Insights from START Summit 15

“For startups it’s the best time to start: Take the cheap money and use it” – Alfred Gusenbauer, Chancellor of Austria a.D.

The atmosphere at the Summit was very good. The University of St. Gallen was full of ambitious start-ups looking for co-founders, employees or investors. And yes – a lot of investors from Switzerland and abroad were present and talked to founders at the “Meet the investor” session. However the conference showed no signs of start-up hype. Investors, supporters and entrepreneurs talked about the real business world and told the audience about their failures and setbacks. Several speakers made clear that even in the start-up world not everything is possible. A good example was Todd Emblay, Program Director at Chinaccelerator. The serial entrepreneur lives in China for more than six years and told the audience quite a lot about all the challenges for entrepreneurs China.

“Successful ambitious start-up ideas look like multistage rockets”, Dalton Caldwell, Y Combinator

One of the most inspiring talks was Dalton Caldwell’s speech. In his view good ideas that will disrupt an industry are simple, solve a hair-on-fire problem for this market and have network effects. The best way to realize these ideas is to start small. The first step for a start-up should be to solve a real problem for a small group of people and then to expand step by step to bigger markets. He mentioned that even Facebook started small: as a platform for the students of one university only.

Caldwell mentioned Facebook a second time in connection with the role of revenues for start-ups saying that it is important to know that Facebook was always almost profitable.

If this is the best way to grow Swiss start-ups start very well with their focus on problems in niche markets and with achieving revenues fast. However Swiss start-ups often stop there. To initiate the second step they need investors and those are hard to find after the seed phase. However several investors gave some useful tips for approaching investors.

„You should raise as little as possible to get to the next step, which allows you to raise at a higher valuation” Stephan von Perger, Wellington Partners

Several business angels and investors gave start-ups valuable tips at the conference. In his workshop Stephan von Perger, Partner at Wellington Partners, spoke about the same multistage approach which was mentioned by Dalton Caldwell. Stephan von Perger advised start-ups to raise money for financing the growth over the next 12 to 24 months and then to start with a new financing round. In his view this phase thinking is sometimes lacking. Stephan von Perger also stressed that fundraising takes time. Start-ups should start the process of fundraising more than six months before they are running out of cash.

Another interesting tip was to consider a convertible loan as an alternative. “A convertible loan is a cheaper and faster way to finance a start-up than an equity investment”, von Perger said.

“I see a vast potential in the food and beverage industry”- Christopher Ax, Schmatz

Although most of the start-ups at the conference were young IT companies several speakers mentioned the huge opportunities for start-ups in traditional industries outside the tech world. The most striking example was Schmatz, a company co-founded by Christopher Ax. He used to work for Rocket Internet and then decided to start his own venture. Schmatz is selling traditional German fast food such as “Leberkäs-Semmel” or “Currywurst” in Tokyo. The company started successfully with a food truck and will open a first restaurant this month. In addition Ax was able to close a Series A round recently.

…and some room for improvement

START Summit was really a great conference. However there is still room for improvement. The most important improvement would be to have women on stage. During two days there were nine key note speakers on the main stage plus panellists of the fintech panel and the jury of the START competition all in all 19 persons. All were male. Two days without a single women speaker - that is not acceptable.