Posts tagged ‘Investment’

June 16, 2014

Investing in people and teams

Marc Andreessen

Marc Andreessen (Photo credit: jdlasica)

I have been meeting a lot of people about my new project, the feedback has been extremely positive. What is key in this new project is the fact that we are going to invest in People and Teams with potential. I have written a lot about this. I believe very strongly that investing in people with courage and genius works and it is not new. Marc Andreessen with a16z constantly writes about it. I just finished reading a blog post by Trent Griffin titled “A Dozen things that I’ve learnt from Marc Andreessen“, here is the quote from that post

5/ Venture capitalists “spend a lot of time talking about markets and technology…. and we have lots of opinions. …but the decision should be around people…. about 90% of the decision [is people].”… “We are looking for a magic combination of courage and genius .… Courage [“not giving up in the face of adversity”] is the one people can learn.” When you have a team of strong people in a startup, their ability to adapt and innovate gives the company and the investors optionality. Weak teams which can’t adapt to changing environments usually fail. Identifying the right people is all about pattern recognition.

I could not put it any better. We do this constantly as a community, however when you meet Venture Investor especially in markets where venture investing has not evolved you see the investors talking a lot about their knowledge of markets, technology and what they know, what baloney! No-one knows, the best strategy is always to invest in strong teams, be their resource and help them win. I draw an analogy to being a Coach to a Basketball team. The fund we are putting together will play the role of a coach, be there in every practise session, see what the team is unable to see, tell the star player that he needs to straighten her shoulder and elbow before shooting, watching winning games and adopting best practices in building the team and be in every game on the sidelines but the team takes the shot and makes the plays. The fund team is a resource for the team on the floor. I believe this model works. I believe very strongly that VC business is a “Service” Business. Here is a quote from that post

11/ “You spend most of your time actually dealing with your companies who are struggling and trying to help them. Because it’s the companies that are struggling or failing that actually need the most help. The companies that are succeeding are generally doing just fine without you. The companies that are failing are really the ones that need help and support. And so a lot of what you end up doing at the job is supporting struggling entrepreneurs. It’s kind of continuously humbling. You are a trouble shooter. There’s always something going wrong. Psychologically–we talk about this with our partners–you have to be psychologically prepared for the opposite. It seems like it’s going to be a life of glamor and excitement. It’s more of a life of struggle and misery. And if you are okay with that–because it’s part of the package–then the overall deal is pretty good.” Bill Gurley likes to say that venture capital “is a service business”.  Venture capital isn’t sitting in expensive chairs “picking winners” and speaking at conferences, but rather day in and day out work in the trenches helping entrepreneurs succeed. An effective VC spends time on things like trying to recruit engineers for portfolio companies.  This is not glamorous work for a venture capitalist, but it is essential work.

The above two more or less outlines the strategy for the venture fund that I am putting together. I think it works, I have enough data points to show that I have walked the path to see this through. The trick in this is to be humble and be open minded about what you don’t know. So if you have the courage, genius and doing something with Software on top of networks please email me. I would love to meet and learn.

May 2, 2014

Sherwood Neiss – Startup Iceland 2014 – Speaker Profile

Sherwood Neiss

I am really happy to start the series on the Profile of Speakers lineup that we have for Startup Iceland 2014. The US Embassy in Reykjavik, has been a big supporter of Startup Iceland since we started in 2010, and I am happy to announce that the Embassy was able to organize a fantastic speaker for Startup Iceland 2014. Here is a bio of Sherwood Neiss. Without much ado here is Sherwood Neiss and Crowd Funding.

Sherwood Neiss, Principal of Crowdfund Capital Advisors, is an expert at building successful businesses. As a 3-time INC500 winner whose company won E&Y’s Entrepreneur of the Year, Sherwood understands the keys to entrepreneurial success from concept to company to sale.

As a serial entrepreneur and investor during the credit crunch, Sherwood saw a need for a change in outdated securities laws and did something about it—as a co-founding member of Startup Exemption, Sherwood co-authored the Crowdfunding Framework used in the JOBS Act that was signed into law by President Obama on April 5, 2012.

Within Crowdfund Capital Advisors (CCA), Sherwood works with clients ranging from governments and banks that are looking for ways to boost economic development in their countries to investment firms looking for access to increased deal flow that crowdfunding creates. Sherwood serves as an advisor to several crowdfunding platforms and crowdfunding technologies giving him a unique understanding and view of the industry and market. As an industry leader, Sherwood contributes to several publications including VentureBeat and TechCrunch. He additionally wrote Crowdfund Investing for Dummies through Wiley & Son’s.

Sherwood co-founded the Crowdfunding Professional Association (CfPA), serving as Governing Board Member and co-chair where he leads the fight to ensure investors are protected while entrepreneurs have access to the capital they need to start and grow promising companies.

An avid public speaker, Sherwood speaks at universities and seminars around the world discussing crowdfund investing, what it takes to be an entrepreneur and how to build winning companies. He also does a large amount of work presenting to government bodies, speaking in front of the U.S. Congress, leading SEC and FINRA meetings, as well as, addressing foreign governments—testifying about how they can bring economic benefits to their citizenry through implementing their Crowdfund Investment Framework.

Sherwood started his post-MBA career on Wall Street and moved to Silicon Valley where he completed personal and financial goals in his late 20’s he hoped to obtain in his 30’s. Wondering what to do next and also left struggling with a debilitating family dilemma, he used his entrepreneurial drive to help turn his family adversity into a multi-million dollar company that today is helping millions of sick children, animals and adults get better by being more compliant with their medicines.

As the co-founder of FLAVORx (www.flavorx.com), Sherwood structured an approach and built a business model that threw off millions of dollars in cash and while growing the business from one pharmacy to over 80% of the pharmacies in the United States. He raised millions of dollars in capital and saw the culmination of his endeavors with the sale of the company in 2007.

When not working, Sherwood is an avid traveler. He lived in Japan for a year and post-sale of FLAVORx took his second backpacking trip around the world. In addition to speaking at universities and businesses around the country he invests in real estate in the U.S. and Brazil, is part of a private equity group in Los Angeles, is working on a clean tech project in Puerto Rico and is involved with several other start-up ventures.

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April 14, 2014

Learnings from CEO Bootcamp – Dealing with Fear and Failure

cae3272cacc61eb07d81c3e66bc057b3As an entrepreneur you are constantly fighting the grips of Fear, Doubt and Failure. It is a natural part of being on a journey that is low on data and high on uncertainty. I wanted to share the learnings from the CEO Bootcamp, the first day we discussed the 5 mistakes CEOs make and how to deal with them. We were made to deal with our Fear and Failure thoughts during the second day of the CEO bootcamp. I have written about being Fearless, and my role model there was my Father. God I miss him! He was always fearless in everything he did sometimes foolishly so but never ruthless or mean. So the fundamental question that you should ask yourself is why are you fearful, Entrepreneurs and Startup Founders are typically impatient with the status quo, pathologically optimistic and the ones who challenge and inspire because they want to make the world better. That is a pretty lofty goal to go after and we wonder why are we scared? I think being scared is natural part of the journey of an entrepreneur. The next logical question is ok, how do we deal with it? There were 3 questions that were posted to all the participants:

What are you afraid of?

What are you afraid of?

What are you afraid of?

it is not a trick, you have to dig deep to find out what you are really afraid of, the superficial narrative that is on the top of your head is not the only answer, there are layers of fear. We fear failure and therefore we fear uncertainty. Uncertainty is painful, uncertainty undermines our sense of safety, uncertainty fuels our expectations of infallibility and luck exacerbates the uncertainty. Did you see that? getting lucky actually makes the problem worse.

November 12, 2013

QuizUp

QuizUpIcelandic Startup Plain Vanilla Games launched their new game Quiz Up and it has been getting a lot of attention and has been in the top 3 in the Apple App Store. I played the game and it was a lot of fun. I wrote about Plain Vanilla Games here and Thorsteinn their Co-founder and CEO has been a speaker in Startup Iceland Conference. I promise there is a point to my writing about this and not just a plug for Plain Vanilla Games or QuizUp. I remember Thorsteinn pitching in a Seed Forum Event 2 years back and I remember him talking about how he got a Venture Investor in the US to invest in the company and the rest is history. I find that very strange and interesting, how come the minute a VC investor putting money in a company an Entrepreneur turns out a big hit? Is there some magic that these US VCs seem to carry with them and their investments? Well, as much as I want to say there is a secret sauce and magic, there is none. It is all hard work to develop a product or service and a lot of partnering, hustling, marketing and selling. It takes time and effort to bring a product to market. I am really please to see Icelandic companies break the mould and are starting to venture out and be global. I hope with the success and role models created by these entrepreneurs we will have more investors wanting to participate in this journey in Iceland. Angel and Venture investing is a lot of hard work and value creation tied with investing unlike buying a stock or bond in the market where the part of the returns are driven by speculation and market dynamics. I have created an Angel Syndicate to motivate more people to co-invest with me in building the startup ecosystem in Iceland. I always put my money where my mouth is. I know there is value in Iceland. I can go all day about why I believe we can create global companies out of here, there needs to be a conscious vision, strategy and execution to make that a reality. Doing that right is the key, and investing in creating an environment that is conducive to that is a must have. We cannot guarantee success but we can reduce the odds of failure. I think with each success like Clara, Plain Vanilla Games, Betware (Betware was acquired by Novomatic, that news item is for another blog post) etc we are reducing the odds of failure in Iceland. With the syndicate that I have created, we will be doing $1m worth of early stage investing every year, in my humble opinion if we are able to get this going it will transform the Icelandic startup ecosystem.

November 11, 2013

Team Engagement and Leadership

TinyPulse Happiness metricI have been on the road for the past 2 weeks related to my role as CEO of GreenQloud. We had a number of initiatives and the company is on a nice growth trajectory. We are starting to get great customer engagement and team engagement. The team has grown to 27 people from 11 a year back. While I was on the road got a chance to meet with Forest Key, the CEO and Co-Founder of Buuteeq, the company that my partners and I invested in 2011. It has been fascinating to see the growth of this team. Buuteeq now employs about 106 people and doing really well in terms of growth of customers, revenue and all the key metrics that drives the company. I was very happy to see that we are investing in the right kind of team culture and things that we believe in. While I was talking to Forest, I asked him how has he and his leadership team managed to build a great culture at the workplace and maintain the super aggressive growth in the number of employees and his answer was very simple… Team Engagement and a tool. He pointed me to Tiny Pulse, a simple tool that he and his leadership team use to engage with their team members. It is such a simple tool but brings a very high level of engagement as well as allows to get direct feedback on a regular basis from all the team members.

The important thing is to act on those feedback items and I congratulated Forest on really driving the engagement and growth of the company. I am pretty sure we will do well with this investment. If you are in the growth path as buuteeq or greenqloud, I highly recommend using Tiny Pulse, I was quite impressed with the philosophy behind the company, it is based on the book by Tony Hsieh, Delivering Happiness. We are strong believers in that philosophy at GreenQloud … so it was easy for me to institute the same with the team.

October 10, 2013

Track Record, Trust and Leadership

Screen Shot 2013-10-10 at 5.14.07 AMI have more or less documented the journey since the day the Financial System in Iceland collapsed in 2008. There has been a lot written about October 8th, 2008, the day when the Prime Minister of Iceland addressed the nation stating the challenges in front of Iceland and the collapse and ending the speech with the most famous last words for a politician whose career was pretty much over… oh, yes the famous words were “God Bless Iceland”! there was total disbelief within the Icelandic community. I don’t want to go into the details of what happened after that I think many people have done that. What I do want to do is describe what I did, I decided right then and there that there was only one way to rebuild the business community in Iceland and that was through re-inventing what really creates value in Iceland. I was very impressed with the Design, Software and Infrastructure talent in Iceland and so I decided that I would invest my time, effort and money in building that sector. We invested in a team of Entrepreneurs and they won for Iceland. After I have been working with the Entrepreneurs, it was obvious to me that Startups and Entrepreneurs in Iceland needed more than just Angel Capital (it was non-existent then). I actually built a presentation on Why we would invest in Iceland and what Icelandic startups needed. Here is the first iteration of the Investment Thesis and Strategy that I created. What is important are the above 2 questions, in terms of What Icelandic Startups needed then and what they still need now are 3 things:

  1. More Seed and Angel Capital
  2. Mentoring and advising on developing, marketing and selling products/services to the Global market
  3. Bridge to a bigger market

the reasons why I felt we should invest in Icelandic Entrepreneurs was based on again a bunch of things:

  1. Young demographic
  2. Well educated and technology savvy population
  3. Excellent infrastructure
  4. Cost effective (hiring/training a software engineer in Iceland is much cheaper than say New York or London)
  5. Entrepreneurial culture
  6. There was lot of emphasis on Design, Innovation and Creative industry
  7. Small market is great for customer validation and to find the Product to Market fit and easy to pivot a product or service strategy

I naively thought that I could present this to the investor community and create a Venture Capital firm, I went to every pension fund and Asset Management company. Presented the idea, just to be laughed out of the office. It was rather humiliating, when they asked why I thought I could do this better than anyone else? it was a very valid question and I asked myself that question. At that time it was not something that I could quantify as we had just done a couple of investments and jury was out on those investments. Fast forward to 2013, we have the track record, all the investments that we have done are alive and kicking and are doing very well. CLARA was sold to Jive Software and I can say without exaggerating that every single person who invested in CLARA got their money’s worth. Buuteeq is growing leaps and bounds and I am pretty sure they are going places. The funny thing about these investments is that we went in with no expectation on when the companies will win or when we will get our money back, we wanted to help the Entrepreneurs and did some common sense thinking on the deals and made sure it was a Win-Win deal for us and the Entrepreneurs and we spent considerable amount of time helping the Entrepreneur. It is not for everyone… but we just love it. I love helping Entrepreneurs, I meet every single one of them and give them my time, my connection and whatever else I possibly can. Founding Startup Iceland the Conference was based on that philosophy of doing something to help the Entrepreneurial community in Iceland and to build a really vibrant community of Startups and Entrepreneurs in Iceland. That vision has not changed and I am pretty sure that we will get there, but we will not get there if the community does not invest.

I understand that investing in Startups is risky, the results are not guaranteed and it is a lot of work but nothing worthwhile is easy. I am willing to work my fingers to the bone to get this community built in Iceland. The Angel syndicate is platform to crowd source capital. Everyone keeps talking about how Pension Funds should be investing in Startups etc I think that is baloney… Pension Fund Managers do not have the time to work with Startups what they need to be doing is investing in Platforms and People who are investing in Startups. Unfortunately in Iceland, this community has not developed because there is no history to really creating a huge win in a Startup until the last couple of years. Through the syndicate, we can really harness more than what everyone thinks is possible. Raising capital is hard anywhere but it is extremely hard in Iceland if you are not part of the inner circle. I want to disrupt this, I want everyone in Iceland to have an opportunity to participate in this journey.

February 28, 2013

Accelerator for Investors

I have been thinking a lot about how to get new breed of investors into the fold of supporting the Entrepreneurial Ecosystem. I think it would be great to have a mentorship driven accelerator just like TechStars or YCombinator focused on building Investors or Investment companies. I think everyone can learn from having mentors and advisors, even Warren Buffet had Ben Graham, time box the creation of the concept and get validation on a public forum and then go on to raise the money and build a venture firm. I wrote about the documentary “Something Ventured“, it was obvious all the early investors had some mentors and advisors who did not know much about startups or silicon valley but they acted as sound boards, what if we could create that here in Iceland?graham-buffett

I think the current club of investors is a crap shoot. It is an exclusive club of someone having pedigree, a wealthy family or should have been lucky to have been a entrepreneur who cashed in or lucky to be appointed as a fund manager by the government or a pension fund or a bank. I think this model is broken. I am sure there are very qualified people playing the role of investors in all these platforms, but I think there needs to be a better way to build a new generation of investors. Waiting for the new generation to successfully exit and return back as investors takes too much time. What if we could create an accelerator that allows anyone who is willing to go through the troubles and tribulations of an entrepreneur, but to become an investor?

The reason I have been thinking about this is because of all the nays I get when I suggest that we need to have more investors looking at startups and investing in startups. The more nodes we have in the ecosystem the stronger the node becomes and what drives people to take on the role of an entrepreneur is a supporting community that provides the environment but also the capital. I have said it before I will say it again, there is enough and more capital well within the confines of Iceland. I wrote about Local Capital a while back. I have come to believe the reason people don’t want to jump and do this is because it is a lot of work and you need to be willing to become a student even though you may have some money and success.

Now that we have a accelerator for Startups in Iceland called Startup Reykjavik, I think creating an accelerator for investment firms is not such a bad idea. The intention would be to create 10 investment companies, solicit applications, pair the teams with mentors, time box it for 3 months and at the end of the 3rd month run a investor day where the teams can present the idea of how they will run the investment firm. What do you think?

January 14, 2013

Organizing Angel Capital

As we are starting the preparation for Startup Iceland 2013 (have you signed up and marked your calendar yet?), one of the elements of building startup ecosystem is to bring more investors into venture investing group. I think there are many avenues for Entrepreneurs to get started like Startup Weekend, Startup Reykjavik, Innovit Incubator and the University Startup Weekend class etc in Iceland, however, there is not a lot of activities that are centered around investors. I have been searching for  model that we could adopt here in Iceland and I finally found someone who is doing this in Seattle – John Sechrest. You can read about John here.

Seattle Angel Conference

The biggest challenge in Angel and Venture Investing is not RISK, there I have said it it is not about Risk it is about not being able to devote enough time for the amount of capital that one invests. Just to give you an example, a typical angel investor may invest from $10000 to $100000 per company and in order to really spread the investments one needs to take 3 to 5 companies. Given with Angel investing one needs to spend 6+ hours a week for every company, investors need to spend considerable amount of time for a small size of the investment. In addition, one cannot make a living doing this, again there I have said it. If you think you are going to make a living doing Angel Investing or Venture Investing, the truth hits you quite harshly across the face when you are starting out. The pay window if you are successful in Angel Investing or Venture Investing is nothing less than 5 years, you could get lucky but that is kind of the average and the returns are lumpy ie you don’t get a steady stream of returns but one or two lumpy payments if the companies you invest in gets an exit. So, why would someone go through all this pain to make a living… well, the same reason why an Entrepreneur goes through all the pain to start a company and build things of value. There is a reason it is called Angel Capital :)

Back to practical matters, John shared with me a template for a conference that he has organized in Seattle, called the Seattle Angel Conference. I think it is a sensible model that could work to bring new investor groups into the world of Angel investing and Venture investing. For everything we need a few good women and men, and John has assembled that group in Seattle. I have invited him to come and share his experience in Startup Iceland. The gist of Angel Conference is pretty simple:

  1. A group of Angel’s come together form a Limited Liability Company (LLC or ehf in Iceland)
  2. Each of the members commit capital ie $5000 each
  3. LLC Manager is elected
  4. 6 to 10 weeks of due diligence is conducted by the group that came together
  5. 5 to 10 companies are picked to pitch during the conference
  6. A subset of the companies are funded by the LLC and all members can participate as mentors or advisors to the companies that were picked

This is an incredible value for Angel investors, a seasoned group can guide new Angel investors into the world of venture investing. This model is very similar to the Mentorship driven accelerators that have become so successful. Of all the things that have been said and done, everyone can learn when we collaborate and work together. I am big believe that bringing diverse group of people together and throwing a challenge to them and providing the right incentive can facilitate solution to any problem. I think Iceland needs a better class of Investors, other than the posers! we need someone really committed to building the startup ecosystem. koma svo!
 

December 11, 2012

We have a big exit in Iceland – DeCode Genetics

BalaInIceland:

Iceland: Aurora Borealis

We finally have a big exit in Iceland for a startup that started it all in the Genetics space. This is the kind of stories that will bring attention to the fact that entrepreneurship and building companies in Iceland is not such a bad idea. I hope the people who cashed on this exit re-invest the money back in Iceland in young entrepreneurs and startups. I believe this is the only way to build equity in a society. I have written about how value is created and despite all the challenges that faced DeCode they were finally able to make an impact in this space coming from tiny Iceland.

Originally posted on :

By Terry McGuire, Co-Founder and Managing General Partner, Polaris Partners

Today, biotech giant Amgen announced that it acquired deCODE Genetics for just over $400 million in cash.  deCODE is a Polaris portfolio company and genomics pioneer.  Analysts will ask why; this certainly doesn’t fit the more common pharma model of acquiring a company with a promising drug in Phase 2 or 3 trials.

The answer is simple.  There is a great need by large biotechs and pharma companies to show true and more predictable innovation.  And Amgen’s leaders know that the future of healthcare is laid on the foundation of producing truly innovative medicines and technologies.

deCODE-Blood-Samples

deCODE utilizes over 140,000 Icelandic blood samples

And that’s exactly where deCODE will help Amgen.

deCODE was big data before there was something known as big data.  They and a handful of other pioneers began the big data movement in genetics.  In the…

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October 19, 2012

3 Ideas for a better Iceland

Original post was written for the Asbru Blog.

Idea #1: Invest in yourself and your local community

Source: Inspiration Monkey

I believe every Icelander can invest in their local community and in local entrepreneurs and in themselves. It takes very little to create an impact in a small community. I believe if 20 people get-together with ISK 2.000.000 each and invest in 5 entrepreneurial companies it can transform not only the entrepreneur but the investor as well. Investing is a lot of work, but that is the only way to grow value and wealth. I am not talking about investing in the Stock Market or Buying Government Bonds, which are perfectly acceptable methods to invest, but picking smaller companies and entrepreneurs in areas that each and everyone of us is familiar in and investing in them will transform Iceland. My partners and I did just that when we invested in Clara (http://clarahq.com), when I met with the founders they had a good idea and they were going places but lacked the mentoring and money to take their ideas to market. The business was in a field that I was very comfortable in (software, internet and computer systems), we decided to invest in the company. Today Clara is a 14 member team serving Gaming companies like Sony Online, CCP and many other companies. We achieved the team growth and value growth in about 2 years and my belief is that we could have done it faster if we had invested more money, the biggest challenge we faced was the lack of faith of Icelander in their own abilities and ideas. I think changing that would go a long way. I am not talking about some esoteric ideas, the concept of Angel Investor Networks and Angel Investing is starting to make a real impact all around the world.

Idea #2: Volunteer to be a mentor, helper or give something without expecting anything back
If you don’t have the capital to be an angel investor, you can volunteer to be a mentor or give something to the community to enable knowledge sharing or network sharing. I am not talking about charity, though charity and social work have a place in a society. I mean time and effort where you contribute something without expecting anything back. A mentor is that kind of a person, without spewing ideas but listening to a young entrepreneur or practitioner in your field of expertise. There are many avenues to do that Asbru Incubator, Klak, Innovit and more recently Startup Reykjavik provide the platform for everyone to participate and contribute to building a sustainable startup ecosystem.

Idea #3: Learn a new skill using a new technology
This idea comes back to the first idea, of investing in ourselves. Learning a new skill using the current or new technologies. The world of technology changes rapidly and there could be a point in time where everyone of us can be left behind if we don’t keep up. I would encourage everyone to take an hour a day to pick up one skill, whether it is blogging, tweeting or coding in HTML or reading about technology or learning how technology works. This is important not just for those in the technology field but for everyone. To quote my favorite mentor Brad Feld, “The machines have taken over, now they are patiently waiting to learn everything about us by asking us to input everything about ourselves into them”, don’t you think it is time we should learn how the machines work? not because any sinister agenda but just to be curious and asking questions.

My dream is that in 10 years we have a thriving entrepreneurial ecosystem in Iceland that provides sufficient resources for anyone to start fresh, create value and make a living. I think Entrepreneurship is life, one of my favorite blogs is written by Jerry Colona, I could not have said this better so I am quoting Jerry:

“Those who seek to create their own startup do so more often out of the desires for freedom, dignity, validation and, ultimately, self-actualization (in the full Maslow-vian sense) than for riches. (Indeed, those who seek riches most often fail.) For them, and despite what most politicians and government officials blather on about, it’s not about jobs. It’s about life.”

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