Join UNC Kenan-Flagler Business School, our talented panelists and our moderator, Paul Wetenhall, President of Ventureprise at UNC Charlotte and UNC Kenan-Flagler alumnus (MBA 1975), as…
10 Changes Happening In the Startup Environment
August 06, 2013 at 8:06 AM
The landscape for startup ventures is rapidly changing according to Paul Singh, Entrepreneur in Residence at the White House and partner at 500 Startups. Singh spoke at the dynamic International Startup Festival that I attended last week in Montreal. The conference was sponsored by FounderFuel, a top tier mentor-driven accelerator that helps early stage startups raise seed capital. Accelerator program managers and advisers from Silicon Valley, Los Angeles, Boulder, Sydney, Charlotte, and Washington, DC joined our Canadian counterparts in Montreal to share ideas and learnings for accelerating entrepreneurial ventures.
Singh shared his insights on these global, technological and economic forces that are changing the landscape:
- Startup costs are getting cheaper, primarily due cloud technology. But it is increasingly expensive to scale at the products and markets fit stage. So don’t get over-confidence from a quick build on your technology, because the market traction may be costly.
- Infrastructure is now virtual, diminishing the United States’ predominance as the mecca for innovation and new companies. The rest of the world is nipping at your heels.
- Traction is the new IP. So instead of spending money and months tweaking your IP, go get a customer. Reality is that the longer you are in the market with no customers, the more skeptical investors become.
- Capital is increasingly commoditized. Look for added value from your investors.
- New reality is that money follows founders. The best founders have access to capital.
- Early stage venture investing is not very sophisticated. One venture capitalist later shared the “dirty little secret” that venture investing is very subjective, often based on chemistry with the founder. Research and get to know the people behind the money.
- Advice, control and money are becoming unbundled. Mentors advise, trusted third parties control outcomes through recommendations to venture capitalists, investors provide cash.
- Investing used to be about capital, deal flow and judgment. Today is it about access – can investors find and attract the best founders? Accelerator program managers and investors may look outside their direct markets for good companies, increasing local competition.
- Accelerator programs should aim to provide the best access to functional expertise. Get the best mentors, even if that means recruiting high impact employees in corporations to get into the operational weeds with founders. For example, a corporate marketing manager with a huge Google AdWords budget could be a fantastic mentor for a startup on online marketing.
- Scale and global perspective are more critical than ever. Accelerator programs should focus on specific verticals, regions or strengths with the goal to support the growth of local and global high growth companies. Go big or go home.
Bonus insight: There are too many startups and not enough businesses. According to Singh, one dollar of revenue counts as a business, so move quickly from incubating ideas into finding customers, getting traction and generating that first dollar of revenue. If only it were that easy!
Lori has always loved starting new things, and cut her teeth building new businesses at great companies like American Express, Fidelity Investments, Bank of America, and LendingTree. Just recently she served as President of Abundant Power Solutions, an emerging energy financing venture in Charlotte. She was an early adviser to Clean Power Finance in San Francisco, and a Board member then CEO for SmartHippo, a startup in Montreal positioned as the “TripAdvisor for financial services” that provided consumer ratings and reviews on lenders.
As a member of the original Executive Team at LendingTree, she helped grow the company from $7 million to $476 million in revenue over seven years and participated in the sale of LendingTree (NASDAQ: TREE) to IACI (NASDAQ: IACI) in 2003 for $750 million. It was a wonderful ride in many respects – an amazing values-based culture (“winning despite obstacles”), a focused mission to be the dominant online loan exchange, and awesome all-day Halloween parties.
At Bank of America, she led the mutual fund marketing team that grew assets from $28 to $68 billion. At Fidelity Investments, she helped launch their mutual fund marketplace and led the team to drive assets from zero to more than $9 billion in three years. At American Express in New York, she helped envision and launch American Express Gift Cheques as well as various travel insurance products. She’s a Tarheel alumni and also admits to being a Wildcat, although she didn’t have much time for sports in grad school at Northwestern.
What the Arts Have to Do with It
Inspiration comes from many places, and for Lori, it’s the arts. Lucky to be in the inaugural class of the Innovation Institute at the McColl Center for Visual Arts, she and her classmates learned the discipline of creative thinking from artists, sculptors and craftsmen. Now she has the great pleasure of working with Dwight Rhoden, a world class choreographer and founder/owner of Complexions Contemporary Ballet in New York, to create a new work for the NC Dance Theatre’s Innovative Works annual performance. She’s learning the creative process from Dwight by commissioning his work, and savoring the rare treasure of “angel investing”.
Lori currently serve as a strategic adviser and coach for emerging ventures, particularly in the areas of marketing, business development and strategic growth. She’s a coach for SEED20 innovators and is helping launch the Social Innovation Fellowship, an accelerator in Charlotte, NC for social entrepreneurs.