Tomorrow morning we're bringing together around 60 folks like Jeff Clavier, Martin Varsavsky, Brent Hoberman, Lukasz Gadowski, Stefan Glaenzer, Dave McClure, Andy Philips, William Reeve, Robin Klein, Jyri Engestrom and Sherry Coutu for the first edition of Seedsummit.
Seedsummit is a new event produced by Seedcamp, which aims to bring together twice a year a critical mass of our region's most active seed investors to try and establish a stronger, more cohesive network to support entrepreneurs.
Creating a distributed network for European startups
To succeed in creating an start-up ecosystem that can repetitively and sustainably build global leaders, Europe has to deal with the critical issue of fragmentation.
Seedcamp has spent the last few years very focused on building the beginnings of a network model for entrepreneurs. We've tried to lessen the constraints and isolation of geography by giving people the best possible access to a distributed network of advisors, funding and investors across our region, who can help them aim high and build ambitious global businesses.
At Seedcamp we believe we need to make our geographic distribution and cultural diversity part of our strength, so we've pushed the network out across the region with programs in London, Berlin, Paris, Ljubljana, Helsinborg, Tel Aviv, Warsaw, Kiev and San Francisco. In 2010 we intend to extend this to Copenhagen, Barcelona, Prague and New York.
This network model is the right focus and one that Seedcamp will deepen and maintain.
Leveraging the network for seed investors
One of the things we've learnt with Seedcamp is that there is a huge amount of seed investment activity across our region.
But right now it is fragmented, in pockets, shares no learnings and almost never networks. In fact, there is no dedicated regional network that brings together active seed investors in a concentrated way and these are the folks that entrepreneurs (including Seedcamp ones) often look to as their first source of capital.
So with Seedsummit, we are trying to create an informal forum where the people most actively investing in seed can get together, share best practices and dealflow.
Why is seed so important?
While micro-seed funds like Seedcamp, Techstars and YCombinator do an awesome job of helping start-ups get off the ground and traditional venture firms are great at providing early stage and growth capital, seed investing provides a vital bridge between prototype and establishing product/market fit.
Even before today's well worn arguments about the lower cost of starting businesses, seed has always played a vital role in any vibrant and successful start-up ecosystem. In the Valley, enlightened seed investors like Mike Markkula ($250k into Apple in 1977), Andy Bechtolsheim ($100k into Google in 1998) and Peter Thiel ($500k into Facebook in 2004) have given some of today's biggest technology players their start.
But more than just capital, the best seed investors provide critical advice, mentoring, connections and qualified access to top-tier capital when and if that becomes appropriate for start-ups.
Seed networks are developing strongly outside of Europe
While seed investing used to be the preserve of a few well intentioned individuals, seed in all key markets is becoming professionalized and there is now an incredible network of active stage investors and firms.
In all of these markets - especially the Valley and Tel Aviv - there is enough concentration and flow that not only do startups have great choice but investors can share best practices, access more filtered dealflow and find great syndicate partners. As with any network, everyone improves by more participation and information flow.
So what about Europe?
In Europe we do have some very active seed investors and some venture firms like Index, Mangrove and Eden are institutional investors who are active at the earliest stages in the market.
But the market is fragmented - syndicates which form easily in the Valley, Israel or New York often are hard to create. Sometimes it even hard to get people in London and Cambridge investing together, never mind Germany and France.
This is the goal of Seedsummit
Get these guys together - at least twice a year and make it easier for these active seed investors to work together and learn from each other, so it becomes easier for entrepreneurs to source and experience superior seed capital.
As with so much else in Europe we have a long long way to go, but like Seedcamp three years ago we have to start somehwere and that where is tomorrow when we have over 50 active investors from UK, France, Germany, Italy, Spain, Nordics and the US come together to connect....
I'm really looking forward to it and seeing what happens.
Why write this post? People often ask me about Seedcamp - why we started it, what's it about and where's it going. I also haven't put any thoughts down on the subject of building startups in Europe for over two years. It occurred to me that as a European startup itself, looking at Seedcamp might give a view on both. So this is a lot longer than 140 characters but hopefully this answers some of the questions. Anyway, here goes....
More and more role models & an emerging startup ecosystem of mentors
Globalization of the web which no longer put the US at the centre
Radical lowering of start-up costs
None of this has changed in the last 3 years - if anything, it is more true than ever given:
the further development of open source;
the emergence of cloud services;
the bootstrapped role models of 37signals, FreshBooks and the like;
the mass-market adoption of new distribution platforms like Facebook & iPhone
So what's the real problem with Europe? Mike Arrington knows that its not just that people like long-lunches. The problem is our region's cultural complexity and geographic fragmentation. When you include Africa and the Middle East, there are over 50 viable markets within a 5 hour time zone - the same time zone that separates New York and Silicon Valley. Instead of 50 states with one government, one language, one currency and one set of media - we have 50 countries. Say no more.
If you want to get everything in one place, there is nowhere better in the world than the Valley. It is perfectly self-contained.
But if you want to tap into the diversity of talent, ideas and culture you can see from Cape Town, Tel Aviv, Budapest, London, Amman, Kiev and everything in between then you need a different and more distributed approach.
Can Seedcamp's distributed approach work? We don't have the density of the Valley and quite frankly never will, so we need to deal with what we have and make the best of it.
Personally, I believe passionately in the distributed model. I think over time, with the right institutions and networked infrastructure it is capable of producing serious technical and business alchemy.
Seedcamp was designed to be a way of bringing together the different strands of the ecosystem together - entrepreneurs, investors, advisors, academia and corporates. A grass roots attempt to bring some cohesion into the region's diverse and highly fragmented startup scene with a focus on the first-time, most inexperienced entrepreneurs.
Seedcamp is one several positive initiatives, including the great work Mike Butcher is doing taking Techcrunch across Europe, that Loic & Geraldine Le Meur do every December with their LeWeb conference and the forum for European founders Brent Hoberman & Marc Samwer put on every summer with Johnnie Goodwin & Jeffries. We all have a very long way to go I know people say that long-term thinking is unfashionable in our industry, but I agree with Fred Wilson and my dad that great things take time. In my mind, helping to bring some cohesion to our region's distributed network of talent, capital and advisors is a 15-20 year project.
No single organization can achieve this. Even if Seedcamp is not ultimately a success - as measured by the success of the entrepreneurs who have been funded by it or experienced its programs - hopefully it will have helped to inspire some of the right thinking.
Getting to the right point takes time, and the cycles that kicked off what we now know as Silicon Valley began nearly 50 years ago.
Investing legends like Arthur Rock (Fairchild Semiconductor), Don Valentine (Cisco, Apple, EA), Don Lucas (Oracle), Dave Marquardt (Microsoft) and John Doerr (Netscape, Amazon, Google) and the entrepreneurs they backed created franchise businesses that still dominate the technology industry today. But maybe more importantly, all these businesses created the raw materials (talent, seed capital and technology) for next generation of the today's winners like Google, Facebook, Salesforce.com and many many others.
In Europe and Israel, we have been going for no more than 15 years - so we need to maintain the perspective to think long-term, to build great franchise businesses and have the patience to reap the rewards of the ecosystems they will help to create.
Plus, how many independent technology titans do we have in our region today? Not enough.
A truly great independent technology business is capable of doing what Microsoft, Apple, Cisco, Oracle, VMware have all done - generating a billion dollars in annual revenues. In our region, its hard to look much beyond SAP, Amdocs and Checkpoint - sorry Nokia doesn't count but Skype is on its way.
[An interesting sidenote is that none of Cisco, Oracle, Microsoft, Apple, Checkpoint or VMware took in more than $10m in outside capital. They were just great businesses.]
What can Seedcamp do to help? Seedcamp is a 2.5 year old startup focused on micro-seed investing, so only so much.
We launched Seedcamp with the idea that we would hold 3 years worth of Seedcamp Weeks and make small €50k investments in 15 companies. Here's the launch post and presentation.
We knew the problem we were trying to address was large enough to be worthwhile and we had a long-term vision for what we could achieve, but like any start-up we only had limited resources to prove:
there was a need for our product in the market ("make something people need")
we could operate to the benefit of all our stakeholders (customers, partners, investors)
Seedcamp's first 100 days were like any other startup
You always need inspiration. I was inspired by the work that Paul Graham was doing with YCombinator and some conversations I was having with John Borthwick about new models for startups.
You always need some luck. I was really fortunate to be introduced by Mike Arrington at FOWA to ReshmaSohoni.
You always need a great co-founder.Reshma was at 3i at the time but thanks to some enlightened management from Mike Reid (now at Frog) and Daniel Waterhouse (now at Wellington), she was seconded to help and we set about developing a program and getting support for what would become Seedcamp.
You always need the focus of a deadline. In July, we set ourselves a launch date of September
You always need ambitious challenges. We set ourselves the two month task of:
getting applications from all over Europe
finding a venue for a week in September (and putting on the event)
getting over 100 top-notch mentors to inspire and advise entrepreneurs
raising €2m (enough money for 3 years of Seedcamp)
You always need some sceptics. We had many.
You always need loads of support. In addition to Index and 3i who encouraged me and Reshma to develop Seedcamp, we had a great group of initial supporters who helped us brainstorm the concept and produce the event including Paul Birch, Sara Murray, Mattias Ljungman, Robin Klein and Jason Goodman.
So after 2.5 years what has changed from the original Seedcamp plan?
We planned to run only 3 events in 3 years all in London - we ended up doing over 22 events in 3 years in 10 countries
We learned pretty quickly people wanted Seedcamp in more locations and now run Mini Seedcamp's in 7 regional hubs across the year
We've reviewed our 1,500 applications from 53 countries
We have had winners from Estonia, Romania, Slovenia, Poland and Jordan - we have proven to ourselves that their is both demand for what we offer and great startups from all over the region
We built a bigger, more diverse network of advisors & partners
We started off with 100 advisors at the first Seedcamp week in 2007 (albeit superstars!)
We now have over 1,000 people to help support startups across every dimension of their journey - product, marketing, business development, investment etc
The depth & breadth of this network means that at every event in every region we have at least 50 amazing advisors to support the winning teams
We've also had incredible support from the likes of Microsoft, Google, IBM, Sun, AWS, Oracle and Facebook to give teams access to knowledge, technology and support
We are still a fund - we are not a non-profit. We believe in having a mission which has social good at its core, but we have always set out to be a commercial enterprise that offers a return to our investors. How else could we inspire entrepreneurs to create businesses if we were not one ourselves?
But like YC (and Techstars) we are a different kind of fund - we apply a new model to discovering, supporting and launching start ups.
We address the micro-seed stage - we invest €50k in a start-up in return for a small amount of equity (normally 5-10%), which means the kind of companies we can help leverage the platforms and practices outlined above and the founders typically have low personal burn-rates
Our founders are focussed on bootstrapping- we help support teams through to "ramen" or real-profitability (3 out of 8 of this year's winners are already profitable)
We help teams that want it, access seed or venture capital - by working hand-in-hand with investors active in seed (€250k-€1m) and venture (€1m+) rounds
What are some of the questions people still ask us about Seedcamp? We try to be as open as we can about who we are and what we do, but as a startup running fast you aren't always as clear as you think and you can definitely be misunderstood at times. [Mike Butcher should be posting later on today an interview answering some of questions on Seedcamp - will update with link].
So in that spirit here are some FAQs:
Who are Seedcamp's investors?
We raised over €2m to make investments and operate Seedcamp
They include some of Europe's top venture firms and seed investors, as well as firms large and small actively involved in the startup ecosystem
Why did they invest in Seedcamp?
For different reasons but mainly because they share our vision for building the regions startupinfrastructure
They want to have filtered access to great startup to invest in or advise
They like us :) and believe we will make good invests which give a positive ROI
Can only Seedcamp investors invest in Seedcamp companies?
Absolutely not, anyone who's a qualified investor can invest in Seedcamp companies
Seedcamp investors do often get to know the companies better as they have typically put in the time and commitment to come to Seedcamp events but any mentors, corporates or readers of Techcrunch (who regularly covers Seedcamp finalists) are free to invest and often do
We love it when people want to invest in the companies, it means we're doing our job :)
How does Seedcamp judge the finalists for Seedcamp Week and Mini Seedcamps?
We have an open web-based application process in the months running up to every event
Every application is reviewed by and scored at least two judges - the judges are a combination of Seedcamp investors and advisors- all of them very experienced at looking at startup plans and teams
We normalize the scores to counteract variations in judging styles and then invite the top 20 teams to attend a Mini Seedcamp
In the case of Seedcamp Week, we invite 40 teams to come to London for a 10 minute interview with a panel of judges and then apply the same scoring techniques
How does Seedcamp make its investment decisions?
All Seedcamp investors are invited to participate in the investment committee decision of making any €50k investment as we are allocating their capital
This group is often more than 25 people which is unusually large (and sometimes unwieldy) group for an investment committee, even a large venture firms would have no more 10 people
Like Seedcamp judging, all teams are scored, the votes normalized and a debate held to determine which companies to invest in. As she will spend the majority of timw with the companies Reshma has a veto right
What if I want to invest in Seedcamp?
Seedcamp I is now closed.
Seedcamp was funded in a couple of months by over 30 different organisations and individuals - all of whom have a clear interest in helping to build the startup ecosystem and want to be exposed to the best startups the region has to offer.
Some of Europe's best VCs, angels and professional firms large and small participated and Seedcamp welcomes investment from all these groups.
Our aim has always been that Seedcamp would be 'owned' by the industry and not dominated by any group of institutions or individuals. For that reason, we encourage wide ownership and look forward to expanding and diversifying this base.
The structure is a typical Limited Partner one and the formal fundraising for Seedcamp II will begin very soon.
When do you intend to raise Seedcamp II?
We'll be talking to investors in the next few months about our next fund.
We hope to retain many of our existing investors but hope to be able to work with many of the new investors we have met since we began, especially in new regions and in the public/private sector
So are we succeeding so far with Seedcamp? We've definitely shown that there is a need for what Seedcamp offers.
Whether we have been able to deliver value to the stake holders (startups, partners and investors) is something we'll only be able to judge in time. The reality of startups and the funds that invest in them, is that most businesses take 5-10 years to become great - in fact many will take longer and most will never succeed.
What we know so far:
Startups: we do know from the research we've done that startups really value the experience and focus on the business advice, networking and validation that Seedcamp offers even more than the access to capital - this is great news.
Partners: we have had great feedback from advisors and partners. They seem to value not just the filtered access to really promising teams, but something which has surprised us, is how much fun people have mentoring. We have mentors who have become long-term advisors, invested in and in one case become the CEO of a Seedcamp company. Mentors also tell us how much they like the peer-to-peer networking of meeting each another and interacting in a new type of setting (ie not a conference).
Investors: the Seedcamp fund has its own group of investors (see our site), feel free to ask them if they are happy :) But the investors which matter to the startups are the ones that will fund them - the good news is that within 3 months of graduating from Seedcamp 2007 and 2008, 11 of the 13 startups have received follow-on funding.
So where does Seedcamp go beyond the start-up phase, what's Seedcamp II? We've had plenty of discussion over the last year to think about where to take Seedcamp next.
We like to think we've made a good start, but we really understand how much work there is still to do. We've also learned some fundamental lessons in operating Seedcamp that we'd like to apply to the next phase of our development.
Some of the key things we feel strongly about in terms of improving the model are:
We want to continue pushing the federated model - not just deepening our roots in the regions we are already playing in, but also starting to go into regions where people have asked us to take Seedcamp but so far we've not had the resources or bandwidth to go
We want to extend our network - one of the things people have liked the most about Seedcamp is how we've been able to bring some cohesion to the fragmented startup scene across the region. We know we can do a better job bringing together active seed investors, tapping into academia and working with public/private partnerships focussed on encouraging startups.
We should be making more investments - not just because we think the talent is out there and we are only just starting to really find it but because the economics of investing means that to have great returns you have to place enough bets. This is true of growth, venture and seed (look at the portfolio sizes of Jeff Clavier, Josh Kopelman, Ron Conway and TAG) - its especially true of micro-seed and something YC is aware of as well.
We need to have fire power to follow our winners - early stage investing doesn't make economic sense if you can't follow your winners. Most startups need additional capital - even though as I pointed out above, some superstars don't need more than $10m. Unless you are lucky enough to be the guy who wrote a $300k cheque which turned out to be the only money into Checkpoint as more money goes in you get more diluted. Good seed investors (like First Round Capital) know that you need to firepower to keep funding your winners, both to ensure they have enough capital and to presever your ownership. Managing and allocating reserves is a very tough discipline, but one that great investors practice and do very well.
We need to be able to attract and retain a killer team - sparing her blushes Reshma has done an amazing job, as Seedcamp scales we need to add to our team at the highest levels and we need to be able to attract and retain people like that. Micro-seed is a special discipline - it means rolling up our sleeves and working with businesses and entreprenuers that are very unformed. This is not a skill all investors have and if Seedcamp is to succeed we need the best team to support these startups.
So will we be able to take Seedcamp to the next level? I hope so, but like any startup, its hard to know what's around the next corner - as I said above, even if Seedcamp doesn't succeed to go from startup to phase two, hopefully we'll have inspired some of the right thinking.
Today the team at Songkick publicly rolls out the labour of love which they've been working on for the last year - and I'm really excited about it and very proud of the team.
Why? Well, for a few reasons.
First, the service they've built is really killer. They have taken all the distributed passion and energy that fans pour into gigographies and live music across the web and pulled it all together in one place. The service launches with over 1m gigs past, present and future and the team has built a social layer around the content letting you really get lost in the venues, the bands and the music. If you love live music, you'll love this product and it has a real shot at becoming the home for live music on the web.
Second, they are playing in the most exciting and potentially the most valuable part of the music industry. While recorded music is in trouble, live music is growing like crazy. For fans the emotional attachment we have to concerts and festivals is something unique and for artists live is the place where you get your start, make your mark and is the mainstay of your income throughout your career regardless of your label. Artists and their managers control live music and as labels have lost control over the recorded product, live has become a pivot which is revolutionizing the industry.
Third, the Songkick team led by Ian, Pete and Michelle have really shown themselves to be great start-up role models for the next generation of European entrepreneurs. When I first met them in Boston a few years ago as they were leaving YC, they said they wanted to aim high and bring a passion to succeed and build something really big into the London start-up scene. There are some teams you meet you want to back immdiately, and they haven't disappointed. They are shooting for the moon but they have always kept their feet on the ground. They have been very strategic about investors, partners and hires and are incredibly disciplined controlling their costs and managing their time. Hard things for first time entrepreneurs. Sure they've made mistakes but they learn fast and adapt. Hallmarks of people who can build something big.
So, well done Songkick. To all the team. I know its been a huge effort to go live and you've all been itching to show the world what you can do - enjoy it. To liv music fans, enjoy it too both th trip down memory lane and all the gigs to come.
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