I have been thinking a lot about how to get new breed of investors into the fold of supporting the Entrepreneurial Ecosystem. I think it would be great to have a mentorship driven accelerator just like TechStars or YCombinator focused on building Investors or Investment companies. I think everyone can learn from having mentors and advisors, even Warren Buffet had Ben Graham, time box the creation of the concept and get validation on a public forum and then go on to raise the money and build a venture firm. I wrote about the documentary “Something Ventured“, it was obvious all the early investors had some mentors and advisors who did not know much about startups or silicon valley but they acted as sound boards, what if we could create that here in Iceland?
I think the current club of investors is a crap shoot. It is an exclusive club of someone having pedigree, a wealthy family or should have been lucky to have been a entrepreneur who cashed in or lucky to be appointed as a fund manager by the government or a pension fund or a bank. I think this model is broken. I am sure there are very qualified people playing the role of investors in all these platforms, but I think there needs to be a better way to build a new generation of investors. Waiting for the new generation to successfully exit and return back as investors takes too much time. What if we could create an accelerator that allows anyone who is willing to go through the troubles and tribulations of an entrepreneur, but to become an investor?
The reason I have been thinking about this is because of all the nays I get when I suggest that we need to have more investors looking at startups and investing in startups. The more nodes we have in the ecosystem the stronger the node becomes and what drives people to take on the role of an entrepreneur is a supporting community that provides the environment but also the capital. I have said it before I will say it again, there is enough and more capital well within the confines of Iceland. I wrote about Local Capital a while back. I have come to believe the reason people don’t want to jump and do this is because it is a lot of work and you need to be willing to become a student even though you may have some money and success.
Now that we have a accelerator for Startups in Iceland called Startup Reykjavik, I think creating an accelerator for investment firms is not such a bad idea. The intention would be to create 10 investment companies, solicit applications, pair the teams with mentors, time box it for 3 months and at the end of the 3rd month run a investor day where the teams can present the idea of how they will run the investment firm. What do you think?
- Organizing Angel Capital (startupiceland.com)
- Dear awesome startups, don’t join an accelerator, unless… (pandodaily.com)
- Excelerate Labs to Become TechStars Chicago (technori.com)
- 4 tips for first-time startup investors (medcitynews.com)
I like the idea and firmly blieve the environment to be as ready as it will ever be. There is a bubble brewing in the Icelandic financial markets where there is way too much capital chasing very few “safe” investment choices. A good example can be seen in the commercial real estate company Reginn that went public in July 2012. Their valuation has risen by 62,8% in the last 7 months on the back of a very unscalable business model!
There are two sectors in Iceland that have created great wealth for families and these are fisheries and pharmaceuticals. It is my experience that there is a lot of individuals within these families that are interested in becoming angels and frankly some of them are already involved. They main thing holding them back is not understanding the startup community or it´s biggest playground, the consumer internet. I´m sure education would be welcomed.
I like the idea. I’d want to participate in an investment firms accelerator.
Good article, I couldn’t agree more, the venture capitalist industry here in Iceland is virtually non existent and definently needs a boost!
You should check out “Yozma”, a government initiative in Israel to boost venture capital investments.
“The success of the Venture Capital industry in Israel can be traced to Yozma (Hebrew for “initiative”), a government initiative in 1993 offering attractive tax incentives to foreign venture-capital investments in Israel and promising to double any investment with funds from the government. As a result Between 1991 and 2000, Israel’s annual venture-capital outlays, nearly all private, rose nearly 60-fold, from $58 million to $3.3 billion; companies launched by Israeli venture funds rose from 100 to 800; and Israel’s information-technology revenues rose from $1.6 billion to $12.5 billion. By 1999, Israel ranked second only to the United States in invested private-equity capital as a share of GDP. And it led the world in the share of its growth attributable to high-tech ventures: 70 percent. According to the OECD, Israel is also ranked 1st in the world in expenditure on Research and Development (R&D) as a percentage of GDP.”
The key thing in its success was to attract foreign venture capital, because with it came valuable knowledge of how to manage VC investments. There should be plenty of opertunity for something similar here in Iceland now, expecially with the asset bubble that is building up due to the currency restrictions and pension funds struggling to find investment opportunities. The challenge is to offer the foreign experienced VCs a way in at a favoriable price and then double their investments with the local money that is piling up for instance in the pension funds.
Another thing to look at is the Kauffman Fellowship Program, http://www.kauffmanfellows.org/overview.aspx, it is basicly a VC school, and claimed to be a sure ticket into the VC industry. Could be good role model for a similar education.
Excellent suggestions thank you
Pingback: SI2013 – Speaker Profile – John Secrest | Startup Iceland
Pingback: Building Startup Communities | Startup Iceland