Venturepreneurs'

IE Business School invited for a one day conference to bring together European Entrepreneurs and Venture Capitalists to assess the current entrepreneurial situation and access to capital in Europe.

The IE Business School campus is based at an old convent and we were invited to the most unique location you could imagine: An old medieval church where Queen Isabel I used to pray for Christopher Columbus’ return.

Thanks to the organizer Gary Stewart, co-founder of nuroa and new Managing Director of the Venture Lab of the IE Business School, a good number of interesting internationally focused Entrepreneurs, Venture Capitalists and 400 MBA students were brought together.

The Entrepreneurs

Juan Pablo Julia, founder and owner of Axel Hotels, created the world’s most successful hotel chain for hetero-friendly gay hotels in Barcelona, Buenos Aires and Berlin. He mentioned that one of his most difficult challenges was and still is to take the company from a first entrepreneurial stage to a real well-structured company with qualified management team (he employs 120 people worldwide).

Venturepreneur Albert Armengol and founder of eConozco, Spain's first online business network which was acquired by Xing in 2007. Later on he co-founded and invested in several pure internet start-ups participating as Business Angel and Venturepreneur. He actually is a graduated medical doctor with a passion for Internet technology so he created Doctoralia, the world’s leading doctor and medical search engine. He says the great thing about Internet companies is that they permit you to start off without investing a lot of money at the beginning and you can quickly change paths if things are not working or need to be adapted to the market.

Gary Stewart, before starting nuroa he came to Europe as a Yale graduate and first worked as a lawyer. In his particular situation of being a foreigner abroad, he very soon realized the only way to control his own destiny would mean being his own boss and creating a life within is control. Thus together with Oriol Blasco he co-founded nuroa (vertical real-estate search engine). The entrepreneurs shared a few lessons they learnt throughout their entrepreneurial activities:

1. Fighting insecurity: As an entrepreneur you need to find your own way to gain your strength. Juan Pablo recommends "meditation, yoga or go running every day at 6am in the morning".
2. Be creative – as an entrepreneur you NEED to find a solution for difficult situations. There’s no one to turn to and to ask when you are in a difficult situation. Be creative and think out of the box.
3. Be persistant, perserverant - There are many difficult situations ahead of you - be prepared to fight them!
4. Test the concept first and make sure that it works before you start approaching any investors.
5. Do your homework - It’s essential for entrepreneurs to do their homework: Do market research and be aware who your customers are and what they really need.
6. Value of networking – Go to events, go to conferences, connect with other entrepreneurs and potential investors. Always keep the lines of communication open as there might be an opportunity coming up in the future.
7. The importance of money – If you want to bring an idea, to an opportunity and to a company you will need money to grow. For each step you'll need more you will need to give up parts of your control. Ask yourself what your motivations are? Do you prefer control or money and growth?
8. Values of the team – Make sure you have people on board who are better than you in certain areas. “Better an A Team with a B idea, than a B Team with an A idea”.
9. Sense of the market – Make sure you know who your target is. The key is to adapt the vision in your head to what the market really needs.
10. Passion- is even more important than the vision. Your passion will always help you overcome your difficulties.

The Investors

In Europe we don't have the same history of success like in the US. The US have strong success cases like Sequoia Capital boosting companies like Apple or YouTube. Europe only has a few comparable growth cases like Skype for example. Europe is much more dispersed than the US. Everyone is creating their own little ecosystems but none is reaching the power that Silicon Valley has. In order to find answers to the current situation in Europe and how it affects entrepreneurs raising funds, the following VC’s painted a picture of the current VC market:

Jan Borgstädt from Bertelsmann Digital Media Investments (BDMI). BDMI is the venture capital arm of Bertelsmann AG, a leading global media company based out of Germany. They invest into start-ups in the sector of online content distribution (advertising, online payment solution, mobile technology). With consolidated revenues of over €17 billion (U.S. $25 billion), Bertelsmann AG is an international media company encompassing television (RTL Group), book publishing (Random House), magazine publishing (Gruner + Jahr), media services (Arvato) and media clubs (Direct Group) in more than 50 countries. Being an Entrepreneur himself,

Creator of Venturepreneurs Organization, Christopher Pommerening presented in his role as Co-Founder and Partner of Active Venture Partners. Active is a Spanish based early & expansion stage fund which invests primarily in technology related businesses. They've completed 9 investments and invest between 0,5 – 4 Mio €. He created the Venturepreneurs' organization – an organization for serial entrepreneurs who also act as venture investors. His advice to any entrepreneur is: If you act according to your passion you will find the skills and the money – not the other way round.

Olivier Tardieu, Senior Analyst at Van den Ende & Deitmer, a Dutch €150 mio fund. The fund was created by Joop van den Ende and Hubert Deitmers who sold their shares of Endemol, World leader TV production company of famous shows like “Big Brother”. They invest between 3-8 Mio € into entrepreneurial mature start ups with a geographic focus in Benelux, France, Spain and UK.

Patrick Raibaut is co-founder and Partner at Debaeque Venture Capital. His investment interests include online and mobile services as well as media investments. Even though the crisis has hit many companies hard he says there’s still enough money, more resources and a lot of talent out there. So it’s the right time to start your company now.

Xavier Lazarus, Partner of Elaia Partners, is heading up a French VC Fund of €75 million investing into Spanish and French Start Ups. They have 18 investments completed and on average they invest between 1 and 4 million. According to Xavier, the effect that the 2008 crisis had on VCs was that the money flow completely disappeared. They made only two investments in 2009 and are now slowly starting to invest more again which means there's light at the end of the tunnel.

Joaquin Alexandre Ruiz Tarré manages a Spanish Technology Fund from theEuropean Investment Fund. The European Investment Fund is an institutional investor in the VC asset class. They have 300 VC funds under their management. In his eyes the crisis has affected the VC sector in that way that it was obviously much more difficult to raise money. Nevertheless some VC’s have managed to do a first closing which shows confidence that little by little the industry is coming back now. Therefore the requirements have also changed: Whilst before the crisis most VC’s already wanted to see the Business Models to start working, they've become even more pickier “show me how you make money first and then I think about investing into your company”. He calls these the best vintage years and is confident that by the end of 2010 we will see a reactivation of the investment activity. If you think about raising capital, keep these questions in mind if you plan to approach any VC's:

1. Does your business scale? Make sure you build a business – not only a solution. VC’s will only invest in businesses that scale.
2. Does your company actually fit in the VC’s focus area? If they only invest into technology there’s no need to present them a fashion product.
3. Are you really solving a problem? Make sure the VC will understand the solution you're presenting and how it makes money.
4. Is it the right time to market? Is the market ready for your product?
5. How big is your market? Is the market large enough where the customers really have money to spend? Is the market scalable?
6. Do you have the “flame of passion” in your eyes? In the end they invest in you as a person and in your team. They'll only do that if you're dedicated to the project 100%.
7. Do you know the pitch of your company? Be prepared anywhere anytime to explain what you do within 60 seconds. You never know who comes along if you don't expect it.