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Sandip Samra

October 14th, 2016

The finance maze – raising money in Europe

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Estimated reading time: 5 minutes

Sandip Samra

October 14th, 2016

The finance maze – raising money in Europe

0 comments

Estimated reading time: 5 minutes

‘If you decide to be an entrepreneur, do something crazy. Then at least when you fail people will remember you.’

You wouldn’t expect these words to come from one of the most successful investors in Europe, would you? Oussama Ammar, co-founder of TheFamily, a European-wide investor that currently nurtures a whopping 250 startups through an innovative mix of education, services, and capital is different from any other investor you will have met (in a good way!) This was clear from the start of his talk when he spoke to over 60 LSE students and alumni about the secrets to fundraising. His neon coloured presentation slides and honest tales of how he lost 700 million dollars on the Uber investment deal (‘so here I am, instead, talking to you guys!’) made for a wonderfully refreshing change to the overly saturated, well-worn path of discussions around financing new business. His ambitious plans to transform the European business ecosystem so that it can give birth to the next generation of ambitious startups was truly exciting and the audience were captivated from the beginning, staying over three hours in the room to gain some words of wisdom from Oussama and his equally impressive team.

We’ve gathered together some of the most interesting points of Oussama’s talk, his thoughts on creating ecoystems in Europe, and the process of fundraising in Europe:

Team

A team is the first reason why people will invest and investors have a very different idea of what constitutes a good team in contrast to you. A good team in the eyes of an investor is one that has had previous experience. Build projects as early as possible. Show that you are pro-active. Being an employee in a small startup is one of the shortest paths to being an entrepreneur.

FOMO (fear of missing out)

Investors do not invest in businesses due to rational reasons but out of a fear of missing an opportunity. They really care about not missing something that can be big. Ousamma missed investing in Uber when the offer was 5% of Uber for 50,000 dollars. He hasn’t made that mistake again!

First impressions

Investors become very excited about new tech and products, but once you show them the first interface they are less excited. Yet it’s very important to launch early. It’s important to see the reactions and learn. Have a KPI that is exceptional and unheard of. Just look at Facebook: people weren’t impressed by 20,000 Harvard students using Facebook every day when it was launched there. People were impressed that Harvard students used it on average two hours a day. This was a number previously unheard of! What blew investors’ minds was that students spent more time on Facebook than TV, the first time in history of US that anything took over TV in the ’24 hours day’. This is called TRACTION: the idea that one of your KPIs is exceptional.

The current situation

On average companies spend less than 20,000 to start up. It’s become very affordable but the VC market has stayed the same. Thus, competition for funding is fierce. When you get money you are supposed to take it back, don’t forget that.

#1 UK is the best location for investment right now, especially if you come from a good school! There is a lot of money on the market, but it is very unsophisticated with nothing attached. You don’t always get advice, mentoring or access to a network. London has a huge amount of venture capital, many times more than Paris which is the second biggest in Europe. The UK has a club attitude, very brand-driven too.

#2 France – half the money invested in startups comes from the government. But public money is not always good because you can burn through it seeing as the money is free.

#3 Germany – there is a monopoly of Rocket Internet in Germany. They single-handedly built the ecosystem in Berlin. it’s very much focussed on e-commerce and marketplace platforms.

Rest of Europe: Not much! 60% of venture money comes from the UK Europe-wise. 25% comes from Germany and France, the last 15% comes from the rest of Europe. For instance, Spotify is Swedish but raised from London.

USA: Vast majority in Silicon Valley, then NYC, and 1% from the rest of the USA.

If you want to watch the talk online, it can be found online from next week so keep your eyes open!  TheFamily is always happy to talk to students about their business so contact them if you’d like to set up a meeting!

We’ll hopefully see you next week at our next masterclass on building a business plan – we can’t promise neon slides but we can promises some fabulous tips on creating an impressive pitch deck to showcase your idea!

Team Generate

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About the author

Sandip Samra

I am the Marketing and Communications Coordinator for LSE Careers

Posted In: Generate | LSE Careers

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