Why do startups most often fail and how can you avoid it? Why should rapid global growth be the key goal that only two Slovenian unicorns managed to achieve so far? How can startups collaborate with big companies and where is more and more capital hiding for them? We revealed all this and more last week at the Forum 100 % Start-up, where we once again filled up the big lecture hall of Technology Park Ljubljana with more than 130 participants. We also announced the new round of the Start:up Slovenia competition with P2 and financing with Slovene Enterprise Fund’s products SK75 and SK200. And don’t forget, application deadlines for pre-selection procedures are 5 April (for the competition and P2) and 12 April (for SK75 and SK200).
The event started with the opening speeches of the host and co-leading partner of the Initiative Start:up Slovenia, Iztok Lesjak, MSc, from Technology Park Ljubljana, and dr. Sabina Koleša, Director General of the Directorate for Entrepreneurship, Competitiveness and Technology of the Ministry of Economic Development and Technology. Afterwards, Maja Tomanič Vidovič, MSc, general manager of the Slovene Enterprise Fund (SEF) and her co-workers presented all programmes available to startups in 2016.
A bit less than 5 million EUR available this year
Once again, products P2, SK75 and SK200 are adapted to individual development stages of startup companies, which have a bit less than 5 million EUR at their disposal. Tenders will be posted on Slovene Enterprise Fund’s website and in the official journal in April, but the deadlines for pre-selection procedures are fast approaching: 5 April 2016 for P2, and 12 April for SK75 and SK200.
If a startup goes from one product to the other, it can obtain as much as 329,000 EUR of favourable financial incentives of the Slovene Enterprise Fund in a period of four years, emphasized the representatives of the Fund. In the photo are (from left to right): Manfred Lepej (SPS), Iztok Lesjak (TPLJ), Maja Tomanič Vidovič (SPS) and Sabina Koleša (MGRT)
10 fatal traps awaiting startups
Aleš Špetič, our known startup mentor and hard-bitten entrepreneur (Koto, ex CubeSensors), warned us about the ten fatal traps that startups most often get caught in during the first years of doing business. He based his warning on numbers and research, as well as told us what percentage of companies actually fail because of it:
- The market doesn’t need the product (42 %)
- The company runs out of money (29 %)
- Mistakes in forming the team (23 %)
- Better and faster competitors (19 %)
- Inability to make sufficient income or margin (18 %)
- Bad product quality (17 %)
- Wrong business model (17 %)
- Not considering the needs, problems or feedback of the customers (14 %)
- Bad marketing (14 %)
- Unsuitable timing of entering the market (13 %)
“A startup is a serious business, not a hobby! It’s a company that doesn’t have any money at the beginning, and thank god that we have a country that gives you some. Take advantage of this, don’t waste it,” said Aleš Špetič to Forum’s participants.
And top 10 solutions for avoiding fatal traps
The gathered crowd listened to Špetič as he gave some more honest advice that he shelled out of his long years of startup and mentor experience. They will help you avoid the above-listed traps:- Startups are a serious business, not your hobby. You invest into a hobby to feel good, but you invest into a company to make profit.
- Be careful when forming the team. Prepare a “prenuptial” agreement, with which you make arrangements for how you will fight or break up
- It takes as little as four months for you to figure out whether the business will succeed or not. If it won’t, sit down for a beer and break up according to the prenuptial agreement.
- The product always lacks something and that’s the disease of every engineer. But you do have to finish it before you run out of money.
- The dilemma lies between the right choices and the fast ones. Speed is of the essence, so make a wrong decision rather than no decision.
- Too much planning! You simply can’t have everything planned, some uncertainty will always stay. But always plan how much money you’ll spend.
- Don’t make excuses how about “we’re specific, this is a little different with us”. Don’t reinvent the wheel, and take into account the experiences of those who made the same mistakes before you.
- Even the best product doesn’t win on the market and it doesn’t sell all by itself! Don’t neglect the importance of sales and good marketing.
- Work culture: if you work 16 hours a day for one year, this isn’t biologically endurable. You have to work following common sense, the intensity can last for a month or two but in the long run, it leads to bad results.
- Goals are important, not how you’ll get to them. This is why even popular work methods, like lean, scrum etc., aren’t more important than the goal that you must achieve.
Why did Facebook make it?
Dr Aleš Pustovrh from the ABC Accelerator spoke to the participants about the advantages of entering their accelerator programmes. On the example of Facebook, he clearly illustrated why the success of a startup equals the speed of movement and the amount of learning.“Until Facebook was used by a billion people, they focused exclusively on user acquisition. Only then did they start thinking about creating income,” was how Aleš Pustovrh highlighted the importance of accelerated growth.
Facebook also succeeded because they understood their weaknesses and surrounded themselves with experts who helped them, while they themselves stayed focused on rapid growth. They also had excellent marketing which they built on exclusivity and recommendations.
Outfit7 and Lyst – the only Slovenian unicorns
“Such accelerated growth can be achieved in a couple of years, and we have two examples in Slovenia – Outfit7 and Lyst – that managed to do it. These are Slovenian unicorns and our goal is to help our members reach such exponential growth,” added Pustovrh.Big companies are looking for ways to be different
“Why does a big company, like Celeia Dairy, collaborate with a small startup?” is how Matej Golob, startup mentor and established Slovenian lean startup consultant, challenged Žiga Drev, co-founder of the Prospeh startup. “Because they were looking for ways to be different from all other big producers and the competition in the dairy processing industry,” explained Drev, whose team takes care of the development and sales of Origin Trail, the web platform for tracking food origin, and soon also the Foodko platform.“Differentiating factors with which big companies wish to gain advantage over their competitors today are based on IT or web and mobile solutions. So become their development partners and thus increase your chances for success, same as Origin Trail or Prospeh did for Celeia Dairy,” is how Matej Golob (right) summarized his advice for Forum participants.
Technology Park Ljubljana is a bridge between the big and the small
As the event went on, Domen Bole from Technology Park Ljubljana also presented the programme of connecting startups with big established companies.“The technology park works like a bridge between the big ones and the small ones. Based on their needs, we connect big companies with available technologies, especially those in health, green technologies and IoT,” explained Domen Bole.
Where to get capital?
Forum 100% Start-up was concluded with Urban Lapajne, organization leader of the Initiative Start:up Slovenia, who presented all opportunities for getting an investment, such as the PODIM Conference and PODIM Challenge, Pioneers Challenge and COINVEST. Urban also introduced the pre-selection procedures for all three products from the Slovene Enterprise Fund – P2, SK75 and SK200, as well as invited participants to send their questions regarding applications and contract conditions to FAQ@startup.si.
