact they need to take VC money to really press the pedal down. As you well know, profits in a rapidly growing SAAS business get deferred as you reinvest in gaining more new accounts, renewals etc. But there is no ecosystem or experience there to guide and mentor the Spanish founders in that thought process. And its hard to provide that guidance from here

zoom lebron shoes

they are missing the opportunity to seize a market by the scruff of the neck and make

GHD Iron

Good stuff as per usual, thanks. I do hope this kind of thing gets more exposure.

prefabrik evler

those challenges threaten to deeply retard the success rate of startups overseas.

New Balance Shoes

There's lots of great stuff cooking. But European entrepreneurs face some real challenges when it comes to building their businesses and those challenges threaten to deeply retard the success rate of startups overseas.

Low Carbon Steels


This is a brilliant post, im really glad I found it thank you

kabin

comes to building their businesses and those challenges threaten to deeply retard

Cheap Onitsuka Tiger

Only an injunction)0f the lessening Can avoid that problem. Defendant: 1)Our name accurately reflected the first BaFfle of the owner of the store.andwe used the word“secret”as a kind of inside ioke because we wanted to keep the new business a secret from a former boss at a competing store.

Vibram Five Fingers


The nomination of the winner depends on the capability and spirit of the personality to finish the race.I like the post very much as it contain informative in knowledge.I like pics of Chelsea shares of the beauty of running in Madison, Wisconsin.I want to congratulate the winner for the nomination race.I want to know suggestion from others.

Air Max Shoes


i come here first time. You can share some of your article, I'm like you write something, really very good! I will continue to focus on

Black nike shox

but they've been found to work for many people and are therefore worth a try.

Womens New Balance

Angel investment isn't just about the capital. It is also about the advice. First time entrepreneurs face a mountain of challenges that they lack the experience to overcome. Good entrepreneurs overcome those challenges through strong intuition and sheer force of will. But great entrepreneurs overcome those challenges through strong intuition, sheer force of will, and the ability to draw upon the experience and advice of others who have navigated the challenges before them.

Ken Griffey Jr Shoes

Thanks for informative and helpful post, obviously in your blog everything is good.If you post informative comments on blogs there is always the chance that actual humans will click through.

Christian Louboutin Pumps

i agree with your views from here.

Tiffany jewelry on sale

The nomination of the winner depends on the capability and spirit of the personality to finish the race.I like the post very much as it contain informative in knowledge.I like pics of Chelsea shares of the beauty of running in Madison, Wisconsin.I want to congratulate the winner for the nomination race.I want to know suggestion from others.

Nike Hyperfuse

challenge European entrepreneurs face is a crisis of capital. There simply isn't a robust network of angel investors who are actively investing in Europe.

male enhancement

Hi, thanks so very much for these suggestions!...

moncle

Here I learned a lot, then I will pay more attention to you

Ugg Boots Clearance

lol. I like your post.

MBT Trainers

Thank you for sharing. Very happy to see your article, I very much to like and agree with your point of view. Have a good time.

foreigner tickets

Interesting post and thanks for sharing. Some things in here I have not thought about before.

Soccer Shoes

before qualifying for venture investment from non-US investors. Not surprisingly, many of the most promising European startups thus make fundraising trips to the United States

kitchen storage cabinet

I think creating businesses in Europe is the way to go. For example, my wooden cabinets business is really successful

mbt shoes online

Thanks very much, I have learned a lot from your post. That was my thought,too. Well done, really! also have a good train at http://www.honest123.com/

Air Max Shoes

You can share some of your article, I'm like you write something, really very good! I will continue to focus on.

gucci outlet

Here I learned a lot, then I will pay more attention to you

1045 steel


This is a brilliant post, im really glad I found it thank you

cosmetic surgery los angeles

Hi, thanks so very much for these suggestions!...

toyota cikma parca

Wisconsin.I want to congratulate the winner for the nomination race.I want to know suggestion from others.

ken griffey shoes

I have never read such a wonderful article and I am coming back tomorrow to continue reading.

Herve Leger Dress

It took us ages to get dressed - we got changed about 3 times before finally settling on a bit of sparkle...

naturopath adelaide

I have been to your site before. It’s Great! IMHO you have a nice port

bathroom tub faucets

I like this website, the style is awesome and really easy to follow. Did you download a theme you found online or get it custom developed? I really like how your comments are laid out as well.

lili

Fear not that the life shall come to an end, but rather fear that it shall never have a beginning.

oakley sunglasses cheap

It is so lucky to read your blog,it is full of useful message.I wish we both can do better in the future.

canada goose buy

i'm very excited to find your artical, in this period, i'm studing some points about your artical. Your artical give me much help. thanks for your sharings. i will proceed to read your artical.

movers INDIANAPOLIS

It's good to see this information in your post, i was looking the same but there was not any proper resource, thanx now i have the link which i was looking for my research. . . . . .

Moncler

Content of the article you write so well, so I benefited from

UGG Button Bailey Bomber

allegations he got, Nike decided to go with another marketing approach.

ugg.com

I loved to read that. Thank you so much for sharing the post with all.You are bookmarked in my favourites.

True Religion Jeans Outlet

Two $1,000 scholarships for restaurant workers and children of restaurant workers are available from the Shui Kuen and Allen Chin Scholarship, a program of the Asian Pacific Fund. The scholarship, founded in 2005, honors the values of Detroit restaurant owners Shui Kuen and Allen Chin through supporting the education aspirations of children of workers in the Asian/Pacific Islander food service industry in the U.S.

cheap handbags

Do you have any hints for taking good pictures of nails? I know it has a lot to do with bad lighting in here but all I'm getting is blurry shots when i try to capture the designs I try. What setting works best, and what's the best alternative to sunlight?

beats by dre store

in here but all I'm getting is blurry shots when i try to capture

The comments to this entry are closed.