Golden Horn Ventures

Grou.ps has kicked off US Beta

2008-04-25T10:50:50-07:00

One of our portfolio companies Grou.ps has launched US Beta.

Venturebeat, Techcrunch and Web Worker daily from GigaOm network has covered some details on Grou.ps product.

We are very excited to be a part of the Grou.ps team. More news to follow ...

Venture Capital in Emerging Markets Conference, 9 - 10 June 2008, Istanbul, Turkey

2008-03-29T03:09:05-07:00

Golden Horn ventures is organizing a conference in Istanbul, Venture Capital in Emerging Markets. The goal is to bring together fund investors, venture capitalists from all over the world and entrepreneurs and discuss investment strategies, the right and wrong practices of venture capital in emerging markets.

Please check out http://emergetechvc.com for more information on the venue and the agenda.

JAM SESSIONS MARCH EVENT

2008-03-19T07:31:38-07:00

Golden Horn Ventures team is inviting everybody with a passion in technology - investors, entrepreneurs, idea owners, students - to Jam Sessions on 28 March, 10:30 am to our offices. Once again, Jam Sessions are a series of 'get togethers' where we can share ideas and talk about the opportunities as well as have a chance to discuss how we can help each other or chat about anything that catches our fancy over a cup of coffee.....
We are looking forward to seeing you all there!

The Dirty Dozen Mistakes of a Startup Entrepreneur

2008-02-01T07:24:03-08:00

Entrepreneurship is hard. Tackling technical and business problems and building a business from the initial idea up, one step at a time is very difficult.

Starting from the idea, technology entrepreneurs make certain mistakes that make their lives even more difficult. These mistakes can be caused by the entrepreneur fixating on what she is comfortable with - people tend to stay in their comfort zones -, or misconceptions of what is valuable in business or maybe simply being a first time entrepreneur. As investors in early stage technology companies, we keep on seeing similar problems in different companies, which tells us that these are common mistakes, especially in emerging regions.

Below is a list of these mistakes which we have seen and which might eventually cause a business to fail or or an opportunity to be missed. It isn't intended to be exhaustive but rather indicative. Some of the mistakes listed are common to the nature of the technology entrepreneur, but some are the results of the state of the sector in emerging countries.

Mistake No 1: "We are a framework company and can do it all"

The idea of a framework company sounds attractive. Especially, in this region entrepreneurs tend to collect their expertise into a "framework" with no product or application definition. Having a framework that works can be very advantageous. However, the downside is the entrepreneur's indecisiveness on selecting a focal application that will act as the showcase for the power of the framework. Sometimes, because the entrepreneur lacks sufficient knowledge on a specific area or the "productization" knowledge and expertise, she tends to sell the framework - and that puts her in a very difficult play.

An example of a successful framework is what the Skype entrepreneurs had. They had a great peer-to-peer distribution application that they developed in a company prior to Kazaa. Later they used this framework in Kazaa. Afterwards, in Skype and now in Joost. Each one of these applications are products that rely on solving the hard peer-to-peer distribution problem.

In a startup, a showcase application and the usability, traction, revenue model of this application is very important in the proof-of-concept stage which will eventually turn to a profitable business.

In addition, honestly, it takes enormous money and effort to be a framework company. It doesn't happen overnight.

Mistake No 2: "Everyone will love this cool technology"

Fall in love with its technology and produce a product that nobody wants

Many entrepreneurs forget that few people buy a product or consumes a service because it is just a cool technology. Unless the end product or service is any use to many, the business can hardly scale to a size that makes you a significant company.

It is the product that matters not the technology in order to become a company that is significant. The technology is an enabler, a differentiator in the product. With technology you can deliver things that you weren't able to before. With technology, you can make it cheaper, faster, better,... But nobody buys the technology by itself, the buyers/ consumers don't even understand the underlying technology. They see the end results.

Mistake No 3: "I want to raise a lot of money so I can feel secure"

Raise too much money and Burn too much cash

Raising too much money is a killer. It actually makes a company die faster. I would say, raise small amounts, test if the bet is the right bet, if not learn and modify and revive. (It becomes harder to be profitable if not anything else)

Smart entrepreneurs debug and test what they think is true and verify with their market that their bet is actually true. They don't assume too much and try to build a huge business depending on their assumptions.

Mistake No 4: "We have the same features as X and more (X being the leader or worse a giant)"

Run after the Competition

Entrepreneurs, believing they have a technology that is much better than that of the big players, the usual suspects, try to adapt the features set of the competitors. That doesn't necessarily make any difference in the product, nor in the experience that the end user receives.

Try to be revolutionary instead of evolutionary and try to disrupt the very rules of the big players. After all, in disruption you have a big advantage being a startup.

Mistake No 5: "While we do our advertisement product, we will also run a content site that uses the product"

Startup with No Focus, No defined Bet

A startup has limited time and limited money to spend. Therefore, the startup shouldn't try to do too much. The startup needs to concentrate on what the entrepreneur and the team knows and can do best. They need to create a value there. They don't need to waste their precious and scarce money and time on things that they don't want to bet on.

The real value that the startup can gain is in the creation or expertise that the entrepreneur and the team will gain in testing its bet, focusing on the core business. Doing that, the company gains huge value learning the market, rather than guessing.

Therefore, the startup needs to focus on a defined bet and learn. When they hit the target and really create something wanted then they can build the business around it. But their core needs to be valuable and most of the work and value creation (operational and strategical) needs to support the core of the company.

Mistake No 6: "We can't define the Product, We don't have a CTO, we don't have ...."

Lack of Talent in the right places: The Human Resources Problem

The gap between technology and a useful and wanted product is hard to cross over. It is the entrepreneur's job to find the right people and build the team. However, especially in the emerging world, experienced talent who believes in a startup can be hard to find.

The entrepreneur's job is to find and partner with the right people for the right reasons.

The lack of management talent and the lack of productization experience becomes a killer for the company very early on.
That is why you see many hard core technologies with no specific products.

Another important talent for the startup is the CTO (chief technical officer). CTO is a very important person that a startup needs, who is key in finding the right ways and using the right technical tools and strategies for adoption, stickiness, openness, scalability, etc.

Mistake No 7: " I need to make money fast"

Chose early revenue and divert from the grand vision

An entrepreneur needs to focus on the milestones.

If you are in technology business in an emerging country, it is harder to keep believing in and keeping your head straight out of the local ups and downs, how other people are making money, etc.

Local dynamics become a threat for the entrepreneur, because the technology market is still in its infancy. However, big corporations need consulting budget and have just asked for the entrepreneur's help. Todays' money looks sweeter than risk and tomorrow's gains. And the entrepreneur usually chooses to dedicate some or all of her and the company's time doing consulting and making money, without working on the grand idea or the product.

Lack of success stories yet, lack of respect for innovation and the lack of an existing ecosystem to support the idea owner/ entrepreneur in the region causes the entrepreneur to divert from her idea. By working with a company that doesn't have a place in the grand vision, causes her to give it all up. It is the story of the boiling frog. When she realizes that she hasn't done anything for her product, the window of opportunity is long gone. She probably will realize what she has done when she sees some other entrepreneur doing exactly what she wanted to do.

But thanks to the Internet and the global World, that is changing rapidly. Success stories from the emerging world enlighten the path more and more.

Mistake No 8: " I can't tell anybody about my project. They will copy it right away!"

Secrecy: The tendency to create a closed environment and keep the ideas and projects secret

A smart entrepreneur knows that execution is the key for an idea to be successful. A smart entrepreneur also knows that she needs to learn through the process of talking and sharing. If she keeps the idea to herself and not share and have the opportunity to discuss it with other people, then she will end up learning what others think after she has spent a lot of time and money.

Ideas need to be collaboratively worked on to make it practical for many to use. A smart entrepreneur gets all the information she can about what potential partners can think or what the customers say, even if it is just a preliminary stage. Ideas are very valuable and different ideas concerning

This also has a really negative effect in the environment as the ecosystem of innovation needs and open environment where everybody shares ideas, and opinions and ideas become mature through a collective sharing process. Open environments readies and allows innovation.

It is healthy to get in discussions and create conflicts. No conflict no interest!

Mistake No 9: " We don't have the Stock Option Plan"

Don't share the upside with team members

Stock option plans still don't exist in the emerging countries. It is crucial for a startup to have the stock option plan, because it is the only way to attract talent. Stock option plans allows the wealth to be created to be distributed among the team members. It sends the signal to the team members that the success is through the work of the team and the rewards will belong to the team.

Mistake No 10: "My first motive is to get rich"

Try to get rich instead of changing the world

Creating some local copy of a winning business is an easy win. However, in a fast globalizing world, this strategy will soon be futile. In addition, without understanding the business deep enough, a person can't really make a successful copy. A successful copy needs a lot of understanding of the
business as well. When the entrepreneur's target is to only get rich, we don't believe technology is an area that is easy to play in.

Instead, innovate, innovate, innovate...

Mistake No 11: "Who Needs Mavens, Connectors and Salesman?"

In an era where information is abundant and reachable by anyone, for a product to stick the entrepreneur needs mavens, connectors and salesman. In an emerging World this is another challenge, which we will keep the issue to another post for now.

Mistake No 12: "Show me the Money!"

Venture Capital isn't just a game of finance, it is more a game of operational management capabilities, expertise, network, simply "the business itself". Finance is just the means to be cash flow positive and stay alive without facing bankruptcy during 'the idea' to "to-market'. Venture capitalists need to add significant value to the company. In our mind, that is much more important than the finance that a venture capital firm provides.

Without the value big threats await the startups. The finance speed up the process in a company's growth, in other words capital buys the time to market, make the process faster. In parallel, the entrepreneur and the team needs to be equally ready to deal with the problems that come up faster than they will be ready to face. They need to be emotionally ready to understand the market, interpret what the market tells them, what the next steps need to be or many times deal with the company and team problems, which require more emotional objectivity.

That is why choosing the right Venture Capital firm very important in a startup's life. Seasoned executives know the roller coster ride, foresee the problems before happening and support the entrepreneur and the team and help them keep their business and help them grow.

Mae Ozkan

JAM SESSIONS

2008-01-25T04:39:48-08:00

Golden Horn Ventures team is inviting everybody with a passion in technology - investors, entrepreneurs, idea owners, students - to a series of 'get togethers' starting on 30 January, 2 pm to our offices. We call these "Jam Sessions". A Jam Session is a 2-hour get together where we can share ideas and talk about the opportunities as well as have a chance to discuss how we can help each other or chat about anything that catches our fancy over a cup of coffee.....

GLOBALISATION; What Is On The Agenda

2007-12-27T05:06:11-08:00

There are few topics today that solicit greater controversy, evoke stronger emotions, and actions than that of “Globalization”. Almost everyone has a strongly held opinion on the topic since almost everyone is touched by it in some form or another. What used to be a “genteel” discussion at academic meetings on “multinational corporations” with its specialized language and little press fanfare has become a village square squabble. The participants in this discussion have expanded to include corporations, political parties, government ministries, labor unions, the media, environmental groups, civil rights activists, NGO’s, international organizations, and a vast array of civic society across the spectrum of countries.∗

Although this is a positive development for a “democratic” debate of the issues involved, the curse of Babel is upon us. In the more or less intelligible discussions that take place, the discussants seldom use the term in the same sense as their counterparts. Some talk of the drivers, some of the process, and some of the consequences in the same discussion, examples and counter examples are drawn from vastly different historical periods, and citations from “authorities” used to support ones arguments are generally taken out of context or truncated to modify the intent of the original author. The broad, critical importance of the phenomenon seems to be getting lost in the obfuscation of the myopic, special interest arguments of the discussants. The discourse has become anything but “genteel”.

The term “globalization” seems to be used in a number of different senses. At one extreme is the limited sense of the movement of goods and services across national borders. This is essentially presented as a benign extension of international trade. A bit wider than this usage is one where the process is seen to be a movement of productive capacity and resources across borders and related to this, the exchange of ownership across borders. These probably would constitute the “hard core” of what most people think about when using the term “globalization” – basically an extension of economic activity, in its various facets, across borders. There seems to be four other senses in which the term is used, all of which imply some sort of intent:

1. The process by which tastes, consumption patterns, and cultures around the globe are “homogenized”.
2. The process by which corporations avoid, or circumvent, various regulations in their home countries and
3. The process by which non-local financial criteria dominate other, local, criteria in decision making.
4. Last, but not least, there seems to be a usage of the term to designate what used to be called “imperialism” with all of its connotations and processes.

The proponents of “globalization” can point to a number of “positive” results of the phenomenon: increased worldwide economic activity and growth, increased flow of productive capacity and capital, increased transfer of technology and know-how, increased efficiency worldwide. They can refer to increased pressures for “democratization” around the world as well as increased pressure for freedom from oppression and the generalization of human rights and their protection. They could point out that there is increased pressure for companies to live by standards of “good conduct” where ever they operate, that there is an increasing push for worker protection, prevention of child labor, and women’s rights. They may refer to increased environmental awareness and protection or to the increased importance and influence of “civil society” and NGO’s in general. It is possible to paint a rosy picture.

The opponents can refer to the same observations and point out their negative impacts: the increasing gap between the rich and the poor, the flow of “low value added” industries to developing countries keeping the “terms of trade” against them, an outflow of creative ideas without commensurate returns, increased disparity in income distributions (both within and among countries), increased delocalisation and resulting unemployment. They can point out that child labor has actually gone up. They may refer to increased exploitation of local resources and the use of local populations to implement “illegal” activities such as trade in drugs, organs, and people, poaching protected plants and animals. They would point out that regulations (environmental or labor related), far from being helpful, either push the problem towards the less regulated developing countries (in the case of the environment) or are actually barely hidden forms of non-tariff barriers to keep out low cost foreign imports. They will point with alarm to increased migration, increased lawlessness and local wars, an accelerated break-down of local cultures and the extended family structures as well as a general weakening of the social bonds that kept societies together. They will point to increasing intra-generational conflicts. They will argue that despite the trimmings of democracy, there is a general breakdown of the democratic processes that, through the legislature, regulates activities that the general populace wants to see regulated.

Both parties make valid points. Both are right – and herein lay the difficulty.

In a way, the whole experience of “globalization” is not particularly new in most of the meanings in which it has recently been used. The age of empires and the whole colonial experience were also periods of “globalization”. What borders did exist were eliminated by incorporating the subjugated lands into the domain of the hegemonic entity. The elimination of borders secured trade and unified the various regimes and laws regulating economic activity and “globalization” under that foreseen by the imperial power. “Homogenization” took the form of local populations emulating the behavior and norms of their counterparts in the imperial power - elite for elite, middle class for middle class. Those carrying out economic activity in the periphery of the imperial powers did not feel compelled to subscribe to the same norms of behavior as applied at the center. And the list of similarities may be extended…..

Yet in a very real and fundamental way the current phenomena of globalization is significantly different from its historical counterparts. In previous experiences, the forces and actors at work were fairly well defined and identifiable. The “crown” no matter how distant, was a recognizable entity. National parliaments, no matter how self-serving, were a sign of sovereignty, in principle accountable to the populace they represented. Occupying armies, no matter how unwanted, were nevertheless, agents, and symbols, of a recognizable entity responsible for their actions.

In a nutshell, revolutionaries knew whom they were fighting.

In the current round, the situation is different. Although there are still “non-local” forces at work in determining local phenomena, the forces and actors at work are very diffuse, impersonal, and hardly identifiable. “The market” or “the financial markets” are hardly well defined actors; decisions seem to “happen” based on some abstract measure of “efficiency” which is supposed to be good for an unknown group of people called “shareholders”. Things seem to happen and fortunes seem to change without any apparent “local” reason or any identifiable “culprit”. There seems to be no accountability to recognized political processes. Even elected governments give the impression of being impotent in the face of these unseen forces adding to the feeling of being at the mercy of shadows.

Revolutionaries no longer unambiguously know whom to fight.

Corporations are obviously high on the list of both groups; either as heroic propagators of a new and more desirable civil order or as the despicable villains exploiting people and natural resources for barely disguised base motives of one sort or another. Contrary to the general belief that “the left is dead” and therefore arguments seen to be “leftist” irrelevant and no longer an issue, the above cleavage is not one of the traditional “left” or “right” but rather a much more complex and nuanced one. We’ll pick up on this in a coming communication.

Whatever ones view is, though, one conclusion is inescapable; corporations can no longer extract and insulate themselves from the social discourse taking place with the argument that “the business of business is business”. For better or worse, they have become a very significant contributor to the discussions on the problems and their solutions – even if some see corporations as part of the problem and some as part of the solution.

What is true for corporations is equally, if not more, true for VCs. In the interaction between creative ideas and funds, the intermediary can, by the way they act and transact business, be seen as the channel through which local heroes are created worldwide thus assure wider access to interesting ideas or they can be seen as the agent of exploitation who will then end up being marginalized and wasting their time in the global market. We no longer have the luxury of operating in the shadows far from public opinion with a set of rules seemingly insulated from the momentous changes happening in economic structures, and social perceptions and norms. We will touch upon the relative position of funds/liquidity and ideas in a coming communication but suffice it to say here that capital in general, and western origin capital in particular, is no longer king and that makes all the difference in a global world. The fund models of the 1980’s or even the 90’s will no longer suffice and need to be largely modified.

In a real sense, the popular clichés of the world having become “smaller” or that it “is flat” are not only wrong but also very misleading. A century ago competition was the guy next door, entrepreneurs did not have to think or worry about much beyond that. Fifty years ago it was your national competitor; you had to think of the other end of the country but not much beyond. Today even the corner video rental store has to worry about what is happening in India or China. The world we have to keep track of, understand, develop counter-strategies for has become much bigger. And it is not “flat” either in the sense of the uniformity of the competitive space or of its dimensionality. What seems to be very “far” in a flat space can actually be very “near” on a sphere and the shortest distance between where you are and where you want to go may not be a straight line.

This generates the need for a cadre of executives and VC’s who understand the issues from a perspective other than just that of the local corporation or shareholder in the narrow sense; executives who can decrypt the language of the other participants in this discourse and aid in bringing a modicum of clarity to an already complex set of issues. There is a need for corporations and funds to begin reading “weak signals” in the socio-economic environment to be able to recognize emerging patterns and manage perceptions. This is not a matter of “PR” but of a changing economic order in which corporations and fund managers need to organize their “internal” discourse to be able to make a meaningful contribution in the “social” discourse as well as the economic one.

This is also critical from the perspective of the local entrepreneur, the creator of the new IP or business idea. If they happen to fall upon a VC or fund that does not understand “ideas” and how to deal with them except as manifested in a set of Excel projections, if they do not understand the local context in its relation to the global context, if their ability to read the global context is merely a slight extrapolation of the way they read their own local context, then many good ideas will go to waste.

In this emerging world the entrepreneur should not be fooled by “size” or number of affiliates in any potential fund but take a close look at the dominant culture and pay close attention to whether it is organized around liquidity or ideas... that is the acid test….

More coming on this, stay tuned in……

∗ For the time being VC’s seem to be excluded from such debate, but that is only an illusion, as we shall see…

Ahmet Aykaç

Introductory Remarks

2007-12-21T02:58:47-08:00

The dawn of the 21st century will be looked back upon as being a period of enormous emergent change and yet one of unbelievable myopia on the part of contemporaries. A bit like how we tend to look back on the 18th century and ask “how is it that intelligent people could not see what was going on.”

Globalization, irrespective of whether one concentrates on its pro’s or con’s, is challenging the very roots of our established governance systems and the processes that used to legitimize the acquisition and use of power. The roles that corporations used to play, as well those of other social actors such as NGO’s, are getting modified at an accelerating pace. Demographic changes are causing massive structural modifications in the way the (aging) industrial countries operate relative to the (younger) developing ones. Changes in our physical environment are causing a radical rethink of how resources are being used and to what end. The technologies of digitalization and miniaturization, the twin pillars of the information revolution, are playing havoc with known scientific, economic, and social structures. The spatial and temporal nature of work relations are changing dramatically and current technicities are becoming commodities. Industry boundaries have become “fuzzy” and the competitive rules are being redefined even as the game is in play. And the list of “signals” goes on and on…..

Yet many commentators (and most venture funds and investors) look upon all this and insist nothing is really that different than before; that the “dot com” bust “proves” that such a thing as the “new economy” does not exist, that the “business of business is business”, that all that would be required is a bit of financial wizardry, flexibility and speed, and a dash of client relations management. In essence, nothing to worry about, one just has to get the “basics” right, the rest will follow.

At GoldenHorn we believe that this is an extremely shortsighted and erroneous assessment of ongoing events and their implications resulting from a mechanical view of social phenomena. Indeed, under the influence of Newton and the celestial mechanics he enunciated, the image of a “machine” has exerted a seemingly irresistible influence on most areas of the social sciences and in particular the practice of management. This has led to the belief that once the initial state and equations of motion of a system have been determined, its behavior could be predicted and controlled. If there are any deviations from the predicted sequence of causal events (as there seems to be lately), this can only be due to human errors of reasoning or measurement and the cure has to be found in training people to be technically more proficient.

And this is what established views on management, where the “manager-as-technician” paradigm still reigns, seem to insist on doing.

Yet there has been an explosion of research in adjacent fields challenging our understanding of how the brain and neural systems operate, how cognition and emotions interact, how linguistics and semiotics may contribute to our understanding of the world around us, modifying our views on causality and our ability to control complex systems. There is an intellectual cauldron that is bubbling with exciting new developments and mental habits for understanding and “managing” the world around us.

At GoldenHorn all of our activities are infused with this excitement and the prospect of going beyond established norms of thinking in a relevant way.

The role of the VC has become too serious an occupation to be left to people whose major form of action is a knee-jerk, codified, reaction to financial demands. The “hard-nosed” investor of today is the person who can play with ideas as well as bring closure to a debate. A person whose horizon goes far beyond “business” into fields critical to understanding how ideas originate, develop, disseminate. A person who has enormous mental rigor and as such does not get sloppy while meandering through related ideas building on one an other. In short a person who realizes that “the times they are a’changin…”

In a series of commentaries we will share with you our views on these changes, their implications, and what we are doing about them.

Tune in….

Ahmet Aykaç

Companies Defined by Competition

2007-02-18T07:51:17-08:00

To argue that any place will replace the Silicon Valley as the center of technology universe is just a futile exercise. But I believe that more and more success stories will come out of anywhere in the world, and will disrupt the existing winners, the ones in the Silicon Valley.

One common mistake that companies outside of the Silicon Valley do is letting competition define their products.

This tendency has many reasons naturally. There isn't enough support (financial, business connections, etc.) to back up novel ideas and companies. Companies tend to do what everyone else is doing, or better, the bigger guys in the Silicon Valley are doing, just to guarantee to survive.

For example, after YouTube's success, every country got its share of local YouTubes, the copiers. The same was true for eBay as well. YouTube and eBay are known models. It is easy to create applications and websites that imitate them on the surface. And everybody knows that they hit it big. So local versions of them should too, right? I don't think so! It rarely happens that imitators understand the underlying ingredients for a success behind YouTube or eBay. I don't want to get into the details of why eBay or YouTube was successful in this post. However, as an entrepreneur who targets even a local success of a YouTube imitation, he/she needs to bet more than just an imitation of YouTube. He needs to have an original idea that serves the local needs. He needs to create a product regardless of imitation, regardless of competition! He needs to know how to create an original product and an original company at the end.

Let's take another example, a company that is offering enteprise applications such as CRM. Let's say that this fictitous company is competing with the big guys, the usual suspects; Oracle, Microsoft, SAP, etc. etc. Their proposal to their customers is a check list that combines both Oracle's and Microsoft's offerings all united together. The killer part is not only their long list of checklists Oracle, Mircosoft and SAP combined, but also their price tag, which is 1/10 th of the competitors' offerings!

This is just wrong! It is a waste of resources thrown just to stay one step behind of the current winners. There are so many things to do in the enterprise space. It is a land of opportunity. The difficulty of usage of the enterprise applications, the long and difficult processes to get the systems up and running, the price tags, the long trainings needed for users, the neglections of users and user habits, etc. of the competitor offerings don't ring any bells?

The problem is they don't have the courage or the means or the vision (or a combination of all) to not let the competition rule their product and company. This is just a fatal mistake for a startup.

The winners set their own game. They have their own vision. They want to change the world.

What I want to say is, forget the traditional way of doing things. Get out of your obsessions with the features lists of the big guys. Stop letting competition define your products. You have a chance to change the world. It is your turn now. Don't let the competition define you. You try to define the competition, you create one yourself!

Mae Ozkan

Examples of Changing Early Stage Technology Venture Capital Landscape

2007-02-17T12:29:32-08:00

There were two interesting news this week:

The first news was coming from India. Google takes an LP (Limited Partner) approach to two early and seed funds in India and for the first time invests in venture capital funds. My take on this is that Google is willing to catch the ideas early no matter which geography of the world the innovation comes from.

An innovative company such as Google itself, is betting early and seed stage companies and technologies and tools that they will create on geographies outside of the US. I congratulate Google on its vision and act.

The second news was about the successful technology venture vapital firm of Europe. Index Ventures closes its forth fund at more than $400 million and reaching the total capital under management to over $1.3 billion. It is getting exciting in Europe as well.

We will see more and more success stories from all around the world as more capital and interest goes to early stage companies outside of the US. This is just the start of the globalization of early stage venture capital. The results will be innovation and information flowing throughout the world regardless of borders and geographies, democratizing and leveling the field of innovation.

Mae Ozkan

Leveling the Field for Innovation

2007-01-28T09:09:33-08:00

One of the problems with the entrepreneurial environment of the emerging countries is not the lack of ideas, but the lack of tools that help the entrepreneurs to make something out of their ideas and the examples of successful companies.

The scarce resources are finances such as venture capital for early and seed stages, business experience and an open environment, where innovative ideas are fed by each other and talented people are supported by experience and networks.
In emerging countries, all of these important ingredients are lacking. The environment doesn't have finance tools. The environment doesn't support openness. There is no conversation among companies where they encourage each other for more innovation and build on top of each other's ideas. An open environment could easily be supported by rewarding the talented and innovators and encouraging dialogs among them.

The scarce resources are barriers to produce meaningful products and companies from innovative ideas and technologies. The end results are what makes the difference in the world. The consumers don't buy the ideas, but the products. However, the scarcity of tools and opportunities to make the end results and successes from meaningful ideas stay on the way of an entrepreneur.

However, luckily, the world is changing. Some of the ingredients that are needed to turn ideas into products are becoming more available for people all around the world. The result will be leveling the field for innovation and thus, the ideas will worth more and more as the needed ingredients are becoming abundant and commodities.

For example, the Internet has leveled the reach of information for most parts of the world. The open source movement has been a great force in the industry. It has disrupted many companies, while giving opportunities to many entrepreneurs with ideas.

Now, the rise of services such as Amazon’s Simple Storage Service (S3) and Elastic Compute Cloud (EC2) that are cheap alternatives to storage and heavy lifting of Internet applications, will level the playing field. Solving heavy lifting problems will result more time being dedicated to differentiated ideas. The result will be more innovation and smaller market cycles, therefore more opportunities for the ones that have the right alignment, and more threats for the ones that are big, hard to move and lack an understanding of the industry dynamics.

The technology industry is going through a faster chage more than ever. It will change other industries related with it, including the venture capital industry. When the ideas matter, the power of whoever holds bigger chunks of money will be replaced by whoever holds the bigger and better ideas and whoever has the value to add. This exciting change will disrupt many things along with it. These changes will give a chance to the world's best kept secret projects to be secret no more!

Mae Ozkan