How did Wamda.com found about me? The Power of comments

I wrote a blog post at wamda and I’m not sure if you guys read it or not. In this post I explain my story behind the scene and how blog posts kind of changed my life. I can’t copy paste the full post so below is an introduction and you can click on the link to continue reading:

Sometimes a comment is all it takes to open new doors. Commenting on a website helped me start contributing at Wamda, connect to AngelsDen, and hopefully raise my next round of investment. I remember the first comment I ever left; my English wasn’t that good, but I left a thought in the comments section of a Financial Times article……..continue reading here

My comment

Saudi in Silicon Valley

These days we are (at fishfishme) super busy with business and our preparation to raise our second round of funding. I always try to find the time to write a post and then found out that its 12AM and I’m super tired to do anything. So apologize for not posting stuff lately.

I found this video yesterday, its a great video of a Saudi guy (Ahmed Al-Ghazi) visiting silicon valley and visiting all of these top startups there to give a better look on how does it look like. Below is the video, it’s in Arabic so apoogies for our non-Arabic readers.

 

Also you can find here the full story behind the video at Wamda.

Is Venture Capital The Way To Go?

The folks at FindTheBest.com wrote us the following guest post in response to Aziz’s latest post on venture capital. FindTheBest is  unbiased, data-driven search engine that helps people make quick and informed decisions. Below, they offer their take on the venture capital decision, and show us a tool they’ve built to help entrepreneurs answer that question:

Every budding start-up comes across the same big question as its revenue starts to grow, “Is it time to seek funding from a Venture Capital Firm?” The answer may vary depending on the type of company and the economic conditions surrounding the forecasted growth of the startup. One aspect that every entrepreneur must do is evaluate whether they actually need VC funding or if they should go after the likes of an angel investor, private equity investor and maybe even a business incubator. Venture Capital funding has its positives and negatives and they must be assessed before considering accepting an offer.

We will first look at the positives:

1. Money, Experience, and Mentoring

The biggest takeaway from working with a venture capitalist is the lifetimes worth of experience they bring to the table. It is more than likely that your investors have worked with companies similar to your startup or have ran their own company. Their experiences as successful entrepreneurs becomes an asset to your company as they can provide you with direction, advice, and money that has a continuous flow. If you are interested in scaling your startup, VC funding should be an objective on your company’s roadmap.

2. Networking and Recruiting

This is most likely not your investors first time working with a company. They have worked with several successful startups and manage to maintain an extensive list of contacts with top executives and other venture firms they have worked with. They can help you seek funding from other firms and hire skilled executives to help manage your company. If the money and experience was not enough of a reason to work with a VC, the size of their rolodexes should do the trick.

3. Shared risk, Big picture, Exit strategy

Risk arises in any business, not just startup companies. The market will not always work in your favor and deals will not always turnout as expected. Investors are there to support you through the rough times that every startup faces, whether through monetary means or reassurance. They are also the masters of focusing on the big picture while making sure to emphasis the present. If a VC has invested in you, it is because they believe in the future growth of your company. Lastly, the exit strategy. Everything must come to an end, and with startups the end may be three or four years down the road. When the day comes, your investors will make sure you are prepared to cash out and start again.

Now we will assess the negatives:

1. Exit Strategy

There are some cases where venture capitalists are investing just for the exit, meaning their only priority is to sell the company or take it public. Several VC firms are looking to multiply their returns, but that is business and does not necessarily hurt your bank account. Personal relationships with your investors can sometimes be overshadowed by shareholder returns.

2. Losing Independence

CEO is just the name you gave yourself when the company started. When signing the dotted line with a venture capitalist, it no longer becomes just your company. VCs will want one or more board seats with the right to veto actions that your company plans to take. Investors may also have the right to fire you or any member of your management team.

Resource for Selecting Venture Capital Firms:

A new resource was recently created by a startup in Santa Barbara called FindTheBest. FindTheBest is an unbiased, data-driven search engine that helps people make quick and informed decisions. They have developed a new tool that helps anyone seeking venture capital funding select the right firm for their startup. This tool allows you to search for and compare firms based on industry focus, fund size, investment stage, etc. It is a highly valuable tool that will help any startup assess the decision to seek VC funding. The resource is interactive and easy to use. Check out to tool here and access the link above:

FindTheBest: Compare Venture Capital Firms

The Verdict

The negatives of working with venture capital firms should be considered when deciding to seek funding. Is your startup really ready for an exit or a takeover? The positives in most cases lead to big success in the future. The monetary value and experience they bring to a startup help growing companies move in the right direction. Remember, a VC has been there before and they will apply all they know about running a startup to your company. If your goal when deciding to run a startup was to change the world and make money that you never envisioned having, venture capital funding is a step in the right direction.

Must watch video: The creation of Danbits.com

Steve Blank recently tweeted a link to Soren Therkelsen‘s video “The creation of Danbits.com”. It offers great insight into how to build, test and validate a startup idea using lean. You can find the video here.

Odds and ends: Recent updates at StartupQ8

I wanted to share a quick post this morning to update you on some upcoming events and interesting information:

  • The “June” StartupQ8 Event will occur in July. Many of the event organizers will be at the ArabNet Digital Summit 2013 in Dubai next week, so we’re tentatively scheduling the event for the following Monday, July 1st. We’ll update you once we confirm the date and speakers.
  • Speaking of ArabNet Digital Summit, the conference kicks off in exactly one week. The agenda has been set and speaker list is quite deep. We still have a limited number of discount tickets available on a first come, first served basis. Let us know if you want one.
  • For those looking to build multi-sided platforms, we’ve found two interesting blogs for you: Andrew Karpie publishes a frequently updated blog, and Sangeet Paul Choudary has some very interesting insights on his blog.
  • We loved meeting so new people at our weekly coffee meetup. It’s a great platform (no pun intended) for tech entrepreneurs and startup enthusiasts in the local scene to meet, network and share. If you haven’t joined us yet, what are you waiting for? Details here.

Week 5 in Dubai: Interviewing startups and my interview with Skynews

Last week I was busy meeting lots of people. Most of them are startups and entrepreneurs based in Dubai. In this video I interviewed three startups:

1- Amr of Doctorized.com

2- Mohammed of Roundout App

3- Louis of Astrolabs.me

I was also interviewed for a program in Skynews – Arabic called Afaq, you can find it here if you are interested. BTW we need someone to add an English subtitle to it  🙂

Will add a full post later on how to get blogs, newspapers and TV channels to cover your startup.

What Do VCs Offer You?

As Venture Capitalists “VCs” screen through potential startups to invest in, sitting behind a financial model and a suit sometimes sends the wrong signal to entrepreneurs on how much value-add can be extracted from VCs.  I’m sure there are plenty of investors that tag-along with the lead investor in funding rounds with minimal contribution besides capital, tier one lead investors will always have direct positive impact on startups.   Unlike Private Equity transactions, primarily leverage buyouts, where leverage accounts to most of the value General Partners “GPs” create to their Limited Partners “LPs”, Venture Capital as an asset class that invests in high-growth/risky startups with the potential of typically making a 20x return on investment driven by equity instruments or the equivalent; As investors go up the value chain and de-risk their investments, returns start looking more modest relative to the 20x multiples.

In mature ecosystems, funding rounds take a huge slot of the entrepreneurs’ day as they compete for their best funding source however, VCs also compete on the best transactions too.  Term sheets typically reflect how much value-add your lead investor brings; the more value-add the better terms for the investor.   VC value-add standards are constantly being upgraded, setting the expectations from founders to anticipate more from their investors aside from their financial backing.  Funding rounds in venture are very structured as an asset class; Depending on the startup’s size and maturity, the required value-add varies.

So what should startup teams expect from VCs besides deep pockets and strategic/technical business insights?

VCs’ value-add typically comes in the form of services that vary around the following areas:

–       Partners/Clients: With experienced general partners and access to a great pool of companies in different parts of the value chain, the introduction to partners and clients is an important feature VCs bring to their startups.  Consider your VC backer as your strategic business development division; they will contribute directly to your startup’s top line and make the necessary introductions in building strategic/equity alliances.  This is quite common practice and usually comes across all VC fund sizes.

–       Marketing/PR: Despite marketing being an important block within the “build-measure-learn” cycle, some venture capitalists dedicate marketing professionals to assist backed companies that aren’t ready to hire a marketing team of their own yet.  An example of the same is currently available with Fly Bridge Capital Partners.

–       Recruitment/Talent: As investors engage with the startup community early on through startup competitions, events, incubators/accelerators, colleges, deal flow…etc, access to talent is naturally inherent.  Coupled with the first hand entrepreneurial experience the investors bring in, VCs attract a lot of industry talent to its portfolio companies.  Some examples of enriching funded companies with the right talent include Andreessen Horowitz, which has established a talent agency and college program that attracts developers to assist funded companies.  First Round Capital and Kleiner Perkins also both have platform teams to support entrepreneurs in funded companies.

Larger VC funds are standardizing these value-add services and are becoming a common feature to have.  Although large funds give great access to the above services, it’s very important to sense a level of comfort working with the deal leader.  The deal leader will be spending a lot of time with your startup and would formally have board meetings on monthly basis however, he/she will be dedicating a lot more time, experience, network and strategic/technical insights to your startup than just attending the board meetings. Make sure the chemistry is there.

Unfortunately, I didn’t get a chance to be a VC backed entrepreneur yet and I’m not too sure that the VC attempts in the region provide the above services in a structured format.   In early 2009, I was the Managing Partner of 6alabat.com and I recall putting together a pitch book for a funding round that did not materialize.  However if I were to make a choice between 2 offers for the round, one from a large institutional VC and another smaller fund, I would focus more on the deal lead for my transaction regardless of the VC size; deal leaders can make or break the success of startups.

 

@aballoughani

Week 4 in Dubai: Not in Dubai, but in our office in Malaga, Spain

I took my friend Mohammad  and my sister advice to start video recording my life instead of just posting a written posts. So I did, but I think I really need help with recording and editing the videos. Anyway I did my 1st video and I think it is really bad, my the best part is the music, don’t you agree 🙂

Great Interview with Ibrahim Manna

This is for sure the best interview I saw with a startup co-founder in the Middle East. Ibrahim is an entrepreneur that built a previous delivery startup that failed and in the video he is explaining why this happened and how can you avoid it in the future. Also he went into details about the who cycle of his startup and the difficulties in each step. In addition, he talked about something very important that many of us in the Middle East forget, that a startup here is still like a regular business; revenue, expenses and profit is the single most important equation, he says “we are not in silicon valley” (he is right, I think we need to read less of TechCrunch). I know that Ibrahim  moved to Dubai the same time I did to startup his new startup, and I was supposed to meet him actually, but we didn’t at the end. Hope to meet him sometime soon.

 

I’m very impressed by the quality of the questions and the videos that Ahmad Takatkah made to help us all better understand what it’s like to build a startup in the middle east. You can find more about Ahmed work here www.sinbadthevc.com/. I’ll send them both a message to thank them for their efforts.

The interview is an hour long, but seriously I was so engaged that I couldn’t sleep until I finish it. What I like the most was Ibrahim honesty answering the questions. Watch all or part of the interview and let me know what do you think.

%d bloggers like this: