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Alex Farcet (Q): Torsten Kolind, tell me about yourself. What is your background and how did you end up running Venture Cup?
Torsten Kolind (A): Well, my background is biotechnology, I followed the MSc program at DTU and graduated in 2005. I then worked in a research lab at UCL in London for about a year afterwards, as a continuation of my thesis research project (immunology) and then by coincidence I stumbled upon the Venture Cup job. I read the posting, and it all sounded very interesting - during my studies I worked for two years for a small seed investor screening business plans, so the idea of university research into business plans was not strange. I applied and got the job while still in London, so I moved back in May 2006
and started work the next day in Copenhagen
Q: How do you explain Venture Cup to someone who's never heard of it?
A: Venture Cup is a business idea competition. It runs across the Danish universities, and the main idea is that students should form teams across academic backgrounds. The purpose is two-fold, to inspire and educate, as well as to help start up university spin-offs.
Q: How does it work practically? Can anybody enter? With any idea?
A: The competition is open for all students, recent graduates and staff within Danish higher education. The idea does not have to be research, nor have any relation to the university - you participate as yourself, and the idea could be anything really, it is more about the process than the product in most cases.
The true value in Venture Cup is what we do besides the actual competition, that is the workshops, interaction with investors and business developers, the jury feedback, the mingling across institutions, etc.
Q: Can you describe the process
A: Venture Cup runs across the academic year:
- Sep-Oct: You hear about Venture Cup and start thinking about ideas.
- Oct-Nov: Workshops within customers, market, team, what is a good idea.
- Nov 17th: Regional Venture Cups (3-page idea proposals)
- Dec 8th-11th: Finals, regional Venture Cups
(this is where the top ten teams from each region get to pitch in front of the jury and audience. The jury then deliberates and picks three winners who win cash prizes of 10K DKK, 15K and 25K, respectively) - Jan-May: National Venture Cup phase, workshops within business plan writing, budgeting, financing, business set-up, risk management, etc.
- May 4th: Deadline, national Venture Cup
- June 2nd: Final, national Venture Cup
(same set-up, top ten get to pitch, jury picks winners of 75K, 125K and 250K)
Q: Who sits on the jury?
A: Investors, start-up advisors, serial entrepreneurs, patent advisors, etc.
www.venturecup.dk/jury
Q: What's in it for them? Is it easy to convince people to become jury members?
A: It's quite popular actually. They don't get any pay or anything, it's
all about giving back. They have different supplementary reasons though, some are actively looking for investment leads, some are looking for clients (IP, law, audit), and some are looking for partnering opportunities. All are interested in equipping next generation of Danish entrepreneurs better than they were themselves :-)
Q: Now the killer question: how many contestants have gone on to 1) start actual businesses? and 2) succeed?
A: Well, we do an annual alumni survey, where we track the progress of our past participants, and the previous one (Spring '08) showed 53 active companies started by ex-Venture Cuppers.
Now, I reckon that many more have started and failed, so about 100 companies started in total is probably a good guess. This comes out of about 1000 teams going through one or more phases of Venture Cup since its start in 2000. So a 5% hit rate :-)
http://www.venturecup.dk/media(756,1033)/Alumni_Report_0708.pdf
Q: That demonstrates the impact of Venture Cup. Are there any particular business cases or teams that stand out in your memory in terms of craziness, ambition, etc.?
A: Yes
- iMotions
- Friprint
- NIL technologies
- And one that hasn't started, MOD - biodegradable cardboard coffins for mass graves at humanitarian disasters.
iMotions because it is a textbook case - the techie (DTU PhD) meets the business man (CBS cand. merc), they quickly realise that both sides need each other, which has been essential in their success (50+ employees, ~$8m raised capital I think)
Friprint because it was not a very good investment case in principle – they provide free print for students, where they print ads on the other side of the paper. They can't really protect their idea, anyone else could do it, but they started up, got investors, and are still active - a great example of the right team making a relatively crap idea a success.
NIL tech because it's a great venture case, they raised a fair amount from an american VC because their technology is right.
And MOD was just the odd one out - bizarre idea, but they made it to the top ten at the national final 06/07, and they probably got more PR than any other team that year :-)
Q: I saw iMotions present at a Venture Cup event and yes, they're
impressive. And I do know NIL since I interviewed Theodor Nielsen.
You mentioned workshops and training. In your experience, what are the areas where students are the least prepared by their formal education?
A: Well, their formal education is exactly that, formal. What we provide is training, practical work on your own (or someone else's) business idea.
Most Danish universities have entrepreneurship courses these days, where you either learn theory of e-ship, or how to write a business plan - unfortunately, you also need much more than just a good business plan to win Venture Cup, and that's what we try to bring to the table.
As an example, we run exercises like our customer pain game, where they have to sell someone else's idea to a customer, who doesn't know the idea either, and the entrepreneurs can't say a word during the exercise (they can prep their salesmen before). This way all parties get a feel for the idea man > salesman > customer relations.
So, ironically, we don't really teach how to write a good business plan, but we help them develop their ideas and come up with the right business model, so that they have good stuff to put in their picture-perfect business plans ;-)
Q: That must be fun to watch! So when you say 'you need much more to win Venture Cup', how would you describe the prototype winning team?
A: Well, iMotions is a good example. It is a cross-academic team, first of all, preferably with the idea guy/girl and a business person at least. Last year's winners were three guys, a hospital employee and two business school students (ASB in Aarhus)
Secondly, they are good at sharing their idea and listening to fellow
participants, jury members, coaches, investors, etc. Very often the winners have the right idea, business acumen, and the ability
to listen and develop their project with the feedback they get but there are exceptions. Last year's #3 was just one guy, a CBS student, who developed a piece of software to help make life easier for web programmers. He convinced the jury, and did a great job, but it remains an exception.
Q: Do you think the Venture Cup ideas follow current hot trends (i.e. cleantech)? Or on the contrary, are they going against the grain - and
sometimes positively surprising the jury?
A: We have a very wide variety of projects from all sorts of academic backgrounds and within all sorts of industries. Typically, people do what they like or are good at, rather than follow the latest fad. This is good in the way that they can surprise the jury with unexpected stuff, but on the other hand, many investors are focusing quite narrowly, so if you are, say, making coffins for the third world, your investment opportunities are limited.
Q: Right, but doesn't that say more about a kind of herd mentatlity among venture capitalists?
A: Yes, absolutely. However, they are free to pick what they want to invest in, and if you can't give them that, you won't get any money. It is a buyers market, with many more projects than cash around. But if I was starting up a seed fund tomorrow, clearly, I would venture outside of the traditional biotech, ICT and cleantech areas
Q: ... and what area would you pick?
A: I would pick the right people to invest in, first of all. Industry-wise,
I'm not sure, but Venture Cuppers are mostly quite young and come up with tomorrow's business ideas rather than today's, and personally I find some of these projects highly exciting precisely because they don't fit into any existing areas or industries.
Q: Do you think that Venture Capitalists could get better deal flow if they provided more value added to entrepreneurs? I mean for example training and workshops such as what you do with Venture Cup?
A: Hard to say, should they provide this themselves, or should they rather pick only people who have had this sort of training beforehand? I think many of them will say that it is not their duty to educate, instead they should pick the winners. Most VCs would rather invest in serial entrepreneurs to lower risk, but that also means that they are older and their ideas may be less radical but more likely to work out. In the US for instance, business angels pick up the crazy high-risk ideas and coach the entrepreneurs, and VCs take the survivors. But in Denmark we don't really have this ecosystem,
so Venture Cup training can be a way to go directly from no or little
experience and get investment.
Q: Let's turn to Venture Cup as an organisation - how many people are on the team, where do you get funds and what is your job?
A: Venture Cup is a non-profit association, where six universities are the members and owners (AU, CBS, DTU, KU, RUC and SDU)
We operate in four regions, and have a total of 12 staff in Copenhagen, Roskilde, Odense and Aarhus - 4 full time employees and 8 part-timers, mostly students.
Funding comes from three main sources: the universities themselves, our private sponsors, and government programs - see the web for more info.
My job is to lead the team, raise the funds, and deliver a world-class
Venture Cup. :-)
By the way, I told you that I am leaving right? My successor is Tine
Thygesen, a Danish entrepreneur. She started about a week ago and I'm hanging around until she kicks me out, or until Jan 1st at the latest. http://www.venturecup.dk/media(859,1033)/tinethygesen.pdf
Q: What are you going on to?
A: I am going to San Francisco to do business development for a start-up company there.
Q: Can you name the company?
A: It's called YouNoodle, and is basically a social networking tool for
entrepreneurs and investors. We actually use it in Venture Cup for our jury process, teams, plans, networking, etc.
http://younoodle.com/groups/venture_cup_copenhagen
Q: Tell me more, who's behind it and what is the business model?
A: http://venturebeat.com/2008/02/18/younoodle-offers-investors-a-start-up-predictor/
It's backed by nine Silicon Valley business angels, Peter Thiel among
others. The business model? That's what I need to figure out :-). I have a bunch of ideas, and so do they, but I'd rather get started over there before I speculate too much in public about how we will become profitable, if that's OK.
Q: Not OK, I want it all right here in a global exclusive!
A: We'll talk about this another day, but it is a very promising and rather controversial project
Q: Well, Torsten, thank you very much for the intro and overview into
Venture Cup. I'm a fan. And very best of luck with YouNoodle. I'll be looking for a follow up interview when you've moved to SF.
A: Sure thing