Q&A: The background of Rainmaking and the beginning of Startupbootcamp
Carsten Kølbek is Partner in Rainmaking which is organizing Startupbootcamp - an entrepreneurial initiative where each entrepreneur can get DKK 25.000 as seed capital to start a company in three months.
What is the point with Startupbootcamp?
--The purpose of Startupbootcamp is to support and strengthen entrepreneurial teams with good ideas. The target group consists of entrepreneurial people in Northern Europe, and we hope to receive approximately 250 applications from teams. From these, 10 will be selected to enter a three-month program in Copenhagen over the course of the summer 2010. The goal is that the teams will move from idea to prototype or product, which at the end of the program will be presented to a large group of investors.
Who is Rainmaking?
--Rainmaking was founded in 2006 by Martin Bjergegaard, Morten Abildgaard Kristensen, Morten Bjerregaard Nielsen and I. Since then, we have had two exits with the GodtSyn and CityLasik, both related to eye surgery treatments, and both sold to the eye treatment company Memira with Investor Growth Capital as major proprietor. In the beginning of 2010, we opened an office in London, and we are planning to open an office in New York within the next two years.
Why did you initiate Startupbootcamp?
--More and more self-employed business people approached us wanting to do business, and with Startupbootcamp we have found a good way to comply with these approaches. Also, we want to be attractive towards new and edgy entrepreneurs and hopefully contribute to the making of the next Skype. Last but not least, we feel that we have learned a lot about entrepreneurship over the last couple of years, and we would like to give something back as well as pass on this knowledge.
Who’s helping?
-- Approximately 50 top mentors from our network will take part in Startupbootcamp passing along their good advices as well as open some doors to their own networks.
Who have been your “rolemodels” to start Startupbootcamp?
--We have been inspired by Tech Stars, Seedcamp and Y Combinator. We have not found any similar initiatives here in Scandinavia. Although there are plenty of councils, incubators and investors, we have not seen others, who help entrepreneurs with the first and crucial steps in such a hands-on approach.
By Anders Frick, Rapidus
Launching Startupbootcamp
Today is the start of Global Entrepreneurship Week 2009 (http://www.unleashingideas.org/?_c=1), during which "for one week, millions of young people around the world will join a growing movement of entrepreneurial people, to generate new ideas and to seek better ways of doing things."
This is a fitting time for the Rainmaking partnership to launch its latest initiative: Startupbootcamp (link to www.startupbootcamp.dk).
Startupbootcamp is for entrepreneurs with great ideas and great teams who are looking to convert their idea into a live company in 3 months. Following a rigorous selection, up to 10 teams will come to Copenhagen in summer 2010 to be part of the first generation of Startupbootcamp companies. We will host the teams in an incubator environment in the heart of Copenhagen, we will inject some cool cash and lots of top notch mentorship, and we will close with Investor Day - a unique opportunity for the 10 to pitch to the most active Danish, Nordic and international investors. See how to apply here. (http://startupbootcamp.dk/apply)
Feeding the underforrest
Small plants have trouble getting sunlight and growing in the shadow of big trees. The recent financial crisis has reduced business angels' and venture capitalists' appetite for risk and a natural reaction has been to invest in more mature startups with proven business models and existing customer bases.
Startupbootcamp feeds the budding underforrest of young entrepreneurs by giving a highly selected group the ideal conditions to reach up to the big trees. Rainmaking calls itself a "startup factory" because this is exactly what it's good at: converting an idea on a napkin into a live company by injecting the needed energy, creativity, and business acumen. The key for entrepreneurs joining Startupbootcamp is that they not only get the support they need but experienced co-founders who have 'skin in the game'.
Born global in Copenhagen
Startupbootcamp's roots are Danish but our ambitions are global. We aim to attract the very best teams and ideas from the Nordic region (in our broad definition that not only includes the Baltic countries but also Poland and northern Germany). but we're not concerned with the candidates' age or nationality. Our ambition is to have several Startupbootcamp companies expand on several continents. We already have an international team and we are not limited by our location.
Come meet us
We are celebrating the launch of Startupbootcamp by inviting David Cohen, founder of Techstars, to Copenhagen this Wednesday Nov. 18th. David has a long track record with his own tech startups and he runs Techstars which is recognised as a leading program for tech entrepreneurs.
We will be using the occasion to officially launch Startupbootcamp and we'd love to meet you. Sign up here. (http://startupbootcamp.dk/apply-cohen).
We look forward to reading your comments below and will answer your questions via email (info@startupbootcamp.dk) or phone (+45 24 29 4000).
Kind regards,
Alex Farcet
Ready to invest
In Rainmaking, we are now ready to increase our investments in new projects.
Our business politic is that we want to spread the risk by investing smaller amounts in several projects. We have a margin of expenditure of 1 mill. Dkr. for projects that we start up from scratch ourselves; and a margin of 500.000 Dkr. when we engage in others’ projects.
We cultivate our network of investors, and feel that it is healthy to have to convince professional investors to see the sense in our project. Previously, we have raised 25 million. Dkr. to the development of our existing companies, and we will continue this line of fund-raising.
Now, we are furthermore considering creating a "scholarship"/pre seed arrangement, by which we invest e.g. 100.000 Dkr. in totally new and untested projects. In the States, a guy by the name, Paul Graham, has started a company called Y Combinator by which he makes these kinds of micro-investments; as of today, he has ownership-shares in 145 start ups. We are somewhat tempted to start a similar arrangement in Denmark. In addition to money, we will – just as Paul Graham does – contribute with sparring, networking and ad hoc assistance in regards to e.g. fund-raising, larger contracts, and exit plans.
Do you think that talented entrepreneurs in Denmark will be interested in such an arrangement?
Welcome in the Press
Rainmaking has been elected "Entrepreneur of the Week" by Dagbladet Børsen and is today presented on the back of the supplement VækstDanmark. Rather the back of Børsen than the cover of Ekstra Bladet:-)
During an interview a couple of weeks ago, we were asked to provide some good advices for other entrepreneurs. We wrote down 7 advices, which in our belief can lead you to either make it or break it. They were shortened so as to fit into the textbox in the paper, but they do better in full length. Here they are:
The Rainmaking advice to other entrepreneurs:
1) Choosing the first the idea that comes into mind is slobby! Evaluate many ideas and kill the ones that are not waterproof.
2) If you can’t find investors for your project, there might be a good reason. Come up with better project instead of getting stubborn.
3) Your initial concept is most likely not the one that will give you a success. Always start of with a small test, so more approaches can be tries out before the purse is empty.
4) Be critical when choosing partners. Go for the best partners and employees. People who are twice as expensive are usually ten times more efficient.
5) Create a mental vision with your team from the very beginning. Identify exactly what you want to create and why it is worth fighting for. Be prepared to adjust the vision as you go along.
6) Take 10 hours of your workweek and spend the time reading relevant literature, talk to people and exercise. You will loose perspective if all you do is work.
7) Do not believe all the miseries you hear about entrepreneurship. Given the right circumstances it can be the best job in the world.
What´s in it for you?
Sometimes it is sound to pause for a second and consider what others can use your company for: What’s in it for you?
Investors
If you invest in a Rainmaking project, you will first and foremost receive a solid return on your investment. Today we have 9 experienced and competent business angels, who have jointly invested 25 million DKK in Rainmaking and since the sales of CityLasik they have started to earn a yield. But our investors not only get a good ROI, they also become part of a strong network that meets 4 times a year to share knowledge, contacts and learning. Because we actually listen to our investors’ input, we only take on "wise money" and get enhanced chances for success through their experiences.
Team member
If you become part of our team, you will have a unique job. You will be starting up companies from scratch together with other skilled business developers, specialists and the Rainmaking partners. One month you might be testing a new business idea, and next you will spend 3 months increasing the bottom line in an existing company followed by 6 months spend on getting the first 20 customers and first 5 employees in a brand new firm. In Rainmaking we spend a lot of energy helping each other to become even better through day to day coaching, courses, seminars and sharing of knowledge and experience.
Partner colleague
If you have the right competences, values and motivation you can become partner in Rainmaking on equal terms with the 4 existing partners. As a partner in Rainmaking you own a range of firms together with like-minded people. You can either work your way up internally or come straight in if you are e.g. a successful entrepreneur, a partner in an acknowledged consultancy, a manager with proven results, or if you in some other way can contribute massively to the further development of Rainmaking. Our partnership is cordial and we want to stay that way. Life is too short for internal fights, "me"-attitudes, sub-optimisation and bad vibes.
Entrepreneur
If you are an entrepreneur you can become part of Rainmaking Club. This is a place for help and support to succeed in your projects in exchange for a small share of ownership. In this way we are in the same boat and we set our competences, network and sparring at your disposal. We send no invoices as we want you to spend your money developing your company. We will rather have a small share of the upside if you create a success. If you give us 10% of your company, we dare to promise that your chances for success are increased by 10% and that the success will become at least 10% larger. It is a win/win partnership where you do the hard work and make the calls – and we help you to overcome those stones on your path which often knock down entrepreneurs and to gather momentum and pick up speed.
Ideas from other Entrepreneurs?
Supplementing the questions of the journalist, who Martin just wrote about, I can add another question that we often get, most recently when Thomas Mølgaard and I visited the Iværk fair yesterday:
Do you accept ideas from outside Rainmaking and cooperate with other entrepreneurs?
We might be getting some pretty good ideas in Rainmaking, but in all likelihood there are even better ideas in the world around us. So why do we love our own ideas so much then? We probably could cooperate with other entrepreneurs with excellent business ideas, but lack the execution power?
The Rainmaking Way
When we start a new project it is crucial to be able to do it "The Rainmaking Way" without large hesitation or resistance. This e.g. means that we typically run a small test of the business model and only carry on if we believe that the company can be sold at a three digit million amount within 5 years.
Consequently we have a high degree of portfolio-thinking in our approach to our companies and are not afraid to kill "zombie firms", that don’t create the expected value and hence causes defocusing. Subsequently The Rainmaking Way requires a high level of cold-bloodedness which is rare amongst entrepreneurs who enter a project with all the time, savings and lifeblood and neither can’t nor will let go, even if the potential proves to be smaller than hoped for.
Open to ideas and new partnerships
In this way our reservations can be boiled down to two criteria: (1) there must be a potential for a three digit million exit within 5 years and (2) we must be able to conduct the project The Rainmaking Way. The latter doesn’t necessarily mean that we need the dominant part of the ownership, but we do need the authority of decision and hence be able to carry out the project as a part of our culture and best practices.
Within these boundaries we are always open and ready for dialogue. We even have a policy stating that Rainmaking will give up a 5% share to the originator if the company is based on an external business idea. Such ideas can come from creative individuals or companies who see a market potential, which they can’t or will not meet but still prefer to see the idea launched rather than forgotten.
Write about your business ideas on this blog or comment on our attitude to cooperating with other entrepreneurs.
More CleanTech…
Today we received the first result of our networking efforts at the CleanTech conference: a 54-page business plan for a new technique used for charging electric cars.
I feel it will be difficult to create a good partnership with entrepreneurs who have already gone far with their ideas and who presumably wish to run their projects on their own. They want our help, but they most likely do not want to share a sufficient amount of ownership and decision-making authority. One of our principles for the projects we take on is that they must be "Rainmaking projects". By this we mean that we manage the project, that it must become a part of our business factory, our best practices and our infrastructure. We see this as the most effective means of creating value. On the other hand, we are always open to making an exception to the general rule if it makes sense in a given situation, so one of these days we’ll have to take a look at the electric car business plan.
Today we also met with one of the big VCs here at the main office. They manage three billion Danish kroner and still have 2 billion kroner in "free" capital, so they are quite open to making new investments. We discussed the possibilities of a win-win partnership between them and Rainmaking. They receive countless business plans that can be divided into three categories: a) the great ones that they want to invest in right away; b) those which are immediately rejected; and c) those which have potential but which are not yet mature. From now on they will send projects from the last group to Rainmaking so that we can assess whether or not we can play a role in "upgrading" them to the level needed for the VC to invest in them. Now we’ll see what becomes of this partnership. I think it’s having these VCs in our network is a huge asset, as they have great insight when they evaluate their sea of business ideas and meet a great number of entrepreneurs.
We also met with a CleanTech entrepreneur who has a number of exciting inventions and new concepts for bedding. He has plenty of wind in his sails, though it will most likely be difficult to form a partnership with him because he is a "self-made man" type of guy who prefers being in control of the entire project. No matter what, it was interesting meeting with him, and one can’t help but have great respect for the results he has achieved (several hundred employees throughout 6-7 different businesses).