I got connected to John through Kristjan Freyr Kristjanson, CEO of Innovit+Klak and who runs Startup Weekend in Iceland. I had always felt that what we lacked in Iceland was broader participation of investors and mentors in the Startup community. John has been solving that problem in Seattle and in the greater Washington state. I am excited to hear about how he has been able to get new Angels to invest into the startup companies. I am also really excited by the philosophy that John has put into practice through his Seattle Angels Network. Startup companies need a lot of due diligence and investors need to play a role in actually helping the startup get off the ground. I believe strongly that Investor group has to work as hard as the Entrepreneur to make the startup a success. I have been writing about Brad Feld, Brad Burnham and Fred Wilson, in my opinion the successful venture investors work much harder than any entrepreneur I know. Check out the documentary “Something Ventured“, it is obvious how much effort the early VCs started to invest much like Angel investors and how much effort they put into each of the companies that they invested in. I think the advent of the Investment Management profession has killed the spirit of each and everyone to become an investor and entrepreneur. I think we have some really smart people working in the Investment management and Asset management business but I don’t think Investment is something that we should outsource. By getting involved with early stage companies with the partnership of experienced angel investors and investor mentors I believe anyone and everyone can invest in Startups and be successful. Don’t believe the fear mongering that your Financial Advisor gives you, Risk is misunderstood consistently by everyone so Investment or Fund managers are no different or better than any of us.
Anyways, I have digressed enough. The post was about John, John Sechrest is the founder of the Seattle Angel Conference and the Willamette Angel Conference, each providing a venue for new angel investors to explore the process. He is a co-organizer of the Lean Startup Seattle, helping entrepreneurs get focused on stronger company processes. As a global facilitator for Startup Weekend, he has worked with several communities take a step forward on entrepreneurial ecosystem development. The motivation to get John to visit Iceland and participate in Startup Iceland is to bring some knowledge on how we can create an Effective Angel Investor community here. I want to expand on the idea that John and other successful Angels have created. Maybe we will launch as I had wrote about before an Accelerator for Investors so young and new investors can get started early and participate in building an Antifragile Startup Community in Iceland.
Startup Weekend Reykjavik happend this last weekend. I volunteered again as a mentor and it was a lot of fun.
This time around the organizing team at Innovit had brought an external facilitator from the UK, and I was also impressed that the organizing team nudged the participants to aggregate around ideas that actually had some meat in the bones. In the previous few Startup Weekend that I have participated in Iceland, the challenge has been that some of the team members were married to their idea but the idea did not have a big enough market or potential of becoming a business. Anyways, the teams that were working on the ideas this time had some programming resources with them and some designers. It was obvious as they could actually develop the websites and have some working apps within the 54 hours of the weekend. There were 13 teams presenting at the end of the day, I met with most of them and talked to all of them and I learnt a lot and I was tempted to write a check to a couple of the teams, but realized that it would be too soon and the teams were not ready for that. I intend to follow up with the teams to see how they are doing and who knows maybe I will invest :)
Here is the coverage of the event in Icelandic, It was great to see a lot more mentors participate in the event.
I think what is missing is if an Angel Investor would show up and write a check at the end of the Weekend to the winning team and get them started on the journey to becoming entrepreneurs. My intention is to be able to do that here and also in Startup Reykjavik. I think we are starting to see the green shoots of yearly activities showing up in Iceland which goes back to the strategy of building a startup community here in Iceland. In my opinion, we are on Year II on the journey to building an Antifragile Startup Ecosystem here in Iceland.
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:
- A group of Angel’s come together form a Limited Liability Company (LLC or ehf in Iceland)
- Each of the members commit capital ie $5000 each
- LLC Manager is elected
- 6 to 10 weeks of due diligence is conducted by the group that came together
- 5 to 10 companies are picked to pitch during the conference
- 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!
Logo Open Source Initiative (Photo credit: Wikipedia)
Steve Blank has been one of the bloggers, Entrepreneurs and Gurus who has been writing about and teaching entrepreneurship in Stanford and a number of universities all over the world. He has compiled a blog post that has all the resources that any entrepreneur can use in this blog post with the Title “Open Source Entrepreneurship“. I am a big fan and I hope we all can use the wisdom and knowledge that has been aggregated in this blog post.
via Open Source Entrepreneurship.
Image via CrunchBase
I have agreed to participate as a Mentor for the Entrepreneurship 3 week course with the title “Startups and New Ventures” for the new incoming students in Reykjavik University. It used to be a Business Plan development course, this year the course manager changed it to be run like a Startup Weekend for 3 weeks. This would be a great training for Kristjan from Innovit before he starts running Startup Reykjavik, IMHO. However, what was fascinating to see was the number of students (there were more than 300 split up into 50 teams!) who were working with the Business Model Canvas and trying to create a new business that creates value. This is a valuable life lesson and I am very happy to see the transformation that is happening in Iceland. It is a great build up before Startup Iceland.
I started blogging this post in Akranes, where I was volunteering as a Mentor in the Startup Weekend organized by Innovit. I keep asking the question why am I the only “investor” participating in all these events? well, maybe we need more participation from the Investment community in Iceland. This is what I want to change. No-one from the Investor group ever comes to any of these events. I have inquired about this to Kristjan and this is probably the 10th Startup Weekend organized in Iceland and I have participated in the last 3 and I have not seen one Angel or Seed Investor. Ok, I will stop with the rant. I have written a lot about being a Mentor, it is hard work and it takes a lot of commitment… it is about giving without expecting anything back. I do this willingly because I learn a lot while listening to people talk about their passion and vision. If I can help even one of them realize that vision, my job is done. I will be part of the mentoring team this coming friday as well at RU.
I will give a lecture on May 7th on the following topic to those students – From a startup point of view: How to talk to investors?
- What do investors want to hear
- do’s and dont’s
- What does a term sheet look like
- what is fair for both startups and investors
- how much should you be willing to give away in your idea?
- Overall valuable lessons
Ok, I did not come up with the name for the topic or the key items, Kristjan did… I think. Never the less, I think it is an important topic from a startups and entrepreneurs perspective. I will try to publish this in the blog for everyone to see and use. I always have a disclaimer in any advice I give, this is my opinion it does not mean it is right or should be used to make decision. These are more like recommendations and you should always consult your lawyer or accountant before making key decisions related to agreements or finances.
The last couple of weeks have been incredible to watch, I truly believe Spring is in the air. First of The Golden Egg Competition
was conducted and the winner were announced. Second, Seed Forum has gotten a face lift and is happening tomorrow and some bird told me that there is going to be some major announcement… ok, I know what it is… Startup Reykjavik is going to be announced. So what is Startup Reykjavik? I have written a lot about this, lobbied with many people for it and I am extremely happy to see it take shape. I am very impressed to see Arion Bank is taking the leadership role in this effort. If you are a startup or want to do a startup I highly encourage you to apply to Startup Reykjavik. The deadline is May 7th, and it is not much involved. The requirement is NOT to build a business plan but to focus on how you are going to form a kick ass team focused on execution and building your Minimum Viable Product.
I know Kristjan and Eythor are going to work really hard to make Iceland the best place to incubate and accelerate a startup. My hope and vision is that Iceland becomes the magnet for early stage European companies and Startup Reykjavik becomes the best in the world for accelerators…
well, if you are going to dream at all dream big! Right? There has been an explosion of Accelerators around the world, I believe Iceland offers a unique advantage, once again I have written about it here, here and more recently here. With the Global Accelerator Network link established through Startup Reykjavik, there is absolutely no reason why Startups cannot build companies in Iceland that can scale, expand and solve problem around the world. It is one of the steps to build a sustainable startup/entrepreneurial ecosystem.am focused on execution.
The second piece to this puzzle is Startup Iceland the Conference focused on Entrepreneurship and Startups. We need to have a yearly event focused on Venture Investing, Entrepreneurship and Startups which kicks off ideas, initiatives and themes. This year it is going to be about building sustainable startup ecosystems. We will start marketing the conference soon given it has taken a little longer that we anticipated to get the website up and running. If you have not booked your ticket I highly recommend you do, it is well worth it. It is from 9:00 to 15:00, opportunity to network with other entrepreneurs not just from Iceland but from around the world, Matt Wilson, of Under 30 CEO is marketing a packaged trip for Entrepreneurs in the US to participate in Startup Iceland. The cost includes lunch, refreshments, coffees etc and it is going to be in Harpa Concert Hall and Conference Centre. Did I mention we are going to have very prominent speakers like Brad Feld, Brad Burnham, Dr.Ted Zoller and Alexander Osterwalder participating? As part of the conference we are going to have a Whole Day Hands-on Workshop conducted by Alexander Osterwalder on Business Model Generation. Here are the workshop details… It is jam packed day where you get the same benefit of attending an MBA program in a year.
Kristjan Freyr Kristjansson
Cover of Minority Report
was at SXSW
2012 and he gave a brief talk about the show and more importantly shared his thoughts on attending many of the Lean Startup Panel. The summary of the SXSW update was:
- It is very noisy, crowded and advertisements everywhere – it would be impossible to get your startup noticed or even to meet someone and follow up on the conversation. It is a fantastic place to get connected for the first time through the parties hosted by various brands, Kristjan particularly liked the one hosted by Startup Weekend, TechStars and Google.
- Have a plan with regard to what you want to achieve when you attend SXSW, and it is something every startup/entrepreneur should experience once
- There is an opportunity to have a big Icelandic contingency in the next SXSW, as the planners of the SXSW really liked the Thojdfunder National Assembly that was organized in Iceland and they would like to tap into the crowd of brilliant entrepreneurs and people focused on solving challenging problems attending SXSW next year and apply the same approach that was applied in Iceland. Gudjon Mar and Gunnar Holmstein were the instigators. I fully support the initiative lets see if we can gather enough people in Iceland to support this initiative and show some strength from Iceland next year in SXSW.
- There were some very exciting interactive advertisement focused software that had face recognition software and based on your online profile was able to display ads that were targeted. The technology is here and it is just a matter of time before it becomes mainstream. The advertisements on the subway in Minority Report when Tom Cruise was running is going to happen sooner than you think.
- There were many formats for the Lean Startup sessions, some of them were led by Eric Ries, but there were others where different startups shared their examples of applying the Lean Startup Principles. Kristjan, thought it was so incredible to be see so many startups starting to apply the lessons and are learning fast and pivoting into valuable solutions. It is amazing to me why this has not caught on sooner here in Iceland, we have a long way to go here.
The general discussion centered around how we can experiment and validate hypothesis, Kristjan shared the link to the Lean Startup Experiment website lean.st. The 5 minute corner was taken by Helgi þor Jonsson, Helgi has been following a blog site Unicornfree.com and how he has taken the first step to becoming an entrepreneur. He has started working on a prototype of a Project Management Platform for volunteers and non-profit activities. His insight working with this blog site is the concept of 30 x 500, which is get $30 from 500 people then you have a business or $500 from 30 people. He has been taking the online course which is almost over and he would be ready to move on to the next stage of launching his product.
We discussed a lot about how to raise the bar on Startups being created in Iceland. Of course there were many suggestions, Gudjon Mar was of the opinion that we need to have big wins to establish a precedence that successful and profitable startups can be created out of Iceland. I feel we need to go one step further, successful and profitable startups need to created in a faster pace. We need to accelerate the process to actually make an impact and change minds in Iceland. I believe that if we can focus the entire startup community to pick topics from Paul Graham‘s Ideas that YCombinator will invest in and basically build companies for those problems we will get somewhere with the culture here. We need to make it attractive for someone to invest in, nothing against someone wanting to start a coffee shop it just does not create a buzz for Angel and Venture Investors to get excited about.
DataMarket.com is a startup out of Iceland. I have met with Hjalli a couple of times, spoken to him quite a bit and used DataMarket services on some of the presentations and have been following the company. The company started in June 2008 and Hjalli has been around the block in the startup journey a couple of times, he successfully created and sold a company in Iceland and I believe he is a 3rd time entrepreneur. You can read all about him in his blog, he has a distinct voice within the Icelandic startup culture and he is a big proponent of Transparency and DataMarket was way to address that issue. Although a lot of his opinion and comments are in Icelandic, so I glaze over them :)
Initially, I really felt that DataMarket’s business model was weak because you don’t see the light of the day if you are an intermediary for data and given the advent of new visualization technologies it is quite easy to hack a graph from structured data. The customers of data want data from reliable sources and you had to be a source of data to be able to sell data and typically people buy data from a Credible and Authentic Source like the IMF or the World Bank or The Economist etc. I believe the market for data is big but probably getting smaller with all the publishing tools out there. I could not put my fingers on the Value Proposition of DataMarket.
DataMarket just announced that their portal and services can be utilized by third parties to publish data, I believe that is a very interesting value proposition
. In addition, they are getting credible sources to use DataMarket’s portal to channel their data. I don’t know the financial performance of DataMarket to comment whether they are able to make progress or not but given that they just announced they were able to secure a significant round of funding in Icelandic terms, I presume they are on track. I think breaking into the international market
needs a different kind of thinking. The team composition that Hjalli has put together needs work IMHO
. I have a big issue with Startups who emphasize to much of their importance on the idea
and very little on the team, the strategy for customer acquisition and putting together a truly international team.
Here is an interesting article about “How to make a region innovative” by Strategy+Business portal of Booz & Company. Why am I writing about this? well, because there is all this talk about Innovation Clusters
in Iceland around Geothermal Energy, Seafood etc In My Humble Opinion (IMHO), it is a waste of time! this is old school thinking that never works. Don’t take my word for it go and read the article. I am not the only one who thinks this way, there is a need for new thinking on innovation and entrepreneurship all around the world so how does one go about creating this new value i.e new equity. We are here because of our over indulgence in Debt which has basically eaten away all the equity in the world. I am sure we all can agree that is the case in Iceland, but more and more countries are starting to feel the pain of this… hello! have you seen the news about Greece, Spain, Italy, Portugal… and the USA? So, here is a thought start hyper growth companies that can innovate at the speed of the internet and it can be done only by small teams because of many things especially team chemistry, mechanics, change management etc. There is enough evidence to support that Bigger a company gets the smaller their rate of innovation, I am sure there are exceptions to this, but the majority of large companies fall into What Clay Christensen calls the Innovators Dilemma. If you have not read the book I highly recommend it. The only way to innovate out of crisis is to start small, start at the grass root and change the entire paradigm of thinking and radically make traditional businesses obsolete. There is only one sector that is good at this and that is the Internet based companies in the the Startup Nation! Actually I would go one step further and say… you better be thinking about a Startup Of You, no wait Reid Hoffman of LinkedIn just wrote a book with that title. People these days, always stealing ideas :) just kidding. Go and read that book it is fascinating to think about the fundamental changes that are happening right in front of our eyes, but we need to be aware to see or suddenly you become obsolete. Are you getting obsolete?
Drum roll… Entrepreneurship! Yes, the winner over the weekend is the concept of Entrepreneurship. It was exciting to see over 100 people working on a problem, listening to feedback and presenting their ideas and getting recognized for their effort. As much as I like the idea of people getting recognition for their ideas, Ideas do not equate to launching a business. I have written about “Startup Ideas – Why ideas are not the problem“. There were 19 teams that presented their ideas. The companies that I thought really created a business over the weekend were:
Video taken from previous Startup Weekend Events in Iceland
- Campalo.com and Campalo.is – a booking and reservation application over the web for Camp sites around iceland
- Disulistar.is – a hyper local curated list of things for everything from Top 5 restaurants for business meetings in Reykjavik to Task list to do press release. You pay a small fee for not having to spend the time to research the list yourself
Of course both of these companies did not win the award because their idea was not revolutionary or “cool” but both of these probably will be able to build a sustainable business. I think the other ideas and teams need to be recognized as well. Here is the link to a slideshow of pictures from my Twitter stream.
- Whale Buddy – A Multilingual App for Smart Phones that enables a better experience for tourists on a Whale watching tour
- Life Line – Making the rescue suits and life jackets fitted with GPS device, Nano technology and Diode lights to enable finding the missing persons at sea.
- Viral Trade – An online market place for digital goods used in online games
- Tannstra – A toothpick made from Icelandic straw
- Active Site – A photo market for pictures taken underwater off the coast of Akureyri, I guess it could be applied for any all underwater pictures.
There were 12 more companies, I have to admit did not find them very interesting that is probably because of my lack of understanding of Icelandic.