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If you ask a local startup leader what is holding back their community from growing, chances are the answer you will get is “a lack of capital”.
But in our experience working in nearly 100 markets across the globe, "lack of capital" is nowhere near being the biggest hindrance to startup community growth.
In fact, in nascent and developing markets, we have seen an influx of government and strategic capital actually hurt the local ecosystem more often than it helps it.
Consider the following sequence of events, which we have seen play out time and time again across several continents;
1. New capital to grow a local startup ecosystem is announced, either by the government or foreign investors. This money needs to be allocated fairly quickly, so investment will go to a select few organizations.
2. Organizations in the local ecosystem immediately begin jockeying for the investment. As a result, these organizations start (1) creating exclusive relationships with others in the ecosystem (these become known colloquially as “tribes”), or (2) vertically integrate (ex. co-working spaces that used to partner with accelerators now create their own accelerators, and those same accelerators start looking for real estate).
3. Almost overnight, a once collaborative ecosystem becomes overly competitive and fragmented.
The biggest losers in this scenario? Local entrepreneurs.
Rather than having access to many different options at each stage of their startup journey, they now become funneled into “walled gardens” of services (or “tribes” of partners). This fragmentation limits optionality, and creates a less inviting environment for new entrepreneurs to start up.
Unfortunately, it doesn’t take an influx of capital to create this scenario. As entrepreneurship becomes more “in vogue” and competitive across the globe, we see growing ecosystems become more and more fragmented every day.
The biggest threat to a growing startup ecosystem is not a lack of capital - it is fragmentation and a lack of transparency, because it takes a city to raise a startup.
Fragmentation can’t be fixed overnight, but if you can map out your local ecosystem, then you can immediately make it more transparent and inviting for newcomers. In other words, if you can lower the barrier to entry for new entrepreneurs to join your startup ecosystem, you can ultimately help it grow.
Hence, we developed the Startup Ecosystem Canvas to help startup leaders map their local ecosystem in a framework that makes it more transparent and inviting for new entrepreneurs.
The Canvas is free to use, and is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Learn more about the Startup Ecosystem Canvas project at the Founder Institute blog.
I met one of their associates at an event organized by a firm and bunch of us pitched to him. Super super young sounding and young acting.
The other participant was also an associate, which did not help. But there was a distinct difference.
The comments were generic, if they were not borderline idiotic.
I think everybody left thinking their morning was totally wasted.
I don't mean to beat up a little associate either. They are generally inexperienced. But associates are generally the first line of gate keepers. If the rest of the firm anything like this, then...
I met Artiman through their annual event and met some of their portfolio companies. Their philosophy is 'white-space investments', which I did not truly understand until I met with Yatin, Ajit & Tim. They back you for the long haul, and white-space meant focus on un-contested markets with huge potential. This may frustrate entrepreneurs, who are trying to innovate in established markets or where there isn't a clear path to profitability. I found my meeting to be professional, somewhat informative. While I realized I was not the right fit, I can understand how they are the right partners to entrepreneurs who qualify for 'whitespace'.
Private: 784 Chars
Last year I emailed Bill cold and he invited me in quickly. Fast process, all of the partners (Bill, Morgan, Kip) were there. We're in the cloud user management space and they have already funded companies in that space. Even though I hadn't yet brought in my team and was pitching solo, they were sincere, nice, polite, direct, and extremely intelligent.
Bill kicked me over to a portfolio company for further review, which didn't go perfectly. When I mentioned it to him, he gave me another try and had another (famous) entrepreneur talk to me.
Their questions were excellent and indicated that they'd already reviewed my doc, but they didn't interrupt or play with their phones. Smart questions -- they all 'got it' and didn't insult the idea/product/team.
I've only pitched a couple of times so don't have much to go on, but this experience was light years beyond the other VC's I've spoken to in Austin and Houston. Silverton is the epitome of professional investors - "smart" money.
Even though they passed, I was invigorated by the experience and even more determined to make it happen (and it is!!) If you have the chance to pitch Silverton, absolutely do it. You won't pay for it in demoralizing or inane conversations. These guys know their stuff and would add a lot to a board, but more importantly they seem to be very decent, real people.
Private: 66 Chars
Private: 642 Chars
We had a couple of meeting with True over a period of a couple of years and one partner meeting where they may have been close to investing in our first round though obviously I cant be sure. What I can say is that every single person was extremely friendly, thoughtful, prepared and respectful during the pitch I gave (which was not great) and during the review period afterward. Even though they didn't wind up investing, John Burke wound up referring me to several eventual customers that netted hundreds of thousands of dollars in revenue for us. I can't recommend them highly enough and they'll be my first stop whenever I start my next company.
Early on in 2011 when i was first starting my company i was approached by a Keiretsu member who claimed he was interested in investing in our first round (we had several rounds and then a very successful public exit afterwards) He suggested I fly out to SF from the east coast and I met with him in person at my expense after several phone calls. He tried to first pitch me on a "virtual incubator" where he would provide advice and consulting and a 3-5k "stipend" for 15% of my company. This was before i had raised any money but even as a first time entrepreneur with limited experience this seemed ridiculous. This was all over the phone but then I invited him to participate in my round and thats what precipitated the meeting in SF. At the meeting he informed me that I had a "lot of work" to do in order to get the necessary materials together for due diligence in front of his "investor colleagues" at the Keiretsu Forum. Of course he offered to "help" with this in exchange for "sweat equity" that he would provide in lieu of an actual funding amount. Only once he had gotten equity for his 'sweat' would he then actually consider investing. I balked at this and challenged him to invest as others began to commit to the round - he refused and told me that I would never be able to build a company as I lacked the business saavy to build a great company. Well its 4 years later and we just exited after building a fantastic company - had he invested in the round he would be somewhere between 8 and 10x depending on his timing. These guys are complete scammers - oh and had I actually taken him up on his multiple offers to swindle equity i would have then had to PAY to get in front of his Keiretsu brethren. These guys are complete frauds and just like the idea of being investors. They are playing a role they either cant afford or are too afraid to commit to. The fees they collect are literally the only thing that is keeping them going and they eat and drink those fees at their showcase shams every month RUN AWAy from these guys - if there were more regulations around angel group investing these guys would be in jail for fraud.