The team, the product and the size of the market: these three ingredients are typically preached to us as the key to a successful startup. But what if someone much bigger or much better funded comes along, essentially copies the product, devotes a much larger team to the task, and spends heavily on sales & marketing to grab the market?
European startups are able to raise just a fraction of the capital at home compared to their U.S. counterparts. And they receive a lot more value from their investors. Why would I ever fundraise anywhere outside of Silicon Valley?
I think I’ve read enough about the theory of fundraising and venture investing. But how do the venture capitalists really work? How do they decide which investment to make, and what is the logic behind their thinking?
Here are the good news: you don’t have to go to the Silicon Valley to get funded. Not even London or Berlin. There is plenty of capital to be found in the CEE. You just have to know where to look. And the bad news: if you know where to look, and still can’t get funding that means your current idea/startup is just not good enough. And if you can’t raise funds in the CEE, the odds are very high you won’t in Berlin or London either. It is better to fail fast and move on to something new.
This is an introductory post to a mini series that analyzes the startup investment cycle: while this first post discusses what the cycle looks like in mature markets such as the Silicon Valley, the next post will analyze specifics of the cycle in the CEE region. Subsequent pieces will dig deeper into each phase and its CEE players, starting with Credo Ventures and the seed/venture investments.
Every time an entrepreneur pitches such plan for his startup to me (and it happens quite frequently in Central Europe), I try hard to hide my disappointment. I am writing this post from Israel, where I am meeting with local entrepreneurs to hear their pitches and get a better feel for the local startup scene. After listening to several entrepreneurs this week, the lack of ambition of our region became even more striking. How come that there are so many entrepreneurs in Israel who treat their home market as a playground to test their product before its real launch in the United States, while our entrepreneurs have a hard time dreaming beyond Prague?
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