Germany has long been known for tech innovation and a very powerful economic driver. Berlin has grown to one of the most attractive start-up hubs in the world, putting Munich on the second place within Germany, yet still before Hamburg, Stuttgart, Frankfurt and other cities. With the enormous startup thrust – startups pushed to grow even beyond the German borders. Funding was the most significant barrier.

IPO Breakthrough

In the first quarter of 2018 alone, startups and spin-offs from larger companies pulled in close to  7 Billion Euro with their IPOs. This is more than the rest of Europe combined. This is pushing Germany in spot No. 2 globally behind the USA. And more IPO candidates are already in the loop. It took a bit for Europe actually to show that their startups have IPO quality – but now they seem to come with full power. More than just a handful, including HalloFresh, Delivery Hero, Zalando, Rocket Internet, Windeln.de, German Startups Group, Elumeo, Ferratum, Trivago, MyBucks, Akasol, Home24, CreditShelf, NFON and some others made it and IPOed in Germany already.

In the meantime, more IPO spots try to attract fast-growing businesses like the EuroNext in Amsterdam, Netherland and the Paris Stock Exchange. The relatively high P/E ratios of the classic enterprises, relative to their growth rate make those young businesses attractive. If one looks back to the early 2000s when a big surge of US startups went public, the majority of the investors where laughing, but today those companies produce a multiple that has never be seen in public companies before.

 

Artificial Intelligence Leadership

With the second biggest IPO finance place in the world, Germany is also attracting companies from other countries. More importantly, Germany is also preparing the capital flow into the next generation technology to support their declared attempt to become a global leader in Artificial Intelligence. The official AI strategy will be introduced Dec 4/5 2019. And with rapid financing growth has always been a worldwide challenge, the IPO leadership in Europa makes Germany also the place to go for AI startups. We will report about the AI Space Germany in December.

Stay tuned.

 

Innovation gets funded with billions of $ all across the world. Hundreds of thousands of startups get founded every year. Yet 90% of the inventions, patented ideas, startups and corporate innovation labs do not succeed. If our crops would have been treated like our brain crops, humans would have extinct by now.

SOMETHING WENT REALLY WRONG

After a keynote at the European Commission’s Digital Agenda, I discussed a burning question with one of the officers. I asked: “Why is so much money poured into more and more inventions and innovative ideas but absolutely nothing in helping to get them to markets?” The answer was prompt and very clear: “Commercial success is the job of the entrepreneur, not of a government”. While I understood the rational behind the thinking, I still found it odd to let 90% of invested money evaporate, just because a more or less philosophical process. The result is not only lost opportunities but also widening the chasm between rich and poor, putting the leadership position of a nation in jeopardy and risking to loose talents who may find other nations more appealing.

Innovation that can’t be brought to market is of no value for the respective society and should not be funded with tax money.

WHAT PROFESSIONAL INVESTORS DO

The top venture investors nurture their investment from Idea to IPO. It’s the only way to get a significant return on investment. Plus they educate, mentor and coach their portfolio companies to bring them to maximum performance. And the result is stunning. instead of 90 % failure rate it’s only 75%. In other words they doubled the success rate of startups they have invested in. Unfortunately that is the tiny fraction of startups that had the privilege to move to Silicon Valley and get investments from some of the top VCs. But in the end, our “Innovation Crops” deliver a miserable 10% yield, while we know we could get it up to 25%.

We need to change the innovation paradigm

WHAT IS THE VALUE OF INNOVATION

I guess we can agree that innovation is perceived a key driver for progress and growth. But is that true?  Is it the innovation or is it the ability to bring new and different products to market and attract a huge amount of people to support it, buy it or otherwise engage with it. A less innovative product that is produced in huge quantities and attract a large global market is most likely creating more jobs, more revenue, more profits and therefor more taxes for the local community than a product that is much more innovative but nobody knows about it therefor the company may not even survive. The true value of innovation is created at the time that product or service is hitting large markets and get a lot of business.

ONLY SUCCESSFUL INNOVATION MEANS JOBS AND TAXES

If we can agree that a value is only created when the companies grows, creates jobs and pay taxes, we should also agree that funding the urge of developing something is less important that funding the the need to bring it to market. Creative minds will build innovative products whether they get funded or not. But only if economic success is supported afterwards the innovation is gaining in value. And if the core driver for Innovation Funds is job creation and prosperity we may need to reconsider the funding strategy and put some money aside for every amount of money spent in the invention itself.

NEW INNOVATION PARADIGM FOCUSING ON COMMERCIAL RESULTS

A new innovation support program needs to focus on commercial success more than anything else. That includes providing non bureaucratic processes and rules to actually be able to make global trade even as a startup. It means lowering regulatory barriers to an absolute minimum. It also means providing business education to leverage latest techniques for an efficient and successful go-to-market plan – something no university will ever be able to offer. And means that young startups are supported with international networks and concepts to leverage existing trade networks. And of course that some of the funds available for the invention itself is also made available to kick start the commercial success.

 

Getting innovation to global markets

Bringing innovation successfully to market is key for prosperity

Nations all over the world pour millions and billions into innovation support – yet only a fraction of those inventions are ever seen their markets. Innovation officers consider bringing those innovations to market the sole responsibility of the entrepreneurs who created them. The job is done when an innovation was funded. An estimated 2% of the innovations funded by the European Commission become eventually successful solutions – the rest of the Millions in funding evaporate.

Instead of taking some of the grants to ensure that the major part of the investments in innovation even has a chance to survive – more money is thrown into ideas that all too often already from the beginning have no chance to get anywhere. This frustrating waste of money time and resources drove us to rethink the core values of innovation.

The initial value of innovation is zero

Any invention or innovative product or service has no value just because it exists. Assume, somebody develops a battery in the size of a matchbox that can host 1 Gigawatt of energy for 500 hours. As long as nobody has access to it, there is absolutely no economic value for our society. That power box does not create revenues, it does not create jobs, it does not give business to trade organizations and no added energy to its actual consumer.

Only if that invention is brought to market, it begins to create an economic value to the economy / society it is made available to. And the larger the geographic range is, the higher the value. Social networks have been in existence in very rudimentary forms before Facebook, LinkedIn and Twitter. But only once the innovation of digital social connections became a user friendly appearance and was brought to large numbers of the population it became of real value. And in almost all cases the value for the company is created when the value for the consumer is created.

Innovation Value

We see a clear correlation between consumer value and innovation value. If we stay with social media media for a moment, we see that correlation in several instances pretty clear. The US social media company LinkedIn started in 2003 and shortly thereafter German competitor Xing. Xing was even able to make it to become the first social media company in the world to do an IPO. However LinkedIn was more appealing to users and was strategically marketed on a global scale. Xing vanished away and LinkedIn dominates that part of the social media tools. The IPO for Xing did not help, the money they gained did not get them to the top. And exactly the same happens in the early phase of a business – when they are still startups.

Switzerland for instance is known for its innovative people and companies. It’s the country with one of the most patents per capita. Yet – in the past 20 or 30 years not a single tech company made it to the top. The innovation was purchased on an very early stage, investors and entrepreneurs chose the quick money over the economic value potential it could have for the country and sold the business, one after the other to companies who mostly siting other countries. The Innovation Value for country of Switzerland is nearly zero because the value creation, job creation, revenue and tax creation is happening in other countries.

Innovation Value and Valuation

Companies like Microsoft, Google, Facebook, Intel, WordPress, and lately Bitcoin dominate the technology related behavior, data usage and providing across the entire planet. All those companies have been considered vastly overvalued and part of a crazy hype. Just a few years later we most realize that the value seem to be OK and even if not, those companies dominate the rest of the world. Recently however the US dominance is broken and another country is becoming the most critical enemy: China. Europeans, Africans, Latin Americans just turn their heads from west to east and now complain about overhyped companies like Alibaba, Baidu, Tencent, Huawei, Xiaomi, Geely and so forth. All those companies shine with their high valuation. And the high valuation in turn attracts investors, talents, consumers and general attention. Only the combination of highly innovative products PLUS well marketed solutions create an economic value for a society by creating large amounts of jobs, revenue and taxes.  And the valuation from far sighted investors is the best indication for the economic potential in the future.

Innovation Value for a Economy / County

A country which does understand that network of value, innovation, valuation, and marketability of their startups and entrepreneurs has a great chance to benefit from the innovation they support, sponsor and fund. For others it is a risk of a large money and brain drain and even worst – like in Switzerland, large sums of money are poured into innovation and those who actually seem to have a great chance to grow are purchased long before the value could provide a return to the donor.

 

SOCIETY3’S FIRST GLOBAL ONLINE MEETING

After creating one of the most successful accelerator programs and working with entrepreneurs for the past 4 years, we decided to take our vision global. Today we are represented in 25 countries. And since we cannot bring millions of entrepreneurs to Silicon Valley – we need to do something radical different. We, the founders of Society3, are used to disrupt and make a difference. Today we begin to make a difference in how entrepreneurs in all countries get supported, treated more equally and have a chance to become a big company as if they would have started in Silicon Valley.

We need to rethink our abilities to permanently collaborate on a global scale. Creating a simple copy of Silicon valley is not going to work and definitely not the very spirit of Silicon Valley. Disrupting the main disrupter is. The digital world already holds all the necessary assets. We don’t won’t to ‘improve’ Silicon Valley but stand on it’s shoulders taking the amazing culture that was created there to an all new level.


REGISTER CON CALL EAST

Best for attendees from Europe and Asia


REGISTER CON CALL WEST

Best for attendees from Europe, Africa and Americas

AGENDA

* THE NEW EXCHANGE
Creating a global exchange for innovative minds.
How can entrepreneurs, investors and enabler benefit.
What’s our experience after 20 years Silicon valley.
How can every entrepreneur around the world leverage
global connections.

* GLOBAL ACCELERATOR
Running the first global online accelerator so every
entrepreneur can join, no matter where they are.
Main topics are: Bold visions, disruptive business models,
zero budget go-to-market strategy, traction and growth
hacking, fundraising,

* INTERNATIONAL TRADE FOR EVERY STARTUP
Building the first global trading & transaction system for
young entrepreneurs using blockchain technology.
Getting business rolling into almost any country faster then
ever before imaginable – at nearly no cost.

There is no substitute for a great in person meeting, like there is no substitute for an amazing live concert. Yet we hear MP3 music every day. This online conference is about online engagements, creating a mindset for online collaboration and an experiment to create a permanently connect online ecosystem – very much like Silicon Valley.

HOW TO CREATE A SILICON VALLEY CULTURE?

Every group of autonomous people can create a culture. We are on the verge of creating an all new entrepreneurs culture and significantly increase startup success rates no matter where they are located.
We do not want to change anybody or their culture. But we want to connect those, globally, who already have a good idea about an open and sharing ecosystem where we all can learn from each other and build businesses who can grow fast, create new jobs and provide value.

On April 5 we want to talk about how we can do that and how the culture in Silicon Valley was created.
All you need is an internet connection and a way to listen and ideally talk online.

Please register here:


REGISTER CON CALL EAST

Best for attendees from Europe and Asia


REGISTER CON CALL WEST

Best for attendees from Europe, Africa and Americas

There is no charge to attend

I’ve worked with over 100 startups in the past years and ran 5 businesses myself.

My experience – in this order: 

No. 1) Weak execution

Most failing startups could just not execute in a timely manner and/or showed a huge lack of judgment. They worked too hard on product features, too little with the market. They built too many “nice to have” features. They did not launch in time and did not work hard enough to build a use/customer base. Didn’t manage expenditures well enough. Failed to identify opportunities, failing to build strategic connection…

No. 2) No long term vision

It’s hard to convince a customer that your young startup is the right business if you just focus on your present product features. It’s hard to convince investors, partners, top talents if you can’t express where you want to take the company. 

As a result you won’t get enough traction and most likely fail.

No. 3) Superficial market/customer research

Lack of product-market fit. Very often startups develop products for themselves instead of for a large market. They keep their development too close to their chest instead of involving test customers very early on – even before they create their first prototype. The result is often to too far off from what the market needs. 

No. 4) Team weakness

No sense of urgency. Not fit enough on the technology side, not fit enough on the marketing side, not fit enough on the finance side, not fit enough on the operational side. 

5) Lack of connection power

Startup teams all too often underestimate the importance of building their own network of influential connections. Connections to influential users, influential industry groups, influential analysts, influential media, influential business alliances… Or they hope to find investors and mentors that provide those connections. In reality it’s just not working that way.

Re- money 

Many comments are made that money is one the problems. In all the cases and startups I’ve seen, lack of money never brought a startup down. Lack of funding is a function of one of the above issues – not a problem in itself. There is more money available than ever before – but the above weaknesses prevent startups to raise funding.