Episode 19: Silicon Valley Venture Capital

Pascal Kocher mindcast.tv, Sendungen 2 Comments

In this episode, Alex Fries, General Partner at Polytech Ecosystems talks about Venture Capital in Silicon Valley.

Comments 2

  1. Great interview. Glad somebody who has been on both sides of the Atlantic takes the time to shares their experience. Even though I’m not completely agreeing – I do agree that we need to evolve quickly if we want to grow innovation and entrepreneurship in Europe. The first and most important step in my mind is to share investment practices, successes and failure. If we don’t, we cannot learn and continue to invest like US VCs in the 60’s.

    Swiss investors are NOT overly conservative. If they would be, they would not invest in US or Asian startups either – but they do. However they are conservative enough to not invest in Swiss startups. And the biggest reason is that Swiss startups lack of mentors and role models that help them build significantly better companies. Unfortunately it’s all a bit complex but there are a few global roles:

    1) Capital flows like water to the lowest common denominator which in our case is the best possible startup opportunity. And it absolutely does not matter where these companies sit. 10 years ago nobody would have thought that US and European investors prefer to invest in Chinese startups. Today they do – even before European startups.

    2) The quality of a startup is determined by four very simple – even trivial – aspects: Team, business model, initial market validation, go-to-market strategy. The idea itself? Oh well somewhat nice to have.

    3) Startups are not like stocks, bonds, commodities that you buy and sell. Startups are like Hedge funds that need daily attention or like home swapping that requires some major effort to refurbish in order to sell it with an upside. Not understanding this part makes 99% of business angels loosing their investment sooner or later.

    4) Startups that are mentored by entrepreneurs who have made it before, have a 300% higher chance to make it, in accordance to the Kauffman Foundation. My personal observation is even higher but it is an important indicator.

    5) Like anything that needs to grow, also startups need an ecosystem or seeding ground they can hatch quickly and go big very fast. As long as Swiss startups work in isolation from other entrepreneurs and isolation from the rest of the world, they have nearly no opportunity to grow anywhere.

    6) Investors, investing capital that was made in large corporations, have not much to offer to a startup team other than cash. And here closes the loop: They know, and rather invest elsewhere to reduce their risk – which everybody probably can understand.

    My 2 cent 🙂

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