How to scale and fund your startup in the Caribbean. Interview with Valerie Vallenduuk
Over the past four years, Present Your Startup (PYS) has organized its regular training program and pitch competition event as well as a special hackathon in the Caribbean. To know more about the root motivations behind these efforts and the general economic climate of the islands, we interviewed Valerie Vallenduuk, founder of PYS.
“Long walks on the beach, cheerful activities and high-spirited music.
Who doesn’t think of this when imagining the Caribbean? Certainly, the picture is attractive, but the reality presents much more. People must notice that tourism is not the only opportunity.”
With the upcoming Bonaire edition, the entrepreneur and former lawyer aims at unlocking and boosting the unseen economic potential:
The Caribbean startup ecosystem
Bonaire and in general the Caribbean ecosystem have changed dramatically over the past few years, what were the components of this transformation?
I could mention many elements and highlight a few critical events but, in the end, it is really one factor: necessity. The economy relies too much on tourism and misses out on the wealth of ideas entrepreneurs have. Business people relocate hoping their talent will be recognized oversea. Governments have picked up on this trend and activated themselves to retain such geniuses. Present Your Startup is the perfect stage to attract professionals and accelerate business dreams.
In your opinion, what does the ecosystem need to fully develop?
Funding and support from public-private cooperations.
While the awareness is there and the first steps have been taken, we are far from having a system that encourages and nurture startups. PYS is a pioneer in this change and has built a valuable network throughout the years. PYS Bonaire is an example of it: The Chamber of Commerce proactively connected newly registered businesses to Present Your Startup and gave their commitment to other future events.
What do you think makes Bonaire and also the Caribbean an appealing investment opportunity? What are the main challenges in attracting capital to the islands?
The ABC islands are attractive because Dutch laws and regulations apply. Dutch companies aiming to interact and doing business with South America can think of the region as a test location. However, it is always difficult to convince investors if the political and economic situation is not completely optimised.
What advice would you give to Caribbean entrepreneurs to be investor-ready? What advice would you give to investors who are looking forward to do business connections?
For entrepreneurs, educate yourself on how funding works, use supporting programs to the maximum and seek assistance from trustable advisors.
For investors, if you really want to make an impact on our society, invest in the regions that need it the most.
How do international startup events like PYS have a positive impact on the ecosystem there?
We don’t only drive capital, but mindsets and perceptions. Other than startups, we accelerate the development of the ecosystem.
Lastly, what’s next to happen in the Caribbean landscape? Do you have aspirations or messages you would like to share?
The Caribbean is busy with getting more entrepreneurial and it goes well! So, I expect a lot from the younger generation in terms of changing the mindset, proving that within and beyond the island borders there is a lot to achieve.
If you felt inspired by the words above, we have great news! You can contact us if you would like to be part of the progress. The finals of PYS Bonaire take place on the 20th of February and we still have future plans for the region. Click the button below to see the change with your own eyes!
Written by Steven Pango
steven@innovate.today
Lean Startup: Are you ready to innovate?
How can you make sure your idea works? There are many methods, but in this article, we will explain the Lean Startup methodology, which teaches you how to drive a startup, when to turn, when to persist and grow a business with maximum acceleration.
One of the founding fathers of this concept is Eric Ries.
As an entrepreneur, he experienced firsthand the drawbacks of the traditional process with his first company. During his second chance, as a co-founder of software company IMVU, he and his team tried a different approach by rapidly creating and releasing their product before it was perfected, only to continuously update, revise and re-release it, based in part on customer feedback.
This experience and his findings built the famous and successful book “The Lean Startup” which helps startups create order and avoid chaos by providing tools to test a vision continuously. If you would like to apply this method, follow the next steps.
VALIDATE YOUR PRODUCT/SERVICE
Many startups begin functioning with a product idea they think people want. No market research, no testing and some of them spend months or even years perfecting a product based on their own beliefs, without even showing the idea to prospective customers. Therefore, some startups receive nothing but indifference when communicating or launching their final product and this is certainly not helpful to new businesses. Keep in mind that deep market research and a good validation of the idea will help you to develop a better product that solves needs.
ELIMINATE UNCERTAINTY
"Just do it" is an approach that avoids all forms of managing. The lack of structure could lead many startups to abandon all processes. Using the Lean Startup approach, startups can create order and avoid chaos by providing tools to test a vision continuously. It is not simply about spending less money or failing fast, it is about having a process, a methodology around the development of a product/service to build it the best way possible.
WORK SMARTER NOT HARDER
Products are experiments.
“Every action you take in product development, in marketing, every conversation you have, everything you do is an experiment”
Should this product be built? Can we build a sustainable business around this set of products and services? This assessment is more than just a hypothetical checkup; it is actually what we would define as a first product. If it is successful, it allows you to get started with a campaign, for instance, enlisting early adopters and adding people to the team and eventually starting to build a product. By the time the product is ready to be launched, it will already have established a proven customer base. It will have solved real problems and offer detailed specifications.
FIGURE OUT THE PROBLEM, GIVE A SOLUTION AND CREATE THE MVP
One of the essential components of “Lean Startup” is the build-measure-learn feedback loop. The first step has as objective, to figure out the problem that you must solve and then develop a minimum viable product (MVP) to begin the process of learning. Once this MVP is established, you need to measure the impact and results and learn. Remember to include metrics that can validate the question you asked before.
As a startup, you can also use an exploratory development method called "Five Whys", which refers to ask simple questions to study and solve problems along the way. When this process of measuring and learning has been done properly, it will be clear if the startup is moving the drivers of the business model or not. If not, you have the perfect sign to define if it is the time for pivot or to make a correction in order to test a new hypothesis, strategy, and engine of growth.
VALIDATED LEARNING
The Lean Startup method can help you with metrics and progress to prove your idea works with a solid foundation, which helps a lot when you want to get funded and you are in need of evolution. Once entrepreneurs embrace validated learning, the development process can be substantially more efficient.
That said, when you focus on the right thing to build, based on what customers want and will pay for, you do not need to spend months waiting for a product to change the company's direction. Instead, as an entrepreneur, you can adapt the plans along the way.
Some examples of successful companies using the lean startup method
DROPBOX
Dropbox is one of the best-known examples of a business that has grown using lean startup principles.
The file transfer service now has over 500 million users worldwide but it started life as a minimal viable product in the form of a 3-minute screencast showing consumers what Dropbox could do. Response to the video enabled Dropbox to test if there was a demand for the product and, at the same time, capture an initial audience through a waiting list. Comments on the video provided high-value feedback.
ZAPPOS
When Zappos started out in 1999, founder, Nick Swinmurn, didn’t know if customers were ready to buy shoes online. Swinmurn approached local shoe stores, took pictures of their inventory and posted the pictures online on a basic website. If he received an order, he’d buy the shoes from the stores at full price and then sent them directly to customers. Swinmurn soon proved that customer demand was present and Zappos would eventually grow into a billion-dollar business based on the model of selling shoes online.
PEERBY
A good Dutch example of a company using the lean startup method to build up their business is Peerby. Founder Daan Weddepohl came up fast in 2012 with his peer-to-peer platform for household items. After refusing an offer of 16 million to sell his company problems started piling up for him. With trial and error and The Lean Startup by Eric Ries in his hand, he managed to turn things around for Peerby. Now the company is showing the hockeystick growth you want to have as a fast scaling company and they are back on track for rapid expansion. Weddepohl has since published a book about his experiences.
Want to learn more about The Lean Startup method and about ways to finance and grow your startup? Register for the free introduction day of Present Your Startup Alkmaar on February 13th!
References & further reading
Muckersie, E. (2016, September 8). 3 EXAMPLES OF LEAN STARTUP IN ACTION. Retrieved January 28, 2020, from Decidedly: https://decidedly.com/3-examples-of-lean-startup/
The Lean Startup. (n.d.). METHODOLOGY. Retrieved from The Lean Startup: http://theleanstartup.com/principles
Wharton University of Pennsylvania. (2011, November 22). Eric Ries on ‘The Lean Startup’. Retrieved from Wharton University of Pennsylvania: https://knowledge.wharton.upenn.edu/article/eric-ries-on-the-lean-startup/
Luimstra, Jelmer (2019, September 20). ‘Boek over Peerby leest als achtbaan aan overwonnen failures’, in: Sprout. Retrieved from: https://www.sprout.nl/artikel/boeken/boek-over-peerby-leest-als-achtbaan-aan-overwonnen-failures
Written by Claudia Flores and Steven Pango
Cost structure: What’s yours?
According to CBInsights, pricing/cost issues are the #5 reason for startup failures. In the beginning, it is not uncommon for entrepreneurs to ignore negative margins. However, such an approach can, in the long run, prove to be very costly.
The start-up expenses play a huge role since your business will not take off without the right amount of capital. By estimating your start-up costs, you can determine if your business plan is feasible and the amount of financing you may need. This article explains how and why assessing costs is fundamental for your company’s long-term viability and explores some international companies that terminated/slowed down their operations because of cash flow problems.
Big picture
“As success has a price, operations have a cost”
The Cost Structure describes all costs incurred to operate a business. Minimizing costs is an approach which every company should adopt, yet there are 2 extreme categories a business can fall into:
Cost-driven: this approach aims at creating and maintaining the leanest possible Cost Structure, using low price Value Propositions, maximum automation, and extensive outsourcing.
Value-driven: this approach contains premium Value Propositions and a high degree of personalized service.
Following are some basic but important characteristics:
Important questions
Prioritizing costs and ranking them by amount can help you conclude which ones must be changed.
What are the most important costs inherent in your business model? Which Key Resources are most expensive? Which Key Activities are most expensive?
SWOT Cost assessment
Using this familiar tool in combination with the business model canvas, we can determine that costs belong to the internal environment and thus opportunities or threats may result from the analysis of the section.
With the table below, you can assess your own cost structure:
Strengths
Do you have a cost-tracking system?
Is your cost structure better than your competitors?
Weaknesses
Do you have any major cost streams which cannot be matched to a Key Activity?
Threats
Which costs threaten to become unpredictable?
Which costs threaten to grow more quickly than the revenues they support?
Opportunities
Where can we reduce costs?
News & Examples
In the following section, we will name notorious companies which, in one way or the other, encountered cost issues during their effort to success. Loss leaders are the idea that losing money can build a customer base, which will increase profits in the long-term.
Starting big, the most striking case of the last year is WeWork.
While multiple reasons can be attributed to the recent fiasco of the real estate company, it is important to mention that the business went overboard losing $1.25 billion in the 3rd quarter of 2019 alone, largely from acquiring new offices that are hemorrhaging money at an impressive rate.
Other big names in the negative-margin club are:
Uber – The company is still making a loss due to having to subside its rides and other platform operations. Profitability is set to 2021.
Slack – The business is not far from its era of profit making but for now it remains one of the bigger companies struggling to reach the plus margins.
Snap Inc – The parent company of Snapchat, has been making a loss since it started, and despite having quite a high valuation, still registers red in the bottom line.
Startup Takeaways
1. Your startup’s cost structure reflects directly on two essential financial metrics: cash burn rate and cash runway.
2. If your business requires high costs to run, but you can’t design equally high revenue streams, you’ll face problems in sustaining and scaling it.
3. Cost structure mapping helps you on visualizing significant costs and thinking about alternatives to reduce them.
4. The relation of cost structure with other business model blocks shows you the impact that iterations or pivots have on your financial results.
Costs will remain a major concern for any kind of business at any stage, whether they will become a problem depends on your approach and ability to change. Minimizing costs is not the only strategy you can adopt!
Would you like assistance in creating a game-changing cost structure? Apply for an intake with Innovate Today.
References
Anastasia. (2015, March 20). Cost Structure Block in Business Model Canvas. Retrieved from Cleverism: https://www.cleverism.com/cost-structure-block-in-business-model-canvas/
Austin, D. (2019, November 25). Why WeWork Failed — And What It Means for Coworking. Retrieved from Medium: https://medium.com/@derek_develops/why-wework-failed-and-what-it-means-for-coworking-5d6bb209f5e2
Azevedo, A. (2019, August 13). What Is Your Startup’s Cost Structure? Retrieved January 6, 2020, from The Traction Stage: https://thetractionstage.com/2019/08/13/what-is-your-startups-cost-structure/
Rossington, R. (2019, November 7). 5 Of The World’s Biggest Companies That Are Making Zero Profit. Retrieved from CEO Today: https://www.ceotodaymagazine.com/2019/11/5-of-the-worlds-biggest-companies-that-are-making-zero-profit/
Upcounsel. (2019). Cost Structure Example Startup: Everything You Need to Know. Retrieved January 6, 2020, from Upcounsel: https://www.upcounsel.com/cost-structure-example-startup
Written by Steven Pango
steven@innovate.today
2019 in review: PYS analyses the Dutch startup market
In the midst of organizing our 2020 resolutions, Present Your Startup will take a look back on 2019 and the global and Dutch trends that influenced the past year. Join Valerie Vallenduuk, Mike Rijkers, Lennart Freud and Samed Sökmen as they discuss FinTech, Circular economy, Aerospace and more in the entrepreneurial landscape of the world and the Netherlands.
Solutions for a faster and long-term society
Most exciting 2019’s sector?
To gather all the beautiful sustainable efforts in one word, I would say CleanTech. I take hope in observing how the reason for today’s problem is also the key to tomorrow’s survival.
Rising 2019’s sector?
Still, within sustainable concepts, the circular economy has made great leaps forward. The Dutch government has been an active participant in the development of these solutions by financing means.
Present Your Startup itself looks forward to many entries in this field while Innovate Today has full hands helping green businesses make an impact through PIM.
Work in progress sector?
Cryptocurrency
In 2019, the Dutch Central Bank proposed a throughout version of the European guideline in which it is explained how supervision will be applied. Its complexity makes profitability and competitiveness difficult for young crypto companies.
What 2019’s accomplishment are you most proud of?
Present Your Startup track was part of the American concept Global Entrepreneurship Summit which was founded by Barack Obama.
Tech, tech and more TECH
Most exciting 2019’s sector?
FinTech.
2019 has seen many new financial services focused on a more user-centered approach. Personalization proved to be a competitive advantage, allowing products to reach new customers.
Rising 2019’s sector?
Home automation.
It was amazing to see all the solutions to make our lives in and around our houses smarter. In such a fast-paced lifestyle, I believe more and more people will transform their residence into an efficient, data-driven establishment.
Work in progress sector?
Circular economy. Many of the current solutions aren’t circular but just extensions of the (linear) lifespan.
What 2019’s accomplishment are you most proud of?
The expanding of Present Your Startup to Alkmaar.
Earth and Space
Most exciting 2019’s sector?
Food sector, specifically meat replacement.
The past year registered floods of companies that produce alternatives for meat consumption. The IPO and stock price of Beyond Meat, for example, was such a turbulent ordeal. In the longer term it remains interesting to look at this sector as lab grown meat might be coming to the market soon. There are also some Dutch startups that want to secure their place in this market.
Rising 2019’s sector?
Aerospace sector.
It is becoming cheaper and cheaper to shoot objects into orbit. Examples are Elon Musk and Jeff Bezos with respectively SpaceX and Blue Origins, but even smaller and younger companies have opportunities in this field too. Our own Delft has some interesting buzz, and the European Space Agency is now running its own incubators.
Work in progress sector?
Not a sector but I am still waiting for the proper take-off of chatbots: they are still irritating, I see them being used less and less as they often do not work properly.
What 2019’s accomplishment are you most proud of?
Running my first edition of Present Your Startup Netherlands as program manager.
The last century was about the physics, and this will be about biology
Most exciting 2019’s sector?
E-mobility
The past year has had many new players in the field focusing on electric scooters, bikes, and cars. Although the concept has been introduced for a long time, people have started adopting it more and more. If I were to mention names, Amber Mobility, Felyx and Lightyear are companies to keep watch of.
Rising 2019’s sector?
Genetics.
Within BioTech, this category is showing great results. We have gone extremely far in technology these past years, but can we say the exact same in making our lives longer and healthier?
I expect governments helping genetic engineering startups in regard to R&D costs. Big news in the organ printing will come soon as well.
Work in progress sector?
With technology becoming more and more effortless to work with, there has been a proliferation of different applications and products that make advertising easier. On one side, switching costs are practically non-existent. On the other hand, innovation is stale: format and features are copy and paste of each other with different branding.
What 2019’s accomplishment are you most proud of?
Playing a role in the culture and structure of Innovate Today, our empowering company.
Comment, like and share!
Do you agree with what has been said? We look forward to your take on how much the Dutch startup ecosystem developed in 2019. Find the next networking opportunity on our event page!
Written by Steven Pango
steven@innovate.today
Links:
https://www.sprout.nl/artikel/mosa-meat-strikt-topinvesteerder-chris-sacca-en-nutreco-als-partners-crime
http://www.esa.int/Applications/Telecommunications_Integrated_Applications/Business_Incubation/ESA_Business_Incubation_Centres12
https://berk.es/2020/01/10/dutch-government-killing-crypto-startups/
