Tag Archives: Europe

Biocartis, the (could have been) Swiss success story

Biocartis might have been a Swiss success story but most of the company is now based in Belgium. Probably not a decision of investors (as people think when company move) but from management! One of the founders is from Belgium and an impressive serial entrepreneur: Rudi Pauwels. Here is what you could read in the IPO document:


Still the numbers are interesting. The company has raised more than €200M before its €100M IPO this week. Despite such huge amounts the founders have kept about 5% of the company. Its IPO prospectus is available on the company web site. It has signed deals with Philips, Hitachi, Biomérieux, Abbott, Janssen and Johnson & Johnson and counts Swiss-based Debiopharm among its mains shareholders. Here is my usual cap. table:

(click on image to enlarge)

We must create a Google in Europe

The self-citation is a delicate exercise but as it does not happen often that I give my point of view in the media, I guess this is acceptable… Newspaper Le Temps asked for my point of view related to the recent acquisitions of EPFL spin-offs. I extract some messages.


What worries me is that in Europe, I have never seen the birth of technology companies like Google, Apple or Cisco.

– Yet there is SAP in Germany or Internet service Skype…

– Yes, but [forgetting SAP] there was no big success in Europe in technology in the last fifty years. Microsoft has bought Skype for $8.5 billion and Logitech is worth $2B on the stock market with 6,000 employees. But in the United States, industry heavyweights are valued at over $170 billion and have more than 50,000 employees. There is a difference of a factor ten between the two continents and this has been disturbing me for over twenty-five years. I have doubts and fears about the future of Europe.

– How do you explain this difference?

– I think this is essentially cultural. A young engineer who listens to her parents will work with Nestlé and Novartis, and then remains there. Americans have parents or grandparents who were immigrants. The tradition of moving is digested and failure is accepted.

– What are the risks of such a situation?

– If it does not renew, it is the death of Europe. We are almost there, look at France. This is a concern I have for my two children. We must create a Google in Europe for the economy to evolve. Without the presence of a major technology group, innovative start-ups will be systematically acquired by American groups. Yahoo! bought French start-up Kelkoo, Danish Navision now belongs to Microsoft, the Swedish MySQL to Oracle and French ILOG to IBM.

For the spin-offs of EPFL, it is the same. Medical imaging company Aïmago was acquired by Novadaq Technologies for $10 million. Sensima Technology, active in the production of magnetic sensors, has been integrated in Monolithic Power Systems (MPS) based in San Jose, California. Only Jilion was bought by the French Dailymotion, which integrated their video technology on their site. And now it’s Intel. And when these companies are acquired, it’s expertise and jobs that may disappear. There is a risk of loss of wealth.

The rest of the article is available on Le Temps website.

Zalando files to go public

Zalando, one of the very visible European start-up should become a public company on October 1st in Germany. It’s not so much the numbers which I found of interest, but how difficult it was to get them. As usual, Europe is showing less transparency. Finding the prospectus was not easy, and I am not sure I could have found it without claiming I live in Berlin. And still, I have no clue how much the company has raised, at which price and when. This is not in the prospectus – I just have all capital increases dates and shares number, it does not help much.

Rubin Ritter, David Schneider and Robert Gentz

I could still build my usual cap. table and here is what it gives. Revenues are impressive, as well as losses. Founders have been diluted, btu given the capital increases and losses it is not so surprising…



Europe, wake up!

This is a short text I wrote in 2012, and my friend Will from Finland had made comments about it which I added. Thanks! I read it again this morning and thought it might be worth publishing it now…

Intel, Apple, Microsoft, Oracle, Genentech, Cisco, Google, Facebook, Skype. You probably know these companies. They were at the origin of major innovations for our societies. Maybe you are less aware of Niklas Zennström and Janus Friis, Mark Zuckerberg and Dustin Moskovitz, Larry Page and Sergey Brin, Leonard Bosack and Sandy Lerner, Bob Swanson and Herb Boyer, or Larry Ellison but you know much better Bill Gates and Paul Allen, Steve Jobs and Stephen Wozniak, Bob Noyce and Gordon Moore. They are entrepreneurs; the founders of companies that were all start-ups one day in the not-so-distant past, but are global titans today. Europe does not seem to understand the importance of high-tech innovation produced by these young entrepreneurs. Skype is the exception in the list and the Americans were able to produce hundreds of such success stories. Why have we failed and what can we do to change the course of history?

Innovation is a culture where trial-and-error and uncertainty have huge roles. Failure, unfortunately or maybe fortunately. Just as life! The European culture in all its diversity has provided welfare to its citizens since the end of World War II. Ironically, the comfort-level we all appreciate will actually accelerate its end. A culture can only live with creativity and renewal. As a recent article in The Economist illustrated it well [1], we Europeans are no longer able to innovate, our businesses are too old, at least in technological innovation (e.g. Nokia or Alcatel) and we do not create enough innovations. The causes are probably numerous, but fear of trying is the most serious. And I’m not sure that we are aware of it. Do many Europeans understand that innovation through high-tech entrepreneurship is critical? I fear that we would rather have well-educated children to enter the large established firms than creative individuals willing to try their luck. Worse, what models do we have?

Bob Noyce was a model and a mentor for Steve Jobs.

In this unique place, Silicon Valley, thousands of entrepreneurs try each year. “The difference is in psychology: everybody in Silicon Valley knows somebody that is doing very well in high-tech small companies, start-ups; so they say to themselves “I am smarter than Joe. If he could make millions, I can make a billion”. So they do and they think they will succeed and by thinking they can succeed, they have a good shot at succeeding. That psychology does not exist so much elsewhere” wrote Tom Perkins, co-founder of the legendary Kleiner Perkins fund.

Europe is not fully unconscious of the problem. In 2000, the Lisbon agenda proposed by theEuropean Union had the ambition to make of Europe in 2010 “the most competitive knowledge-based economy”. This has been a total failure. A variety of support mechanisms were created, but the Europeans seem to have forgotten that innovation is primarily a question of adventurers, pioneers – these types of people by definition are not looking for safety and support. Entrepreneurs live on their passion. “Launching a start-up is not a rational act. Success only comes from those who are foolish enough to think unreasonably. Entrepreneurs need to stretch themselves beyond convention and constraint to reach something extraordinary” says Vinod Khosla, another Silicon Valley icon. A start-up is a baby whose founders are its parents. Not surprisingly, founders often start the adventure as a couple, because they have the intuition it will be difficult and they need more than one mind and body. They are often migrants. Probably because migrants do not have any existing network or “right” connections in the new places where they have settled, they simply work passionately on their innovation, again raising the probability of success. Half of the entrepreneurs in Silicon Valley are not Americans. Why are we afraid of that opportunity in Europe? Silicon Valley is an open culture where even competitors like Apple, Google or Facebook talk and cooperate. This is REAL open innovation, not high-level top down roadmaps, but grassroots, bottom up collaboration. Interestingly, entrepreneurs are often young. While this is not always the case, youth does not give up on creativity easily, largely because they have not lived through the many failures that the rest of us have. Silicon Valley is a unique place in the United States that no one could replicate. And yet every state, every region of Europe is desperately trying to create its own! Let’s work together. By no longer seeking to create the Holy Grail, one unified “European technology cluster”, and by instead deciding to cooperate on a practical level to enable innovators rather than trying to do the work for them. While our egos are still too large to give up our dreams of global domination, at least let us work together without unnecessary waste! In a recent talk [2], Risto Siilasmaa, the young chairman of Nokia, called for a similar reaction and added that “entrepreneurship is a state of mind, which implies pragmatism, ambition, dreams, perseverance, optimism and give-up-&-start-again attitude”. Without a large ambition, it is not worth trying.

One concrete area to focus on is creating an infrastructure where risk-taking investors can thrive. Entrepreneurs cannot succeed alone. Very early in the innovation process they need investors to enable them to embark on the adventure. America has created the best tool out there so far, venture capital: former entrepreneurs who become the supporters of the next generation once they have already succeeded, financiers who have “been there and done that” [3]. These VCs know the start-up culture because they have been there! This experience complements the expertise provided by others who have spent years in large corporations; a perfect storm of competence and culture is needed. It also requires employees who also digested this culture, employees who can take a stake of the future success of the company through stock options. I said stock option, the word that became a bad word, the tool to fatten those who do not deserve it. Stock options should go to those who try. No doubt it will also require some labor flexibility for start-ups as they face uncertainty and rapid cycles. But it should not be assumed that the absence of these mechanisms is the cause of our failures. It is the absence of this culture of innovation that hurts us. Do not be afraid of failure. Failure is the mother of success, says the Chinese saying. Does the child successfully ride the bicycle on her first attempt?

Failure will always be part of innovation. This is why we need a critical mass. In one single place or not, in Europe. And failure should not be stigmatized. I think everyone interested in innovation needs to experience the Silicon Valley culture, to spend time to understand. Weeks or even months. Without fearing that our children will not come back. It is better to try out there than be safe back here. They will return to teach us, at worst, and at best return to set up Europe’s future growth companies! We also need to support high energy mobility among entrepreneurs across European hotspots, as we have done very well for our students. Universities are still critical once the students have left to provide landing zones for mobile entrepreneurs. You may criticize me for being too fascinated by the American culture and technological innovation. “Europe has other ways to innovate,” I am often told. It innovates with large corporations such as Airbus or with German- or Swiss-like SMEs, or in services. And you believe that US companies do not?! I am told that venture capital is in crisis, that Silicon Valley innovates less, and that may well be true – outside of the web, creativity seems to slow down. Schumpeter, the great economist, has built a theory where large established firms die and are replaced by new entrants when they do not innovate anymore. Why would the twenty-first century be different from the previous one? Maybe … but our energy, aging, health problems are not going to require new innovations and new entrepreneurs? I do think so. Europe needs a new ambition, a new enthusiasm and we Europeans are aging. We owe this to our children, to our youth. From primary school onwards, let us our children express their creativity, let us teach them to say no, and tell them that this is positive. A career is meaningless unless it includes passion and ambition. Let us not encourage them to follow the paths of certainty that may be deadly. Steve Jobs in a wonderful speech in 2005 [4], indicated that we were all going to die one day, and before that day, we needed to stay hungry, to day foolish. Let us follow his advice. Let us help our children!

Hervé Lebret supports high-tech entrepreneurship at EPFL. He is the author of the blog Start-Up, www.startup-book.com.

[1] Les Misérables – Europe not only has a euro crisis, it also has a growth crisis. That is because of its chronic failure to encourage ambitious entrepreneurs. The Economist, July 2012. www.economist.com/node/21559618.
[2] Risto Siilasmaa at the REE conference. Helsinki, Sept. 7, 2012.
[3] Do not miss the movie SomethingVentured which describes wonderfully and humorously the early days do venture capital, www.somethingventuredthemovie.com.
[4] Stay Hungry, Stay Foolish. ‘You’ve got to find what you love.’ http://news.stanford.edu/news/2005/june15/jobs-061505.html.

Again a few key points:
• Europe is behind USA and Asia in innovation.
• Entrepreneurs are not considered heroes in Europe.
• Trial and error, uncertainty, and failure are integral parts of innovation
• Our high level of comfort will accelerate its own end (again creative destruction).
• Fear of trying is the most serious problem with innovation.
• Europe’s 2000 mandate to become the world’s leading knowledge based economy has failed.
• Open Innovation is bottom up, not top down.
• Youth are creative because they have yet to experience failure.
• We must create an infrastructure where risk-taking investors can thrive.
• All students that show interest and ability in innovation should experience the Silicon Valley Culture. We should not worry that they will no come back.
• Europe’s leading universities can be the game changers, the catalysts, by agreeing on what is important (what innovation, what education, what tech. transfer) and investing in it.

The Immigrant, Factor of Creation

Here was my last column in 2013 for Entreprise Romande, with a subject that is dear to me, the importance of migrants.


The paths of innovation and entrepreneurship are paved with a myriad of dilemmas. Clayton Christensen a few years ago had explored the first topic in his Innovator’s Dilemma and last year Noam Wasserman has published the interesting Founder’s Dillemmas. The uncertainty of the market, youth vs. experience, disruptive vs. incremental innovation, the new vs. the established are just a few examples of these difficult choices. A more controversial and politically sensitive subject is the contribution of migrants and foreigners in the field of creation.

Just when he debate is growing in Europe as well as in Switzerland about the threat that would represent those who are different and come from elsewhere, it is perhaps worth remembering more positive elements about the importance of openness to outsiders. The Swiss history [1] reminds us that the watch industry is linked to the arrival of the Huguenots in the sixteenth century; a part of the textile industry in St. Gallen has its origin in England. There is also a French origin in the Basel chemical industry. Perhaps it interesting to recall that Christoph Blocher has distant German roots. But what about Nicolas Hayek, the savior of the watch industry, rocked by his Lebanese and French cultures.

Much further, Silicon Valley, the world champion of innovation and entrepreneurship, owes much to its migrants. Of course America is a land of pioneers, but the San Francisco area pushed the logic to an extreme. More than half of the entrepreneurs in this region are of foreign origin and for example Google, Yahoo, Intel had founders with foreign roots.

While Europe has a temptation of closing its doors due to its economic difficulties, in the United States, the Start-up Act 2.0 intends to streamline visas for foreigners and to regularize children of migrants to enable them to enter higher education. Japan was another major country for innovation a few decades ago nut it may have suffered from its low level of migration; the country is aging and has not really reinvented itself.

Switzerland is a land of migration, let us not forget it. This is one of its strengths. Today, the campus of EPFL and ETHZ have a great deal of students but also of researchers and teachers with foreign origin. The proportion increases much more if you focus on those who create businesses. For those who have received an entrepreneurial scholarship to EPFL, the proportion rises to 75% including 25 % of non-Europeans.

Would foreigners be more talented and creative? The answer is rather a larger experience of what is unknown and uncertain. Migrants have agreed to leave their homeland, sometimes leaving everything behind. And they know by experience that we can recover from this loss. They know well that it is always possible to start again and the fear of failure is reduced. He also learned to domesticate novelty. It should be added that a migrant has less access to established circles and is stuck by “glass ceilings”. They must often build they destiny. From this point of view, they do not take the jobs of anyone, they create new opportunities, that will become beneficial to others!

[1] http://histoire-suisse.geschichte-schweiz.ch/industrialisation-suisse.html

A beautiful thriller in the world of start-ups

Today, Peter Harboe-Schmidt presents L’HOMME QUI NE CROYAIT PAS AU HASARD the French translation of his thriller The Ultimate Cure. I had at the time said how much I liked this novel. Do not hesitate to join him on the EPFL campus this afternoon.

Here is a short piece again:

“Take your start-up as an example. Why did you do it? If you analyzed the pros and cons for doing a start-up, you’d probably never do it. But your gut feeling pushed you on, knowing that you would get something very valuable out of it. Am I right?”
Martin speculated on why he was so drawn to a world that at times could appear to be no more than sheer madness. Like a world parallel to real life with many of the same attributes, just much more intense and fast-moving. People trying to realize a dream in a world of unpredictability and unknowns, working crazy hours, sacrificing their personal lives, rushing along with all those other technology based start-ups. Medical devices, Internet search engines, telecommunications, nanotechnologies and all the rest competing for the same thing: Money. To make the realization clock tick a little faster.
“Funny you should say that,” Martin finally said. “I’ve always thought of this start-up as a no-brainer.I never tried to justify it in any way.”

A Quiz to New 2012 EPFL Students

Each year, I have a small tradition of giving a start-up-related quiz to new EPFL students. Here it was:

I was in Helsinki last week and there, the chairman of Nokia gave a talk. “The world is in crisis and the only way we will solve our challenges is with creative people and entrepreneurs. […] Therefore entrepreneurship should be cherished, it is not a profession, it is a state of mind. […] Again it is a state of mind.”

EPFL 1st mission is teaching, its 2nd mission is research. Its maybe-lesser-known 3rd mission is innovation and technology transfer, which includes entrepreneurship. If you have creative ideas, we are here to support you. More on http://vpiv.epfl.ch/innogrants

To show you that that has been understood at the top of the best universities, both the President of Stanford University and the President of EPFL have been entrepreneurs, they have been the founders of 3 start-ups each. I will offer a bottle of champagne to the first student who sends me via email the names of these 6 companies. I am Herve Lebret and I support entrepreneurs at EPFL.

The answer may be found here, and more importantly, I will come back on Risto Siilasmaa’s talk – the chairman of Nokia.

The State of Innovation

After my summer break, I received mails from friends and colleagues, all related somewhat to new (in fact old) trends in innovation. Thanks to Jean-Jacques, Andrea, Will and Martin :-). The four articles I read are:
Les Misérables – Europe not only has a Euro crisis, it also has a growth crisis. That is because of its chronic failure to encourage ambitious entrepreneurs from the Economist (July 2012).
Small is not beautiful from the Economist again (March 2012).
In bid for start-ups, venture capitalists elbow their way into the spotlight from the International Herald tribune, (not freely available online).
In Silicon Valley, Chieftains Hold Sway With Few Checks and Balances from the New York Times (July 2012)

The second one is probably the easiest to summarize and it is such an important message, that it needs to be hammered again: Innovation is not about large or small companies (SMEs), it is about fast growth (gazelles, start-ups). And let me add, it is also about a culture of trying and risk taking. “Rather than focusing on size, policymakers should look at growth.” […] “In a healthy economy, entrepreneurs with ideas can easily start companies, the best of which grow fast and the worst of which are quickly swept aside. Size doesn’t matter. Growth does.”

The first article is more complex to describe and I really liked only the first half. The second half explains that Europe struggles because of bad laws on bankruptcy, bad access to finance and bad labor laws. I am not sure these are the causes of our innovation crisis. I preferred the first part such as: “Europe’s culture is deeply inhospitable to entrepreneurs; wanting to grow a start-up into a behemoth is quite as countercultural as piercings and performance art.” […] “They will struggle to hire professional managers to help their firms grow, because European executives are extremely risk-averse. Their young firms will quickly find that established European companies tend not to like dealing with tiny ones.” And as a consequence, “the giants are all ageing”.

“Europe gave birth to just 12 new big companies between 1950 and 2007. America produced 52 in the same period (see chart above).” […] “Many aspiring entrepreneurs simply leave. There are about 50,000 Germans in Silicon Valley, and an estimated 500 start-ups in the San Francisco Bay area with French founders. One of the things they find there is a freedom to fail.” The answer is not simple, but there is hope: “There are schemes […] to get academics to hate business less, to expose schoolchildren to entrepreneurial notions.”

The last two articles are probably less important but give interesting new trends in Silicon Valley. One shows that the venture capitalists are becoming more visible (in order to court entrepreneurs) and mostly thanks to or because of new fund Andreessen Horowitz. But there is also debate (and I agree with the following comment): ‘‘I don’t quite understand the venture capital celebrity. We should be supporting actors. The entrepreneurs do the work and deserve the credit.’’ But Andreessen adds an interesting comment about the dynamics of venture capital: “Each year 15 deals account for 97 percent of all venture capital profits. To be successful, they would have to pursue those 15 companies. And they would do it by aggressively marketing their expertise to the reporters and bloggers who follow start-ups.” The final paper complains about the dangers of too much control to founders and managers vs. board or shareholders: “Since Google went public in 2004 in a way that maintained control for its founders, the leaders of Silicon Valley have been chary about shareholder voting rights.” […] “Directors are meant to act as a check on executives or at least add their expertise and advice to big decisions. In the Valley, however, the idea of the visionary chief executive dominates, and there may be little room for input from directors.” […] “So the new thing in Silicon Valley appears to be for public companies to be run as private ones without significant input from boards and shareholders. This leaves the wunderkinder of the Internet free to run their companies without interference. The question is whether this is merely a bubble in corporate governance or a trend that will spread to the rest of corporate America.”

European Founders at Work

European Founders at Work is a very interesting book. It is the perfect complement to Founders at Work, particularly for the European dimension.

One comment though, I noticed 8 UK projects out of a little more than 20 and these 20 are mostly Software or Internet. More diversity may have been great. This being said, the lessons are great! Here are some… (and you will learn much more by reading the book entirely!)

About the US Market (for Europeans)

“I think that Europe has a lot of credibility in certain sectors, particularly media and the creative industry, but I think that in technology, generally, most of the world’s biggest companies were founded in the US and, therefore, the expectation in the US market is that in technology, they are going to be talking and buying from US companies. […] it’s important to become a US team in the US market. […] I think you need to be prepared to make a pretty big investment in the US and you need to be prepared to build up the business for several years,” Jos White – MessageLabs

“I would say that the IT sector, and especially enterprise software, is extremely global but remains dominated by US companies. There are very, very few examples of European IT and software companies that have managed to go global. I believe, the only way to make that happen is to go global very, very quickly, as we did from the outset.” Bernard Liautaud – Business Objects

“In my experience, if you come from a smaller European market, like Hungary or Sweden, you tend to think that it’s a nice next step to go to UK or Germany. The issue is that if you become successful there, it is still only a sixth of that of the US market. So, if you get a US competitor, you immediately become a regional player instead of a global player. So, very early on, I said we shouldn’t even be thinking about opening up offices in Frankfurt or in London because the way to make it globally was to first prove that we can make it on the world’s biggest market, which is the US. That’s going to be the truth at least for the next ten to fifteen years.” Peter Arvai – Prezi

“I think the reality is that it’s not about Europe vs. Silicon Valley. The best entrepreneurs in Europe understand Silicon Valley very well. They have spent time in Silicon Valley and developed relationships in Silicon Valley. Take all of that and all of the value that comes from that because you’re a fool if you think that Silicon Valley isn’t the most sophisticated, vibrant place for technology start-ups on the planet. It probably will continue to be so for the next twenty-five to fifty years because of the network. And the ecosystem is so profound there and keeps on getting stronger with Zynga, with Twitter, with Facebook, etc. I think any European entrepreneur or any entrepreneur in this space that doesn’t want to spend time or learn from Silicon Valley is foolish. But I think there’s a lot of things that you can learn and be aware of as an entrepreneur if you’re not in Silicon Valley, that you can use to your advantage.” Saul Klein – LoveFilm

The interviewed entrepreneurs

About success and failure

“Any successful entrepreneur knows that it was a combination of skill and attitude, with luck, that really leads to success. And there are very fine lines between success and failure” Jos White – MessageLabs

“I learned that the game is never over: you should never give up, stubbornness is somehow a requirement to lead a company to success, and the road to success is inevitably paved with failures. When things start to go wrong, the worst thing to do is panic and change everything.” Olivier Poitrey – DailyMotion

“I think as an entrepreneur you fail all the time. You’ve got failure built into your business. Right? So you don’t really keep track of failure. You never really fail. I think that’s essential when you’re an entrepreneur, that you’re not afraid of failure. You embrace failure. Your whole business is based on trying out stuff, being ready for stuff to fail and just taking the next step as soon as you fail.” Boris Veldhuijzen van Zanten – The Next Web

About ambition

“Come up with an idea which is impossible then try to find somebody who can make it un-impossible and then do deals which have never been done before.” from the Shazam founders

“[A new trend is] You definitely see entrepreneurs being extremely ambitious.” Reshma Sohoni – Seedcamp

“I guess one advice is it’s more exciting if you feel like you’re changing the world in a positive and innovative way. So we’d love to see more of those out of Europe.” Brent Hoberman – lastminute.com

“But it is probably harder in Europe in that it innovates less, because you have less-crazy investors financing crazy entrepreneurs. [Advice:] One, international. Two, innovation and no copycat. And then, three, big ambition.” Loic Le Meur – Le Web

About the team

“There are very few founders that stay with their businesses beyond five years and quite often, in my opinion, it’s because they didn’t manage to surround themselves with the right team.” Bernard Liautaud – Business Objects

“But also obviously you hire people that are better than you” Ian Dodsworth – TweetDeck

“I also learned how hiring the right people from the start is key: the very first people to join will shape the company’s personality. And finding talented people you are pleased to work with is very important to generate emulation from new hires. Olivier Poitrey – DailyMotion

“A common mistake is building the team. If they’re quite scared to part with something … Like when they’re quite scared to part with equity or bringing on mentors. “Do you want to be a big fish in a small pond or a big fish in a big pond?” They’re too closed with their equity and they try to do everything.” Reshma Sohoni – Seedcamp

“Another common mistake is like a cliché now, but it’s just the classic: “I’ll just build another feature and I’ll focus on my product.” Alex Farcet – Startupbootcamp

About entrepreneurship

“The main advice is just start. Many people have hundreds of ideas, but they never really start their own project. And if you fail, start again. Entrepreneurship is, in my point of view, the best and the only way to personal development” Lars Hinrichs – Xing

“There are a lot of moments like that where you don’t know what you’re doing, but this was the whole point.” Giacomo Peldi Guilizzoni – Balsamiq

“Do it.” It’s the best decision I’ve ever done in my whole life. […] And I was studying engineering as well, and I had one hundred classmates. And I know that almost zero of them actually went on to start a company, which is kind of crazy because I know a lot of them have good ideas. But none of them quite felt that they were able to pull it off.” Eric Wahlforss – Soundcloud

“I have been lucky enough to be born with optimism.” Richard Moss – moo.com

“Hang in there. Don’t give up. I heard that most start-ups fail because the founders stop working on them.” Richard Jones – last.fm

“I would be realistic and I would say, “Look, if you think you are the lucky sperm that’s going to get the ovule, go ahead and start the business.” It’s a very difficult thing to do with a very high probability of failure. But it is essential for society and even those who try and fail are also helping society. So I encourage people to try, but at the same time warning them how difficult it is. I am tenacious and I am sometimes lucky and I’m good at spotting trends. But I was also lucky. Most people who try businesses fail. That’s the truth and people should be warned about that.” Martin Varsavsky – FON

As a conclusion let me quote Saul Klein in his foreword… “Right now, Silicon Valley is peerless at both supporting innovation and creating serious scale. There’s been no master plan, but the 60-year interplay of government as an early catalyst; academia and established companies as early customers and sources of talent; and of course, investors willing to take risks and a long term view, have given entrepreneurs fertile ground to sow seeds and try to grow monsters with dragon’s teeth ready to conquer the world.You need every element of this ecosystem working perfectly to create monsters. This is serious progress. But the straight facts are that while we are unquestionably masters of invention in Europe, we don’t yet have the ecosystem— or perhaps the attitude. […] For me, the big question is if we are truly able to do this.”

Post Scriptum: I am not finished yet. I love to add cap. tables and not so many of these entrepreneurs are running a publicly quoted company. Strangely enough, one is Russian, Yandex. Its foudner and CTO says something great about sales: “I think one of them is when you create a software product, you have to learn how to sell it, you have to learn how to make it a product. It’s a very basic skill. I think every engineer has to try that at least once, to sell the software he created, regardless of how bad it is. No matter how unpolished your product is, you have to try to explain why it is good for someone else.”

Here is Yandex amazing cap. table…

Click on picture to enlarge

Going public when you are not a US start-up – part 2/4: Envivio

Envivio follows my recent post on another start-up with European roots, Transmode. Envivio has similarities and differences. Both have roots in the Telecom industry, Transmode with Ericsson and Envivio with France Telecom. Both were founded in 2000, 11 years before the IPO or filing.

Both had complex financing rounds, including “down rounds”. You can see that in the Transmode case, the price per share went from $5.5 in the B round to $1 in the C round. These down rounds are usually terrible for founding teams. And indeed, there is not much info about Transmode founders.

Envivio had raised $41M until 2008 and the price per share increased steadily to $2 per share. Difficult to give precise dates for the rounds, but the investors were a combination of corporate investors (France Telecom, Intel, Bertelsman, Philips), and financial (Global Accelerator, Crédit Lyonnais – now Crédit Agricole). Then the G round in 2008 was a down round at $1.25 and the H round, less than 2 years later, even lower at $0.34. With such events, it is not surprising to discover that the investors own 87% of the company before the IPO. Obviously, this would have been very dilutive to the founder, Julien Signes, without the possibility of granting new (stock option) shares that you discover in the right column.

There is another interesting difference with Transmode: Envivio is filing to go public in the USA, it is indeed an American start-up, and not much shows its French roots (the R&D is based in Rennes, Britanny though). Even if Julien Signes studied and worked in France initially, he worked also for France Telecom in San Francisco and I would be curious to know if this had an impact in his entrepreneurial path. I asked him and am waiting for an answer, but it is possible that Envivio is not allowed to communicate in the pre-IPO period.

It is one my thesis that Europeans who had a US experience have digested better the start-up dynamics (whether they moved to the USA and became entrepreneurs there – De Geus, Bechtolsheim, Brin – or they became entrepreneurs in Europe but had lived in the USA – Liautaud, Borel, Haren). This does not prevent European high-tech start-ups to exist and succeed, but I have to admit, the numbers are not exactly the same.

Again, because the company is not public yet, I had to guess what the price per share might be at IPO. I have put a small price, using multiples of market cap. to revenues of 7x. I will make an update when I know more…

Next: Alibaba

NB: an explanation from the filing on the issuance of incentive shares: “In September 2008, we sold 1,532,372 shares of Series G1 convertible preferred stock and 13,359,323 shares of Series G2 convertible preferred stock for $1.25 per share and received total consideration of an aggregate of $15.9 million. Also in September 2008, we converted the outstanding principal balance of our outstanding convertible promissory notes in the amount of approximately $8.9 million plus accrued interest in the amount of approximately $0.2 million into 467,628 shares of Series G1 convertible preferred stock and 6,829,154 shares of Series G2 convertible preferred stock simultaneously with our Series G financing. In June 2010, we sold 895,502 shares of Series H1 convertible preferred stock, 18,487,298 shares of Series H2 convertible preferred stock, 7,775,801 shares of incentive Series 1 common stock and 87,170,915 shares of incentive Series 2 common stock for $0.3351 per unit and received total consideration of approximately $6.5 million. In connection with this Series H financing, all outstanding shares of Series B, C, D, E and F convertible preferred stock converted into shares of common stock. Also in June 2010, we converted the outstanding principal balance of our outstanding convertible promissory notes in the amount of $1.0 million plus accrued interest in the amount of approximately $4,800 into 2,998,571 shares of Series H2 convertible preferred stock simultaneously with our Series H financing. The number of Incentive Shares to be issued was based on the series of the outstanding convertible preferred stock held by each Series H participant as follows: at a rate of 107.430618 shares of common for each share of the Series B, 77.588779 shares of common for each share of Series C, 1.492092 shares of common for each share of Series D, 1.865115 shares of common for each share of Series E, and 3.073709 shares of common for each share of Series F. As a result, the Company issued 94,946,716 Incentive Shares with the shares of Series H convertible preferred stock issued during the Series H financing.”