There are hundreds of accelerators on the planet. But a few stand out as doing something unique. StartupDelta’s Jonathan Marks recently got a chance to speak with Ana Mihail. She recently moved from the Netherlands to join BlackBox, a very influential match-making organization with a long tradition of connecting European startups with Silicon Valley capital. They run “Blackbox Connect”. It is a two-week immersion program designed to gives founders the access and resources needed to launch their prospective companies in their respective countries, as well as in the US. To date, 140 startups from 47 different countries have participated. Half of all participants are female, and there is a program dedicated for women entrepreneurs. As the latest program kicks off, Ana shared some extremely useful insights. She cuts through the PR hype and passes on practical advice as to what’s working. Take some time to explore the links.
Understanding the Valley Ecosystem
“I recall in 2013, when I was organizing the Maastricht Week of Entrepreneurship, that visiting US entrepreneur Steve Blank was asked the question “What should European entrepreneurs do to increase their chances of success?” Without a moment of hesitation, he said: “Get a plane ticket and move to Silicon Valley.”
“At first, I thought he was simply promoting the SV ecosystem, as opposed to what we were doing to build a start-up community in the South of the Netherlands.”
“In fact, he was saying that it’s difficult to understand how an ecosystem operates unless you’re in it.”
“But now, having moved to California, I can see that many European entrepreneurs may indeed benefit from coming to Silicon Valley. But their business may accelerate even faster if they keep their base in Europe, especially if they have validated markets and set up supply chains”.
“Timing your visit here is the clue because you only get one shot at making a first impression. Before you think about moving your team to anywhere in Silicon Valley or the US in general, I believe you need to ask yourself some fundamental questions:”
Why are we even considering a move to SV?
“Many entrepreneurs consider Silicon Valley as the Leading Centre of Entrepreneurship. Unfortunately, entrepreneurs from outside the Valley fail to understand how and why the ecosystem works. They often underestimate the difficulty of reaching the right people and raising enough money, especially second and third rounds.”
“There are many organizations offering what look like pitch-package tours to San Francisco with the promise that foreign startups will be able to present their company in-front of a “panel of investors”. They forget that reputable investors in the valley won’t even look at you unless you have established a US presence – and that you have done the paperwork to operate here (start-up visa, incorporation, etc.). I see too many delegations from various countries waltzing into the valley rather like high-tech tourists, underestimating that it takes several meetings in order to win anybody’s trust. They often head back off home a couple of weeks later disillusioned because the visit didn’t go to plan and no lasting contacts were made.”
Preparing for success
“The Roman Philosopher Seneca is known for a famous quotation: “Luck is what happens when preparation and opportunity meet”. I believe this sums up success in Silicon Valley. I regularly see foreign entrepreneurs arrive in Silicon Valley with just an idea or a flashy Keynote deck, rather than a validated business ready to fund.”
“Almost all the investors I meet have the same question: “So, what are you working on?” In an interview with Forbes Magazine, Steve Blank argues that instead of responding by showing a flashy demo pitch, founders need to show they have really built a match between what they make and what the customer needs.”
“Startups need to explain why they started, what they built, what they found when they talked to customers, what they did as a result and then explain where they are going. It's an open-ended company narrative not a finished, polished story. Only then can the investor judge if the company in front of them has really discovered a way forward”.
“Don’t be surprised to find people here in California not only understand your technology, they may have a deeper understanding of the global market you’re trying to enter. If they are not interested, you’ll get a polite “that’s interesting” and you know they’re moving on to someone else. That could be an opportunity of a lifetime wasted because you were not prepared.”
So here are a few thoughts that strike me immediately:
1. Do the homework
If you are planning to move here, then knowing when to move to the Valley is crucial to your success. If you’ve been through a European accelerator program, then it’s unlikely to be earlier than 3 months after “demo day”.
- If you haven’t validated your business model canvas with launching customers, expect to return home early. You need early traction and early wins before you even consider Silicon Valley.
- Read the many startup-resources that are out there before you buy the airline tickets, not in the plane. You are heading for the most competitive ecosystem on the planet. Make sure you speak the start-up language.
- Subscribe to tech-blogs and any on-line publications that cover your field of business. You need to understand what’s happening in the global market – not just what’s happening in the Netherlands.
- Read what others say about their experiences. The Harvard Business Review article by Sramana Mitra is excellent and still current. Remember there is a talent war. If you had a job at Facebook, Google, Twitter, or LinkedIn what would persuade you to leave that career to join your start-up?
2. Do the math
"If you’re still bootstrapping, remember that prices for apartments in the valley are very, very expensive by European standards. It may seem cheap if you currently live in the centre of Hong Kong, Sydney or London. But for the rest of us – think of your maximum rent in Amsterdam and double it. Think of what you pay in Eindhoven, Maastricht or Groningen and triple it. Don’t take my word for it. Check out what’s on offer and do the reality check. What is this going to do to your burn rate? And what about the cost hiring local engineering talent in Silicon Valley?
Do the calculations to help you work out the strategy. You’ll find that The Netherlands is a great place to validate a market, perfect a technology and build a team. Once you’re in a position to scaleup is the point at which a move to Silicon Valley could well be an option."
3. Understand term sheets, options and tax basics
"If you want an hour well spent, have a look at the presentation by David Weekly, author of "An Introduction to Stock & Options for the Tech Entrepreneur or Startup Employee". Founders need to have a basic understanding of how their company is going to be valued by investors and what can go wrong if you don’t file the value of stocks with the Internal Revenue Service (IRS) at the right moment."
4. Understand the business culture
"One of my favorite quotes from Victor Hugo says; “Nothing is stronger than an idea whose time has come”. Has your startup technology really reached its tipping point?
Time is money in the US, especially in Silicon Valley. With so much world-class talent to choose from, there’s almost zero tolerance for “wantrepreneurs” – the clueless timewasters who try to sell a house of cards.
- Ask for specific advice from a contact in the valley and understand what’s in it for them if they were to reply to you.
- Spamming or unfocused “news announcements” get blocked and often reported.
- Check the calendar. Although the culture in the valley is to have long hours and very short holidays, trying to arrange meetings on Labor Day weekend, Memorial Day, isn’t going to work."
5. Learn from rejections
"The founder of AirB&B, Brian Chesky, recently published the 7 email rejections he got from potential investors at the early stage of founding his company. When you get rejected (and you will), learn to understand why they are saying no to investing now. It may open doors to positive conversations in the future."
6. Profit from informal networks
"Silicon Valley does an amazing job at bringing together research, talent and funding. But the reason it definitely assists startups gain traction is because of the turbo-charged informal networks. Once you’re spotted by the right people, things happen at a lightning pace as they open up their trusted networks. At that point, everything revolves around the speed of getting things done."
7. Plan for a soft-landing
"I’m now working full-time for Blackbox, an outward-facing accelerator matching human capital from outside the region with venture capital inside Silicon Valley. It was founded five years ago by Fadi Bishara, a man who’s been inspiring founders here since 1995. We run regular two-week immersion courses to help international startup founders understand the Silicon Valley culture. The program is offered quarterly, deliberately targeting 50% female-founded companies. We're following the development of teams across the StartupDelta very closely.
We’re careful to select startups who have reached the right point in their development, so that an intensive insider’s briefing makes sense. But the fact that we now have alumni ambassadors in 50 countries is testimony that this approach is not only sound business sense – it builds networks of friends that last a life-time!"