I attended the first day of this event in Stockholm. Here are some key notes and comments from some of the presenters;
Magnus Aronsson, Managing Director for ESBRI, the institute for entrepreneurs and small business research, http://www.esbri.se and Randy Mitchell, Private Equite Specialist, U.S. Department of Commerce were the co-chairs of this event. Randy talked among other things about the usefulness of the SBIC, Small Business Investment Company. For more info see http://www.smallbusinessnotes.com/financing/sbic.html
Jöran Hägglund the State Secretary, Ministry of Enterprise, Energy and COmmunications was also part of the introduction. A panel about the role of government followed. Us view basically "Get the Government out of the way"... where as the Swedish version is more of Government guidance and control...
My two cents out of this is basically, I think Sweden needs to explore the "Chinese" way of developing businesses, "create economical free zones" where you as an entrepreneur can get a number of years of no tax and other benefits to get a chance succeeding building a new business that can become a big enterprise. All the political parties and people are just too focused on getting (re)-elected to their offices and cannot do what it takes. One simple example is, why should I have to pay 100k SEK (about 15k+ USD) to register a corporation in Sweden when it will cost you about 30 USD in Las Vegas and less than 250 pounds in UK... and why should you have to pay about 55% tax on personal company income (salary)??
The next session focused on how to get funded these days in the aftermath of a world-wide financial crisis.
Kimberlie Cerrone, entreprenuer and involved with The Angels Forum in Palo Alto, CA. See http://www.angelsforum.com and kimberlie at gmail.com or +14153782838.
- 1M USD in revenue is what investors are looking for
- "Put me as no 1 on your B round of funding"
- Great crop of companies will evolve in the years 2012-2014 in the valley once liquidity available
As a reference for Kimberlie, see alsohttp://www.esbri.se/pdf/Panel_4_Kimberlie_Cerrone.pdf
Clare Fairfield, Managing Director Concerto Ventures was next, for more info about Clare see http://www.esbri.se/artikel_visa.asp?id=506
- Government programs can be more useful for entrepreneurs these days
- Use service providers
- VC companies with over 50M USD will get new SEC regulatory rules
- Consider cross border alliances
- Break down funding needs into smaller pieces
- Conserve, conserve, conserve your cash needs
- Use milestones whenever possible
- Funding rate 1-2%
- Success rate 10-20%
- Fail rate 20-40%
A conclusion I make of his presentation was basically as before, do not use VC money unless you have no other way of getting funded.
Katarina Bonde, Managing Director of Kubicorp was up next in the funding section. See for e.g. http://www.linkedin.com/pub/katarina-bonde/0/23/78b for her public LinkedIn profile.Here are her options for getting funded;
- Through revenues
- Regional funds
- If you have got positive sales go to bank
- If you are in the export business go to EKN (Exportkreditnämden), http://www.ekn.se
- Use covertible debt
- Finance through invoices
- Joint projects with customers
- Partner with distributors
- Create a pre pay business model
- Barter of trade your products or services
- In Sweden check out the SVCA list of VCs, http://www.svca.se
- Look in different regions of the country and start there
- Partner with customers in a coop, example given, in state of Washington, a wine development company started by inviting interested customers to buy shares of the company to get started
ALMI has been around for quite some time but this spring they have launched the new investment part of the company. See http://www.almi.se
- Regional offices owned by Swedish counties to 49%
- They do equity investments
- 1-10 MSEK put up by them
- Mission is to bridge gap to get started
- They have 7 regional funds, 1B SEK, launched in spring 09, 50% EU funding
- Max 50% co-funding is the rule
- They are looking for 5-15 MSEK investments, companies with good potential and within 7 yrs an exit