“Tell her the future is in her pocket,” digital futurist Paul Papadimitriu told the audience of Digitalk 2014 in Sofia illustrating the coming generations with a little girl on a swing, just minutes after bringing everyone down with stats about rising youth unemployment and the disappearing middle class.
In a way, his lesson resonated with every other speaker who followed during the two-day event, organised by Sofia-based weekly newspaper Capital, VC fund NEVEQ and seed fund LAUNCHub. Executives from Twitter, Netflix, Uber, and many other successful companies took the stage together with representatives of European and American funds to discuss what the future may look like for technologies, business and investments.
Looking into the crystal ball
And the future, apparently, is not just in everyone’s pockets but also in the hands of those entrepreneurs, who learn early enough how to ride the next big innovation wave. Social media and technology have already changed the way politics work, and the Internet is expected to triple in size in the next three years, Chris Chabot from Twitter said. So those who think that everything has already been invented are terribly wrong: “Everything is wide open,” he said, “we’re just at the very beginning of defining what the new generation of applications is, what the context is for us, how we are going to change society.”
An aspect of the changing technological and socio-economic environment is the rise of the sharing economy and virtual marketplaces, speakers agreed. Representatives of Uber, HotelTonight, BlaBlaCar, and Incrediblue, focused on mobile-driven sharing and booking businesses as an answer to growing unemployment. They also talked about the challenges of building up a business based on trust.
“In order to create trust, you need to moderate, by verifying information and providing peer-to-peer reviews,” Piotr Jas from BlaBlaCar said. “You also have to have a great, responsive, unscripted and emphatic customer service team,” Heather Leisman from HotelTonight chimed in.
Know thy investor and know yourself
In parallel with the roadmap into the future, delivered in a highly futuristic, jam-packed hall, startup owners also had the chance of freely networking with a number of venture capitalists from funds such as USVP, Earlybird Venture Capital, Qualcomm Ventures Europe and Passion Capital. The investors shared their take on the qualities they look for in a team and a business, uniting around the idea that they are most excited about businesses that provide new solutions to existing problems. Or, as venture capitalist Scott Hartley put it: “Focus on a problem that’s a heart attack rather than a headache.”
While their take on the funding landscape and the latest trends was quite valuable, the speakers perhaps surprised the audience the most with their honesty about the need to educate founders on selecting the proper investor.
“Do due diligence on your investor,” Qualcomm Ventures Europe’s Director JasonBall advised, “it is going to save you a lot of pain.” “It is a five-year plus committed relationship, so before you go and pitch to the whole world, look at your VC’s thesis and their portfolio,” Hartley agreed.
Some investors even admitted that they might not always know best: “Whatever a VC tells you, don’t bother too much,” said Stefan Glänzer of Passion Capital. “You are the entrepreneur, you have to create the business, so take the input but form your own opinion.”
Contrary to popular belief, over the last 15 years, the top performing funds have been the ones below 15 million because, although they are small, they are more committed and more involved, Samer Karam of Alice said, while Marvin Liao of 500 startups quoted similar stats on the return of VC firms. Karam equated funding pitches to beauty pagents and offered an informed approach through his company’s Startup Indexs, and Liao urged entrepreneurs to “find investors who have a clue about the products and services they invest in.”
While speakers regaled the audience, 10 startup founders pitched at a concurrent Mini Seedcamp event in the next room. The young companies presented in front of a panel of five experienced investors they would otherwise hardly manage to get in one room, and received honest feedback, sometimes brutally so.
What most of the spectators didn’t know, however, was that the previous afternoon these startups had received advice during a coaching session at the LAUNCHub HQ with Seedcamp partner Reshma Sohoni. During an impromptu Q&A after the session, Sohoni stressed on the importance of telling a compelling story in the pitch, and commented on the rise of fintech and behaviour-analytics startups.
That Valley myth
During the forum, which welcomed more than 1.000 visitors to become the biggest Digitalk yet, Sofia once again affirmed its place as the startup hotbed of the Balkans. Naturally, one key question arose quite early in the discussions – could Europe, and the SEE region in particular, copy the Silicon Valley and does it need to? “
I guess we don’t have to copy Silicon Valley when I look around here,” Huber Cottogni of the European Investment Fund said in his opening remarks, “this is the European way of Silicon Valley and I’d like to see more of that.”
And although the general consensus was that funding in Europe is on a completely different scale and with different rules than in the US, some of the speakers saw positives in how this affects the community. Heather Leisman of HotelTonight told inventures.eu that she was impressed with the size of the event and with the energy of the crowd. The Silicon Valley has lost a bit of that energy and the awe around startups, she added, it has become much more commercialised and competitive while the mood in Sofia is still primarily collaborative. Ivan Hernandez from The Digital Loop seemed to share the sentiment: “This is probably one of the few places where I have seen the audience so attentive and so hungry for knowledge.”
In a true Balkan manner, mindset being another hot topic of discussion, when local community players took the stage to comment on the state of the Bulgarian startup ecosystem, they were accused of being too pessimistic, even though some of the issues had been brought up by other speakers before them.
Generally, the consensus was that a lot of the entrepreneurs in the region are great engineers but they lack some of the soft skills needed to be good sales and marketing people and thus, successful founders.
“We have people that can come up with good ideas, execution is usually good as well, but if you don’t have a market it’s hard to develop business and soft skills,” Maxim Gurvits, partner at Teres Capital said. When challenged by Rene Tomova of Creative Shower in the audience, he, and the whole panel, ended on a positive note, advising everyone to “Do a lot of giving before you take.”
Final Lessons
“Most organisations are slow to transform their thinking to digital, [as] they still think digital is a medium and not a reality,” Hernandez said in the most applauded speech of the second day. Talking about the digital reality with examples of toilet paper and mismatched socks companies, he left entrepreneurs with a valuable piece of advice: “It’s not about ideas, it’s about making ideas happen. You need to get your hands dirty and start working. You need to develop a sense of urgency. This is your time, don’t waste it.”
inventures.eu is a media partner.
