Latvia’s capital Riga hosted TechChill tech event on February 8-9. It involved 2000 representatives from around the world.
Torsten Kolind is an advisor to a number of startups and an investor in two venture funds. He is the co-founder of San Francisco-based YouNoodle, a technology platform to source, select and engage the most promising startups in the world.
Prior to YouNoodle, he ran Denmark’s largest startup engagement program, Venture Cup. He also has judged startup programs at Stanford University, MIT, and Imperial College.
Torsten Kolind is a frequent speaker on corporate innovation and on how governments can spur ecosystem growth through global startup engagement.
Itel.am talked to Torsten Kolind within the frames of TechChill.
You are an advisor to various startups, as well as an investor. Based on what you see, what are industry’s current trends?
I think some of them are very obvious – AI, VR/AR, autonomous cars, etc. Tech is going to be everywhere, in every industry, and that gives a lot of opportunities.
Another trend is that you can start companies everywhere and that you don’t need to be in Silicon Valley or some other big tech hub to do that.
Even for the investment side, I think there is trend which I call “global deployment of investments”. So instead of just saying I’m in London so I’m investing in London, the investors now start looking around the world. I think all these are really fantastic trends that are democratizing access to technologies.
You have probably seen many failures from the startups you used to work with. Which were the most common ones?
They are many, first of all everyone knows that 9 out of 10 startups fail. Startups don’t want to hear about failure, only about success stories like Skype, Airbnb, but in fact a lot of startups fail. It’s fine, it’s a system where you try, and if it doesn’t work you fail and start again. Lots of successful entrepreneurs tried more than one time.
I think some of the factors that are leading to failure are first of all lack of product market fits. Essentially, you build a product you think the market wants, and when you actually hit the market and start scaling, it doesn’t work.
Sometimes you have a fantastic product and the time is right, but your team is having issues. Often startups do everything right but when it comes to fundraising, they fail to convince the investors.
Let’s talk about YouNoodle, a platform co-founded by you.
YouNoodle is a platform for startups which are looking to move to new places, take part in programs. We work for governments, foundations, universities in both sourcing and selecting startups. We allocate around 25 million a year and that’s why it is very competitive. Half of the startups are based in the U.S. and other half abroad, so it’s very international.
There are hundreds of programs in the platform and each of them has its own criteria and process. You can go to the platform and choose what program you are interested in. There are lots of programs open to Eastern European startups, including Armenians. And there are actually Armenian startups searching programs for themselves on the platform.
You specialize on the topic of how governments can spur ecosystem growth through global startup engagement. What would be your advice to the governments of Eastern Europe, particularly Armenia?
With YouNoodle, we are working with and for governments of different countries and for different concepts. A good case to actually look at is what happened in Chile.
That country's government decided 6 years ago that they didn’t want to wait for the startup ecosystem to develop, and instead they came up with the idea of importing foreign founders, to allow them to come in and build companies in Chile. The government gave them startup visa, USD 40,000 seed investment, co-working space, mentoring.
Every year there are around 5000 applicants to this program and as a result, 300 startups get into Chile annually.
It’s a case, and I am not saying that Armenia or other countries should copy this case, but studying and understanding the process would be useful.
For example, UK has a tech nation visa for people who are coming to UK anyway. So there is a different approach. If in Chile they say we want you to come, in UK they say as you are coming anyway, so you can get this visa.
So there is sometimes a choice for the government – either to focus predominantly on local Armenian entrepreneurs or on foreign entrepreneurs in order to get them into the country. And that’s a fundamental choice. I am a big proponent of internationalization, but sometimes politically it’s very difficult to spend money on foreign entrepreneurs.
As you are based in Silicon Valley, what should foreign founders know before going there?
I moved to Silicon Valley 8 years ago as a Danish entrepreneur. I was new in that ecosystem. The whole process there is very manual until today. It’s based on trust, social proof, and connections. The good side of it is that we have the “pay it forward” culture - it’s like you do something for somebody first and then chances are high that they will do something else for you in future. It’s about giving more than receiving. But the problem is because it’s based on social proof, it’s actually very hard for outsiders to come in, get the right investors and pitch. The investors would possibly just say, “We don’t know you”. And that’s true, I just came from Armenia, how could you know me before?
It’s very much built on social proof and that makes it difficult for newcomers to make a change.
Successful foreign founders spend very much time on just building those networks, making sure they behave well and understand the culture. I hope this is changing but it’s currently the unexpected side of Silicon Valley.
I want to say one thing. You don’t need Silicon Valley today nearly as much as you did 10 years ago, as now there are many places where you can grow a startup. And that brings so much good and so much potential to every corner of the world.
I think it’s a very good time to be an entrepreneur in Armenia; there are many opportunities that people didn’t have 5-10 years ago. Don’t leave and say you need to go to Silicon Valley. It’s good to go out and experience stuff, but definitely, there are a lot of things you still can do at home. And right now you have all the tools in the world to do it.
Narine Daneghyan talked to Torsten Kolind