startups

A country is hit by the entrepreneurial bug and start-up culture

jamaica startup women

Guest post by Susana Garcia-Robles (@RoblesSusanaro)

September 9th:  Arriving at my destination to speak at a Venture Capital conference sponsored by a local government agency.

September 10th and 12th: Attending the inauguration of the country’s Start-Up program and meeting the women behind that initiative and Startup Weekend. Listening to the manager of a prestigious private sector incubator. 

September 11th and 12th: Meeting tech entrepreneurs and participating in pitch events showcasing the winners of two local pitch competitions— one run by a local university, the other  a National Business Model competition spearheaded by a US fund manager who visited this country last year, fell in love with it, and has supported different entrepreneurial activities since.

September 12th: Meeting with a woman who runs mentorship programs for entrepreneurs. Meeting with potential  investors in VC/PE funds. Meeting with regulators.

Can you guess where in the world I am? If you are thinking Silicon Valley, Israel, or Brazil, you’re wrong. 

I’m in Kingston, Jamaica.  And I’m witnessing history in the making.

When I started working with the public and private sectors in developing entrepreneurial ecosystems in Latin America and the Caribbean more than 16 years ago, the world –in spite of the Internet boom – was a very different world than the one we live in today. We were beginning to experience the power of the Internet. Globalization was an issue discussed at an academic level. In Europe, the Euro had not been implemented yet. The region was not an investors’ destination, and there were subjects pending to be taken care of before we could be considered as a region with potential: poverty, economic crises, corruption, weak institutions, and lack of innovation better described us then.

Fast forward to 2014. The region has improved dramatically: many people who belonged to the Base of the Pyramid are now entering the middle class. No global or regional crisis has originated in the region  in a long time and better yet, we showed resilience during the last global crisis. Democracy is established at large. Globalization, coupled with access to technology, has shortened geographic distances, making access to information and knowledge available all over the world. 

Add to this mix the benefits of many countries having a young growing population known as the Millennials. They were born and live in a world where technology allows them to reach out to anyone they want, learn and work in informal settings, and be informed of what’s going on in the world as events unfold. Most importantly, they have developed a sense of belonging to a global community where they can work together in teams.

And this is what’s happening today in Jamaica. The  entrepreneurial bug has infected this country  and there is no cure for this.

I have met these Jamaican entrepreneurs and they resemble any other entrepreneur from any country that has a well-established VC industry. They are full of drive, trying out their ideas to make them into viable business models that can attract financing.  Angel investors, incubators, accelerators, MVP, pivoting the model, are part of their daily lexicon.

Together with many actors that come from different sectors of the country, the MIF is helping this ecosystem thrive: establishing a culture where risk of failure is accepted as part of the innovation and start-up creation process (fail fast, learn from your mistake, get up and move on to try again!), where being an entrepreneur does not mean having lost your job and not yet found your next one, but a life choice.

So…  yes, there is a Start-Up Jamaica, a Startup Weekend Jamaica, a Branson Centre of Entrepreneurship, a Jamaica LAB. And entrepreneurs are running start-up companies like Herboo, DocuJam, and Regal Farms Ltd.

Best of all, the Jamaican entrepreneurial movement and early-stage industry seem to have a greater participation of women than in other countries like the US or Brazil. Women are running the Start-Up programs and incubators, and start-up teams have women founders!

The future is bright for this island committed to fostering innovation from both government agencies and the private sector. At the MIF, we are working on a project with the Development Bank of Jamaica to strengthen this growing ecosystem for venture capital.

Meanwhile, major players in the Jamaican economy are getting involved as well. Jamaica’s largest bank, National Commercial Bank (NCB), and the Jamaica National Building Society (JN) are the companies behind Start-Up Jamaica, the cellular company LIME helped establish the infrastructure for Start-Up Jamaica’s awesome space. 

Have you seen signs of the entrepreneurial bug in Jamaica? And where do you think it will be seen next? 

5 Bad Excuses Not To Start a Business

entrepreneur startups

Lame reasons to give up before you even start

I often hear people claim to have good ideas for a business, but say they can’t pursue them for one reason or another. Some of course are valid, but others are misconceptions that deserve to be revisited. Here are the top five from my experience.

1. I don’t have the business skills

Not having business experience is not necessarily a problem. There are several ways for a person with a good idea for a product or service to develop it into a business, regardless of his/her background. First, you can look for a business savvy co-founder, someone you trust and that can take the lead on the business side while you focus on developing your product. Second, you can look for structured initiatives that support startups through mentorship and guidance, such as business incubators and institutional programs, like I-Corps and others. Third, you may join an accelerator, like Y-Combinator, TechStars and dozens of others, where mentorship and funding come hand-in-hand. (However, as I point out in another post, you do have to bring something to the table other than just an idea.)

2. I don’t have the technical skills

This is the other extreme to the excuse above: not having the technical skills to develop your product or concept. This is even less of a problem because, if you have the business skills and can articulate the commercial value of your idea, finding engineers or coders to build a prototype or MVP should not be so hard. You might engage them by offering equity (even bringing someone in as co-founder and potential future CTO), royalty payments, or raising a little seed capital to pay consulting fees. You can also explore partnerships with universities and other research centers. If you got something big and present yourself properly, finding the right resources to build your product should not be a deterrent. (Note: In my companies we have built software and websites without previously knowing much about coding – we simply mobilized the right resources).

3. I don’t have the time

Well, you don’t have to immediately quit your job or drop out of school to launch your startup. Most entrepreneurs begin to develop their ideas working a few hours at night and on weekends. If you are really passionate about your idea, you can certainly put on 30+ hours a week even if you are working full-time or going to school. You can also involve people who would put a few hours of their own. After 6-12 months in this “part-time” fashion, you should be able to at least reach a point where you can make an educated decision about betting the next couple of years full-time on it.

4. I don’t have the money

Raising funds for early stage is certainly not easy. But nowadays, building a prototype or MVP is much cheaper than it used to be, so funding needs are much lower on average than say 10+ years ago. There are several free or cheap tools for building products (open source software, Wix.com and others for websites, 3D printers for hardware, CrowdSpring and the like for design etc.) and marketing them (Salesforce, Facebook pages, blogs etc). Similarly, funding has become a bit easier with tools like Angel.co, that match angel investors with entrepreneurs, crowdfunding websites like Kickstarter, and the angel clubs and networks that sprout all over the place. Also, don’t be shy to approach family and friends for seed capital or loans, they will likely appreciate your efforts (as long as you are transparent about the risks). Finally, you may be able to get a lot done without any funding at all, just by bootstrapping and involving the right partners, who would work for equity or success-based returns.

5. I don’t have connections (nobody knows me)

Today it is easier than ever to make your voice heard and connect with people. Even if you don’t know anyone in the industry and don’t have a track record to show for, if you build something that people care about, you will be able to reach the right persons. Check your LinkedIn connections (if you don’t have a LinkedIn account, get one yesterday!) and see if anyone in your network (2nd and 3rd levels included) knows a person you need to reach: ask for an intro. Sign up for all relevant Facebook/LinkedIn groups and take part in discussions. Participate in industry events, meet people, shake hands, network. Cold-call if you have to, just make sure you do it with taste. Start blogging/tweeting about your product or industry. In other words, if you don’t have connections, just make them.

If you believe you have a winning business proposition, as well as the drive and guts to pursue it, none of the issues above should deter you from going for it!

See also Time To Start A Business – Or Not. Picture: ThinkingForward (Tumblr).

Are you sitting on a good business idea? Leave us a comment!

Copycat Businesses Can Be Great

innovation copycat business

Innovation is relative, originality overrated

Innovation is one of the sexiest words in the business vocabulary. However, originality can be overrated, especially when it comes to the opportunity of bringing a proven business concept to a new market. The world is full of examples of copycat business models that were successfully replicated in new countries.

The Chinese watched the successes of Amazon and eBay and launched Alibaba, which today has higher revenues than both U.S. firms combined. Indians followed suit with e-commerce Flipkart. Brazil’s Peixe Urbano, in turn, mirrored itself on e-coupon websites like Groupon and LivingSocial. Pretty much every country or region in the world has its own travel booking website, inspired by Expedia and Travelocity. And on and on we go.

The main benefits of copycat business models

The first benefit of being a copycat is the fact that the business model you are implementing has already been proven elsewhere. Of course, this doesn’t mean it will be a hit in your country, but at the very least you can incorporate several lessons before developing the product and launching the business. The risk therefore is considerably lower than that of an outright innovation, with no benchmarks to fall on. In fact, lessons learned can be applied not only at entry, but also from the moves and mistakes your reference company makes along the way, for it will always be a few years ahead of you. You benefit from the best of both worlds: innovation (at least in your target market) and proof of concept/benchmarking.

Second, pitching the business to investors and potential partners is easier than with other startups. What’s not to understand when you tell someone you want to start “Colombia’s SalesForce” or  “Turkey’s Paypal”? Investors quickly relate to your idea and can tell you if they like it or not. This may seem trivial, but it comes in handy when you are dealing with people who are used to listening to dozens of business ideas every week.

Third, copycats have the privilege to be born with a potential exit strategy already in place. If you are Turkey’s equivalent of Paypal, and market conditions are favorable, you can always approach PayPal for an acquisition or at least a partnership. Of course there’s no guarantee of that happening, and they may decide to compete instead, but the path is clearer than for many startups. In fact, copycats are often approached by their inspirers wanting to expand into new markets through strategic acquisitions.

Challenges with copycat companies

Nevertheless, there are a few particular challenges associated with copycats. Barriers to entry for replicated business models are by definition low and you usually have no IP edge. The innovation doesn’t belong to you and, unless there is some sort of local IP protection (rare), anyone with the same idea and resources can jump in. As an example, after the first couple of crowdfunding websites emerged in Brazil, dozens followed suit, ironically “crowding” the market. The only things that keep you on top are first-mover advantage, fast market-share growth, good marketing and continuing innovation.

Also, adapting the business model to a new market can be tricky. Country and cultural differences have to be taken into consideration. For instance, in certain regions of the world, you can’t really launch a peer-to-peer lending website because charging interest from peers is not considered a socially acceptable practice. Also, trusting strangers in web2.0-type interactions may not be something that the local meme supports (yet).

Macro role of copycatting

At the macro level, copycatting plays an important role in technology transfer, from developed markets to developing ones. New solutions and businesses are internationalized at fast pace and relatively low risk, benefiting the economy by fostering local innovation, creating complementary businesses and generating jobs. It is also one of the best ways for budding entrepreneurs in less mature markets to learn from more experienced ones. A copycat venture is a great first gig for an entrepreneur. And, who knows, we may get to a point where increasingly we shall see Silicon Valley startups copying innovations from Brazil, India and other developing markets.

See also An idea Is Just That. Image: Brad Jonas for Pando.

What’s your favorite copycat business? Leave us a comment!

Not All Angel Investors Are From Heaven

angel investor

On Angel Investors

As entrepreneurs, in the initial stages of the startup, we often think that the answers to our problems will come in the form of an angel investor. By definition, angels are high-net-worth individuals who get involved early in the company’s life, bringing capital, sector knowledge and network, and relevant expertise.

Angel investors usually invest anywhere between $20k-$300k and take on 10-30% ownership. They spend some of their time coaching entrepreneurs, opening doors, helping the company build the team and product, participating in strategic decisions.

Not all angel investors are the same

However, not all angel investors are the same. Reality has “expanded” the definition of an angel and many times what we see is well-off folks with no particular value-add (beyond the dough) playing the angel role almost as hobby. This is particularly true in less developed markets, such as Brazil (which I know from experience) and the rest of LatAm. Being rich and successful doesn’t necessarily make someone a good angel.

As an example, a retired C-level executive from a large pharmaceutical company may easily have a couple of hundred thousand dollars to spare and decide to invest in a startup. Why not help a couple of smart kids with a brilliant idea for a new technology or web business? What better way to stay busy and motivated!

The problem is that often these investors often have no idea what they are getting into. They just don’t know the real challenges and risks of starting a company. As time goes by, the product doesn’t launch as planned, the bank account gets thinner, and the investor gets nervous.

Entrepreneurs also get frustrated because they had expected miracles from this angel. After all, he is the older, successful mentor, who’s been there, done it all.

But it turns out the guy you looked up to actually doesn’t know much more than you when it comes to building a tech company from the ground. His rolodex only has contacts of retired people from irrelevant sectors. And as he sees his investment going down the drain, he doesn’t think you’re that cute and inspiring anymore.

Of course, I’m painting a pretty extreme scenario here. But the point is that you shouldn’t necessarily accept the first person who’s willing to invest in you. If the angel investor is not a good fit, it’s better to hold your horses, bootstrap the business a bit further, until you find someone who can actually add value to the company.

Originally posted on the Entrepreneur Academy (NEN). Image: nenonline.tv. See also Time To Start a Company – or Not.

What’s your experience with angel investors? Leave us a comment!