EC: Palo Alto Goes Global

Published at Onislam.

 

For years a small strip of California has been the envy of entrepreneurs world-wide. From access to seed capital to expansion capital and exits, Palo Alto has been the de facto hub for seeking investment. Yet in a concerted effort, Ariadne Capital through it’s EntrepreneurCountry platform is looking to bring much needed change, launching a new global initiative on September 30th 2013 to help balance access to funding for entrepreneurs.

 

Julie Meyer, CEO Ariadne Capital, began the program announcing a 10-20 year game plan expanding in 15 regions. The initiative is designed to provide the ideal model architecture for start-ups, reducing the cost of discovery and disruption. The view, she espoused, has always been that capital will follow ideas, and that if you didn’t go to Palo Alto at the beginning you will go there at the end. The alternative she proposes? Do not go to Palo Alto, instead go to Entrepreneur Country: be a native, not a tourist.

 

 

OLYMPUS DIGITAL CAMERAGeorge Freeman, MP and former Entrepreneur and Venture Capitalist, entertained the audience by comparing himself in the Houses of Parliament as an Apostle preaching to the Romans, his opening quip drawing a roar of laughter, perhaps akin to a lions roar. His message however was something more serious: there must be a new model of growth beyond the boom and bust cycle, where focus is on long term productivity. He touched upon the need for a new deal for business, offering terms better than those available at Palo Alto, and he stressed the need for government reform: not privitisation of national assets but utilising the best of 21st century technologies to update and improve the public sector. Crucially, he encouraged entrepreneurship insisting that it ought not to be an extra curricular activity but a fundamental part of every childs education: a nation built through thought and innovation where the greatest asset is not buying a house for your pension, but owning a business.

 

 

George Coelho, MD of Good Energies, Co-founder of Balderton Capital & VP at Intel for 10 years, spoke honesty, including a trinket of sincerity: that it is important to back the best people, even if they aren’t your people. George shared a number of case studies, such as a $400k investment (Sohu) which was, years later, floated for $1bn. But his wider message focused on the importance of risk taking and how there ought to be no limits: figure out a new space in the market and built it yourself, never letting people tell you that it cannot be done.

 

 

Saul Klein, Partner at Index Ventures and founder of LoveFilm, said that being an investor didn’t feel natural and he was more an entrepreneur, this despite his father having been an entrepreneur from the age of 23. Saul stressed the importance of having an honest and supportive group around you, and that despite common perceptions, small companies can still learn from big companies, citing the success of Apple who have created three billion dollar businesses. Yet at the same time he pointed out that if a large company is not inquisitive it will suffer. Entrepreneurs he opined were economically irrational and he cited the example of how in Greece they have 55% youth unemployment: that is to say that if what was being taught in school was of lesser benefit, as if a more entrepreneurial approach was taken, those in Greece, and indeed in the G20, may have benefited from the economic rewards generated by volumes of entrepreneurs. He also gave the example that 55% of capital in US ventures is lost, while it’s 62% in Europe. The lesson? There are but a handful of companies that are truly successful and that the greater the risk, the greater the reward.

 

 

Steve Pateman, Head of UK banking, Santander, spoke of how 4 banks controlled 85% of the market in 2008 and how being innovative enabled Santander to carve out a niche. Their Breakthrough program for example is designed to help businesses grow, providing a diverse set of loan options, including those which enable the entrepreneurs raise finance through better managed debt, helping them retain a larger share of the equity through various release mechanisms.

 

 

 

Michal Cieminski, Platinum Seed Incubator, Poland, provided a historical conext for his country, how, during the days of communism, if a firm had more than 50 employees, it would be taken over by the State. He shared the example of the 1980s where on account of low resources, each citizen was entitled to just a single pair of shoes. All of this changed in 1989 when the wall came down and today 40% of 20 somethings in Poland are one form of entrepreneur or another. The challenge he observed is that Poles require help turning their ideas into viable businesses.

 

 

Onur Eren, Sekizgen, Turkey, began by showing how political disruptions can be a positive force for change. In his own case, Onur comes from a family of entrepreneurs: his grandfather selling citrus fruit from the back of a truck, recognised the need for vehicle spares, and so began an automotive business. In the modern age, the growth of e-commerce posed a significant challenge to the business, with those in, for example, fashion selling product without knowing the product fully. Today, they are in the process of delivering an automotive e-commerce interface, and time alone will tell whether they have created the correct model to sustain a lead in the marketplace, fending of competition.

 

 

Tobie van Zyl and Zulfiq Isaacs, two entrepreneurs from South Africa, shared their experience of the fast growing SA digital economy. 3-4 years ago there were few if any VCs active in SA, and it took them 18 months to raise 300k. Worse, the failure rate in SA a country of 50 million where 30 million have no income, is high at 95%. Yet despite this, there are 10m users of Facebook, and 30% of e-commerce sales in SA today are strangely for airline flights. The challenge is to provide education and services to the 30 million in the rural communities, and the real opportunity to do is perhaps over mobile.

 

 

Nkiru Asika, CEO, Enterprise Creative, spoke at length at the opportunity in Nigeria, a country with 300 ethnic groups, where 1 in every 4 Africans is Nigerian. With a population of 170 million, 70% of the population are under the age of 30- with an average age of 19 – the country is essential a hot spot of digital natives. It is also the largest internet user in Africa with 47 million on-line of whom 30 million use various social media. Nigeria is, a prime opportunity for EntrepreneurCountry.

 

 

Rod Banner, Founder of Banner Corporation, observed how technology is changing marketing and how branding is often identified as a logo when it is in fact much more. Experience, he opined, defines brands, and his view is that social business is the way forward.

 

 

 

 

 

David Willbe, Counsel, Crowell & Moring, shared a number of case studies raising awareness amongst the audience. Key, he observed, was any parties intention when engaging in a business relationship, and how interpretation of those relationships can vary depending on circumstance. The lesson? Always have a lawyer to hand.

 

 

 

 

Freddie Talberg, Founder of PIE Mapping, spoke of how his business has reinterpreted the value of navigation using real-time data to avoid traffic. By digitizing live traffic data, they have created solutions for Transport For London, the Olympics, and more. Indeed their solutions are cross-platform enabling information to be delivered whether by computer, tablet or phone.

 

 

 

 

Petri Rahja, Founder, Scoopshot, shared how his company provides digital content (photos, text and video) to brands looking to gain better awareness by delivering additional value to their consumer base. The challenge for them was how to leverage millions of photos ensuring full rights were delivered to the content creators.  Media and Brands he opined needed to engage, Technology such as mobile phones are generally replacing cameras, and Consumers are eager to engage. In all, today, they have over 330,000 Scoop Shooters, they charge a 30% commission and the fees generated range from $2-700 per assignment.

 

Jamie Conway, Founder of MADE TV, shared how his business focuses on local media. Having secured a number of license rights across Freeview, Sky, Virgin, Freesat and Youview, the objective is to deliver local content to as wide an audience as possible. Today, they reach 13.5 million in the UK, and he stressed that TV is still a main player with just 1.2% delivered via mobile phones, while 47% of 15-24 year olds still prefer their TV sets. He stressed that his licenses did not have advertising restrictions, so they could deliver anywhere from the traditional 9 minutes per hour of advertising, or full 30 minute segments. Most troubling was the statistic that the average viewer is exposed to 47 adverts per day.

 

 

Jonathan Morgan, CEO, ObjectMatrix, observed how some of the big companies such as IBM and HP are not major data centers, instead, Amazon and Dropbox have taken the lead. Why? Because the former did not understand the change in consumer behaviour and so did not innovate fast enough, creating space and opportunity for the latter two. With regards to his own business, he shared how his team of 6 went from dipping to just £20k in revenue to now generating £1.2 million. How? Instead of trying to appease all segments of the market they refocused on media workflows. The lesson, do not bite of more than you can chew, and not every opportunity is worthy of pursuing: focus his key. His prediction? That the nextrevolution will be the private cloud.

 

 

In all, the program as summed up by Amit Pau, Director of Entrepreneur country observed in his closing comments, delivered two very different sets of information. An outline of a new concept where opportunities through networking are delivered locally through EntrepreneurCountry, and a selection of case studies, large and small, which show that those with vision and determination can indeed succeed. Best of all, with the global launch, perhaps with the support of EntrepreneurCountry, it can be done so locally.

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