StartupDelta’s Jonathan Marks recently spent time discussing business strategy with Ray Quintana, who is General Partner, Cottonwood Technology Fund. He passes on some great advice to startups who are serious about scaling up their business in The Netherlands.
Think Global from Day One!
“Just like StartupDelta, I’m interested in what’s happening in the Netherlands as a whole because there’s an incredibly dynamic ecosystem across the country. There’s just the right mix of disruptive technology and passionate entrepreneurs with the vision to build it. We feel what’s lacking is the kind of service that we provide as a technology fund because we understand the capital requirements during the life-cycle of young tech companies.“
“We know emerging companies need capital to get them through the “valley of death”. It is very challenging to cover the negative cash flow in the early stages of a startup before the new product or service is bringing in revenue from real customers.”
“But, just as important, as a startup you need to have a global vision from day one if you’re serious about conquering a global marketplace. We believe you can’t build a global company without access to the aggregated resources of a global ecosystem. That’s why we don’t try to grow our companies organically from the bottom up. It just doesn’t work!”
“We believe in starting up companies with the vision and resources they need to impact a global marketplace. The Netherlands has many of the pieces in place, but at the moment they are fragmented, often scatter across the country. We’re bringing the right resources together and the right time. We’ve done it in two regions that we call “under-resourced”. For us, under-resourced regions are anywhere that’s not either Silicon Valley or the area around Boston & New York. The rest of the planet is under-resourced!“
Never Copy – Simply Adapt
“Nobody can emulate Silicon Valley. We recommend that the hubs in the Netherlands don’t even try. They invested US$ 29 billion in Silicon Valley last year and that’s just a tip of the iceberg. So, by all means, understand what works in the Valley, but translate and adapt that into your own local ecosystem to make maximum use of what you have available.”
“In our vision, you need three things to be a global player. You require;
- Relevant, disruptive applied technology that’s difficult to duplicate.
- Great teams with the right entrepreneurial skills to conquer a world market, powered by the drive to build something new.
- Smart capital, just the right funding at the right moment with access to the right connections.
We believe two of those factors are already in the Netherlands. We’re adding the third. In the early stages, it’s a lot easier to bring the capital to the ideas rather than the other way round. That’s why we’ve built our initial base in Enschede, in The Netherlands Eastern province of Twente.“
How Cottonwood works
"We always start by examining the idea. Does this idea contain the core competencies to really affect the global marketplace? If so, we believe that you then need to bring all the resources together necessary to support that idea, which means opening a global network of 1000 corporate contacts. From the very beginning, we align our companies with the global intelligence and technical know-how of these companies so they can accelerate their growth. We’re unique in that we invest across the entire funding landscape, from seed funding to IPO, and across the industries being disrupted by startups. We’re not confined to any particular geographical region – we do fragment our focus because an idea happens to be located across a boundary of some kind".
"Our name has a meaning. Cottonwood is the fastest growing, but also the most adaptive tree in North America. It is also the most prolific. The Rio Grande Cottonwood was always a welcome sight to pioneer desert caravans heading West across the States. The trees signal the presence of life-giving water—typically reach 20 metres in height and produce as many as 25 million seeds in a season."
"Cottonwood Technology Fund aims to be as fruitful with its work. It’s a model that we’ve been developing and adapting over 15 years and we’ve proof that it works. We’ve been the top performing early venture capital fund in the USA for the last five years. There’s every reason to suppose it is going to work here in the Netherlands. We recently closed our first investment of 1.6 million Euros in a Dutch startup that we believe is going to scale to a global venture. And more term sheets are out there."
Keep an eye on this part of the StartupDelta site for more insights from Ray Quintana.