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Start arrow Agenda arrow 22@Breakfast arrow Past Events arrow 22@Update Breakfast June 2009
22@Update Breakfast June 2009
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What is private financing looking for? Success stories

The current economic situation is affecting all aspects of the worldwide business panorama. Private funding and the role of companies that mainly depend on these resources were the focus of the June 22@Update Breakfast. The session took place at the Caixa Fòrum, offering expert advice on how to understand the trends motivating large investors in the current context.




Luis Daniel Arbulu, Finance and Investments Lead at Google.org, was the first to speak at the June 22@Update Breakfast, explaining the investment trends of this financial group.

Google bases its activity on one clear objective: organizing information around the world in order to make it universally accessible and useful. Google.org aims to harness the power of information and technology to address the most important global challenges of our age. They are the philanthropic arm of Google Inc. Google.org focuses on research, grant-making (strategic channeling of resources), and lobbying, among other innovative areas.

In order to give a brief history of Google.org, Luis Daniel Arbulu explained the investments the company has made so far. In the cleantech and clean energy fields he highlighted their commitment to solar, wind and geothermal energy as well as hybrid and electric vehicles.

Arbulu specified that Google.org establishes the following objectives for their investments: sharing technology and economic wellbeing, protecting the ecosystem, driving innovation, encouraging sustainable companies and generating profit. According to Luis Daniel Arbulu, it is extremely important to establish the specific needs of each stage. There are key aspects throughout the production chain, from the scientific and technological knowledge that ideas are based on, through their final implementation in a product.

“When investing, we must always keep society’s future needs in mind.”

Moreover, the Breakfast’s first speaker encouraged attendees to continuously question what they are doing in order to evaluate their progress. According to Arbulu, in the first stages we should ask ourselves: what is the big leap forward that we can contribute?  Then we must ask if we have the technology to carry out the project and what market opportunities are available?

In the second stage, when the project begins to take shape, the Google.org Investment Lead proposed the following questions: Do I have the right team? Can we transform this pilot project into a product? Can we do it affordably? What basic collaboration do we need? What big leap forward will we be contributing?

Finally, before implementing the product, Luis Daniel Arbulu explained that we must reflect on the following aspects: where will we get funding for the project? What is our market strategy? Do we have the right channels? What new technology is becoming available?
Google.org sets aside a large part of their investment for learning from research and cleantech, which is technology leading to products, services and procedures that improve productivity, efficiency and effectiveness while reducing expenditure, energy consumption, pollution and waste.

Noteworthy among the recommendations given by the Finance and Investments Lead at Google.org were:

1. Understand your financial obligations
2. Assess the amount of risk you can take on:
- scientific/technological risk: Will it work?
- product risk: Can we do it?
- market risk: Is it big enough? Is there room for our product?
    - financial risk: Will we find funding?
    - effectiveness
    - market response
    - management
3. Always keep in mind that technological breakthroughs are very important.
4. The company you keep is also important. You cannot work alone, not even in research.

In his presentation, Arbulu also spoke briefly about the current economic situation, explaining that technology costs are currently decreasing, which provides short-term opportunities. Luis Daniel Arbulu also highlighted the role of countries like China or India, which are emerging markets that opt for easy, cheap and quick production processes. He also warned attendees of the need to be aware of these two powers and always keep them in mind.


Possibilities, despite the economic crisis
Shaherose Charania, co-founder of the Women 2.0 organization, focused her presentation on the current economic situation and its impact on investors. Woman 2.0 was started in 2006 to promote networking, business and technology initiatives for businesswomen. Woman 2.0 supports thousands of women in the first stages of their quest for business success.  They are experts who help both recent start-ups and projects that are still in the embryonic stages. Moreover, Woman 2.0 organizes annual meetings for start-ups as well as events where they compete against each other.


Drawing from her experience working closely with start-up companies at Woman 2.0, Shaherose Charania explained that with the current recession, researchers are not researching. The co-founder of Woman 2.0 also said that, in order to face the new global situation, start-ups need to re-think traditional venture capital opportunities. In the current situation, which has less liquidity, start-ups can’t trust that they will have continued funding. They need to set aside enough money so they can hold out until breaking even.

Among other ideas, Shaherose Charania gave attendees some advice to help start-ups survive this downturn:

1.    Save.
2.    Sell whatever you can.
3.    According to Shaherose, it is actually a good time to invest because generally projects are more serious and concise.
4.    As researchers, we must be more ambitious and creative.
5.    Despite the crisis, it is important to hold on to the most talented members of the team.

The Head of Woman 2.0 reiterated that it is essential to “build, build, build...CREATE.”

“When you start up a businesses you must always think you will succeed, because there are many ways to make it work. We have to change the way we think!”

In order to back up her positive message to start-ups, Woman 2.0 co-founder finished by saying: “In a global world it isn’t easy for anyone, but our experience has worked!”


22@ Innovator of the month for June was Lucas Carné, co-founder of Privalia

Our example of innovation this month was Lucas Carné, one of the creators of Privalia.com. The company was founded in Barcelona three years ago as an online sales club for end customers, offering top brands in fashion at discounts of at least 50%. After opening an office in Milan in 2007—which has allowed them to penetrate the Italian market—, they started their expansion into the Brazilian market in 2008—establishing an office in Sao Paulo—.

Currently the Privalia club has 1,300,000 active clients in Spain, 350,000 in Italy and 300,000 in Brazil. They are a perfect example of high growth and evolution that would not have been possible without funding from various investors. Lucas Carné focused his presentation on these private investments. “In the beginning it was difficult to convince them that we could sell things online,” explained Carné.

In discussing his experience, Carné explained some key elements for successfully finding funding:

-    Develop a good company presentation.

-    Founders must develop a good founding plan. They have to show their credibility in order to get funding.

-    Have a clear financial strategy. In order to convince investors, you need a plan and concise strategy.

-    Keep investors in the loop throughout the process.

-    Create a good team, made up of the components that normally head the different areas of a company. At Privalia, for example, one of the co-founders focuses on financial aspects and the other on operations.

Drawing from his experience and the credibility his success with Privalia has given him, Lucas Carné gave 22@Update Breakfast attendees some advice. They were practical recommendations based on his own experience designed to help companies face the search for funding in a sector that Spanish investors consider high-risk:

-    Financing itself is not everything. It’s a necessary resource but it isn’t everything. It means nothing if you don’t have a product.

-    Investors only contribute financial aid. Investors will offer business consulting but, in Carné’s experience with Privalia, it is best to limit their contributions to those related to funding.

-    Have the best advisors. Not just lawyers or investors, advisors should be experts in the subject they advise you on. You must look for outside help.

-    It is important to have at least two investors competing to participate in your business so that you can choose the best option. Because investors will always want to negotiate strategy for their financial participation.


Hit Barcelona, a date with innovation
To close the June 22@Update Breakfast, Josep M. Piqué, managing director of the district, spoke about Hit Barcelona, the world innovation summit that took place 17,18 and 19 June in the Catalan capital. The HIT Barcelona world innovation summit brought together top representatives from trendsetting large and medium-sized companies in the ICT, CleanTech and Healthcare sectors.

Additionally, Piqué took advantage of the opportunity to announce the arrival of three new companies to 22@Barcelona in the last month. These numbers show the district’s constant evolution as a business center.


KEY IDEAS


•    It is extremely important to establish the specific needs of each stage, but when investing we must always keep future needs in mind. 

•    Technology costs are currently decreasing, which provides short-term opportunities.

•    In the current economic situation, start-ups can’t trust that they will have continued funding. They need to set aside enough money so they can hold out until breaking even. 

•    In order to hold on in these times of crisis, companies must make good use of the following concepts: save, sell, invest, create and talent.

•    In order to attract good financial resources, companies must have a good presentation, a clear financial strategy, appropriate investors for each stage, and a good team.  


ATTENDEES SPEAK


“I thought the presentations were really interesting. Two of the presentations were from Venture Capital companies and it’s always good to hear their experience.”

“Today’s Breakfast was designed for a very specific audience. We work at a small Human Resources firm that was founded only three years ago and hearing these examples motivates us and makes us more ambitious.”

“The topic of this month’s Breakfast was very specific and in this field English is absolutely essential. I think it was totally right to have the speakers address us in English.”

 “The truth is that having the presentations in English forced us to be a little more awake than usual at this time of the morning. But it wasn’t an obstacle. In fact, if it helps bring new people from different backgrounds to the Breakfast we should continue.”

“I missed some details because it was in English but I think it’s a way to move forward, to prosper and, in some ways, to innovate. I think it’s a good idea for 22@ to organize events strictly in English. Maybe if other institutions, organizations or governmental bodies did the same things would be different.”

Documents linked:
- Presentation of  Luis Daniel Arbulu, Finance and Investments Lead at Google.org
- Presentation de Shaherose Charania, co-founder of the Women 2.0






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