Archive for the 'funding' Category

Seedcamp is emulating Y-Combinator for Europe

Just discovered thanks to Sam Rose through his update on Bank & Finance Watch, that a british initiative – Seedcamp – targets replication of the success Y-Combinator has had in the US. Selection will happen in September for a full week in London. Principle is quite simple, 20 projects will be nominated and 5 offered a €50k for a 10% ownership of the company to be formed as a consequence (i.e a €450k pre-money valuation for the wining projects).

I really wish all the success to this initiative and would like to emphasize the opportunity for entrepreneurs accross EMEA. I can’t wait to read the reports of this first event and would like to see it as a forerunner for all P2PVenture initiatives throughout Europe and the whole world.


Private Capital Markets

The Economist released this week an interesting article on the subject of financial exchanges. This gives a broad view of the sweeping changes currently taking place in the world of capital markets.

I’ve been thinking lately quite a lot on the more specific subject concerning private equity placements and ways to create liquidity. I’ve discovered in the process several places doing interesting things like Entrex or others.

What is striking is that the Market is creating many alternatives to the cumbersome machines that the public exchanges have become: selling shares under limited scrutinity, selling blocks of shares between big players,.. It should be remembered that some of these liberties have progressively and conciously been banned from the public markets to prevent small investors from being abused or having big players acting according their own set of rules. It is also interesting to see that a lot of these are genuine innovations made possible by the advent of new technologies,  better understanding of risks and the creation of clever mechanisms to handle complex contracts.

While the good old public capital markets are becoming more and more global, it should be noted that the population of capital markets at large may be becoming more and more distributed.

Private Equity backing serial Movie Directors

A recent article in The Economist called Hollywood’s new model (premium access required) is reporting the interesting trend that Hollywood film funding is taking more and more the private equity approach. Apparently some funds found an opportunity to change the investment process in Tinseltown and take their profits out of a risky business by applying some standard methods: bank on the directors with a track record (even slightly tainted), be ready to invest in unproven ones (if they are cheap). This notably differs from the old investment process: do not be seen with a looser, do not bank on the unbankable. But this clearly resembles the methods applied in high-tech: backing an entrepreneur with a mixed record is better than backing a rookie (if he is cheap), banking on a rookie is an alternative (if he is really cheap).

 Maybe Entrepreneurs will never enjoy the glamorous lives of movie directors marrying their gorgeous lead actress but they may take some comfort in thinking they do not have to invite the board to their wedding party.

Should you give your valuation on your first date?

I was participating the other day to a project presentation session at a Business Angel club. The different presentations were all finally presenting some slide where you could find the money they need (a good point) and some valuation (a bad point). Let me give a fatherly piece of advice: “do not give your valuation on the first date”.

 This special moment of seduction where entrepreneurs meet potential investors is definitely a first date. You may engage for a long time as partners and you must surely take the female approach of being very selective on the gene pool and the means of survival that you want for the baby that “you” will be carrying. So be very seductive, be plain open on what you need, but do not spoil this first getting-together with valuation. The risks that you take is that you could deter some potential investors that have a lot to offer beside money. Second, in a good negociation, you must try if possible not to be the one giving the first price: if your valuation is silly and you find someone ready to talk with you, chances are they will never go for the long stand or are plain stupid. In the case of professional investors like VCs, this can be even considered as a faux-pas, VCs will use their own valuation mechanisms to come to a price and you’ll have small freedom to maneuver beside playing several potentially suitable partners one against the others.

 So do not rush things. Dress your idea up for the event, give your number at the end of the first rendezvous and wait to see if you convinced a smart investor or two to try to know more about you,… and be ready to get rid of the indecisive ones.