Alex Farcet
Startupbootcamp

Alex Farcet co-founded Startupbootcamp in 2010 and it was quickly recognized as one of the top accelerators in Europe. The accelerator objective is a three-month program to help start-ups grow as fast as possible by providing them with micro-investment and a network of mentors and investors. In exchange, the start-ups are asked to give between 5 percent and 10 percent of their equity. Startupbootcamp became the first global affiliate of TechStars, the US-based start-up acceleration program considered to be the best in the nation.

Prior to Startupbootcamp, Farcet worked for DHL, making the transition to entrepreneurship after a one-year career hiatus.

Pedro Santos: What did you do before Startupbootcamp and what led you to the idea of creating Startupbootcamp?

Alex Farcet: My first real job was with a start-up in San Francisco way back in the early 90's, so I definitely had the entrepreneurship bug. My second objective was to travel the world, so I worked for DHL. I stayed with that company for twelve years and had posts in Hong Kong, Eastern Europe, Belgium and Denmark. I had a great time and I blinked and twelve years had flown by.

The catalyst for a complete change was my son getting sick in 2006. I took a year off to take care of him. When I get back into action, I got sick, too. So there were two of us with cancer in the family at the same time. It wasn't serious for me, but it was more him. My definition of risk changed and I just had one of those epiphanies that it was time to do what I really wanted. Life is too short to not do what you really love.

I always enjoyed coaching and working with entrepreneurs, probably even more than being an entrepreneur. I always enjoyed developing people when I had a big line-management role. I had four hundred people working for me and always enjoyed the people side. So when I discovered TechStars I reached out to David Cohen and asked, “Do you want to do Copenhagen TechStars with me?” He said, “No, we're good in the US, but ask me anything. I'm an open source.” So, we built a relationship that way. It wasn't totally planned, but when I saw it I knew this was exactly what I wanted to do.

Santos: Okay, so you reached out to TechStars, who said no. What then?

Farcet: Well, he said, “No, but…”

Santos: And how did he pass from the “No, but…”? What did you do then?

Farcet: Well, I met the right co-founders. That was Rainmaking. That is a partnership of serial entrepreneurs who built 14 startups in 4 years. They were thinking about how to handle their own deal flow and wanted to extend their brand. We just really hit it off. They had a lot of know-how on legal and financial, and also resources. I had the sweat equity, the drive, and the passion to run an accelarator program (and you have to be a bit crazy to embark on such a journey). So we put it together and we said let's try and do one to see how it goes.

So, I found the right project and then I found the right co-founders.

Santos: How did you find them? Did you know them already?

Farcet: One of my projects at the time was startupdenmark.dk, an English-speaking resource for entrepreneurs in Denmark. Instead of writing a blog, I was interviewing cool people. I was using that because I thought it was fun, but it was also a great networking tool. Then one day I got to interview Martin Bjergegaard, one of the partners at Rainmaking, and we just kept the conversation going, basically. I just met the right guys. Some of it is luck; some of it is being open to opportunities and forcing your luck.

Santos: And you started the program in Denmark. What are the advantages and disadvantages of doing such an accelerator program in Denmark?

Farcet: Well, when we defined it, we never said it's in Denmark. We always said it's in Copenhagen. There is a subtle difference in that. When you say it's in Denmark, you kind of imply that that's your catching area. My first initial thought was let's try and draw a one-hour flight circle around Copenhagen and you catch the Baltics and Scandinavia. Let's see who we can get from that region to apply. Then, already in the first batch we had three Danish/Nordic teams and all the rest from all over Europe and the world.

But in going back to your question, there's a lot of technical talent in the Baltics, also in Scandinavia. There are a lot of resources for entrepreneurs who are well-educated. It's super-easy to start a company.

Denmark is consistently ranked as one of the top places to do business in by the OECD. It's debatable whether or not it's really entrepreneurial, but it was a great base, and frankly, that's where we are.

If you're going to do an accelerator, you need to have a very strong home base because that's where your ecosystem is going to be. It's the foundation for recruiting the mentors, attracting the investors. And that's where our base was and that's where our base is. You don't fly in somewhere and do an accelerator. You have to have a solid local eco-system to build from.

Santos: Accelerators are a relatively new financing model. It may even be said it's not even a completely proven model. How hard was it to convince the investors and the mentors to back the program?

Farcet: Well, I think certainly TechStars and Y Combinator have delivered great results, there's no question there. Whether thirty accelerators will be successful is another question. But our first existing group of investors are basically wealthy individuals and angels. Those kinds of people tend to want to touch their investment, what they invest in. So an angel is, by definition, fairly hands-on. It was a hard sell because I was saying, “Trust me. We'll have ten really good teams in six months. Can I have your money, please?”

You're really selling yourself and you're selling your ability to put together a great program. We did it but it was not easy. So I certainly have the fund raising scars to show the teams we work with.

We're changing our funding model now that we've expanded in a number of cities. We're going for slightly larger investors and corporate partners to fund a multi-city multi-year program so we get more runway and don't have to be fund raising full time.

Santos: And the mentors, why did they join the program? How did you convince them?

Farcet: The first twenty or so are the most important. They're lending their good name and get the snowball rolling. So I was very focused on getting the right names on board and they understood that. It was six months of effort, really working like a headhunter and tapping into our network. When they meet you they have to think “This guy looks like he's probably doing something serious. I'll take a chance and let him use my name.” When you get cool mentors, you're more likely to get good teams, and it snowballs that way. But it's meeting by meeting, coffee by coffee, convincing people to join the project.

Santos: What are the advantages for an investor that supports the program, instead of just waiting for the results of the program? Did you have that kind of question from an investor?

Farcet: No, we don't. We don't give formal privileged access to our investors. In some cases it happens naturally, because maybe a couple are mentors as well. They get to interact with the teams earlier, but we don't tell investors, “You get privileged, early access.” That would be counterproductive anyway because we tell our teams to focus on building stuff, not on raising money during the program.

Santos: Yeah, but from an investor point of view, what's his advantage? Or in the way that you were trying to convince him, what's his advantage of investing in the program instead of just waiting for the end of the program?

Farcet: Well, obviously, for a relatively small amount of money, you get a not insignificant percentage in ten companies that are diversified, highly selected and accelerated. So you spread and lower the risk. We attract really cool projects that you don't have to spend time doing due dilligence for. For that type of early stage investment it's still risky but definitely a safer bet than your own deal flow if you're an angel.

Santos: Once the program finishes, how do you provide help to the start-ups? How do the investors keep in touch with the start-ups?

Farcet: I keep the investors updated on what's going on with the teams when our they raise money. In terms of helping the teams, we tend to get involved when there are term sheets flying around, if they want our help. We don't have board seats. We don't have any control over the start-up. We want to be perceived as friendly co-founders or early investors. But we continue to make some matchmaking with investors. We get more and more frequently invited to suggest teams to attend investor and pitch events. We always have a good list of start-ups to join those. It's much less hands-on, but it's a lot more basically focused around the investors. And we're now running our first road show in London and Silicon Valley so we're expanding our investor outreach.

Then we make noise when there's an announcement. We have a big community of followers and fans. If one of our teams is launching an update, a new product—we get involved in that.

Santos: Don't investors require a more hands-on look into the companies? Because it seems they're very hands-off.

Farcet: No, the investors are investing in us. Then we invest in the companies. I send updates regularly, to all the investors. Then sometimes an investor will ask for more details but in general they're fairly hands off. The overall budget is small and we break that down into even smaller tickets. These are not large investments in the investors' portfolios.

Santos: What were the main lessons you learned by putting this program together?

Farcet: Initially I thought I could do this on a part time basis. So the first lesson was: it's a lot harder to pull off than it seems. It's a much bigger project than most people think. You have to fund raise, recruit top notch mentors, attract and select teams, get the logistics in place, set up a structure and legal framework. You have to be a bit nuts and really love it.

I've had someone call me from just about every capital in Europe and say, “I want to do this.” I've tried to be as open as David Cohen and Brad Feld were with me. I'll answer any question, even about our budget and contracts. So I've helped a lot of people. I helped Le Camping in Paris for example.

But there's no secret sauce, as usual it's all about execution. My standard answer now is “call me back when you've got your first twenty mentors on board and part of your budget secured.” That sorts out the vast majority of people and that's how Dublin and Amsterdam have come on board, those guys were just on a mission, unstoppable.

Santos: And did the program change from the first edition to the second edition?

Farcet: Yeah, definitely.

Santos: What are the main differences? Is it because you started expanding internationally from Copenhagen to Madrid?

Farcet: No. We always learn things from the programs we run. It's like when you do your first start-up weekend versus your fifth. There are a lot of subtleties in the process, little tricks. Just having the confidence of having done a cycle and knowing what works, being able to talk credibly about what's going to happen, what an investor is like, etc. I made some changes in the scheduling of mentors, how we engage, and how much mentoring there is. I've put more air in the program, more space for people to be able to digest input, instead of cramming everything in at the beginning. I've definitely learned a lot.

Santos: And in terms of expansion, you started expanding to Madrid and Dublin?

Farcet: Yes Madrid, Dublin, and now Amsterdam. We've also declared that we're going to do Berlin and London in 2012. We don't know yet how and with whom. But definitely, it's in the books.

Santos: Are you planning to expand even further, even outside of Europe?

Farcet: Absolutely. I've had conversations with people in China, Brazil, and India. It's just not a priority right now. We want to get a really strong home base here in Europe. But it's definitely something we want to do; imagine being able to tap our European teams into those BRIC markets? And vice-versa, that would be huge.

We're building a community. In the last 14 months or so we've produced 30 startups. That's almost 100 entrepreneurs who are engaged alumni and ambassadors. Doing that globally is very exciting.

Santos: And how do you think the ecosystem in Europe has changed from the beginning, when you were just starting out the program, and now?

Farcet: I ran the first program only a year ago so that I don't have that much of a comparison point. What I do see is a positive shift away from the never ending obsession of trying to duplicate Silicon Valley to focusing on what's good about Europe. London is doing a lot around the Silicon Roundabout and government focus, Berlin is being hyped as a great base for startups, Copenhagen and Dublin are definitely recognized as strong ecosystems and we're now connecting them all.

Santos: What are the main mistakes that you saw the teams that ran through the program doing?

Farcet: Classic stuff like not focusing on customers early enough and not engaging every single mentor in a good way, so that when you leave the program you're back on your own. Ideally you walk away and still have that base of connectivity. I think most teams did make the most of the opportunities. Some teams may have presumed, “Well, I know what this mentor knows. They're not teaching me anything.” But actually, you never know how a mentor can help you, what else – and who else - they know. There's a great amount of serendipity that teams have to be ready to exploit.

I think a real big lesson learned was the way teams treat mentors is very indicative of how they'll deal with customers, employees, and markets. So if you're slightly arrogant and don't keep people engaged, then you'll probably do the same in other areas important to your start-up. That's why the selection process is so focused on people, attitude, track record—a lot of soft stuff.

Santos: When you say that one of the main mistakes is engaging, how can a start-up engage more or better with their mentors and their clients? Is it just a matter of listening more?

Farcet: It is like a cliché now, but it's just the classic: “I'll just build another feature and I'll focus on my product.” We had an alumni date where three or four of our old teams came by to share what they had learned in the year since they left the first Startupbootcamp program. I asked them to share what they had been through and every other word was “customer.” Customer this, customer that, should have talked to customers more—more often, earlier. It's just a make or break. You can't have too much customer focus and sales focus, really being sales-oriented, thinking more about your why customers need your product.

It's classic. Everybody knows it and has read about but you have to experience it yourself. It was striking to hear the alumni, how much they spoke about customers.

Santos: What advice would you give to new entrepreneurs?

Farcet: First and foremost be extremely aligned with your co-founders on values, objectives, ambitions, motivations, and even financial stability. It's so important, when things go wrong, the human stuff will blow up and if you're tight then you'll come out as one team. And secondly talk to customers from day one, and keep talking to them every single day.