When we started planning for Next Top Startup, we had in mind that the first installment of the event would span maybe two to three European countries, and that if we’d get any traction whatsoever from across a major body of water, it would be excellent and a successful achievement on it’s own.
We had no idea however, that the scale of this competition of ours would reach as far and as wide as it did – in the end, people from 14 countries are coming together to participate in this competition in both a mentor-ship scope and contestant capacity, and as of now we still haven’t reached out to the investment community.
By trying to challenge convention, and doing what we can not to become just another Y Combinatorcopy, we opened the contest up to all industries – and as such saw projects come in from across the board, some of the more interesting sectors applications that we received came from the following industries: Sports, Clean Tech, Aerospace, Cloud Computing, Social Enterprise, Fast Moving Consumer Goods, amongst many others.
There was one concurrent theme in all this – technology – in one way shape or form it’s the decisive communal factor which is driving today’s entrepreneurs forward, and while we would have liked to invite all our applicants to participate, ten does seem to be about the right number, and with that we would like to announce the ten finalists to compete for the title of – wait for it – Next Top Startup.
In alphabetical order they are…
. FastTaxi – will be an interactive platform for taxi drivers and customers to get real time information through their smart-phones in order to find and order cabs within easy reach in urban centres. . Foundation for Global Collaboration & Peace – A serious non-profit concern that aims to build a virtual peace network that benefits the global community through the dissemination of universal human commonalities. . Getagreatboss.com – The concept is built around a crowd-sourced Interactive Manager Review. . INBLOON / Zero2Infinity – is a start-up whose mission is to raise our planetary consciousness by offering near-space experiences. . Lexpertia – aims to commoditise the legal services profession by creating a database and online directory for lawyers based on specialty, operating as a legal advisory search platform for lawyer services. . Teambox.com – Is an online resource collaboration tool for enterprise and project management. . Touchland – provides environmentally friendly disinfectant hand wash to the consumer via direct sales and 3rd party resellers that install their dispensers. . WeCard – is not a typical static loyalty card but an innovative smart channel of information, and user-business relations. . Wellknown.as – A mobile platform for delegates, exhibitors, conference organizers and sponsors. . Xtremgo.com – enables people to easily access action sports through Internet by creating a one off marketplace to book activities online.
Good luck to all of them, and we’ll keep you posted as to the winner, and we ought to have some other treats in store for all our readers after the competition closes. Stay tuned!
VIDEOS
And to get you as excited as we are about our contestants, we’re including those videos that we received from them. Enjoy f3fundit TV 🙂
Y Combinator’s new 8.25 million USD fund shows that it’s funding model is definitely successful, but the question is can it transfer to other industries?
While Y Combinator may be focused on the web (and by we include mobile as the lines are ever more blurry), this new 8.25M fund shows that Y Combinator’s new approach to investment shows merit. The question however is, can those similar practices be transferable to other industries?
Typically an investment of up to $20k ($5,000 + $5,000 per founder) isn’t exactly big bucks and typically won’t provide sufficient capital to hire a team, program whatever, and devise a strong media campaign. What it does is give the founders of said startup enough cash to live for three months and develop the idea while having their hands held by the incubator.
Specialized business training on the go, or more likely during the building stages? Absolutely, look at the successful entrants, all programmers with little to no business experience, but now with successful companies, Reddit, ClickPass, Zenter.
However, this is the web, where businesses are easily and quickly scalable, but how about if we were to apply the same model to clean tech, could a micro investment also work?
Aside from what is undoubtedly the higher cost of a prototype, the model should be transferrable. Why? Because the recipe is the same.
Inexperienced Engineer in Business + Good Scalable Idea + Capable Mentoring = Higher probability of success
The only difference then is, how much money will a non-web company need, and what is the exit?
First off, we are definitely looking at larger figures of 50-100k+ per clean tech project total seed investment – longer lead times, longer, development times, and longer to market times. Not to mention of course that sales and profit generating activities typically will require more effort but should those same hand holding techniques be applied to a different tech sector we could very well see a paradigm shift in the way we go from prototype to market, and more so how early stage non web companies get financed.
Would be interesting to see if anyone will pick up on such a model in the coming 3 years.
Crowd-financing is a great tool to get your project off the ground, but it takes a lot of work and can often keep you from what you should need to, or are working on – the actual business.
There are of course other forms of crowd-financing, such as crowd financed managed seed/investment funds – but the legalities, specifically from the fund management side can get a bit tricky. That aside, company founders have a plethora of other options when it comes to raising capital – however often times these choices are only available to larger firms with positive income streams.
So what’s an entrepreneur to do in this world? Well the good news is that there has recently been some innovation on the field, and it’s a concept that fundamentally crowd-sources start-ups and invests in 100-200 of them per year, so at a minimum, you’re seeing 2investments per week. Compare that to your traditional model of 5-10 annually and you’ll see why this is financially innovative.
So who’s ballsy enough to lead the way on this – it’s a group out of California called Right Side Capital Management. And if you think about it, it makes a lot of sense.
You’re basically taking the roulette table approach, if you spread your money across the table, one will eventually hit, the difference here is, that in this start-up version of the popular Vegas classis, more than one may hit, in fact 2-3-4 may hit, and one of those will hit big – and then there’s your flip.
While there may be problems involved in startup corporate governance, and especially with the way they’ve got their logistics set up, the concept as a whole is absolutely brilliant when it comes to getting money out to those companies that need it.
But how do you go about making investments into 100+ companies, clearly aside from having to increase your deal flow by a substantial amount, you need to employ a very different project valuation methodology rather than the traditional VC model.
From the RSCM website, and specifically the application page, it seems that they are very heavily focusing on the team makeup, and those individuals cash position or personal financial health. Meaning, good credit, probably some money saved up in the bank, or similar – so that you as an entrepreneur can maintain yourself while developing said product and going to market.
After all, an entrepreneur that has no money is one that isn’t going to devote his/her full time to the project. So if we’re right, I bet the assessment criteria would be 1. Team 2. Project 3. Progress.
We attended the BiCE summit this week at ESADE and overall we would say the event was a successful one, some interesting talks, some interesting companies, one that we’ll be covering sooner than later in our Startup Saturday series even.
However what we believe was the most interesting part of the whole thing was the panel of Angel, VC (venture capital), and PE (private equity) investors into the clean tech space, as well as a discussion on the development of clean tech in the CEE region. The low point – a long winded forum of government officials talking about sustainability and efficiency and elaborating on the need to create overly complex programmes to work together with the private sector and banks. So let’s start there –
Government and Clean Tech
Clearly one of the more important roles if any of government is to set policy, and provide incentives for enterprise in it’s own market. This is all good and well, and in our most humble of opinions this is simply something that needs to be done via tax abatement. After all, the stakeholder mentality is undoubtedly focused on the bottom line.
So what’s the problem? There should be none, government should have instituted tax abatement programmes for clean-tech initiatives a long time ago, the same for energy efficiency etc… etc… not only to offset the cost of installation, but also to create incentives for non eco-knowledgeable business to implement eco-friendly methodologies and practices into its day-to-day operations.
But @ BiCE, these governmental entities failed at promoting just that, instead they discusses large bogged down in bureaucracy initiatives, that lacked any sort of clear vision. Notwithstanding what really stood out – in terms of the negative – were comments made by various government individuals that “each case is different” and that a “different programme needs to be established for different companies”. Socialist, sure, but worse that that it screams of 1. Inefficiency, and 2. Higher Taxes. After all someone’s got to pay for all these new programmes.
What’s the solution, simple, Ockham’s Razor – entities should not be multiplied unnecessarily. Create an initiative that fosters the implementation of Clean Tech and Enviro-Friendly practices, give tax breaks to those who participate in the programme, and that’s pretty much all you need.
Clean Tech & Energy in the CEE
Elena Yordanova an investor in the clean tech area with Astra Capital spoke on this topic and although it was brief, it was also very informative. The region as a whole has huge potential for clean tech implementation, specifically in the area of en energy generation.
The SEE is rich in sunshine, there are various opportunities for hydroelectric as well as the north, i.e. Poland, and the Baltics can capitalize on coastal wind farms. Barriers to entry are still fairly low, and the region has massive growth potential across the board, however certain markets such as Romania already have met 2020 targets and over 30{abb65e2b6815f549a727af2ea9f3a377a727ddc064972a198a74f88a6b766686} of their energy production coming from renewable sources.
Investment Outlook for Clean Tech
This is a tricky one, as we all well know – investors want a high margin quick return. Clean tech companies however are not suited for this model, time to market may often be ten years or more, and investments are typically very capital intensive.
At the same time, the industry or sector is as a whole very new, and there is very little if any PE activity within the clean-tech space.The good news however is that you’re starting to see VC’s grouping their funds together for truly large scale capital investments into new technologies that otherwise without this money could not be realized. This is a good thing, the bad thing is the lack to BA’s in the field and their reluctance to throw money at clean tech startups – after all, there needs to be a call to a social cause when investing 500k-2m and expecting generally lower returns over a longer period of time.
The 3F‘s, Seed Capital, Angel Capital, Venture Capital, Series A, IPO‘s sounds familiar or does it?
Many budding entreprenerus, and especially those without a background in finance, and even those with a background in finance won’t really understand how the startup financing process functions.
Or more adequately how you go from cracking open your piggy bank to issuing shares on the DAX, or any stock exchange for that matter.
But first thing’s first, your 3F’s are your Friends, Family and Fools, and they’re the only ones willing to donate some money to your cause, friends and family, cause they care, and fools, cause well only a fool would give someone they don’t know cash.
Next up you’ll get seed money, these are typically people who want to flip their equity within 6 months, quick in grow the company rapidly, and quick out strategy.
Next up, are the BA’s (Business Angels) – who invest on the basis of 30x expected ROI.
These three groups comprise the “Valley of Death” in your startups life, basically meaning, these are the moments when your company either 1. Does, or 2. Dies.
Once your company’s out the red, and has broken even, this is where early stage VC comes in, typically Series A, then Series B for early stage, C for early late stage, etc… etc… and if you’re lucky enough, you get the company to issue an IPO, or Initial Public Offering meaning that the shares of your company can be traded on stock markets such as NASDAQ, DAX, etc… but when you get here, you’ll have a Morgan Stanley underwriting your deal, you may be going through a M or A, and all sorts of crazy things can happen to you so for the basis of this site, our database, and resource we’ll stick to the early stuff. For a visual representation of this entire process check out the really amazing graph, thanks of Wikimedia, and a bit edited by us.
