Message from Jeremy: To all Tech IT Easy readers, who could obviously not necessarily remember the initial announcement, I have invited Vincent to write about innovative start ups based in the Netherlands, Apple, the media industry, incubators, business books and many other things that happen to interest him at the moment. Vince, they’re all yours!

This is a repeat-post from my blog, but as that no longer exists and the material is (hopefully) interesting, I thought I’d post it again. The topic: A few months ago, I spent an afternoon at the Yes!Delft incubator, listening to business angels and entrepreneurs talking about the “philosophy” of investing, how-to be an entrepreneur (is there such a thing?), “networks, networks, talk-to-me-dammit-networks”, incubation, and pitching!

The event was organised by Nebib, an educator and matchmaker between business angels and entrepreneurs in the Netherlands. It holds these types of meetings several times a year, and this was my first opportunity to attend. The location was at the incubator, Yes!Delft, located at Delft technical university, which provides facilities and services for starters with innovative ideas.

The day was organised as follows: introduction by the chairman, Niels de Witte (NDW), followed by a presentation by an entrepreneur/informal investor Paul van Keep (PVK). Afterwards, another entrepreneur/inventor (Edwin van der Heide) came on, Miriam Notten (MN), an expert on networking, 4 pitches by entrepreneurs, and a tour of the facility. You can read the more official agenda here (but in Dutch). Following are some general notes and thoughts on the event.

Investment-style:

Business angels like to invest in products that they understand, that they can help with (Paul van Keep). VCs and other participation-companies have a more money-orientated approach – they care about risk-portfolio, profit, speed, etc. (Niels de Witte). There’s only about 200 informal investors in the Netherlands (NDW), by which he means knowledgeable investors; there are 1000s of rich farmers out there, but they don’t know anything except farming.

Investment process goes as follows: when you start the company, look for seed-funding that can keep you going for roughly a year; show the world that you have what it takes. Then, as you have a clearer picture of what your business needs and you want to expand nationally, go find a source of money. A business angel might be a solution, but so might a partner or bank. It depends. Going international requires more funding—a foreign location costs at least 500k (PVK)—and that’s where VCs or corporate investors are good options. Then there is the exit—which can go well or horribly wrong—and many business angels stay until that point (PVK).

Oh, for reasons that too many of them went wrong, PVK doesn’t invest in internet start-ups any longer.

Entrepreneurship:

What is it? Are you an entrepreneur if you invent and sell concepts, or do you have to role up your sleeves and focus? Business angels seem to think the latter (according to a business angel from the audience); Edwin van der Heide is a concept-developer/inventor/entrepreneur, who has developed a significant number of ideas into businesses, but has never used informal investments. A long discussion followed as to whether he belonged to “the club.” The general conclusion seemed to be no, so I guess there is a fine line.

Networking:

Misconceptions: a network does not equal ‘old boys’—networks can no longer afford to be closed; it also does not equal sales (except indirectly). In order to profit from networking, you should enjoy it (Myriam Notten). You can’t change the personality of a character; networking is little things like sending a postcard (NDW).

There are three types of capital related to networking: social, human, financial, and they follow networking in that order (MN and others). It’s hard to judge the value of social capital; and easier for the other two.

The way to judge someone’s network-viability (or find a good topic for conversation): Superficially, look at Kartoo—many networking-experts do this (note: a weakness of this approach is that you have to have a web-presence/be somewhat famous); Generally, look for 5 contacts that have diverse skills and backgrounds and access to networks. Why the number 5? it’s manageable (MN).

Pitches:

What investors like to see: information instead of pictures; value proposition—why is the product better than existing solutions; marketing plan—how and where are going to sell it; Tip: know you audience—are you asking for financing or for customers/other? Tough question: what are the three biggest risks you see with your venture—reveals a lot about the character of the pitcher. Honesty is good here.

Personal pitch-evaluation: out of the four “entrepreneurs” that presented, two used it to sell their products instead of asking for financing (there is a difference) and wasted our time. The other two were interesting, more scientific, but had to work on value-proposition/presentation-skills.

Yes!Delft:

Business-manager: Job Nijs. Ca. 30 companies reside at the incubator. USPs: best coffeemachine on campus; access to cheap office-space and facilities; coaching and surrounded by  smart people—average university graduation-score amongst residents: 8.5.

Incubation-program goes as follows: you have 6 months to get it together, then first evaluation. In another 6 months another. After 2 bad evaluations, you’re out. Hardly ever happens because coaches are experienced entrepreneurs that hold a mirror to resident’s head. So far none have been kicked out. Max time to stay: 4 years.

Generally, starters are motivated and focussed. But many starters go into consulting, as it’s “easy money,” which is not the intent of the incubator/government interests. The challenge is to circumvent that.

Fairly little going on in terms of informal investors at Yes!Delft – in total 3 companies looking for it. Most have bank-loans/FFF/subsidies, and many have customers that pay for specific research (Job Nijs).

Notes and coincidences:

1. In the introduction, Niels de Witte mentioned some (rather favourable) stats on technostarters seeking financing from the Tornado Insider report, I composed just a month before. As statistics can be read a number of ways, depending on who reads them (see Jeremy’s recent post), I thought it would be wise not to comment.
2. For a project on Gazelles—fast growing start-ups—I interviewed Paul van Keep on his company, Sumatra (site in Dutch, they make custom-mods for the Exact-package), several years ago. I think Jeremy also took part in that.
3. Generally, there seems to be fairly little interactions between incubators and informal investors. It could be a phase-of-development thing, a transparency-issue, or a lack of supply (too little appropriate investors in the Netherlands).
4. I sat next to an editor from Quote-magazine (a top Dutch business-magazine), who gave me some nice tips on what stories are newsworthy and which aren’t. Summarized: It’s got to be sexy!  (And yes, I realise that I completely ignored that advice with this post. Next time, I’ll just summarise the Maxim top-100 or something.)

This text was composed from my memories, though I have some (bad quality) recordings + handwritten notes for future reference. For questions: mail me or comment.

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To all Tech IT Easy readers, who could obviously not necessarily remember the initial announcement, I have invited my friend Raphaël to blog about how he is using web technologies as a business enabler in his new medical tourism venture (blog). Raphaël’s mission statement is to dig into IT applications in the medical field as well as e health matters. . Raphaël, they’re all yoursŠ²

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Those who know me well are well aware that I like counting a number of things during the day (eg trying to guess the revenues of a restaurant figuring out how many rotations happen in an hour at what average check, that’s what I’m best at; or guessing car manufacturers market shares when visiting another country).

So, I was sort of getting bored traveling back from London by Eurostar (a train that links Paris, Lille, Brussels & London, going under the Channel) tonight when I decided I would come up with original content for the Tech IT Easy readership, and inquire about what people do on a train.

From a marketing perspective, some people may find this information quite interesting (let me know if it has any relevance for you). Here are the results of my survey (see chart on your right hand).

I passed twice (go & return) through 3 wagons of 88 people, all economy class, as we weren’t far from reaching our destination. Would statistics from first class be different? I just don’t know (and I actually don’t think so, maybe more PDAs there – I could count only one, a Blackberry, used as a phone when I passed by).

I was struck by the very low number of out layers (no Linux user; only one person was doing a weird thing, and that was playing the guitar – something not so usual on a train, + me doing statistics).

I accounted in the “chatting” category people playing poker & kids fighting in the alley. There was only one baby (I find this figure amazingly low) and he was sleeping.

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