And the Winner of Startup Weekend Akureyri is...

Drum roll... Entrepreneurship! Yes, the winner over the weekend is the concept of Entrepreneurship. It was exciting to see over 100 people working on a problem, listening to feedback and presenting their ideas and getting recognized for their effort. As much as I like the idea of people getting recognition for their ideas, Ideas do not equate to launching a business. I have written about "Startup Ideas - Why ideas are not the problem". There were 19 teams that presented their ideas. The companies that I thought really created a business over the weekend were:

Video taken from previous Startup Weekend Events in Iceland

• Campalo.com and Campalo.is - a booking and reservation application over the web for Camp sites around iceland
• Disulistar.is - a hyper local curated list of things for everything from Top 5 restaurants for business meetings in Reykjavik to Task list to do press release. You pay a small fee for not having to spend the time to research the list yourself

Of course both of these companies did not win the award because their idea was not revolutionary or "cool" but both of these probably will be able to build a sustainable business. I think the other ideas and teams need to be recognized as well. Here is the link to a slideshow of pictures from my Twitter stream.

1. Whale Buddy - A Multilingual App for Smart Phones that enables a better experience for tourists on a Whale watching tour
2. Life Line - Making the rescue suits and life jackets fitted with GPS device, Nano technology and Diode lights to enable finding the missing persons at sea.
3. Viral Trade - An online market place for digital goods used in online games
4. Tannstra - A toothpick made from Icelandic straw
5. Active Site - A photo market for pictures taken underwater off the coast of Akureyri, I guess it could be applied for any all underwater pictures.

There were 12 more companies, I have to admit did not find them very interesting that is probably because of my lack of understanding of Icelandic. 

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Entrepreneurial Density - Startup Weekend Akureyri

I jumped in a car with bunch of Entrepreneurs yesterday and drove to Akureyri. I am participating in the Startup Weekend in Akureyri. This is the 8th Startup Weekend run by Innovit, Kristján Freyr Kristjánsson, the CEO of Innovit and I have been talking and working through a number of things including the Conference in May Startup Iceland - Building Sustainable Startup Ecosystem. I wanted to volunteer and observe this event and also to test my own hypothesis.

Brad Feld, has the theory that there needs to be Entrepreneurial Density in a community to enable a sustainable startup ecosystem to form and function:
Entrepreneurial density = ((# entrepreneurs + # people working for startups or high growth companies)) / adult population

I wanted to test the Entrepreneurial Density in Akureyri, which is a smaller town than Reykjavik. There were more than 100 people last night split up into 31 teams working on a new idea to launch a business over the weekend. I will play the role of mentor and observer today and tomorrow. It is fascinating to see the energy, enthusiasm and twinkle in the eyes of the people working on their ideas. Entrepreneurism is alive and well in Iceland. I think the number might be small, but I am seeing a healthy trend that is pushing the density number up in Iceland.

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Valuation of a startup - the holy grail?

I have been getting a lot of questions related to How does one value Startups. The best reference for valuation goes all the way to Warren Buffet's teacher Benjamin Graham and his classic book Security Analysis, I believe the principles taught in those books are timeless ie. they don't fundamentally change what does change is our perception of value. More recently, Aswath Damodaran's work on Valuation is quite impressive and it is used by many professionals. He actually has most of his work available online. Value is such a fluid word, what is valuable to a startup when it is getting out of the door is not as valuable when it is looking into the abyss of the valley of death. I have written about the challenges in valuing startups and the uncertainty that always stares at you when you want to do this exercise. I personally think this is the reason Banks or Warren Buffet do not want to even look at startups because they don't understand the challenges of running a company that is creating value in an uncertain market climate. In some cases they actually create a market, it hard to calculate the size, market penetration etc.


I have been a student of looking at many of the prominent Venture Capital Investors like Fred Wilson, Brad Feld and Mark Suster, who share their thoughts and methods since I have become interested in investing in startups. Here is a list of blog posts that Fred wrote on Valuation, I have listed them in the order that I thought was relevant to me:

1. AVC.com : The Present Value of Future Cash Flows To all those Python hackers out there here is a link to code that was shared with everyone on this post by Chris Dixon. The code actually simulates equity payout values with anti-dilution preference etc, I have gone back to my roots of looking at code to learn a concept. I don't prescribe it to everyone but works for me. If you have Python installed give it a twirl, I love this way of looking at valuation.
2. AVC.com: Determining Valuation Multiples, there is a link in the article that goes back to a Internet Market place business valuation. I recommend that as well to be considered. In the comments section there is a reference to the baseline data published by Damodaran is also very useful. Check it out here
3. Brad Feld's post on valuation
4. Mark Suster's post on Want to know How VC's Calculate Valuation Differently than the founders

Considering the above 4 posts and the links they refer to and using the basis of valuing any asset from the classic method one can develop a model. We have developed that model, no it is not in a shape that I can share, when I have time will make it available in this blog.

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Startup Communities - My open letter to Brad Feld

Image by TEDxBoulder via Flickr

Brad Feld one of my virtual mentors has embarked on a journey to write a book with the following working title: "Startup Communities: Creating A Great Entrepreneurial Ecosystem In Your City". In typical Brad style he has created a new Blog that documents the journey and has asked his community of followers to participate and share a story on the topic. I believe Iceland can be a fantastic story, but usually when one tells a story we need to have a beginning, the plot, the drama and a hopefully a happy ending. I think the journey in Iceland is still in the beginning stage. I have written the following open letter to him: 


Dear Brad,


I am really excited and inspired by your passion to build communities around startups and entrepreneurship. I agree with you that great startups can be built from any community and it does not have to be in Silicon Valley. I think I have a story to tell about how Iceland rose from the ashes of the biggest financial collapse of a western country because of its startup community. The story does not have a happy ending yet and I hope it does not have one, as we have just begun and we want it to continue through the generations.


The beginning
The collapse of Iceland after the financial crisis in 2008 is well document. Iceland is a small country and I moved from the US to work for one of the banks in 2006. I was fascinated by the energy, ingenuity and innovative nature of Icelanders. In addition, I was impressed by how much a country of 300,000 people could build in a relatively short period of time. The financial collapse has resurrected the entrepreneurial spirit of Icelanders as before the collapse everyone and their mother wanted to work for one of the banks or  financial companies in Iceland.


The story so far

Since the collapse a number of things have happened that I believe are the right ingredients to make a startup culture and community. We for the first time in our lives had to think about what are we going to focus on? and the jury is still out on that question but we got the time to think about where we are and what we wanted to do. I decided that I wanted to do something worthwhile and create real value. I convinced some of my family and friends into starting a company that invested in Startups in Iceland. We have invested in a team of incredibly talented individuals, the company is called Clara they are building a text analytics platform that helps everyone understand their communities. They are focusing on the Gaming communities now but we believe it can be applied to any community. 

I have met many passionate entrepreneurs and startup companies in Reykjavik and I am incredibly excited at the wide range of problems that are being solved by this grass root group. I have cataloged over 165 innovative companies, more getting started everyday and more than 80% of those were started in the last decade. After meeting, talking and working with this group I have come to the conclusion that the community exists, it is buzzing, but it is disorganized. I plan to bring them together by starting an incubator built using the Techstars affiliate program and a VC fund. I think this will bring mentors, entrepreneurs, investors and capital together and that is what is needed to build an ecosystem.

2012 and beyond

I have been blogging extensively about my vision and strategies through my blog http://startupiceland.com and I am in the most excruciatingly painful stage of my own entrepreneurial journey, yes you guessed it right I am raising funds to kick off the plan. 

The startup ecosystem in Iceland does have some support from the Government run grant programs, a venture fund and a growth fund. However we could do with some favorable policies, I plan to lobby with the Government on that. What I believe is lacking is also private individuals and enterprises actively investing time, effort and resource in the ecosystem. I am confident that we will solve this problem. I can write and talk about this forever, but I will stop now. I would like to personally invite you and Amy to visit Iceland, it was one of the Top 10 destinations for 2012.

It would be great to have your thoughts and ideas contributing to our journey here in Iceland. 

Regards,

Bala

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