15 Zen Hacks for Startups to Survive and Thrive with Corporate Investors

By Tytus Michalski,

Fundraising is never easy. When dealing with corporate investors, there can be extra layers of confusion during the process. At Fresco Capital, we’ve been able to interact with a wide range of corporate investors from all around the world. Based on the thousands of hours of direct experience plus feedback from our network over that time, here are some hacks for everyone involved to have more zen and less confusion in the process.

1. Be wary of the quick “yes”

Fundraising from corporates can be time consuming, and so a quick “yes” in the first meeting seems like a good thing. The key is follow through. We have seen a corporate go from “yes, we’re investing $5M” in the first meeting, to “we want to invest $500k”, to “by the way, here is a 10 page list of special demands we would like.” It’s easy to reject offers like this when you have other options. Don’t make any assumptions until the deal closes, especially with a quick “yes”.

2. Review stock prices, 10-Ks, and investor relations materials for public companies

Publicly listed companies provide detailed disclosure about their business. For example, you can head over to the investor section of Microsoft and see a wealth of information. In addition to annual and quarterly results, there is a set of updated materials about the company’s recent acquisition of Github. You can also review the company’s stock price as a check on market sentiment about the company’s strategy and execution. In the case of Microsoft, the market has clearly been impressed by the changes during the last several years.

3. Visit their offices and look around

Online research can only go so far. An under-appreciated way to learn about a company’s culture is visiting their offices. If things are extremely quiet with everyone busy at their cubicles and you have a team that is always talking loudly and enjoys skateboarding in the office for fun, it’s worth noting this difference. If the company has an expensive art collection and yet is trying to scrape out small $ from you in negotiation, that’s cognitive dissonance. You can learn a lot just by walking around an office.

4. Don’t use fake deadlines, use real ones

Startups tend to feel that working with large corporates is slow, and on a relative basis this is absolutely true. One week for a startup can be the equivalent of one quarter for a larger organization. Some people suggest using fake deadlines to add urgency but the problem is that in many cases the large company simply can’t move quickly enough and the deal will fall apart. It’s much better to run a process where you have multiple options, even if one of the options is simply going alone, because at least then you have a real deadline to move things forward instead of being held in a holding pattern.

5. Learn about their key competition

Most corporates have specific companies that they view as direct competitors. When engaging with a corporate, it’s important to understand both how they perceive their competition and also to have your own view. If a corporate believes it is dominating the market but you feel that they are in a high risk situation, there are several things to consider. Will you simply accept this difference of opinion? Will you bring up the issue in the hope of a strategy change? Should you even be engaging with this corporate?

6. Spend time with junior people

A common piece of advice for startups is to focus on decision makers. If you know everything, that makes sense. What if you only know 50% of the context? 20%? Most decision makers will prefer to share things on a “need to know” basis with you. Junior team members will tend be more open and will appreciate the chance to share their opinions. They will also be more motivated to close a deal with a startup as a way of proving themselves internally.

7. Having a diverse team gives you more options

As a diverse team ourselves, we’ve experienced all sorts of combinations between our team and other investors. The historical default that people tend to prefer commonality is still true in many cases. However, we’re also increasingly seeing that corporate investors value diversity and inclusion because that also gives them a differentiation vs. competition. Having a diverse team isin’t just about doing good, it’s good for your fundraising.

8. Provide updates, don’t just chase

As you wait for feedback from a large company, what’s the ideal way to engage? Rather than sending reminders that say “have you seen the message I sent yesterday”, which may backfire, it’s worth sharing new updates about your progress. This gives new reasons for investment and also serves as a soft follow up. You should absolutely pay attention to the responses to these updates — if you send 5 updates over three weeks and get zero replies, that’s a sign that something is not right and at that point it’s worth being more direct.

9. Find an internal champion

Why is finding an internal champion at a large corporate key to making progress? Things get lost — there will be emails that drop, fuzzy memories about conversations, and competing priorities which take up scarce attention. You simply won’t know enough about the internal dynamics to take care of all these details. Your ideal internal champion is passionate on a personal level and highly aligned from a business outcome to push on your behalf — make your success their success.

10. Don’t rely on a single internal champion

While a single internal champion is better than none, the ideal situation is to have several touch points at the company. You will receive feedback from multiple perspectives — the legal team, finance team, and marketing team will all have their own business targets. Meeting with additional stakeholders is especially important to identify potential obstacles before it’s too late.

11. Watch out for internal rivalries

When working with large corporates, be careful about internal politics and rivalries. We have come across corporate investors where the internal teams do not co-operate internally to support their startups and are instead in competition with one another. In addition to being confusing, that can be a waste of everyone’s time and energy. Better to be aware of these issues, ideally before getting into a formal business relationship. This can be accomplished by having trusted relationships with 3rd parties (like your existing investors, for example) who know the reality of each corporate investor.

12. Demystify constraints

It’s understandable that investors will have internal constraints. Take the time to find out why constraints exist. If a corporate investor says “we can’t be a lead investor,” it’s worth understanding why that may be the case. Is it because of a previous bad experience as a lead investor? Is it because they have never been a lead investor? Is it because their investment team is too busy with existing investments? Each of those reasons would lead to a different set of follow up questions and possibly a solution.

13. Hang out with lawyers

Lawyers don’t get much attention beyond legal work. I’ve had a chance to become friends with many lawyers and the successful ones are knowledgable on all sorts of issues. They’re helpful in making introductions, reference checks, and even feedback on fundraising pitches. They’re obviously not going to reveal any confidential information, so don’t even try going there. Instead, take them out for a coffee to have a casual chat.

14. Be prepared for last minute changes

Large corporates will typically have an impressive in-house legal team and some of the sharpest external legal advice that money can buy. So when it comes to negotiating deals, they will have a tendency to push hard even until the last minute. That’s what they’re paid to do. If you have a realistic option of walking away from a deal, be prepared to do so mentally even until the very last minute. This will put you in the right frame of mind to make the right decision even under high time pressure.

15. Maintain the relationship even after a “no”

Sometimes the timing is wrong or there are other specific reasons why a corporate investment won’t be a good fit. It’s still worth maintaining a relationship over time in case the situation changes. This doesn’t mean giving detailed weekly updates. It does mean that in 6 months or even 18 months if there is something which you feel is specifically relevant, it’s worth sharing an update. The answer could still be “no” from that investor but they might have another introduction for you which they are now comfortable making because you have made progress over time.

Success between corporates and startups is hard work. But it’s possible.

We’ve found in our own work bridging the corporate and startup world that communication is key. Yes, that means a few extra calls and meetings need to happen, sometimes at odd hours of the day or night. Yes, that means repeating assumptions to ensure alignment. Yes, that means using multiple methods because some people love email, others are always on WeChat, and some will only open up in person.

In the end, it’s worth the effort because the upside from successful corporate and startup partnership can be massive for everyone involved.

15 Zen Hacks for Startups to Survive and Thrive with Corporate Investors was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Bringing Space Back to Earth

By Tytus Michalski,
Image credit: NASA

While it’s inspiring to think about becoming an interplanetary species, there’s plenty of opportunity in bringing space back to Earth.

Why bring space to Earth?

The dream of space has always been about leaving Earth. So it seems counterintuitive to focus on the opposite. It’s almost too practical.

And yet it’s already happening. Private sector innovation is leading to improvements in both launchers and satellites which monitor our planet from space — creating exponential growth in data back on Earth. Cost, variety, and most importantly, speed of iteration, have been transformed.

As an example, our portfolio company Spire went from no satellites in 2012 when we first invested to 40 by 2017, with applications in areas including shipping and weather.

The infrastructure is now at critical mass to start opening up to partners for building external applications. Instead of building and launching your own network of satellites, you can get access to the data directly.

There are also many under appreciated applications on Earth which will be critical to successfully becoming an interplanetary species. Take digital healthcare as an example: portable diagnostic devices, telemedicine, and augmented reality are just three of the obvious areas of overlap.

Can space eat the world?

The space ecosystem up until recently has been primarily focused on space infrastructure. The massive opportunity going forward is to connect this amazing group of innovators to other sectors of the economy and society.

20 years ago, the Internet was viewed as a separate industry by most people. Very quickly in the past few years, the consensus has come around to the idea that “software is eating the world”.

The space industry has a similar potential for impact across society. But whether that potential will be realized is still unclear. Whether that impact will be positive or negative is also unclear. It’s up to all of us to figure it out — together.

Start with talent

Our team at Fresco Capital recently held an event in Singapore about expanding the ecosystem, which included a panel about talent.

One of the panel participants was Lynette Tan, Executive Director at Singapore Space and Technology Association. After this panel she wrote an overview about some of the opportunities in the sector. Here is a key takeaway related to building the talent part of the ecosystem:

“The integration of space technology into our daily lives also means new modern disciplines are now required. With the avalanche of data from and flowing through space systems, programmers, computer scientists and big data experts are all likely to find increasing demand for jobs seeking to monetise these assets.”

The talent needs described above are clearly cross-disciplinary.

But that’s not all. If we’re going to build successful applications, there will be a need for design, user experience, and sales, to name a few obvious categories that are not traditionally associated with the space industry.

That’s great news in the current environment of concerns about technology replacing humans in jobs. Space applications are a potential growth driver of new jobs across the entire economy.

Of course, there’s the challenge of aligning our education system with these job opportunities, but that’s worthy of an entirely separate discussion on its own.

Practical public / private

At the International Astronautical Congress (IAC) just held in Adelaide, there were representatives of both the public and private sector from all over the world.

On one of the industry panels, a private sector member was the living embodiment of the entitled capitalist, saying something to the effect of “the only role of government is to get out of the way.” This view has the benefit of clarity, but it has the much larger drawback of being completely impractical.

At this same conference, I had a chance to share a panel with members of both the European Space Agency (ESA) and NASA, as well as give a presentation to an audience of country representatives from all over the world. Overall, I found these public sector members to be very self-aware of their organizational constraints and refreshingly open minded about finding creative solutions.

Our panel at IAC 2017 — public & private sector together

Here’s the reality: government to government space agreements and negotiations move at a snail’s pace. The private sector can move faster in theory.

Unfortunately, there are several roadblocks. Export restrictions. Import restrictions. Talent restrictions. Mostly because space is considered to be a strategic industry, which is understandable.

This creates an opportunity for private sector companies operating in applications because the regulatory environment is completely different from the traditional space industry. Obviously, there are still regulations and restrictions when it comes to data and applications. But the level of freedom for the private sector is significantly greater when operating in this application layer as compared to space infrastructure.

It’s important to recognize that governments will continue to play a key role in developing the space industry. At the same, the private sector has a unique opportunity to innovate around applications.

Connecting space to applications

It’s no accident that some of the most exciting private sector entrepreneurs in the space sector have an Internet background. But this cross-over shouldn’t be limited to billionaires who have the capital to start investing in space infrastructure.

One of the lessons from the development of the Internet is that eventually infrastructure and applications do get connected.

Sometimes this is through open standards and co-operation. HTTP is everywhere and yet invisible to almost every user.

Conversely, even a single company can dominate a key connection layer with regulators struggling to catch up.

We could all sit back passively and hope that things “just work” in the evolution of connecting space to applications. That when a billionaire decides to set up either a for profit or even a non-profit, they will be mindful of other stakeholders.

Alternatively, we could be proactive and intentional in building these connections with a mix of co-operation and competition. And in the process, just like the Internet, we may discover that the number of applications related to space are infinitely larger than we ever imagined, right here on Earth.

Bringing Space Back to Earth was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

An Expat VC on the US Election: Why, How, and What Now?

By Fusion by Fresco Capital,

As an American living abroad, I have been shielded from a lot of the insanity of this year’s election, but even sitting here in Tokyo, halfway across the world, the vitriol and frustration is palpable. Sure, the Presidential Election in the United States is always charged with emotion, but as almost anyone who has voted in multiple election cycles would agree, this year is particularly heated.

People have said harsh goodbyes to friends, unable to empathise with their choices. Families have lost touch, fearful of the difficult conversations that would ensue if the topic of politics were to be broached (I’m sad to say I speak from personal experience on that one). The very foundation of the Two Party System has been irrevocably damaged. The question of what it really means to be an American remains up for debate.

One thing is clear: Shit is broken. The world we lived in previously has changed. The American Dream used to be: work hard in school, get good grades, go to college, get a good job, find a wife who will take care of your house, buy a house, work hard, rise in the ranks, save your money, provide your children with a better life than you had, rinse, repeat. Sorry guys (yes, I mean guys), no can do.

For most people, that is no longer an option. College doesn’t guarantee you a job anymore (trust me, even a Harvard degree is worth less than it used to be). And even if it does get you a job, your job has probably started to be replaced by technology. Entire companies are being dismantled, so the idea of a long-term career at one company is rare. Most women don’t want to be just wives anymore, nor do they have to be. As the Great Financial Crisis taught us so painfully, houses don’t always go up in value, so they are not a safe investment anymore. Interest rates are zero, so saving doesn’t do you much good either. So… yeah, shit is broken. The promises we were sold have turned out to be empty, and it’s not really anyone’s fault, either. It just is.

Sure, we can try to put it all back together again. Go ahead and try. Even if that were possible, it still wouldn’t work again. Why, you ask? But why, can’t we just go back to the glory days? One word: technology. Technology has not only changed the world, but it has changed how fast the world changes. As our most recent Nobel Prize winner, Bob Dylan, so eloquently pointed out… “The times they are a’changing.” And they’re changing faster than ever before.

Nassim Nicholas Taleb, author of the Black Swan, wrote a fantastic book called Antifragile. I have a short attention span, so I’m not going to lie to you, I only read half of it. But the takeaway is this; Fragility is when you break something, and you cannot repair it. Resilience is when you break something, and it can return to its previous state. Antifragility (the best way to be), is when you break something, and it returns to an even better state, more powerful and strong than before it was broken.

I can only hope that part of what makes America great is that we are the definition of antifragile. We need to have faith in our ability to heal these rifts that emerged from the US election, to face the difficult conversations that must take place, and to emerge a stronger, more informed, more creative, and more antifragile nation than we were before.

Doing that, however, requires us to take a step back, to set aside our emotions, and to take a deep look at the incredibly valuable and previously unseen information revealed by this election. So let’s remove the emotion, take a quick look at the facts brought to light by this year’s Presidential Saga, and dedicate ourselves to building something better in its wake.

What have we learned?

Technology has forever changed how we, as individuals, make decisions.

We used to live in a world where information was difficult to access, and we relied on key institutions like the political parties, the media (newspapers, TV personalities), academic and religious institutions to tell us what we needed to know to make an informed decision.

Now, we get our information from the internet. Anyone can read about the candidates online, anyone can publish their opinion, anyone can state a “fact”, or share their emotional reactions. We have become infinite information consumers and producers.

As a result, it has been shown that our grip on the truth is loosening. Our willingness to hear arguments counter to our own beliefs is weakening. Our strength to overcome our own biases is diminishing.

The systems that have kept our world stable have not gotten the memo.

The key systems and infrastructure which shape our lives were all created in a time before technology existed. The idea that we would be meeting our mates on Tinder, sharing our momentary thoughts and emotions on Facebook, carpooling to work in a stranger’s car, or tracking our daily food intake and steps on an app were completely unfathomable at the time of their creation.

So, where does it all break down? Jobs. The systems that support the world as we know it can be broken down as follows: corporations that provide us with jobs, education which prepares us for those jobs, the government which protects those jobs and protects us if we don’t have jobs. (Ben Thompson writes brilliantly on this system here, if you’re interested in learning more how this system was created and why.)

As technology accelerates, companies are being forced to adapt to increase margins, productivity, and profits for investors. As a result, jobs are being automated. Because technology evolves faster than we can learn, or the education system can provide us with relevant skills, we are losing our jobs. People without jobs are angry, disappointed, disenchanted, and scared. Not a good equation for an election, or for anything for that matter.

It is up to us to rebuild those systems in a way that will last.

Technology is not a trend. It is not a sector. It is an inevitable force redefining the world in every way. This will not change, it will only accelerate. As outlined by the concept of singularity, the rate of change of technology will only get faster and faster. This unleashes unfathomable potential, but can also be disastrous if we don’t create a system that can keep up.

This brings us back to the concept of antifragility. We can’t simply repair our broken systems. We can’t simply aim for resilience. The only option is to imagine and re-build the world on a foundation that gains from change, and as a result, actually gets stronger over time.

Okay, fine. But what can we do about it now?

First, we have to stop wishing for “the way things were” and start taking a deep look at how we can start rebuilding a world that fits today’s reality. Because of technology, we are living in a world where we have unprecedented power as individuals. Yes, that is terrifying. But it’s also fucking awesome, because it means we all matter and we all have a role to play.

I continue to believe the only way for each of us to start making a difference is through education. Whether this is in K-12, universities, corporate training, online platforms, whatever. A few ideas:

  • Educate individuals on how to find, assess, and synthesize what is valid information and what is not.
  • Encourage empathy so that we have the discipline and intellectual strength to accommodate the views of others.
  • Raise awareness around our inherent biases so we know how to truly listen and learn.
  • Create ways that professionals can continually learn new skills, quickly and efficiently, so we can always find jobs.
  • Provide access to information about what jobs are available, and what we need to be get them.

The list goes on and on. Everyone needs to play their part, but first they need the tools that empower them to do so.

I am personally dedicated to doing whatever I can to help rebuild the systems that shape our world (not just America). That’s why we created Fresco Capital, where we are investing in the technology transforming these very sectors that need serious upgrades: education technology, work technology, digital healthcare. But that’s just one small part of a much bigger, more important picture of creating a new future.

So… let’s stop whining about this fucking disaster of an election and get started.

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Inspiration from Leading 8 Million Active Parents & Volunteers

By Fusion by Fresco Capital,

The most inspirational founders are able to find a mission bigger than themselves and I was fortunate to have a recent Q&A with one of these founders, Karen Bantuveris. Not only is she a savvy entrepreneur and mother herself, her company empowers a community of 8 million parents and volunteers. Karen was recently at the White House as part of the Computer Science for All initiative and this was a great topic to start the discussion.

You recently spoke at the White House about SignUp.com’s role as an official partner to the Computer Science for All initiative (#CSforAll). What was that like?

Speaking at the White House was of course an unforgettable experience for me. I felt honored, inspired, empowered — and excited to see SignUp.comjoining other tech leaders like Google and Facebook as an official partner in such an important initiative in education. It’s a movement anyone can contribute to — you can learn more about it on the White House’s website.

How will SignUp.com be contributing to this initiative?

We’re here to help engage parents. They’re a powerful, untapped audience capable of making a huge impact in our nation’s goal to bring computer science to ALL kids, and SignUp.com is connected to 8 million of them. We’re doing a variety of things to help parents and families drive this movement at a local level, but the one we’re most proud of is “Family Code Night.”

During a memorable and fun Family Code Night event, families learn to code together. Thanks to a program produced by our partner, MV Gate, hosting a school-wide Family Code Night is easy for any parent to coordinate. Kids and parents get an exciting introduction to computer science — they get to do something fun and empowering with their family and with their friends and school community. Families leave the event eager for more and ready to support computer science learning at school and at home. The Family Code Night event kit is available free at SignUp.com/FamilyCodeNight, and we’ll be encouraging our users to download this and other free computer science ideas and resources from our new CSforAll Idea Center in partnership with the CSforAll Consortium.

Tell us why you chose to get involved with CSforAll?

There are so many things we each want to do with our day, with our lives, for our children — but it’s overwhelming if you try to do it on your own. As a business leader and mom, I get that. We’ve spent seven years building SignUp.com around the belief that we are all stronger in numbers. Every day, our solutions help people unite groups of 10, 50, 1,000 people around common goals and interests. With CSforAll, SignUp.com gets to do that for a nationwide movement. Given the powerful role parents play in influencing school priorities and our unique connection with them, it makes perfect sense that we would contribute to this movement.

Image Source: White House

Until recently, your brand used the name VolunteerSpot. Why the change to SignUp.com?

Our solutions were originally designed for moms like myself who were looking for a better way to coordinate school activities that depended on parent volunteers. Over time, parents began to expand how they used our solutions — with friends, at work,… Today, people use our solutions for every type of activity that relies on people to sign up and participate.

We recognized it was time to adopt a name that more accurately reflected our solutions and enabled our company to reach new audiences such as universities and small businesses. So this summer, we rebranded as SignUp.com. Our new name more accurately reflects what we do and who we serve (everyone!), and therefore generates better outcomes for the people using our solutions to organize activities that depend on group participation.

Based on your experience, what advice would you share to other companies who are thinking about a change in brand?

  1. Consult an outside brand strategist early and often.
  2. Build a comprehensive project plan and assign a skilled project manager, just as you would a website launch or product launch.
  3. As you design your transition plan, carefully consider all of the people and components of your business that will be affected — each group of stakeholders and audience segments may need targeted communication plans but deploying a change is much more than marketing and communications. For example, site infrastructure, SEO, help desk, partner contracts, human resources and banking are all touched with a brand change.

Your community of users is extremely active and engaged. What kind of brand partners are the best fit for your community?

We wouldn’t be here without our brand partners. Brands like Lands’ End, Penguin Random House, Uncle Ben’s, and Chuck E. Cheese advertise with us to reach the millions of highly influential moms that use our site.

SignUp.com best fits brands that want to connect with active people (which includes pretty much every mom with school age kids!). They use SignUp.com because they’re always looking for ways to do more with less time — for some that means personal interests like church or book clubs, for others that means career achievements, and for the majority of SignUp.com users, that means contributing to their child’s education and success.

You’re based in Austin and have an insider’s perspective of SXSW. Any tips for visitors, especially those who are thinking of going for the first time?

Treat it like any travel adventure: wear smart shoes, try new things, embrace the unexpected, and sleep when you get home! SXSW is immersive and you may not see a lot of Austin, but don’t leave without eating a breakfast taco (or three). Everyone has their favorite taco shop, but personally, I’m Team Torchy’s all the way!

Thank you for reading!

Our portfolio companies including SignUp.com are always on the lookout for top talent and also partnership opportunities. To learn more, get in touch.

Image Source: White House

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The Most Effective Way Governments Should Support Startup Ecosystems

By Fusion by Fresco Capital,

I once met an active angel investor from Europe who was convinced that government subsidies of investors were the most effective way to build startup ecosystems. Of course I asked the obvious question, “what about Silicon Valley?”

“Except Silicon Valley” was his reply.

Huh. Lightbulbs going on everywhere (at least in my mind).

The Best Intentions

Small scale grants to get startups off the ground in place of friends, family and fools money certainly makes sense. After all, most people actually don’t have friends, family and fools with enough money to support them.

What about when governments start subsidising rich angel investors with tax breaks? While this may be the result of genuine intentions to encourage risk taking, if investors are ultimately viewing startup investments as tax deductions, then this is a fundamentally flawed strategy. Instead of being investments, startups are transformed into tax loopholes.

Moving up the investment value chain, it’s certainly admirable for governments to actively support local venture capital because there is a positive knock-on effect of helping the real economy. This leads to a natural question:

How should governments support local venture capital funds in order to scale and build a local ecosystem?

One approach to building a local venture capital ecosystem is to provide rebates and other complex incentives where the government takes on more risk and leaves the private sector with extra return benefits. No matter what the fancy official name of this kind of program, it is effectively a subsidy.

As a venture capital investor, I’m supposed to jump at the chance of getting subsidised returns. Call me old fashioned, but I don’t want to receive subsidies to juice returns because it’s wrong for society (my altruistic side) and I don’t want my returns to be artificially boosted by subsidies (pure ego).

Fortunately, there’s a simpler idea.

Instead of tilting the risk / return in favour of funds via subsidies, government related capital should simply be open to investing in new venture capital funds on market terms. The boring reality is that most government capital is allocated through various intermediaries and by the time it gets to venture capital funds, many decision makers take the view of something like this:

New venture capital funds are too risky, so we prefer teams that have worked together for at least 10 years and are raising fund 5.

If you want to attract venture capital investors to your local ecosystem, it’s a lot easier to do so before fund 5. Rather than throwing around subsidies to attract funds, governments should take a hard look at how their existing capital is being allocated through various intermediaries to make sure that there is an allocation for emerging venture capital funds.

If done correctly, this market driven approach will actually increase returns, as there’s plenty of data to show that new funds are generating outsized returns. Instead of spending money to subsidize venture capital funds, governments can get more money through higher returns.

The Unintended Consequences

Beyond the obvious concern that governments should not be subsidising investors directly, there is also the problem of unintended consequences.

At the company level, since small scale grants for startups to get off the ground usually do make a positive impact, it’s very tempting for governments to scale that up.

Unfortunately, when companies raise institutional capital which was only possible because of subsidies tied to the investment either directly or indirectly, the incentive mechanisms tend to train grantpreneurs.

The reality is that all startup subsidies come attached with complicated forms because governments need to protect themselves from criticism. So there is no such thing as “simple startup subsidies”.

Grantpreneurs are extremely efficient and skilled at filling out the complicated forms and ticking all the right boxes for subsidies but unfortunately are a lot less skilled in building successful businesses.

People improve their skill through repetition. The worst case scenario is creating serial grantpreneurs, who are able to jump from subsidy to subsidy.

One of the goals usually cited by governments to subsidise investors is that this will then lead to more jobs. Of course, there are usually many restrictions on the people who may be hired.

This prescriptive approach to hiring can actually lead to increased inequality because it increases demand for a fixed pool of talent rather than increasing the overall pool of talent. Wages go up for those already with skills. Everyone else, not so much.

Throwing money at jobs is not the same as increasing the overall pool of talent.

A Better Way

Should we just throw our hands up in the air with the view that governments are always wrong and it’s foolish to mess with markets?

Not quite.

Markets are far from perfect and as the impact of technology continues to accelerate, cities and countries that do nothing to build thriving startup ecosystems are at risk of being left behind.

So what should governments focus on when it comes to extra support for startup ecosystems?

Ultimately, every government has limited resources and a key starting question should be “what is the best use of our resources for maximum impact?”

If the goal is to encourage innovation across society and the improvement of overall welfare, better to focus on talent.

What would a program to support talent look like? Rather than giving money to startups, which would empower grantpreneurs to fill out forms more successfully, governments should be subsidising individuals to learn new job skills. To be clear, this does not mean training everyone to become an entrepreneur.

Empowering individuals to make their own job skill education choices at least creates a pathway for them to find new job opportunities. It won’t work for everyone but it has the potential to enhance the overall pool of talent at scale. So rather than funnelling more money to the same number of people, there will be a broader base of talent.

Will there be inefficiency? Of course yes.

Will there be fraud? Probably.

But at least by focusing on individuals, the magnitude of any individual fraud case should be smaller.

Even with inefficiency and fraud, as long as the overall talent pool is improved, then this approach could create massive value for society.

The Unexpected Benefits

Beyond the direct impact of enhancing the talent pool, there is an important secondary benefit: increasing the quality of overall talent should attract more institutional capital.

Why does increasing the pool of talent attract more capital? Because capital follows talent.

Just take a look at the history of Silicon Valley. The talent moved first, led by pioneers like the Traitorous Eight, and the capital followed.

There are two factors behind this dynamic. First, great talent is still scarcer than capital. Second, it’s easier to move capital than talent.

So by focusing on improving the talent base, governments will naturally be building the foundations of attracting capital for the right reasons.

The First Steps

It’s tempting for governments to go big with a fancy launch party and lots of hype around a new program.

But for a talent subsidy program to actually be effective, better to act like a startup and start with a small test. Make it small because then the mistakes will be small and there is only one guarantee with a talent subsidy program: there will be mistakes.

Then this is the most important part: get feedback, learn from the mistakes, and don’t scale up until it’s actually working on a small scale.

This means less publicity in the short-term but ultimately much larger positive impact in the long-term. It’s a marshmallow test for governments who want to support startup ecosystems.

Lightbulbs are a metaphor for new ideas and innovation. If governments truly want to support startup ecosystems, they should be focused on helping people find their unique lightbulb moments.

For anyone else interested in figuring out how governments can help support startup ecosystem talent, please get in touch.

  Category: Ecosystem
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Fresco Capital Startup Sales Playbook 2016

By Fusion by Fresco Capital,

Although each startup is unique, there are many common lessons which apply generally. We’ve saved you the time and bundled together 9 of the best content pieces covering 3 areas of sales:

  1. Hiring and building a sales team
  2. Compensation, culture and motivation
  3. Strategy and tactics


1. Hiring and building a sales team


How to interview sales candidates?

“The challenge in hiring salespeople is that they are often excellent interviewers. They can be confident, persuasive, and engaging.” — Jeff Hoffman

Jeff shares his own experience about what can go wrong along with practical advice about how to improve your interview process. Read more…

What criteria should you use to evaluate candidates?

“Picking people is very similar to picking stocks. It’s so similar that like stocks, it leverages the same methodologies; technical and fundamental analysis. Like stocks or securities you can look for past trends of the candidate and ignore a candidates intrinsic value (technical analysis) or you can look to measure the intrinsic value of the candidate (fundamental analysis).” — Jim Keenan

Keenan goes on to explain the difference between looking at the surface level factors and the intrinsic value of candidates. Read more…

When to hire a VP of Sales?

“Although a new CEO and leadership team typically want to hire a proven VP of Sales from a very successful company, making a “Rolex” hire early in the company development — and paying Rolex prices for the talent — is not the answer.” — Stephen Forte

Stephen explains the alternative way of building your sales team, including the right time to bring on a VP of Sales. Read more…

2. Compensation, culture and motivation


What is the market rate for direct sales commissions?

“Survey results did not point to a significant difference in direct commissions between companies that predominantly use a field go-to-market strategy vs. inside sales. However, the median fully-loaded commission for field sales (12%) was higher than that for inside (10%).” — David Skok

That’s just a sample of the impressive data, charts and analysis in the 2016 Pacific Crest SaaS Survey. Read more…

What about motivation beyond commissions?

“I’m not saying that commissions are inherently bad. What I am saying is that we’ve got many orthodoxies in business that we never examine. One of them is that the only way people will sell is with commissions. That might be true in some cases, but it’s not universally true. Organizations that challenge orthodoxies — of any kind — are the ones that make big breakthroughs.” — Dan Pink

Dan literally wrote the book on this topic: To Sell in Human. You can get a preview in this interview with Matthew Bellows. Read more…

What can go wrong with culture?

“A number of them say they faced a stark choice: Create new accounts by any means possible, or risk being fired for falling short of their sales goals.” — Stacy Cowley

Stacy interviews former Wells Fargo employees about what it was like working under the constant pressure of selling. It’s important to understand how bad things can get with the wrong culture. Read more…

3. Strategy and tactics


What is a sales pipeline?

“Sales pipeline — a term that gets thrown around so much, you’d be forgiven for thinking it’s an empty catchphrase that simply makes salespeople who use it look like sales professionals. But your sales management operations can benefit from using a sales pipeline, and it could make a significant difference to your bottom line.” — Ayelet Weisz

Ayelet covers the specifics of how to structure a sales pipeline to get increased visibility about revenue opportunities. Read more…

Should you go upmarket with a solution sale?

“Understand that you can make 3–20x the revenues on a given enterprise customer with a solution sale vs. a tool.” — Jason Lemkin

Jason reviews the opportunities and challenges of becoming a solution sale if you have larger companies as your customers. Read more…

How should marketing and sales be connected?

“Marketing and Sales alignment isn’t about meeting each other’s gaze; the goal should be to share a common focal point. To achieve true Marketing and Sales harmony, both departments need to turn their focus outside the company entirely — to the customer!” — Jill Rowley

Jill helps you think through the key questions of marketing and sales alignment with thoughtful guidelines for making it happen. Read more…

What other great pieces of sales content would you recommend for startups?

  Category: Startup Tips
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