This article is a summary of a writing published in the “IlSole24Ore”, Italy’s most important economic daily newspaper. The title of the original version is “Il rientro dei cervelli. In Turchia e Brasile i giovani tornano in patria e fondano start-up” and is accessible here.

Brain gain is a country’s ability to attract the brightest minds. The so-called developing world has suffered a lot from the opposite phenomenon called brain drain. However, the same pattern nowadays appears in developed economies, for instance in Italy. While economies like China, India, Turkey and Brazil can maintain a net inflow of fresh brainpower. Those who previously have emigrated to the West are now returning home.

In Brasil, according to the government, almost 50% of the ex-pats have returned to the country. If their number was 3 million in 2007, now there are less than 2 million Brazilians living abroad. As Brazil plans to invest heavily in infrastructure in the next few years, this could attract many European engineers too. In Turkey, although the government does not publish official data on the numbers, the same tendency has appeared. Not a surprise: while Europe is waning, Turkey’s GDP is growing with a near-Chinese rate of 8.5%.

Zeynep Dagli’s story is typical. He graduated in a British university and worked in the banking world of the City. In 2009 he returned to Turkey to found his own startup, called Momento: it is specialized in gift-boxes and vouchers and this year it is expecting a revenue of 1.7 million dollars. “The trend of youngsters returning home to look for opportunities is growing” – he says.

Ari Bencuya is 28 years old and he was born and raised in Silicon Valley. He moved to his country of origins in 2010 to found a venture capital firm, Inventures which is now investing in seven start-up firms in Istanbul. „We are contributing to the exponential growth of the number and quality of Turkish companies. In a couple of years we will see which Turkish Internet company will have the greatest impact in the international market. It is just a question of time”. Of course this new tendency has spawned some doubt about its sustainability. Although it is a fact that developed markets are losing ground in the fierce competition for the best brains. Italy has decided to provide a tax relief to incentivise the return of its lost brainpower. It remains to be seen whether such moves can help reverse the negative trend.

Il Sole 24 Ore.com

How we got started

Participants of our accelerator courses got used to the casual networking event after the Monday class. So, we said let’s meet during the time where there are no classes. I borrowed the idea from my dear INSEAD friend Julie Meyer who made her first million by launching First Tuesday at the beginning of the dot.com revolution in London.

What is the objective?

First Monday events are supposed to serve as a networking platform, where startup entrepreneurs, wannabees meet business angel, venture capital guys and serial entrepreneurs who typically become entrepreneurial investors themselves. The objective is to create a nucleus of an ecosystem for business creation out of Budapest.

EEF – HVCA

3 years ago, when we started with entrepreneurship programs in Budapest we were laughed at. The environment has dramatically changed since. Pitch competitions are mushrooming, every month a new incubator opens its doors. On and off, we even get a story in the media (as of lately). On the other hand, we see and hear very little about the actors and activities of Venture Capital. Thank God, the new board of HVCA www.hvca.hu, their professional organization is very active in educating the market. So we decided to join forces in this undertaking.

First Monday Feedback for 7 May

“This is the place where you can meet smart and talented people on the first Monday of every month – that is the best summary I heard from one of the non-Hungarian participant. This comment echoes my sentiments.”

“I really like the idea of bringing together young entrepreneurs with investors as during such events they can discuss freely about possible mutual business opportunities”

“Another great mix of new faces and old friends, made some really good new connections”

“This was the best First Monday Event so far. Excellent people, perfect venue and catering. 70 people is great, and I think even 90 would fit.”

“All First Monday events are great – in fact, all EEF events – but this one was especially good for me. I’ve met many familiar and many unfamiliar faces, it was uplifting to connect with old friends and make new ones.”

Our conversation was all about startup ideas, the ups and downs of the entrepreneurs’ lives and so forth. Then all of us headed for different places on this cozy Friday night but before that we all agreed on that next time I’m home we should do this again. Hence the idea of our second liquidity event that took place in MyCorporation‘s bar on a spring Friday evening two weeks ago. Genius loci! (Actually I should have called our little gettogether a reverse liquidity event. If you tell me why, I’ll pay you a beer.) First we had twelve people, nice conversation, couple of topics. Now we were some forty (apart from our regular int’l crew some came all the way from Berlin and Tel Aviv), more exciting discussions, even more topics and connections. Next time… well, I’ll leave the extrapolation up to you!

- men at work -

It has become clear that, given the huge turnout, there was a niche in the Hungarian startup community’s desires up until now – at least when it comes to events. And in order to fill this gap, EEF was there and has decided to expand its programs portfolio. Besides the business casual events there might be a need for more relaxed off-the-record occasions where people just want to have fun and let off the steam at the end of the busy week. Where newcomers, online-discussion-sideliners, sleeping members or young padawans of our steadily growing online community can meet the experienced Jedi knights of entrepreneurship. The startuppers’ underground warmup session where they get together to exchange ideas and have a couple of beers before they leave to the Friday party.  We’ll see where this will eventually evolve.

Seems to me that EEF’s First Mondays would resonate well with quarterly Third Fridays, what do you think? We already have some great venue ideas and we would be happy to test it with you, so come along. See you next time!

-redmond

Panelists: Prezi’s three founding fathers, Ádám Somlai-Fischer, Péter Halacsy, and Péter Árvai, Ustream co-founder Gyula Fehér and Márton Anka of LogMeIn.  In the second half of the event investors have joined the discussion: Christian Lepsen (Sunstone Capital) and Andrew Braccia (Accel).

Prezi’s Founders: Ádám Somlai-Fischer, Péter Árvai, Péter Halacsy

It is tempting to compare the relationship between an investor and an entrepreneur to a marriage: even in a healthy relationship there are conflicts. But if the partners share the same values, it helps to get over situations when they don’t agree. But as all marriages, love has to come by first: how a startup company can appeal to investors? For instance, it needs to have a decent name: Prezi founders funnily revoked a naming conflict, as the product was originally called “Zuiprezi” – which was subsequently changed for the better (not to mention another idea from these ancient times: “Ant and Elephant”). But of course, naming is not everything: “The world is full of tech enthusiasts” – emphasized Somlai, referring to the fact that Prezi has a vast user base and they are all willing to express their ideas and opinions in brand new ways – and their application helps them to do so. In the beginning, what they only had was a “zooming canvas” which potentially could have been used in many other ways (i.e. for mobile phones). But the founders decided to take a different track, thus turning Prezi into the presentation tool of the 21^st century.

Marton Anka, LogMeIn Founder

Does it make any sense to call Prezi or other startups like LogMeIn or Ustream “Hungarian”? Márton Anka said that he thinks of his company, LogMeIn as a primarily US company, as it is listed on NASDAQ. But the general opinion of the panelists was that it does not really matter in today’s globalized economy where a company is actually registered. What matters the most is its competitiveness and readiness to come up with powerful innovations. Péter Árvai added that role models are essential to promote entrepreneurship: Hungary should look at countries of similar size, for example Sweden. Just think of the list of multinational companies that started their successful march in the Scandinavian country: IKEA, Volvo, Ericsson. There is no excuse for small countries, as it is truly possible to build global brands from scratch. Andrew Braccia from Accel expressed his view that Hungary’s strength lies in its educated people, especially in the field of mathematics and science in general. The investor thinks that it is only the level of imagination impeding Hungary’s ascendancy.

Gyula Feher, Ustream Founder

Financing is a crucial issue when starting a company. Márton Anka mentioned that LogMeIn initially had a “tough expansion” – they desperately needed capital. The team relentlessly went from meeting to meeting, pitching their idea to venture capitalists. Strangely, often IT people proved to be superficial when judging the usefulness of their application. Gyula Fehér (Ustream) remembers that he spent the first months with “bootstrapping”, he had all his money in a risky investment. His team faced the challenge which all startup companies need to beat: “raise money or die”. In Silicon Valley they stayed in cheap hotels and pressed in as many meetings as possible to a single day. Altogether Gyula had a positive experience with the people of the Valley: they are very tech savvy and can get easily interested in new ideas. Prezi found its primary investor in a lucky way: they simply got an e-mail from Christian after their debut at an Amsterdam tech show. He actually saw a competitor of Prezi before contacting the Hungarian team, thinking: why not?  They had 5 minutes to introduce the concept. The investor liked what he saw, as he found it very “well packaged”. In Christian’s view a startup must have an easy and distinct way of providing a service and Prezi met this requirement. The other investor on stage, Andrew Braccia emphasized that it was also an important factor that the Prezi guys have already developed the product by themselves.

So what is it, for instance, that Accel is looking at when making an investment decision? They have a globalized practice of focusing on fundamental elements of great entrepreneurs and teams, but it does not really matter where they are from. Christian said that for him it is important to like the team and to build a good relationship with them. “We look at ourselves as partners” – he added, stating that “there is no straight line to success”. Of course, there were some concerns to be settled even with such a great team as that of Prezi as there is always a risk that you make the wrong type of deal at the wrong time. But, according to Andrew it is a common fallacy to believe that  investors control everything in the company. “Once the money is wired in, we’re in!” But also Prezi did due diligence on their would-be investors: they analyzed Accel in and out. What made Peter to opt for Andrew is that he has heard amazing stories about him from other teams they invested in which pushed him towards accepting Accel’s offer.

So what is the ultimate key to success in a startup investment? Christian likes diverse teams, with a multicultural background. In Andrew’s opinion a combination of skill sets that brings value is the most important factor: for a startup it is vital to have nimbleness and speed at the same time. It is a mistake for a team to be laser focused only on one thing, as market changes and competitors could move ahead in the meantime. And first and foremost, he suggests not to take yourself seriously as an investor. Márton Anka added that it is not hard at all to come by good ideas. The question that needs to be answered is rather: what NOT to do!

The company was co-founded by professionals from a Szeged based Hungarian web agency, who wanted to create a scalable product after many years of experience in online marketing solutions. The team started to work on the software in June 2011, applied to EEF’s Venture Accelerator, launched public beta in November. Since then Antavo grew its customer base to ~1,800, and received funding from Seedcamp.

This picture was made in March. Since then we are 7 people!

Antavo is a marketing software for small business, marketers and agencies to build intelligent online promotion applications. It is to increase sales and engage customers. “You can run your promotion application either or your Facebook Page or on your website. We think that the integration with websites is very important, because that’s the point of sales.” says Attila Kecsmar, the CEO of Antavo. “Our public beta has already attracted customers from 90+ countries and it saves each of them circa EUR400 compared to an average market solution. We listen to what they say, and adjust the product accordingly.”

That’s how Antavo Promotion App Builder looks from inside. Marketers like it, because it makes the promotion building process easier.

That’s how Antavo Promotion App Builder looks from inside. Marketers like it, because it makes the promotion building process easier.

Three of the 7 member team moved to London recently because Seedcamp invested in their business after attending a Seedcamp event in Tel Aviv. The goal of their stay in London is to find partners for their international expansion and to raise the next level of financing.

“I became an entrepreneur at the age of 23, and gained a lot of experience working together with my friend and colleague, Gabor Csarnai. Later Zsuzsa Szabo as a non-programmer arrived with her customer-oriented attitude. We attended the Venture Accelerator Course organized by the European Entrepreneurship Foundation in fall 2011, and met Andras Bencsik, who also joined Antavo as a co-founder. The course really took us to the next level. Before, I had never thought about raising capital.” The course introduced them into the world of startups, and gave them great role models to follow – he pointed out.

The fall of 2011 was full of events for Antavo team. Zsuzsi Szabo cofounder is pitching at the final event of the Venture Accelerator course at Corvinus University.

“When we got to know, that we are among the chosen teams who can go to Tel Aviv we couldn’t even believe that. The best-in-Europe mentoring and seed investment program wants to get to know us! Andras and Zsuzsi went to Tel Aviv, they made a great pitch, came back, then we got a call. We were welcome to the Seedcamp family.”

“Antavo targets a growing market with great potential, and their team has the skills to succeed.” – explains Reshma Sohoni, partner at Seedcamp why they invested in Antavo. “We think, they can take advantage of our extensive network and other companies from the Seedcamp family.”

Antavo launches a new promotion builder platform in May this year, which also sheds light on their pricing strategy.

About the Founding Team:
• Attila Kecsmar, CEO, strategy, design, programmer turned to be entrepreneur
• Gabor Csarnai, CTO, a true genius, who has worked alongside Attila for 6 years,
• Zsuzsa Szabo, CMO, customer development, online marketer, former journalist, brought the customer viewpoint into the team.
• Andras Bencsik, CFO, business development, finance, former banker turned to be entrepreneur, joined the team after leading another start-up.

To find more about the team, please visit our website:
http://www.antavo.com/en/company/team

To see Seedcamp’s official announcement, please find there blog post here: http://www.seedcamp.com/2012/05/fromtelavivtotallinn.html

Antavo’s Cruncbase profile: http://www.crunchbase.com/company/antavo
Seedcamps’ Cruncbase profile: http://www.crunchbase.com/company/seedcamp

Please contact Zsuzsi for more information:
Zsuzsi Szabo, co-founder, marketing
PH: +447429816953
EM: zsuzsi@antavo.com
Skype: antavo-promotion

Q: Marton, what is your story?

A: I’ve been a computer-buff since I was 12 years old. I started my professional career as a developer in a small Budapest based IT company. After a couple of years I found working on an ERP system pretty boring, so I joined Michael Simon’s team who were starting a new project: multi-user web-based gaming. This was cutting edge in 1995! We were a very small company at the time, so everyone had to deal with multiple aspects of our business. I developed a server management software after hours because the existing solutions were extremely frustrating. It worked so well that I quit my job and started a business around RemotelyAnywhere in 1998. We quickly ramped up to $1m in annual sales, but I found the business aspects of running a company frustrating and alien. So I invited my former boss Michael from Uproar to join me. Uproar had been acquired by Vivendi by that time, so he decided to accept. We built a strong team, many key players, engineers, sales & marketing used to work for Uproar.

Q: How was LogMeIn born?

A: In 2003 we wanted to raise the number of potential users so we changed our target customers from IT people to home & office users. The business model was changed as well: we combined the nascent freemium model with software-as-a-service. Our peer-to-peer technology made it possible to offer a high-performance service at a very low cost. Thus, a new remote access application was born: LogMeIn.

Q: How did you get funded?

A: As our team has become bigger, we decided to raise some capital, but it seemed to be extremely difficult in the days after the dotcom bubble burst in 2002. I could finance myself at the beginning when I was working from home, but we had to cover the costs of the 11 member team. Finally 3TS Capital decided to join in with $10 m, but they stipulated that we needed to bring in VCs from US, too. And so we flew to the US and convinced Prism VentureWorks and Integral Capital to join in. In round B we raised another $10m from Polaris Ventures, and round C was a strategic investment of Intel. We could be any time cash-flow positive, but our VCs were very happy when we made our IPO in 2009.

Q: What are your greatest challenges?

A: We deliver products that combine simplicity & ease of use with a lot of invisible technology. One of our greatest challenges right now is finding the very best engineers to grow the team in Budapest. We put a lot of work behind Cubby, our latest product, currently in invitation-only beta. This product competes with products like Google Drive, Dropbox, Skydrive and iCloud.

Q: What is your message for entrepreneurs in Budapest and CEE?

A: My message to entrepreneurs and potential founders in Budapest would be: do not fear failure! This attitude is quite common in Europe, but I was pleasantly surprised to see that in America people are culturally less sensitive to cynicism. It’s great to see startups like Prezi emerge from Budapest, but we need many more like them. Funding is easy to come by these days, there’s no reason not to take a chance with a great idea.

Q: Facts & Figures

A: We have 500+ employees, our development headquarters are in Budapest, Szeged, and a small team in London. Our headquarters are in Boston. Over 200 people work for LogMeIn in Hungary. In 2012 estimated revenue will be around $140m and we will pay approx. HUF 1-1.5bn in taxes to the Hungarian state. Our estimated growth rate is 20% and we have 1.4 m paying users. LogMeIn’s software has been installed on over 200m computers so far.

In need of motivation? Read the Prezi story on Financial Times. Who’s next in line to follow? It cannot be emphasized enough times that instead of burning cars and smashing shop windows, it is entrepreneurship that can drag waning Europe out of quagmire – as some clever Greeks have already understood. But firstly, there is much work to be done to remove the stigma of entrepreneurship in the Central-Eastern European region, as a Bulgarian post suggests: “Over the last 20-plus years since the fall of the Berlin Wall, there is a large segment of Central European society that still looks at business with a jaundiced eye” – and we could not agree more! Another article of Guardian argues that well established companies should hear the voice of those with an innovative mind that catalyzes change, otherwise they are doomed to failure: “It’s an exciting time to be a young changemaker, as today there are no excuses not to push to create a better world”. Have a good reading!

Prezi: best thing since the biro? – Financial Times, May 3, 2012

Amid the constant political double-talk, the seemingly incessant new and confusing taxes and the background chatter of who is stabbing whom in the corporate back, it’s a pleasant change for beyondbrics to be able to report on a successful – indeed happy – business start-up story in Hungary. The start-up is Prezi. A few years back, Adam Somlai-Fischer, its co-founder, was asked to give some university lectures on art. He wrote his own software to help reach his listeners as he wanted – flexibly, effectively and with a bit of fun thrown in.

 Entrepreneurial Tightrope: Put some energy behind your ideas – USA Today, May 2, 2012

I often speak and write about how important it is to let your creative juices flow to start and grow a business. And every once in a while I happen upon folks who actually put that concept to the test and can serve as an example of what can happen when the creative imagination is unleashed. A couple months ago my 10 year-old niece called to see if I could help her with how to write a short story. I thought it would be easy to search the Internet for a possible website that would give a quick list of the elements needed to craft a story.

Why organisations must respond to those making the case for change – The Guardian, May 1, 2012

When Greg Smith resigned from Goldman Sachs last month, he said: “I knew it was time to leave when I realised I could no longer look students in the eye and tell them what a great place this was to work.” The judgement of students, the source of future talent, was the yardstick by which Smith judged the values and the value of his former employer. In this Smith confirmed the results of Ashoka UK’s research into the expectations of young people with regards to future employment and the ways these opportunities are evaluated.

Venture Capital Investment Continues To Fall In Europe – MarketWatch, April 30, 2012

During the first quarter of 2012, the drop in venture capital deal activity for European companies was slight compared to the sharp drop in the amount of capital invested over the same period last year, according to Dow Jones VentureSource. Venture-backed companies based in Europe raised euro 762 million for 241 deals, a 41% decline in capital raised and a 7% decline in deals over the same period in 2011. The first quarter’s deal figure of 241 matches the fourth quarter of last year as the weakest since VentureSource began tracking the region in 2000.

 The stigma of entrepreneurship in Central Europe – The Sofia Echo, April 27, 2012

I returned a few days ago from Silicon Valley. It was like a breath of fresh air. I talked to people who were involved in creating companies with hundreds of millions of dollars of value, within a few years after incorporation. There is a constant stream of new start-ups and projects, an excitement in the air. A recently incorporated company was sold to Google for a billion dollars. And it got me thinking about how entrepreneurship is viewed so differently in Central Europe compared to the United States.

Greek Start-ups? Nope, That’s Not an Oxymoron – Inc., April 26, 2012

It’s not only the U.S. that has start-up fever. Europe has caught the bug too. And as entrepreneurial ambitions seized the continent from Estonia to England, they also took hold in Greece. Only problem: the country was soon rocked by an economic crisis of epic proportions. But that didn’t eradicate the dreams of the country’s small but dynamic entrepreneurial community. Take the second annual Startup Live Athens coming up in June, for example. The event combines elements of a pitching competition and a networking gathering to help nurture the Greek start-up scene.

Inside Harvard B-school’s startup boot camp – Fortune, April 24, 2012

Earlier this year, a team of six Harvard Business School MBA students was brainstorming ideas for a new startup business. They came up with a peculiar takeoff on all the online dating sites: a Facebook application for Jewish mothers to set their children up with potential marriage material. When the team shared the idea with fellow students, they heard nothing but skepticism. “They said there were a lot of barriers to entry,” recalls Jyll Saskin, 24, one of the team members. “Others said they didn’t think the market would be that big for it.”

While we know that in most of the cases this is just a bullshit way of saying that people didn’t keep promises, didn’t get along, new interests emerged that and the new guy was in the way etc., sometimes this really is the reason why the new CEO leaves….and when this happens, it raises the following question:

How did the board decide exactly by this CEO?

Truth is in most cases the board doesn’t have a solid case for selection. Considering experiences, track records and chemistry is not enough; even ideas about strategy are not enough: how can the board decide if these ideas are good? Based on what?
The board MUST have a CONCEPT based on which a strategy maybe built before they start talking to candidates.

This concept should be discussed with the candidate who -if he’s good- can credibly add to it, modify it, etc. If the board hires the candidate, he’d present a strategy that complies with the concept and the board can approve it, or -if it’s a well functioning board- credibly add to it, modify it, etc.

Alternatively the candidate(s) must bring the concept which the board must approve!

In lack of this, the typical schema goes something like this:
“can you increase profitability by 20% in the next 3 years?” “yes!” “how?”
“I see chances of reducing operational costs by introducing the following best practices and to increase revenues by cross selling, better marketing, expanding into new markets, etc.”
The schema is basically kept on the level of cliches which means communications is meaningless, which in turn means nobody knows anything. Not the board, not the CEO, not the staff, not the shareholders and certainly not the management team which in cases like this starts jumping ship (starting with the best ones of course). The recent examples of this failure need no introduction: Yahoo, RIM, Nokia, HP.

Hiring like this is highly irresponsible!

Sure: in some industries it’s more difficult to come up with such a concept than in others. Being a 3rd tier supplier in automotive manufacturing SEEMINGLY leaves much less room for new/improved concepts that could serve as a base for strategy than in industries that cry out for new concepts, like technology or media for example.

The common denominator across ALL industries is that only a handful of players have a concept, the rest operates on cliches… like the forgettable headlines they produce.

Neulogy and the European Entrepreneurship Foundation hosted a premiere of an award-winning documentary Something Ventured, which kicked off a series of events and activities related to the this year’s second round of Startup Awards.SK.

Opened by Neulogy Chairman Ivan Štefunko, the screening was followed by a Q&A session led by Peter Zaboji and Imre Hild, both successful entrepreneurs and venture capitalists based in Budapest.

The networking session was abuzz with conversations about Slovak startups and venture capital and was made all the more lively thanks to attendance of Nicereply.com, last year’s Startup Awards.SK winners and fresh graduates of the Slovak start-up development program.