About Start-up Passion

TechCrunch Europe had an interesting article by an anonymous VC the other day. The essence was:

“I am in London-based startups’ offices all the time and I am gobsmacked when they are nearly empty by 6:30 PM…European startups need to work as hard as Valley ones – or forget it

I have been thinking about this for a little while since that post. To me, this is about passion.

Start-up Passion

When you care so much about the company, that you would rather work on it than do anything else. I think you could also call it an obsession.

Some personal observations:

1) When a start-up with high ambitions goes out to change the world, this kind of passion develops. It is not sufficient for success, but most companies that really want to win develop that kind of working environment.

2) I think most UK, US and German start-ups that I know have this kind of environment. Of course, I only have my personal reference frame for this observation. I don’t have any detailed data.

3) This passion tends to wane over time as the company matures. Many later stage employees are just paid a wage with few or no share options. They are not in it to kick ass, but to earn a living. This is a normal process. I have seen many mature and very successful UK, US, and German companies, where staff work more or less normal working hours.

4) UK VCs invest typically later stage than US VCs. This means that they may miss this early stage of passion. Or they may have invested in the wrong kind of company.

My personal opinion:

1) This kind of passion and team spirit is, for me personally, the No.1 reason to do a start-up. It is a fantastic feeling and many long lasting friendships are formed during this period.

2) I personally think that passion and success in a start-up go hand in hand. You need this passion. If you are not passionate and obsessed, how do you expect to kick ass and make a difference?

3) The passion is not a question of being a workaholic. It is simply that the founders and early employees go out there to change the world, kick ass, and make money. It simply absorbs you. It draws you in.

4) If you are passionate, you prioritize what you are passionate about above other things. It is not that I have to work twelve-hour days, I WANT to do it. I love doing what I do. Why would I want to do other, less interesting things?

5) Passion doesn’t necessarily mean twelve-hour days every day of your life. You can’t go 100% all the time. Something will break. Pacing yourself is important. But the principle attitude to working with a passion is just there.

6) If you don’t want to be passionate about your company and would rather work a solid 9-5 job, then this is perfectly fine. However, it makes little sense to work for a start-up, if that is your preference. I suggest you work for a large company. This is a much better paid, better perk option.

7) It is unrealistic to expect of all people at a maturing start-up to continue this kind of passion-based work attitude for many years. I am aware that some company such as management consulting firms and banks institute a similar kind of behavior amongst junior staff. But most companies just cannot sustain this kind of behavior beyond a certain point, as they cannot afford the salaries or equity share to fuel it.

8 ) If you are a VC, you should probably steer clear of young companies that don’t exhibit this kind of passion. When you are dealing with older companies (say 3-4 years+), you should not expect it. It is simply unrealistic. If you can find a company that has managed to instutionalize it: all the better.

9) I doubt that young start-ups without this kind of passion are actually VC investible. VCs want companies that grow very fast. Unless you push hard, how is this likely going to work?

10) Finally, passion can only get you so far. You can’t build a great company without it, but you cannot rely on it either. At some point, your company will become mature. Unless you have turned your company into a cash generating machine by then, it will likely fail, as early employees turn their backs.

Final thought:

I think everybody is living their passions. It is up to all of us to decide and discover what they are. For some, it is starting companies. For others it is other things. All of that is fine. Doing things we like and enjoy will make us happy. Even if we don’t get that much sleep. Just like the (stupidly) smiling people in the photo below. :)

List of VC Funds

list-of-vc-fundsFor several years, I have been building a personal, private list of venture capital funds that invest in the UK technology space. Please note that this is a list of active VC funds, sorted by vintage date, not of VC firms. My private list dates back to 2000 and has over 300 funds on it.

Recently, I started recording all this information in an easy to use online database. The database lists all VC funds relevant to the UK market that have been launched since March 2007 (that I can find/know of). It can be found here. I haven’t had the time to backfill all funds launched since 2000, but it is a start:

http://creator.zoho.com/jenslapinski/list-of-vc-funds#

I think this could be very useful to all entrepreneurs raising capital. If you help me build the list, then I think this could become a great tool for the community. Enjoy.

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VC Fund Raising Manual – 9 Money in the Bank

Congratulations, you just closed a funding round, and the money is in the bank.

Before you become very excited, I suggest you take this piece of advice very seriously: DON’T SPEND THE MONEY

Or at least, don’t overspend. If you raise $10m, this can last you 18 months or it can last you three years or maybe even five. If you spend all the money too fast, all sorts of bad things will happen:

- You will have the need to raise more money, meaning your shareholding will get further diluted.

- The post money valuation of you company increases, increasing the size of a meaningful exit for your investors. Don’t get me wrong, building a large company is a good thing. But having the absolute need to build a company that is larger than the opportunity really allows for can cause a company to fail unnecessarily. I have seen that happen in the past, it is not fun at all. Build the biggest company that you can build, but give yourself the luxury to make your investors happy even should the company only sell for a comparatively modest amount of money.

This concludes the VC Fund Raising Manual. Last thing from me is: Good luck.

This article is part of a series, you can find the index here.

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