Startup Failure Unconvention
10 October 2014

Unconvention Day 2: the Startup Day

The Unconvention celebrated the startup day today: we listened to entrepreneurs and understood how it is to build a startup (and overcome failure and success), we listened to Neelie Kroes, who gave her last speech to startup community and claimed to disrupt Europe together, and then we moved to the practical we learnt why startups fail how to design, communicate your product and raise money for it. Read all about it in our daily round up.

“Every day I feel the fear of failure”

Zourou Eleftheria is the founder of Doctor Anytime, a Greek internet company that makes easier and faster access to the healthcare system. With her startup having just reached break-even (something applaused by the audience), Eleftheria shared her fears of failure and said that, as an entrepreneur, you have to prove yourself among others. However, success “is a journey, not a destination”. The same view was shared by Alexandra Roata, founder of Softlead, a marketplace between software producers and buyers from Romania. “Entrepreneurship is a journey, and my new friend is fear. I learn a lot from it: I improve and learn everyday”.

“It is a phenomenal time for Europe”

Lucy Stonehill, founder and CEO of BridgeEU (a service for international students to get one-stop-shop access to universities around the world, matching students with the best universities for them), is a US-British entrepreneur who moved to Europe to fund her startup here and who has a positive view on this so-called-ecosystem.

“I felt passionate to be part of this while it develops. I have been lucky and helped shape what’s happening”, she says. While one of the greater challenges for European companies is always raising money (“go to the US and it will be easier”, everyone agrees), she sees Europe is in a good moment. “I have spoken to older entrepreneurs who have series A and B. They say that the startup space did not use to be as crowded and it was easier to raise money. But this is a phenomenal thing for the economy and it’s interesting that this mentality is developing in Europe”. “We need everyone to be excited about entrepreneurship, not only techies”, added Calypso Harland, founder of the DevLab in London. “And then, celebrate success”.

“Let’s disrupt Europe together!”

Following the Startup Europe Roadshow Grand Finale, vice president of the EU Commission Neelie Kroes arrived and gave her latest speech to people attending the Unconvention. Kroes has worked for years on the Digital Agenda for Europe, “fighting like hell for  EU you can believe in” as her bio on Twitter reads. Instead of reading her speech (which can be consulted online if you are interested), she told us how she has worked with entrepreneurs during her time on the Commission – they all developed the Startup Manifesto with advise for the policy makers – and then, again, she asked the audience what politicians need to do to encourage entrepreneurship.

“I talked to a young entrepreneur who was sharing information with another one. I advised him not to do it – it’s your competitor! – and then he told me ‘Oh, you’re old fashioned’”, Kroes said. By having this conversations with entrepreneurs she realized how the digital and startup economy, based on collaboration, works. So what followed her speech was exactly that: a round table with the enterpreneurs and audience in which everyone shared their experience. And then, an advise for everyone: people should be responsible of telling politicians what they need from them – if you do not, then do not complain and blame them later.

Why do startups fail (and what can we learn from it)?

After the sessions on more generic topics, such as failure or ecosystems, the Unconvention moved to the core sessions: measuring, communicating, raising money and succeeding. Bjorn Herrmann, CEO of Compass, who has conducted a data driven quality research on why startups fail, explained the top seven signs of failure of startups – and how to run your startup and succeed.

  • Don’t work part time. Invest your full time on it. If you don’t do it, no one’s going to trust on it.
  • Don’t start a company alone.
  • Don’t start without a technical cofounder.
  • Do what you’re good at.
  • Listen to customers.
  • Pivot, but not too often
  • Scale, but not too early. Based on data: the billion dollar companies that found that one thing that were later able to scale to he global market did not escale that fast. Test, test, test, find the process and then scale: as a company, you will get better funding and valuation than the ones that escale quick.

“Startups live in extreme uncertainty, he concluded. “This uncertainty can lead to misallocation of resources, bad decisions and ultimately failure. How can we overcome that? The core of a startup is learning process: try things everyday and see if they work or not”.

How to develop, communicate and fund your product

The latest sessions of the day were dedicated to this topic. First we listened to Konrad Lauten, CEO of inkubato and coms director of the German section of Indiegogo, who insisted on the benefits of a crowd-funding campaign.

“Besides the financial part, it helps validating the market, capturing data, interacting with custopers, identifying influencers… and then raising the money. Crowd-funding reduces market risk because it is the validation of the needs”. Any recommendations to make this products more successful? Do take into account the pre campaign, get feedback and tell your story: what the product is and who and why is behind it. “Develop the community, it’s the public face of the campaign. It has to be emotional, even if the product is not”.

After this, Carlos Silva from Seedrs and Jan Reichelt, cofounder at Mendeley, one of the world’s largest research collaboration platforms, shared their advice on raising money – and talked how difficult or easy it is depending on the sector you’re working in.

“Education is tricky”, said Reichelt. “Very few investors understand that space, it’s difficult to show that there’s money there”. So how they did it (and then sold the company)? “We had fantastic traction in terms of user feedback. Thousands of people were telling how Mendeley solved a problem. We combined the data of traction and people’s feedback and that was the pitch. Then we approached individual investors”.

“When you do the minimum viable product is to prove a point: what you do is technical possible and that people can understand your story. What our minimum viable product did was extracting metadata from pdfs. Without that technology that idea wouldn’t work at all, so we eliminated the tech risk. The more of the risks you are able to eliminate, the more you can raise money”. In the case of Seedrs, “we recruited a third cofounder, who was technical, that’s why we took the decision to outsource the initial pprototype, added Silva. “We had the prototype to raise the money to then hire all the engineers”

“You have to make up your mind in terms of how much money you need and the proper valuation you can ask for”, they concluded. “You are the best person to decide what happens with your company”