Nov 28, 2017 International Stories

Importance of early sustainability, unlimited runway and freedom to pivot

VCs love companies that burn cash in order to grow fast and bring more positive progress as cash gets converted into supposedly bigger assets. Contrarian to the general belief, I believe it is critical for seed stage companies to achieve early sustainability in order to have enough runway to pivot as much as needed and experiment with different business models, industries and value propositions. Entrepreneurship is a game of attrition Almost none of the seed stage startups have the right team, market and product from the get go. Companies go through setbacks as they explore to find the perfect industry and the use case for the technology. Startups must continuously reinvent the business and pivot to new directions on the basis of feedback from the market. Started …


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Nov 28, 2017 International Stories

Ukraine: The Next Startup Nation

Ukrainians already put a stamp on Silicon Valley with outstanding companies like Whatsapp (Jan Koum), Paypal and Affirm (Max Levchin). Still at the dawn of its tech revolution, Ukraine is headed to become a startup powerhouse with many more global success stories to come. Strong tech education provides a powerful foundation. Country’s robust education system creates close to 40k graduates a year in technical studies and the government aims to get this number to 100k by 2020. The economy of the country has been shaking but IT has always been one of the most stable industries with much higher salaries, which makes it super attractive for people and drives more interest. The number of so-called “switchers” (people, who switch from any industry to IT) …


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Nov 28, 2017

VCs Invest When They Feel Ignorant and Uncomfortable

Investors analyze a variety of factors about the team, product, traction and market before investing. But in early stage investing, there’s really one quality that trumps all: self-awareness. Well-informed on every aspect of the business, self-aware founders portray confidence and reliability, that make investors feel impressed and helpless. I love feeling ignorant and it is addictive! Great team trumps almost any other consideration since the whole company is established around the core vision and culture of the founding team. Best entrepreneurs build self-aware organizations that make well-grounded decisions on every step of the businesses, mitigating risk levels and increasing the chances for success. Investors feel excited but incompetent when they encounter sophisticated entrepreneurs well-informed about their industry. This feeling of inadequacy and admiration is a key driver of the investment decision and it …


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Nov 28, 2017 International Stories

Startups in Southeast Asia vs. MENA: United we stand, divided we fall

The paradigm shift in technology adoption, funding and startup formation in Southeast Asia gave rise to 6 unicorns and the region gathered more attention around the globe. MENA has an even bigger adoption and excessive investable capital, but fell short of expectations — as always. There are many reasons why MENA (excluding Israel) lags behind other emerging markets, but there actually is one solution that can solve it all. SE Asian Unicorns Dominate the Region Gojek, Sea (ex-Garena), Grab, Traveloka, VNG and Tokopedia are all unicorns that now roam the SEA startup ecosystem’s green pasture with a total valuation of $20B. All of these companies have active operations throughout Southeast Asia but weren’t aggressive in expanding out of it and only Sea pushed outside to …


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Nov 27, 2017

Even Smart VCs Invest in Cross-Industry Clones

After every disruption, a second wave of startups emerge that adopt similar strategies to transform different industries. Fast on recognizing the first wave innovators, smart investors are convinced to pour money into cross industry clones to scale disruption across markets. Dismantling Disruption Startups are funded on the premise of having a sustainable competitive advantage, that impacts certain components of the value chain so permanently that it changes the rules for a whole industry. Nearly every major startup success is built on the principle of deflationary economics at certain parts of the value chain. Hence, companies are not disrupted but certain parts of the value chain are. Digitalization and internet shifts what has traditionally been protected by incumbents, through disassembling the value chain …


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Nov 27, 2017 International Stories

Population Paradox Unicorns

My first blog post was about immigrant entrepreneurs and the geo-arbitrage opportunities for international investors. I then examined how these entrepreneurs give back to their home country while bringing their know-how and global network to re-build their local ecosystems. Ever noticed the disproportionate success of small countries like Sweden, Estonia or Israel in creating global businesses? Out of 194 private unicorns alive today, only 34 of them are from countries with less than 100M population. For the sake of this post, I’ll define countries with 10–100M populations as mid-scale and countries with less than 10M population as small-scale. Diving deeper into the data, there are 20M people for every unicorn in mid-scale countries like France or Germany. This capita per unicorn figure goes down …


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Nov 27, 2017

The Renaissance Entrepreneurs

In the last post, I’ve emphasized how international investors are helping entrepreneurs move their businesses to the US and the talent network effect this reinforces. Brain drain is seen unfortunate for local ecosystems, but I believe immigrant entrepreneurs return to transform and re-build their startup scene from scratch. Cross Border Give-Back It is important to understand the principles of the spiral growth mechanism as successful entrepreneurs become investors and re-invest in the next generation. This give-back phenomenon, supported by many successful examples in the US, happens at a micro level throughout the world, only with a slight twist. After gaining wealth in the US, successful immigrant entrepreneurs invest back to their home country and bring their know-how and network with them. …


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Nov 22, 2017 International Stories

Geo-Arbitrage Venture Capitalists

According to a WSJ study published last year, 51% of the private US unicorns have immigrant co-founders. Although it may be surprising for many, I believe it is a bit arrogant to think that there are more visionary entrepreneurs in the US than the rest of the world. When you look closely at the data, it is interesting to see that almost all of the immigrant co-founded unicorns launched their businesses in the US and raised funding from US VCs. The American Dream still exists after all… Well, what about all the rest of the great entrepreneurs who do not have the means or access to move to the US and start a company? What if you can catch these entrepreneurs early on, while …


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Sep 29, 2016 Official Announcement

500 Startups Office Hours @ Startup Istanbul

500 Startups will be full force with 4 partners at Startup Istanbul between 6th-10th of October. The tech conference will gather 500 startups and 4,000 attendees; along with prominent investors from all over the world. 50 selected startups will pitch to a jury of investors; and 15 of them will get to be on stage during the final day.   500 will be present at the event, with team members coming from different geographies. Arjun Dev Arora (Venture Partner) and Rina Onur (GP of 500 Istanbul) will speak on stage, while Sharif El-Badawi (Venture Partner) and Enis Hulli (AP of 500 Istanbul) will be active as mentors. Exclusive for the event, 500 Startups will be holding open office hours for startups from …


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Oct 5, 2015 On the Web

500 Startups Launches Another New Fund: 500 Istanbul

No one can accuse 500 Startups of being lazy. The five-year-old, Mountain View, Ca.-based venture firm and accelerator program is currently raising half a dozen funds, including a $200 million global fund; a $3 million fund focused on Latin America; a $10 million fund focused on Southeast Asia; a $10 million Thailand-focused fund; a $10 million Korea fund; and a Japan-focused fund that’s looking to raise $30 million.

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