Entrepreneurship

When the best UK software start-ups visit Silicon Valley..

..they can not state enough how Europe still has a long way to go…

US is still far ahead, at least in terms of market size and access to funding.

I have had the chance to host the UK WEB Mission at Plug and Play yesterday - amazing experience- and we discussed around a panel the challenges about expanding to Silicon Valley for European start-ups.

There might be a lot of challenges in doing so, but certainly far greater opportunities. I had already shared with you the state of innovation in Europe vs Silicon Valley in this post (fr) and why a presence in Silicon Valley was a must for any tech start-ups that want to go global. I also wanted to share with you the advice that Mike Butcher (that is participating to the mission) has to share with European start-ups thinking about the move.

I certainly do not agree with all of them ( I have yet to see a pitch to VCs of 5 slides..setting your office in Alabama just because they offer you grants - Europeans and grants :).. but it is certainly a great insight!  Enjoy..the all post is here

• It’s a very competitive market. If you don’t have a presence here and your competitors do, they will use that against you in the US market.

• Networking with other startups and people is key.

• Speed is key - long introductions on email don’t wash so keep email niceties to a minimum.

• You’re allowed to ask for help from someone you’ve met, it’s not considered rude. An email three hours after meeting someone for 5 mins asking them for help with something is considered fine and normal.

• Hiring local people to “talk the same language” as other business people here is a wise move. You will get your ideas across a lot faster.

• It’s more crucial for Enterprise tech startups to be in the US than Web 2.0 ones which can almost be anywhere because the enterprise sales process is longer and more face to face.

• Part of getting assimilated quickly into the scene is helped by making your corporate web site literally look like American one - as in interface. No, seriously, this is not a joke, it really helps.

• If you can’t answer the phone at midday Californian time then just renting a desk here that you’re never at (because you’re actually back in Europe) is pointless.

• Some states offer incentives to go there. Like Alabama. But It’s “cart before the horse” to set up an office or a call centre in Alabama because you’ll get a financial incentive to set up there. It’s not where tech companies want to be - unless they want a call centre in Alabama.

• The VCs talk to eachother about the companies all the time and if your name gets a bad rep for whatever reason then this is going to make things very difficult. Gossip is rife.

• One of the best ways to impress VCs is to tell them you don’t need money, you have revenues.

• Conversely, Valley startups are is still obsessed with scaling big before generating revenues. The fact that you might have revenues is often of no interest to them, even if you are offering them a partnership deal which might bring them revenue. They often consider monetization a barrier to growth.

• VCs here are not doing Series A or B rounds right now. They are either doing very early stage or late stage deals. The early stage deals are centred around giving a small startup team enough money to burn for three years to get a product to perfection - but without a revenue model, just a really great service - then sell it.

• When pitching, emphasise your proposition to the customer - the ACTUAL business. Don’t bother pointlessly emphasising that you are setting up an office here. No one cares you are setting up here - they care if this is a business or not.

• Don’t pitch as if you are trying to raise money if you are not.

• When pitching use no more than 5 slides

•  Hardly any (almost none) US VCs invest in startups that are NOT incorporated in the US as a company - so you basically have to incorporate here if you are planning on playing at all. The preference is to register the company in Delaware as they have the most corporate friendly state. In fact some VC’s won’t look at a startup unless yit is a Delaware company. Y-Combinator sets up all of their companies as Delaware LLC’s for instance. ‘C-Class companies’ only cost about $500, you don’t need to be a resident, and one person can hold all positions in the company - making it really easy to do. If you’re not generating sales in the US it would only cost around $800 a year or so run. You do also have to register in the state you’re going to do business in, so you will have to also register in California, which sadly will cost you more money and has a more convoluted admin process. [Thanks to Glenn form Booking Bug for those notes].

• Getting office space in a cool place, among other startups - somewhere like Pier 38 - is much better than getting a bog-standard rented office space. It will get you into the eco-system of other tech companies much faster.

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