Network Updates, 11 May 2017
Log into TENx for complete details and RSVP information for all KF events, unless noted.
- May 14: 7-week Venture Deals online course with Brad Feld & Jason Mendelson (free)
- June 11-16: Summer modules & graduation, Classes 20-22
- June 23: New York Regional Chapter breakfast
- September 14: KF Women’s Group breakfast, Bay Area location TBD
- September 22: NY Regional Chapter breakfast
- December 8: NY Regional Chapter breakfast
- International Summit, April 22-27, 2018: Tel Aviv & Jerusalem, ISRAEL
- Wale Ayeni (Class 18) featured in Disrupt Africa update on Africa Tech Summit London
- In Entrepreneur Middle East interview, Fadi Ghandour (Mentor Class 15) says Amazon’s purchase of Souq.com is good for MENA
- Read Amit Anand’s (Class 18) wide-ranging LiveMint interview on the SEA ecosystem
- In Fortune report, Ted Maidenberg (Class 12) explains that healthcare market uncertainty can be good for investors
- Victor Hwang (Class 12) discusses barriers to business creation in CNBC interview
- Chrys Chrysanthou (Class 21) talks B2B startups in fireside chat with Yousef Hammad (Class 21)
- Vinnie Lauria (Class 17) writes in Forbes on messaging apps’ inroads into Asia business communication
- In video interview, Marlon Nichols (Class 18) urges, “Stop trying to create the Uber for Black people”
- Special mentions: Jen Fonstad (Class 3) named one of Working Mother‘s “Most Powerful Moms” • Marlon Nichols (Class 18) and Brian Dixon (Class 21) both part of “15 Black Tech Investors You Need to Know” • Dilek Dayinlarli (Class 18) chosen as a Global Ambassador, mentoring global women leaders
- Podcasts & speakers: Jason Seats (Class 21) was the guest on “Ideas to Invoices” podcast • Numerous Fellows to speak at upcoming Mobile | Venture Summit in CA
- This week’s Fellow blog posts:
- Winslow Sargeant (Class 11) writes on small business job growth in the US
- Jorge Torres (Class 16) launches Venture Stack newsletter
- Guy Turner (Class 17) advises on when not to hire a VP of Sales
- Josh Breinlinger (Class 21) on creating “tiers” of marketplace users
- Gil Dibner (Class 13) has 2 new posts, on demo days and on systems intelligence and barriers to entry
- Carl Fritjofsson (Class 21) writes on Creandum’s investment in Cornershop, and also asserts, “Silicon Valley Has Peaked”
Wale Ayeni (Class 18) Featured in Disrupt Africa Update on Africa Tech Summit London
Wale Ayeni (Class 18), the International Finance Corporation’s VC lead for sub-Saharan Africa, is featured in a Disrupt Africa article from this year’s Africa Tech Summit London, where he was a speaker. The summit brings together VCs and angels, international investors such as the IFC and World Bank, entrepreneurs, and African government and trade organization representatives, with the aim of driving investment and business between Africa and Europe.
African investment, Wale says, is a long game that demands patience. The region poses some unusual opportunities that require tailored business models to take into account specific features, such as consumers’ overwhelming use of mobile phones to access the Internet. Wale warned that investors should not expect to “copy and paste” business models from other parts of the world. “In Africa you need to know what the supply chain looks like, and you need to look at the African consumer, who is either on a mobile phone or offline.” He goes on to stress the challenges posed by the supply chain: “E-commerce in Africa will happen, but it won’t look like e-commerce anywhere else. It won’t look like Amazon, it won’t look like Alibaba.”
In Entrepreneur Middle East Interview, Fadi Ghandour (Mentor Class 15) Says Amazon’s Purchase of Souq.com Is Good for MENA
In an interview with Entrepreneur Middle East, Fadi Ghandour (Mentor Class 15), who co-founded and serves in executive roles in both Aramex and Wamda, discusses the state of the MENA startup ecosystem in the wake of Amazon’s acquisition of online retailer Souq.com for $650M+. Fadi sees the purchase as an indicator that the region is reaching maturity and maintaining momentum despite a slowing economy—and he thinks it’s a good thing. The successful local exit should encourage startups to raise their game, he says, and motivate investors to ask, “What am I missing?” He advises entrepreneurs in the region to differentiate themselves and be patient, pointing out that Souq was founded more than 10 years ago: “Build your team, build your capabilities, keep knocking on doors to get funds—there’s no shortcut.” To investors he says, “You can’t create an ecosystem on aspirations and hopes only”; risk-taking is what enables the growth and scaling without which the next Souq won’t happen.
Read Amit Anand’s (Class 18) Wide-Ranging LiveMint Interview on the SEA Ecosystem
Amit Anand (Class 18), founder and Managing Partner of Singapore-based Jungle Ventures, speaks to the state of Southeast Asia’s (SEA) startup ecosystem in an extensive LiveMint interview. SEA’s startup investing scene is booming, he reports, up from 200 deals in 2012 to nearly 2,500 annually. That said, it still suffers from common emerging market weaknesses, including infrastructure, traffic, payment options, talent, and exit activity. Series B and later funding is extremely limited.
Since India’s startup ecosystem is 5-6 years ahead of SEA’s, Amit sees it as a good place to learn about what works and what doesn’t: “The challenges start-ups solve for the customer needs [that] they are addressing have played out in a similar manner” to what’s seen in SEA today. Despite the region’s large number of countries, Amit believes that big metro areas within SEA “behave in a very similar manner … in terms of supply, demand, consumer behaviour, socio-economics and infrastructure,” and therefore startups can effectively replicate their growth once a foothold is established. The key is to “look for homogeneous market segments within SEA which are sizeable.” Amit also notes one similarity between India and SEA: although each region has nearly 1 billion people, “the number of people who are actively shopping online or have the power to spend is still small, compared with the overall population, though rapidly growing.”
In Fortune Report, Ted Maidenberg (Class 12) Explains that Healthcare Market Uncertainty Can Be Good for Investors
Fortune quoted Ted Maidenberg (Class 12), co-founder at Social Capital, in its report from the Fortune Brainstorm Health 2017 conference in San Diego, “How Obamacare Uncertainty Is Helping Venture Capitalists.” Ted participated in the panel “A New Playbook for Healthcare Investing,” where he remarked that while “uncertainty is bad,” the particular uncertainty surrounding the future of healthcare policy in the US has actually been good for early-stage investment. The benefit, he says, is that investors and companies have to focus more narrowly on their product or service instead of trying to capitalize on a particular system. “You have to make a product that’s economic and that works.”
Victor Hwang (Class 12) Discusses Barriers to Business Creation in CNBC Interview
Victor Hwang (Class 12), VP of Entrepreneurship at the Kauffman Foundation, was interviewed on CNBC in a segment titled “Starting a Startup.” Citing the Foundation’s extensive polling of entrepreneurs, Victor lists “cultural forces, psychological attitudes, and access to capital and social networks” among the most significant barriers to business creation.
To address those barriers, the Foundation organized a “design lab” in Kansas City last month, gathering more than 40 stakeholders from across the early-stage investment and services sectors, to come up with real solutions that would make possible “a trillion-dollar collective investment in entrepreneurs across the United States to restore the American Dream.” Noting that 78% of startup investment goes to California, Massachusetts, and New York, and—as we have reported here before—less than 10% of startup funding goes to women founders, and less than 1% goes to people of color, the event focused on two concepts that can unlock business-creation potential: getting more potential entrepreneurs into the game and expanding beyond a one-size-fits-all investment structure. Read more in this Stanford Social Innovation Review post, and in an account by participants from Village Capital.
Chrys Chrysanthou (Class 21) Talks of B2B Challenges in Fireside Chat with Yousef Hammad (Class 21)
BECO Capital‘s Yousef Hammad (Class 21) sat down for a fireside conversation with Chrys Chrysanthou (Class 21) to discuss tips and tricks for navigating B2B startups. The highlights are featured on the BECO Capital blog in their post, “The 10 B2B Lessons We Learned from Chrys Chrysanthou.” Chrys summarizes significant challenges for B2B founders, such as false positives, expansion, and the future direction of the sector, which he says points to being able to answer the following question: “Do you know how to sell this?” In the face of commoditization, he advises founders “to adapt, move away from a horizontal approach, identify and train the right sales team within a verticalised market, and build your moat. Pick the best of breed, put your secret sauce on it, and go crazy on a vertical. Then you will win.” See the full list.
For Fellows on the go, Yousef invites those stopping by Dubai to get in touch with him for a knowledge swap.
Vinnie Lauria (Class 17) Writes in Forbes on Messaging Apps’ Inroads into Asia Business Communication
Vinnie Lauria (Class 17), founding partner at Golden Gate Ventures, wrote in Forbes about the Asian business community’s increasing reliance on messaging apps in the article “LINE, WeChat, WhatsApp, Facebook: Where Most Of Asia’s Business Deals Are Being Done.” Much of Asia took to the Internet later than Europe and the US, in the age of mobile phones rather than computers. As a result, messaging apps in Asia are far more acceptable for business, and more powerful. In Europe and the US, Vinnie explains, “Email and phone calls are still considered the norm in formal and semi-formal business settings,” whereas in Asia, “relying on WhatsApp, Line, Messenger and WeChat is not only suitable, it’s preferred.”
While WhatsApp and Facebook Messenger are popular, Asian-based messaging apps offer features that go beyond communication. Apps like Japan’s LINE and China’s WeChat allow users to do things like book a cab, set up meetings, or shop online. Those companies are now aggressively moving into the business arena—LINE offers “in-app features like loyalty cards, coupons, and mobile stores,” while WeChat provides “an entire ecosystem of business-oriented tools.” Like Facebook Messenger with its Instant Games, Vinnie says these apps are really platforms unto themselves: “Some companies even build in-chat apps that integrate with WeChat or Messenger in lieu of their own applications.”
In Video Interview, Marlon Nichols (Class 18) Urges, “Stop Trying to Create the Uber for Black People”
As we reported in April, Marlon Nichols (Class 18), co-founder of Cross Culture Ventures, was a “VC in Residence” in Miami for the month. In a video interview from Tech, Beats, and Bytes, Marlon answers questions about himself, why he came to Miami, and his startup experiences and advice. Speaking about the Black, Latinx, and Caribbean communities, he says, “We are the number-one influencers in terms of money spent on consumer products; we’re early adopters of technology, and our influence runs throughout the world.” As a result, he expects the next big thing to come out of those communities, and advises entrepreneurs to stop trying to create the “Facebook for Black people” or the “Uber for Black people,” and focus instead on tackling challenges in their communities. “What pains your grandmother every day?” he asks. “There’s millions of your grandmother out there.” But be sure to choose a pain point that’s personal. “What is it about you that makes you so special, so unique that you can go after this challenge here and solve it in a way nobody else will?”
Inc. also ran a story about Miami’s VC in Residence program and Marlon’s participation. Started as a partnership between Code Fever (“Ridding our communities of innovation deserts”) and BlackTech Week (“Programs spurring economic development and inclusive innovation”) the program uses the EIR model to “connect entrepreneurs with funding, with a particular emphasis on African American entrepreneurs.”
- Jen Fonstad (Class 3) was named one of Working Mother magazine’s “50 Most Powerful Moms.” Congratulations to Jen for co-founding Aspect Ventures while also being a mom to her 4 kids.
- Brian Dixon (Class 21) and Marlon Nichols (Class 18) were both included on Blavity’s “15 Black Tech Investors You Need to Know,” which Blavity describes as “the faces who are striving to improve diversity and inclusion in tech.”
- Dilek Dayinlarli (Class 18) was named one of the latest ambassadors in the Global Ambassador Program—established in 1997 as an outgrowth of the UN’s Fourth World Conference on Women in Beijing—which works to develop women leaders around the world. As an ambassador, Dilek will be partnered with a global woman leader, whom she will mentor in an ongoing capacity.
Podcasts & speakers:
- Jason Seats (Class 21), Managing Partner at Techstars, was last week’s guest on the “Ideas to Invoices” podcast, sharing advice on building a successful company, having himself founded and built Slicehost, an early player in cloud computing. [iTunes] [PlayerFM]
- A host of Kauffman Fellows will speak at the Mobile | Venture Summit next week in Mountain View, CA, including Josh Breinlinger (Class 21), Jonathan Charles (Class 21), Victoria Cheng (Class 19), Mar Perez (Class 19), and Garrett Vygantas (Class 13). The Summit’s goal is to connect top VCs, industry giants, angel investors, investment bankers, and founders and CEOs of early-stage companies in the mobile sector.
This week’s blog selections:
Kauffman Fellows have been making up for lost time, with a large number of new posts this week.
- Winslow Sargeant (Class 11) co-authored “America Behind the Curve: Filling in the World Job Gap” in conjunction with National Small Business Week, which concluded on Saturday. Citing Argentina’s and Italy’s recent laws that make it easier for entrepreneurs to start businesses in those countries, he urges the U.S. government to consider the same, with a specific eye toward enabling new entrants to compete with large corporations, as well as focusing on what he calls “humane entrepreneurship.” Winslow served as Chief Counsel for Advocacy at the U.S. Small Business Administration during the Obama administration.
- Jorge Torres (Class 16) just launched a newsletter, Venture Stack, about building and starting VC firms. The newsletter will also include a global quarterly recap of all new funds that have been publicly announced.
- Guy Turner (Class 17) offers sage advice for startups in “When Not to Hire Your First VP Sales.” Guy includes an analysis of the direct and opportunity costs of hiring the wrong VP Sales, and examines the typical route to—and result of—the rushed-hiring scenario, along with a better route that startups can take.
- Josh Breinlinger (Class 21) wrote “Tiering Marketplace Users,” which looks at the implementing different status levels for online marketplace users, such as eBay’s “power sellers.” When’s the best time to implement tiers? Follow the 80/20 rule: when 80% of activity comes from 20% of users. Read the full post for a detailed look at what “premium” status looks like, and who should be in it.
- Historical data have shown <$250M funds have posted higher multiples than large firms. Samir Kaji (Class 20) notes that “along the way, the narrative of ‘small funds are better’ morphed into a belief that attaining venture returns was only marginally challenging for small funds.” Read his full post: “Micro VC—Smaller Is Better, But the Math Is Still Really Hard.”
- Gil Dibner (Class 13) has two new posts this week. In “Demo Day? Don’t.” he lays out a rather lengthy list of why-not-to’s, and also how a startup can get the most out of one they’re already committed to. In “Systems of Intelligence: Is This the VC Meta-Thesis We’ve Been Looking For?” Gil takes a deep look at “systems of intelligence” companies—using machine learning combined with IoT data—specifically in regards to barriers to entry, which remain a key driver of VC returns.
- Carl Fritjofsson (Class 21) also has two new essays. In the first, he argues that “Silicon Valley Has Peaked,” but that its size and institutional knowledge as an ecosystem still make it unique. Carl also discusses Creandum’s recent investment in “Doing it Like Uber. But in LatAm. And in Groceries. — Cornershop Raising a $21m Series B.” [TechCrunch also covered the funding]
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