Alex Kombogiannis and Giorgos Kontos of mpgreek presented their company and how it started in 2004 without any VC funding. They launched from Astoria, NY in 2005, and in the first four months they had managed to earn 30K USD. One of the first problems they encountered is that labels didn’t even know back then what ‘mp3 download’ means but meeting the right (i.e. open-minded) managers, having a ready product and making payments always on time (which created trust) helped. Their traffic picked up mainly via whitelabel and co-branding and lots of work later, in 2007 they started selling ads, opened offices in Athens and had revenues greater than 850k – but even then VC funding was out of their reach. Eventually in 2008 the deal with internetq was signed however. internetq is a 1200 sms campaigns/year company with offices in 8 countries, strong mobile partrnerships with major telcos and an overall strong presence in the sector.
According to mpgreek the greek market has many difficulties: it is small, there are no resources for new entrepreneurs, the regulation is not beneficial and cash flow remains a problem. VCs are very few and not specialised for our market and on top of that it’s hard to find good managers. On the other hand, exactly because the market is small it’s easy to dominate even if mildly succesful and it’s easy to navigate. Furthermore, localisation is easy (ideas can be transferred from abroad with minimum tweaking) and labor costs are low as such somehow offsetting the market’s drawbacks. Overall, it’s hard to get acquired in Greece but not impossible – you have to find the right relation (as internetq and mpgreek did)
Dave Krupinski of care.com shared the wisdom he has gathered regarding fundraising and how VCs operate. Firstly, he made clear that out of all the business plans reviewed only <1% of them are funded. Of that, approximately 40% fail, 40% break-even and 20% yield high returns (10 times). Apart from that, what’s common for all VCs is that they are accountable to their investors too and want to invest in good teams and good track records. All VCs will be interested to know whether the proposed business model has been tested and will require a solid exit strategy. However, not all VCs are the same. They differ on what they invest on (companies in beta, companies that have just launched, companies with set customer-base etc). Some may want a controlling stake, while other won’t. They may also differ by industry, by stage of development, by the amount of investment, the frequency of investment and the level of involvement, support and advice they provide. For example, early stage investors tend to locate near their investments.
Sokratis Papafloratos of trustedplaces.com presented his company which started off at 2006 and has raised 1M so far. The company employs 8 people currently in London and Tel-Aviv. It’s about providing local search based on your friends – “social networking with a purpose” as Sokratis accurately pointed out. Their business model is based on offering to companies a number of packages: a free one where they can take control of their profile, receive notifications and apply some basic edits and two premium packages with which they can enhance their profile and drive traffic to their business using ads and geo ads. Apart from ads they include local sales and licensing (leasing of their platform/content). For more details be sure to catch the upcoming video of the trustedplacs story.
George Tziralis ended the night by presenting the OpenFund. After a brief introduction about the long road that the OpenCoffee has come (2 years, 40 events, 130 speeches, 100s of participants) and the current situation in our industry in Greece academically (1.7% hold MSc or PhD, #1 in EU students abroad, top in scientists and engineers) and community-wise (startups exist, they are able to succeed and there is interest and potential), he announced OpenFund which aims to cover the two missing pieces of funding and support that could turn the situation around. By providing seed capital, monitoring and advice to the best five companies selected for ‘incubation’ in four months cycles we believe that we will take the first few steps of tapping the untouched potential of this community. The whole effort has been fortunate enough to start off with the good news of Piraeus Bank commiting 250K of anchor investment. More details regarding the exact process and the offer are to be found in the official OpenFund site where also all questions will be gradually answered.