Geeks on a Plane made me yet more realistic

Starting a technology company in Czech Republic is Catch-22. Early-stage companies need in many cases investments (angel, seed) in order to take off. But they currently have hard times to secure the financing. Why? There are no investors willing to take a risk at the early-stage. Angels and VCs prefer to invest in already profitable projects. I know we are not in the Silicon Valley but rather in the middle of nowhere in terms of technology investors. Unfortunately I am pretty sure it is not going better any time soon.

So I really have to thank all the Silicon Valley Geeks on a Plane (led by Dave McClure) for (coming here and) making me yet more realistic. All local geeks should also thank to Jack DeNeut (Nelso.com) for organizing the event. I also appreciate Dan Franc who was, together with me, the only Czech speaker yesterday. Isn’t it a shame?

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  • keep at it Jan! takes time to create the necessary infrastructure (money, talent, companies, experienced angels, market, education, etc) for successful startup ecosystem, but Czech has a great foundation of talent to build on… you guys will get there πŸ™‚

    regards & thanks for hosting us in Prague…

  • Okey. So we just need to learn how to give a VC a hard-on..speaking your language πŸ™‚

  • Back in the early 90's I used to write articles for English-speaking newspapers and magazines here in the Czech Republic about how I believed the country would someday make a name for itself in the software business, and after living here for 16 years, I think my prediction has in large measure come true (with examples like NetBeans, AVG, Avast, Dr. Lang, and others). Having lived and worked also in Silicon Valley and Seattle in the software business I often now wonder if there isn't some possibility or opportunity to work as a go-between, to leverage my tenure and experience in both countries between Czech startups and potential investors in the US… Hmmm.

  • Bob,

    that would be great. I can imagine that you can play the role you just suggested. The only thing I am missing right now is any framework for technology startups, be it a formal organization or a less-formal community.

    If there is any, perhaps virtual, framework or like, it works in a very distributed manner thus very inefficiently.

  • We should get together sometime soon and set up a proper Prague-Brno axis… πŸ™‚

  • Okey, I will let you know when I am coming to Prague.

  • ondrejbartos

    Investing in technology companies in the Czech Republic is Catch-22. Early-stage investors have the intentions in many cases to do investments (angel, seed) in order to make money, some of them even to help the ecosystem. But they currently have hard times to invest their money. Why?

    There are almost no entrepreneurs with a clear idea how to go ahead, and how early-stage investing works. Entrepreneurs in the Czech Republic would prefer to get an investment for vaguely defined projects with no USP whatsoever, with unclear idea about the market or the customer… without any further questions (like the ones about business model or how they will execute).

    I know we are not in the Silicon Valley but rather in the middle of nowhere in terms of technology entrepreneurs. Unfortunately I am pretty sure it is not going better any time soon.

  • Thanks Ondrej for your comment from the investor's point of view. What can I say?

    I just totally agree. Your opinion regarding the lack of knowledge and management skills of local entrepreneurs is what I also mention in the embedded slides.

  • ondrejbartos

    Well, I tried to be a bit sarcastic here – of course neither of the statements is completely valid. There are good entrepreneurs here, as well as there are good investors willing to take the risk (not talking about myself… only :). Problem is (and that's where I would agree to generalise) they just don't yet speak the same language…

    And I am very sad and frustrated that such opportunity as GOaP was not used better. In your post you thanked Jack who was the local partner for GOaP. But I would actually call for a blame for Jack – who just missed this chance of inspiration for Czech startups, geeks … and investors. Most of them just didn't know about it, the word was not out. What a shame…

  • ondrejbartos

    BTW, guys… it's a pure naivety thinking that U.S. investors would ever invest into Czech startups (in the Czech Republic)! Not gonna happen. Even if they would be interested in the project, you would have to move to the Valley (OK, U.S. in general), or they would look for a local co-investor.

    You might soon be surprised about a new tech accelererator project for Czech startups in the Valley. But not even that would ever substitute local investors – you need them whether you like it or not. And believe me, there are a lot of them, most of you just can't find them (or convince them). πŸ™‚

  • Of course the situation is not only black or white. I was also a little simplifying. The general common issue is the overall isolation, be it the local market within the global one or, importantly, the entrepreneur and investor communities speaking different languages. But do you remember our tiny conversation on your blog featuring your U.S. journey? πŸ˜‰ That is the way the communities should talk to each other.

    As for GOAP, I (and few other geeks) offered my help to Jack in promoting the event. According to his words there were a delay on the Silicon Valley geeks' side. That's why the word was not out as it could be. An unfortunate little chaos.

  • A new tech accelererator project for Czech startups in the Valley .. could you give any more details?

  • ondrejbartos

    Right, I offered Jack my help as well as Nikola of TBN… And I have to admit we offered help also to the geeks directly – but they haven't come back until like 3 days before the event… πŸ™

  • ondrejbartos

    Czech Technology Accelerator in Silicon Valley will be announced on Monday 5th at the opening of CzechInvest's office in the Valley at Plug and Play Tech Center in Sunnyvale… That's all I can say at the moment… πŸ™‚

  • Actually that isn't true at all. In the past U.S. investors have invested in Czech startups (in the Czech Republic), but whether they will continue to do so remains to be seen. Ever hear of Esther Dyson, for instance (not Valley, but definitely U.S)? I have numerous other examples from the past, too. But you're right in that if there's local money to be found, it's better. And I've found some local investors, but to be honest I haven't tried to convince them, mainly because I first need something to convince them with. πŸ™‚

  • ondrejbartos

    This is a bit academic approach, Bob… Yes, indeed, technically there have been investments made by U.S. investors into Czech startups in the Czech Republic (we can screw up any statistics if we want)…

    But can you really name 3 examples of investments without local co-investor(s), into startups not moving their HQ to the U.S.?

    And BTW, the last investment Esther made in the Czech Republic really happened in 1999 – 2000 (not counting Systinet as she already knew Roman and he made her money). And as far as I know (from her), she's currently not planning to do any more.

  • That sounds very promising. I hope this activity really helps Czech entrepreneurs (especially in tech sector) in reaching the global market. I look forward to hear additional details on Monday.

  • michalblaha

    And OnTheRoad.To team will be there too – http://davipav.ontheroad.to/silicon-wine

  • Academic? I don't think so. But you were exaggerating by stating categorically that something won't happen, and you were assuming a lot by saying I'm naive. I'm not. But you must admit that you don't have a crystal ball, and neither do I. However I do know Esther from the old days, even before her involvement here. And I know about the history of investments here (and elsewhere), having followed it for the past twenty years. We can discuss over a coffee sometime, it will be a pleasure… πŸ™‚

  • ondrejbartos

    Sure, let's do coffee – you're PragueBob, I'm PragueOndrej, shouldn't be that difficult… πŸ™‚

    BTW, I still stand with “not gonna happen”, and I'm of course ready to apologise once proven wrong… πŸ™‚

  • Okay, what I got directly from Dave McClure on GOAP events in Prague (yup, I was one of the few people there):

    – FB fund: not investing in non-US startups
    – Founders Fund: not investing in non-US startups

    And non-US almost equals non-Valley for him. He said that Founders fund _sometimes_ can make an exception and venture to a non-Valley fund.

    But…… as I commented elsewhere (http://www.lupa.cz/clanky/centralway-je-pohadka…) .. there's more value to build a connection to those guys than just going directly after their VC money.

    I'm very excited to hear about a Czech initiative in the Valley! Good luck to you guys.

  • The fact remains that significant investments have been made in Czech Republic startups in the past by U.S. investors, though not necessarily Valley investors in all cases. Some of these startups were successful and some U.S. investors know their history.

    It may be true that many Valley investors are at this moment in time not inclined to invest in startups outside the U.S., but that doesn't mean that this situation won't change or that an exception won't happen in the near future.

    The past as an indicator, coupled with current conditions, in which there are a few startups with some chance of success here, is probably a better crystal ball than categorically stating things like it “ain't gonna happen”.

    Czechinvest has a pretty good track record of success, so we'll see what comes of their presence in the Valley.

    BTW, one of the persons called naive (myself) successfully attracted U.S. investment into a Czech Republic startup in the past. πŸ™‚

  • thermomix

    Like this message: Very isolated market.

  • It's my favourite message and I'm afraid it's true. But you can tell such an opinion only if you have experienced any extended stay abroad. I have so I can compare then.

  • ondrejbartos

    Bob, sorry, but using a phrase “CzechInvest has a pretty good track record of success” (in connection with supporting Czech startups) shows why we can't get each other… πŸ™‚

    BTW, it would be great if you shared with us what the U.S. investment was – at least I would be very interested to know – maybe I missed that one… (and as I said, I am ready to say apologise πŸ™‚

  • Bob, I am here with Ondrej. If CzechInvest has successfully supported any startups then I have not noticed these successful companies.

  • I said nothing about Czechinvest in regard to Czech startups, I was thinking about successes like attracting DHL to Prague, for instance, this was the largest single IT investment in Europe in a decade at the time it was made. Maybe Czechinvest's prowess in attracting investment in the Czech IT sector cannot be translated into similar success in Czech startups. but since they are just starting in this area (today, it seems), we should probably give them a chance before condemning them outright.

    One Czech startup into which I successfully attracted several U.S investors, who were unrelated to each other except for their connection to me, was AlbumCity.cz, s.r.o, which won Cesky Zavinac 2000, and which according to Deloitte & Touche was at the top of the Czech e-commerce ladder at that time. I was one of the people who started the company and I served as its Chief Operating Officer. But I suppose if you are xenophobic, you won't consider AlbumCity.cz, s.r.o. to be a Czech startup.

  • Jan, see my response to Ondrej above, it should clear up this misunderstanding.

  • ondrejbartos

    I really am not xenophobic, but still I would be very careful to consider AlbumCity a Czech startup… Maybe also due to the fact that the U.S. investors didn't invest into AlbumCity.cz, s.r.o. πŸ™‚

  • No, you are quite mistaken. I personally attracted investment from several U.S. investors into AlbumCity.cz, s.r.o. You simply aren't in a position to know any of the details, but I obviously am, since I was the company's Chief Operating Officer at the time. Or perhaps someone else simply misinformed you?

  • ondrejbartos

    You're the one who is wrong… What I meant was that the Investment must have been into AlbumCity.cz, Inc. – but definitely not AlbumCity.cz, s.r.o.

    You might say it's a technicality, but I don't think it is – it shows the U.S. investors were not prepared to invest into Czech entities (in the Czech Republic), and without the U.S. background (and presence), the investment wouldn't have happened… Typical Czech startup…? No, Bob, it wasn't…

  • The holding structure of the company was irrelevant for the particular investors I mentioned. At the time those investments were made, there was nothing but AlbumCity.cz, s.r.o. under the holding company and it was actually a going concern and doing extremely well in the market and in fulfilling its business plan. All of the U.S. investors I mentioned visited the AlbumCIty.cz s.r.o. office in Prague and invested solely on the basis of what they saw there, the investment vehicle was just a holding and was never an issue for these particular people (and who I'm quite sure you never even heard about). So no, I am not wrong. And I was there. You weren't. However for some of the more visible investments that you might know about (maybe the local “Irish”, for instance?) the existence of a U.S. holding was an issue, so I can see how your opinion might have been formed.

  • Ondrej, we should go for a coffee sometime soon, I'm actually surprised we haven't met after all these years. πŸ™‚ I've been enjoying the back and forth, but it's probably starting to bore the others, so just Google “PragueBob” for my contact information, I'm a unique brand on the Internet and quite a pervasive one at that… πŸ™‚

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