Video Of The Week: The Berlin Seedcamp Discussion

On the same day that Brad and I did our Berlin talk, I spent an hour with Seedcamp during their Berlin Seedcamp Week. I chatted on stage with Dave Haynes, who before Seedcamp was at our portfolio company SoundCloud. So we had a lot to talk about.

#VC & Technology

Comments (Archived):

  1. Twain Twain

    Thanks, this video interview provides a really comprehensive view on what European startups and investors are doing and what still needs to be done.Product and engineering mentoring and being able to cross-hybridize technologies rather than capital availability is why Europe lags the US — as well as legacy obstacles (e.g. German incorporation documentation), comparative $:equity terms and adoption/risk propensities of customers and investors alike.In SV-SF, if a founder needs to figure out how they can get their HTML5 UI to collect data that then passes into a Neo4J database and can be mashed up with Twitter firehose via SparkQL and can later be used to ‘train the AI” via Deep Learning, they’ll probably have met Product & Engineering people at the meetups who’ll share that knowhow with them.That doesn’t happen as readily or with the same product catalysis in Europe because where people are on the knowhow curve is different.Investors with Product & Engineering experience are also a lot thinner on the ground, especially at angel stage. That means it’s not just about their individual frames of reference to mentor the founder, it’s that they then don’t have the relationships with the Product & Engineering people who can provide a steer for the founder on product development and technical scaling.That’s why in 2015, I will yet again be on a plane and spend months embedded in SV-SF.

  2. Matt Kruza

    Fred, not sure where else to post it. A lot of the USV links below your articles have being get not found (404 errors) for the last few days.. like at least 3-5 times. Just wanted to make you or someone aware at USV to see if you know why. (Not sure if the people postint them are doing it wrong etc)

    1. fredwilson

      its fine to post it herewe need to update the blog widget. thanks for reminding me.

    2. William Mougayar

      That’s been fixed now.

  3. Kirsten Lambertsen

    Have you happened to notice at events like this in Europe if the distribution of female and male founders is the same or different from the U.S.?

    1. fredwilson

      about the same

  4. Matt Kruza

    I will be honest.. too long of a video for me to watch. However, kind of going on another comment on this page, Europe seems like such a mess to invest in, and frankly reminds me of one of the macro reasons that the US is such a great hub of entrepreneurship. The US has 320 million people that you can sell your product to. Nearly 40% of the entire market capitalization of world-wide equities of companies that are US centric. And really one set of laws for this whole area (sure there are state laws, but investing or selling in Alabama is not much harder than in California or new York) Europe’s largest economies (Germany and UK) are about 20% as large as the US, so to get to the same scale as the US you have 10 different govts, ten different banking systems (even with the same currency), multiple different languages, much higher (and varied) taxes and regulations. this might be so obvious that its stupid for me to post, but in reality the US virtually almost has a “manifest destiny” to be a startup / innovation hub structurally. So even without the risk taking attitude, laws, and capital we have insane advantages that no other country has. Agree/ disagree?

    1. fredwilson

      We invest a lot in Europe. Mess=opportunity

      1. LE

        What I was writing the same simultaneously in my reply.I had considered a business a few years ago and passed on it only because it seemed to easy and turnkey. That was a drawback. Anything that “everyone and their brother” can do they eventually will do.

        1. fredwilson


        2. Matt Kruza

          Oh certainly agree don’t want it turn key. Guess a dollar is a dollar and if it is 2x as hard to make one in Europe then that seems like a structural disadvantage. But I have never been to Europe, just know the macroeconomics and data that I mentioned seemingly as difficult structural factors. Kind of a little like China I guess. I know there have been some big companies there, but I worked at one of the largest international management consulting firms and one of my major projects was focused on china and Asian operations. A ton of firms have struggled massively to make a profit in china because of JV requirements, local regulations, insane competition right now (since everyone wants to get there), lack of IP protection etc. I feel I am rambling now, but I guess just getting at the fact that US at 320 million people under one system with an extraordinarily high GDP per capita seems so much more ideal than any other market out there.

          1. LE

            and if it is 2x as hard to make one in Europe then that seems like a structural disadvantage.I think you are missing the point. The amount of money you can make very often relates to the competition that you have (among other things obviously). So if there is less competition in theory (all else equal and all of that) you will be able to charge higher prices and make more money. Of course you would have to factor in the time and disadvantages of having to deal with someone across the ocean vs. on the same street. Goes w/o saying.In the case of investing, physical proximity can be an advantage but it is also be a disadvantage. Because your competitors will also be making offers and things would get bid up. Make sense?Look, let’s get back to effort and one of my favorite subjects, dating.In the area that I was located in there were absolutely slim pickings for women. So what I did was decided to broaden my horizon to NYC (about 90 miles away). Everyone (and their uncle) thought I was crazy. Why would you date up there? However since the balance of men to women is tilted toward men in NYC metro, I was able to find an ample supply of very attractive women to date. So, by traveling to NYC (and not being lazy) I did much better than I could ever do in my own area. Simply because (and this is the point really) the supply and demand in my area was not balanced in the same way. And I didn’t mind putting in effort to get a better situation. [1][1] I dated like this for 2 years. Drove up literally every weekend. Although we eventually broke up, I then found someone who lived across the river (about 55 minutes away). [2] Once again it wasn’t easy (had to kiss many frogs and write many emails) but pulled it off and I’m now married to the person that I met that way.[2] Want to also point out that before we even went out on a 2nd date I evaluated what it would take to move to where my now wife lives. I didn’t want to go down that road if I wasn’t able to move (women with small children tend not to relocate and I didn’t want to waste a few years finding out and it’s not like you can ask on a 2nd date “would you relocate”).

        3. Matt Kruza

… Decent data for my point I think. Europe has 50% more people, 20% more GDP, yet 75% LESS VC investment. So probably ripe for opportunity, but seems to be substantially less ideal from an investment point of view

      2. Matt Kruza

        Any good sources on VC returns in Europe vs US? Never really studied this.. curious, will see if I can find anything.

      3. Supratim Dasgupta

        Indian is Messier.Does USV have any plans for India? Right now the two big firms in India are Sequioa & Accel.

        1. fredwilson

          It’s too far. We don’t think it’s investable from NYC the way Western Europe is

          1. Supratim Dasgupta

            Yeah.even the direct flights are 15hrs atleast.The US VC firms have full offices in India which operate mostly independtly..So to your point they are not operated from NYC or the US.

      4. Twain Twain

        Please see comment to Matt Kruza.

    2. LE

      Europe seems like such a mess to invest inThat would be exactly the reason someone would consider investing it in. It’s difficult, more difficult for a US firm than investing in their own country.

    3. Twain Twain

      Two different dynamics:(1.) Market inefficiencies => arbitrage opportunities & returns curve is steeper so potential ROI is better.(2.) Economies of scale => lots of local market victories in Europe but upscaling to global is harder.In some ways, European startups have to work harder for and with their capital because there’s not as much of it around.On positive side, that instils a “Stop burning cash, stupid!” as well as the “Keep It Simple, Stupid” principle in the MVPs they build — that is, if it’s a photosharing / social networking app they’re building rather than anything truly innovative that can become INFRASTRUCTURE (like a Google, Facebook, MongoDB etc).European founding teams have to be even leaner and more dynamic and survive on the soup base of the ramen (they can’t even afford to eat ramen).However, it’s the other constraints (not having the same product & engineering knowhow and then the legal environment) which explain why there haven’t yet been any European Googles, Facebooks, Twitters etc.To make matters worse, to gain the product & engineering knowhow they pay more than in the US for code schools so that means cashburn they could have done without.For example, I sat through introductory sessions for one of the leading code schools in: Immersive Web Development, Immersive UX Design, Product Management. Any founding team who doesn’t have these skills would spend around £30,000 ($45,000) per person to get themselves to a level where they could build a simple landing page that can collect the details of people interested in whatever service they want to provide.The class instructor came up to me afterwards and said that by some of my answers in the intro class, it was obvious to him my skills set are a lot more advanced than what the classes provide for.Haha!Never have I been more grateful my school had compulsory Comp Sci from age 11 and my parents let me play with computers before then. Plus I’ve coded on-off since including in my maths degree and in my career.Otherwise, I’d be burning $45,000 to learn how to build a landing page.I should add that founders put themselves through code schools not because they don’t know that they can launch a business with a WordPress blog, Google survey tools and other free analytics tools. They do it because they know investors prize Product & Technical teams who can actually BUILD STUFF above teams who are great at write lots of words in theoretical business plans and pitching their slides but can’t make the system.Unwanted cashburn also happens through giant potholes in the European startup road — even if the incorporation costs themselves are low, the legal services fees are high.On top of all that, there is the EU VAT issue:*

      1. Matt Kruza

        Thanks for the detailed reply. What you say makes a lot of sense. Part of what you are saying is: the different markets (countries) and tighter control on cash burn allows for many (maybe even more than US) smaller wins, but less mega wins / platform? I can buy that, and also explains why I think china has smaller number of wins.. but those that do are HUGE (baidu, tencent, alibaba etc). Where are you located? UK? (just based on you using the pound sterling symbol if my currency knowledge is correct!!)

  5. William Mougayar

    Ah, I didn’t know that wanting to be first in a category was engrained in your ego.I guess the next one is Bitcoin 😉 Game on.

  6. Conrad Ross Schulman

    the video is really only 45 minutes long! very funny as well

  7. Marcin Szelag

    Yet again, a great interview – honest and insightful. I wanted to reply to this post, because the topics that were discussed in the video are something that we at Innovation Nest think a lot about.Just to give you some background. I’m a partner at a seed fund called Innovation Nest. We are based in Krakow, Poland. Themes we invest in are focused around B2B SaaS. We have started in 2011 doing deals exclusively in Poland. Managed to close 15 investments so far. Our investment model is very simple – find founders who are building next gen SaaS companies and infect them with the Silicon Valley virus. Help them reach product-market fit in EU and then connect them with SV VCs to fund further growth. We have successfully managed to do that with UXPin (, with more to follow.The last three years have been a huge learning process for us. We have put a lot of effort into feeding the startup community in Poland. We are seeing first signs that something positive is starting to happen – Estimote,, Base Labs, Brainly are just a few examples of Polish companies raising money from international VCs. As a hub Krakow is much smaller than Berlin, London or Stockholm which we consider as the leading tech hubs in Europe. What is interesting about Poland is that it is one of the biggest countries in Europe, but it lacks the sort of visibility that “second tier” hubs like Hungary, Rumania, Estonia get. Fred, even in the interview you mention much smaller hubs, but not Poland.With Poland being under the radar, the challenges of growing global tech leaders are even bigger. We are trying to crack this by building a strong relationship with Silicon Valley. What we have seen is that as soon as you start speaking the same “language” as VCs and startups in the US – people start to listen. There are not that many VCs and startups in Europe who do that and that is a huge opportunity.To draw on some of the comments. These are the things we have identified as the main problems in the European tech ecosystem:• if you look at the data on A rounds in European companies, you will see a concetration of four hubs: London, Berlin, Stockholm/Helsinki, Paris• outside those hubs, things get very fragmented. There are few more cities/countries you could identify as “second tier” hubs like Bulgaria, Poland, Estonia (as a Baltic hub) and Budapest• data from and crunchbase reports thousands of startups in Europe but if you look deeper it is mostly noise. To get a sense of how big the market in Europe is, you could assume that there are 20 new interesting deals per hub per year. That gives a total market of about 160 startups across the EU• each European hub is different with different VCs taking the lead. There is an emergence of smaller funds, who are focusing on seed rounds. The problem is that those VCs don’t necessarily now eachother and work together• looking at and the accelerator market, there are really only three acceleratos in Europe with enough density – Seedcamp, Techstars, Eleven• outside of the main hubs, there are very few angel investors• eventhough Silicon Valley is a “magnet hub”, not that many European founders are aware of it. You need to educate them• if we look at Europe as a single tech hub, it is not very connected. It is not like in the Valley where there are strong networks of investors and founders. Sometimes I feel more connected to the US than Berlin or LondonAll in all, even with these challenges Europe is a great opportunity to find hidden gems. Also as Fred you mentioned with mesh networking – because Europe is so different from the US, entrepreneurs tend to see problems which might not exsits in America.What I think would benefit the EU tech community is being more open and inviting. I do not think we will have one central hub in Europe, that is why we need to build better connections between all the places, even with minimal startup activity.Fred you have to visit Poland as the tech ecosystem here is much more vibrant than Romania, Bulgaria or Hungary.

    1. fredwilson

      how about this summer? maybe June?

      1. Marcin Szelag

        great! June is pretty dense with events, like http://festival.bitspiratio…. If you would decide to come, it would be a pleasure to have you at Startup Stage – the leading tech meetup in Krakow (~200 attendees). I could send you some more info on the Polish tech scene via email. Poland has some interesting companies in your themes platform/bitcoin/marketplaces.

        1. fredwilson

          pls send me an email to fred at usv dot comi am still working on my june europe trip and won’t have it finalized for a bitbut that is the most promising

          1. Marcin Szelag

            will do, thanks. hope we can make it work.

  8. Dave Haynes

    Thanks again for the interview Fred. It was a real pleasure.