Silicon Cape will die

[Nefertiti]

Sorry, I should have made clear I meant start-ups that provide services. It's obviously a lot easier to bootstrap a services company where there is very little capital outlay and your biggest expense is just your own labour. Manufacturing is a whole different story, although as mentioned above, debt to finance capital purchases is much better than giving away equity. A think the reluctance of banks to lend money to start-ups is one of the biggest reasons for the growth of VC funding.

I suspected as much. But yea, I though it was a joke when people said by the time you qualify for the business loan you dont need it anymore.

 

[Nefertiti]

at least with manufacturing it's easier to obtain loans b/c you have physical assets as security. For software or services startups, it's a lot harder and VC is often the only option. The problem with that though, imho is that SA doesn't really have the scale to support the ecosystem. Sure there are the few exceptions for companies that manage to grow overseas but that is even harder to achieve.

On a side note, i think also one of the underlying problems is that many (esp young) entrepreneurs aren't that business savvy and think that raising money is the same as cashing in. No kids, that's just the part where you double up on blood, sweat and tears, if you're lucky, the money comes later.

I agree with the working hard thing, I think everybody should have a stint at starting their own business to appreciate just what its like.

I do believe though that we can have an ecosystem, but what do we need to improve the system?

 

[JStrike]

If that is the case why do VC's insist on listing, surely you can extract payment/value out of the company via other means. Like percentages of profits or sell your stake privately.

The entire point of a startup is massively high growth, and a quick exit. Otherwise it isn't a startup. It's just a small business then

 

[JStrike]

Yup - when I was starting my company in the early 00's, we ran our R350k overdraft at max for about 2 years, skipped every 2nd salary, personally stood surety to all the company debt, and are now a 2-dozen odd strong company with extremely healthy books, and are beholden to nobody.


I've watched the rise of the VC movement, and think it's more about Vulture Capital more often that not; almost gone are the days of personally risking your own financial position, it's so much easier to risk someone else's money; and you immediately have less to lose, so the urgency of a 100% self-owned and dependant venture isn't there.

That is by design. People tend to be too conservative with their own money. If you want to grow steadily over time, you have a small business. Not a startup. Startups go big or go home. The mantra is 'fail fast, fail often'. You take big risks, because the reward is big, and it is not (mainly) your money

 

[Nefertiti]

That is by design. People tend to be too conservative with their own money. If you want to grow steadily over time, you have a small business. Not a startup. Startups go big or go home. The mantra is 'fail fast, fail often'. You take big risks, because the reward is big, and it is not (mainly) your money

even a small business can fail fast and often and can have big growth. So I am not seeing a distinction between the two, could you please elaborate more on the distinction between a small business and startup?

 

[JStrike]

even a small business can fail fast and often and can have big growth. So I am not seeing a distinction between the two, could you please elaborate more on the distinction between a small business and startup?

Startups, when spoken about in Silicon Valley and Silicon Cape, are small small tech companies whose aim is to get scale quickly (millions of users). Revenue is not as important as users (or what it can offer to another company). The long term aim of the company is what is known as the 'exit'. This is where the company is sold (either to another company, or on the stock exchange), and investors make their money. During this, the Internal Rate of Return (IRR) is of big focus. From company establishment to exit - in Silicon Valley this ranges from 2 months to 24 months normally, in Cape Town this is much longer. It tends to take a couple of years. Which is just simply not good enough. Startups fail. A lot. But when they succeed, they succeed big. Which is why VC companies put to much money into them and why they invest in so many.

Small businesses tend to work on organic growth, and try to become profitable as early as possible. Their focus is on the sustainability of the business, as opposed to sheer volume of users and the IRR. A small business s normally better serviced by debt than by VC

 

[w1z4rd]

"A startup company or startup is a company, a partnership or temporary organization designed to search for a repeatable and scalable business model. These companies, generally newly created, are in a phase of development and research for markets."

JStrike, were you are StartupSA a couple of weeks ago held in Cape Town? Was South Africas largest Startup conference (probably Africas largest startup conference) and they had big players in the industry there. Not only were there many startups you could network with, but many incubators and venture capitalists were also there.

It was pretty funny watching the actual conference part of it there. The whole sitting area was lit up with tablets, phones and laptops.

 

[JStrike]

"A startup company or startup is a company, a partnership or temporary organization designed to search for a repeatable and scalable business model. These companies, generally newly created, are in a phase of development and research for markets."

JStrike, were you are StartupSA a couple of weeks ago held in Cape Town? Was South Africas largest Startup conference (probably Africas largest startup conference) and they had big players in the industry there. Not only were there many startups you could network with, but many incubators and venture capitalists were also there.

It was pretty funny watching the actual conference part of it there. The whole sitting area was lit up with tablets, phones and laptops.

Yep Far from the best, but also far from the worst conference. Definitely not as good as Disrupt, but easily the best SA has had. Even better then most of the european ones

 

[Nefertiti]

Startups, when spoken about in Silicon Valley and Silicon Cape, are small small tech companies whose aim is to get scale quickly (millions of users). Revenue is not as important as users (or what it can offer to another company). The long term aim of the company is what is known as the 'exit'. This is where the company is sold (either to another company, or on the stock exchange), and investors make their money. During this, the Internal Rate of Return (IRR) is of big focus. From company establishment to exit - in Silicon Valley this ranges from 2 months to 24 months normally, in Cape Town this is much longer. It tends to take a couple of years. Which is just simply not good enough. Startups fail. A lot. But when they succeed, they succeed big. Which is why VC companies put to much money into them and why they invest in so many.

Small businesses tend to work on organic growth, and try to become profitable as early as possible. Their focus is on the sustainability of the business, as opposed to sheer volume of users and the IRR. A small business s normally better serviced by debt than by VC

Thank you, now I am with you. However, how do you do something in 2 months? 24 months I can understand. Though I guess you already had an idea and prototype which got traction and then the vc capital allows you to get the volume.

 

[w1z4rd]

Yep Far from the best, but also far from the worst conference. Definitely not as good as Disrupt, but easily the best SA has had. Even better then most of the european ones

If you are next years one we should say hi

I know the guy that organized it. Vuyisa (he was in my class at school). They did that on a very tight budget and were just able to pull it off thanks to some generous sponsors. I think this year was a pretty epic success. Not sure about you but I walked away from that conference with valuable information and met some very cool people. That was the first one and from what I understand. The big names that were involved in the first one were so impressed it looks like next years one will be even bigger. We definitely need more of this, you network with useful people and companies and get some valuable advice.

I totally loved the electric scooters that were there.

Picture I took of the judges of in that Startup competition. Two Dragons from Dragons Den SA. Vinny is the Dragon that sold Gyft for over R500 million.

I really liked the prize. Mentorship and 3 months in Silicon Valley

 

[icyrus]

even a small business can fail fast and often and can have big growth. So I am not seeing a distinction between the two, could you please elaborate more on the distinction between a small business and startup?

JStrike likes the Paul Graham definition of a startup, which on closer inspection more resembles a ponzi scheme than a company.

Sadly this is the common culture that radiates out of Silicon Valley at the moment. But the party may soon be over.

 

[JStrike]

If you are next years one we should say hi

I know the guy that organized it. Vuyisa (he was in my class at school). They did that on a very tight budget and were just able to pull it off thanks to some generous sponsors. I think this year was a pretty epic success. Not sure about you but I walked away from that conference with valuable information and met some very cool people. That was the first one and from what I understand. The big names that were involved in the first one were so impressed it looks like next years one will be even bigger. We definitely need more of this, you network with useful people and companies and get some valuable advice.

I totally loved the electric scooters that were there.

Picture I took of the judges of in that Startup competition. Two Dragons from Dragons Den SA. Vinny is the Dragon that sold Gyft for over R500 million.

I really liked the prize. Mentorship and 3 months in Silicon Valley

It was really well organised and very well focused.

I know Vinny and Gyft

 

[JStrike]

JStrike likes the Paul Graham definition of a startup, which on closer inspection more resembles a ponzi scheme than a company.

Sadly this is the common culture that radiates out of Silicon Valley at the moment. But the party may soon be over.

Possibly. I strongly disagree though. But it is the model the valley runs on, as does Silicon Cape

 

[JStrike]

Thank you, now I am with you. However, how do you do something in 2 months? 24 months I can understand. Though I guess you already had an idea and prototype which got traction and then the vc capital allows you to get the volume.

Yep. As an example, HelloWorld was acquired by Life360 for an undisclosed seven-figure sum after two months