Aug 12, 2011

Reshma Sohoni, CEO of Seedcamp: European start-ups should prove how commercial they are!

We continue to publish interviews with StartUp Week Festival speakers. Today I'm talking with Reshma Sohoni, CEO of Seedcamp - one of the biggest incubators in Europe. Our discussion is about European startup ecosystem, its perspective, global tech incubator bubble and why European investors are not so aggressive. 

- Do you think that the Seedsummit termsheet template favors one side too much?
- Yes, I think so. And I think the important thing I to understand sort of what is it. What the term sheet does is that it not meant to be a kind of a standardized. What it is doing is bringing transparency. So this term sheet, the versions of it, has been used by the VCs and business angels for the past several years but they have been quite private. What we wanted to do is to bring it to public. And this is a very big deal because they have never been put to a pubic like this.

- What could be next steps after it? I mean what do you see, how do you see them? 
- It’s a great step for standardization in Europe. For investors, this is the way to be more active. And for the entrepreneurs this is a possibility to have a generally accepted type of terms that they should expect in term sheet. And honestly, this is a really good step in education for EU startup ecosystem. This document should be something that entrepreneurs get to understand and figure out what parts they want to negotiate, what parts to accept, they can have more educated conversation with their own lawyers and investors.

- Why a lot less European VC’s than in the US for tens of thousands of startups funded each year in Europe? How to change the situation that European VC’s prefer to invest is less risky project and help in early stage European technology companies?
- I think the investors are part of the story but entrepreneurs are equally part of that story. I think entrepreneurs should continue to build differentiated businesses and really commercially exciting businesses. I guess I have 2 answers to that. One is it will take time. The European VC has been sort of burned in the past and also sort of it is more based in its own development. I think time alone will help us as European venture capital matures. Then secondly, actually what we see is IT companies they are able to attract both US funding and EU funding. I think the more US VCs invest in Europe, it will send even a clear signal to EU VCs that they need to step up the game and invest the European startups. So it’s probably both of those answers. And the third one is that the EU startups need to continue to prove how commercial they are, how aggressively they grow their businesses.

- From your point of view, is there a European tech incubator bubble right now? If yes, what kind of problems it could instigate?
- There is also tech incubator bubble in the US: large number of accelerators and incubators are appearing monthly. Maybe proportioned to the number of startups that we have, that sort of bubble seems even more obvious. I do think that in EU mentors do get stretched with different programs where they can be part of and the accelerator and incubators that are no different from each other, that are doing the exact same thing. So I would say that if you would want to start something up as an accelerator/incubator you should focus on something that should be really different, what’s you advantage as such. And I would look on such areas that aren’t addressed by accelerators to-date.

- So do you think that Europe really needs that everyone with actual entrepreneurial background would create an incubator now?
- I just say it’s a really hard work. It’s easy to set an incubator up. Being as it is a small capital to rise in order to create a company. But to actually out-value it and to actually help those businesses to succeed is a very difficult job.

- Seedcamps don’t have the infrastructure to do what a VC would do with ongoing help for start-ups. So what is the main adventure of Seedcamps? What you really can do better?
- We’ve been doing it for four years now, long before anybody else in Europe at least got into doing such. I think there are few things: approach is really something different; it’s extremely scalable compared to anybody else. We are able to mentor more than 200 companies a year. That’s a huge difference when compared to anybody else. Secondly it goes to the quality of mentor network, quality of the companies that have been funded by us for the past four years, where they’ve ended up, the level of cap that they’ve been able to attract. Those continue to be two big differentiators.

- It is clear that the US market is overheated. Another important point to make here is that the world’s top ten tech companies, based in U.S., more and more often invest or buy start-ups in Europe (remember Skype). What can European funds do to take advantage of this opportunity?
- I think its visibility. Both entrepreneurs and ecosystem that work with entrepreneurs need to bring European startups visibility in front of the US investors and the US corporate as well. So EU entrepreneurs really need to show that they have commercial ethic and commercial drive for doing their businesses. That is not just to get European startup for cheap. It’s potentially a better value investment. And actually you might have a huge business success in this.

- It’s very well known that the main risk for startups is to prove that they are really reliable and can reach result is to prove that they have a good team. The main risk is usually human resources because it’s quite difficult to find really good team, which will work together and stay together. What is your way to find such kind of leaders and young entrepreneurs? How do you see it?
- When companies apply to SeedCamp we take a close look at formation of the team:  who is working on the development, tech development, what kind experience do they have, whether there are superstars or whether it’s a competition and so on. Also we evaluate project in three aspects: design, development, distribution. And when we meet them in person at the SeedCamp it looks a lot like it. But in Europe we continue to see two skill sets that we need to improve on.  As I said, the commercial which goes into distribution I guess, roughly.

- What was the most creative “take break” that you have heard the startup has gotten? What kind of thing they did? 
- That is cool, that is quite an interesting question. One of our companies, what they do is they spend one weekend a month and they work on something totally different from the business at hand. It’s taking Google’s 20% and making it actionable inside of small startup of four or five people. They work on a project that is completely not part of their business. That really helps them get refreshed. The other thing I always say is even for startup companies you just have to kind of go exercise, go do something fun, not just work 24h a day every day of the week. You do need to step out of it and get refreshment. So that is sort of exercise or being around family and friends or as there guys do work on a completely different project, using their skill set, do something different.

- The last question is what do you actually expect from Startup Week Europe Festival in Vienna? What results would you like to achieve there, what is your vision?
- I think it’s incredible to have a week and to there are these people coming from different parts of Europe. So hopefully,  I will just meet a lot of really interesting startups and people from ecosystem. For us is we just see a lot of good startups coming from the NL and coming from Eastern and Central Europe, continue making SeedCamp relevance to them.

No comments:

Post a Comment