De-Risking Entrepreneurship & Hiding Niklas Zennstrom in a Steamer Trunk

Index’s Neil Rimer has out some interesting ideas on venture investing in Europe. I was particularly struck by this:

Help to de-risk the riskiest endeavor of their lives.
Being an entrepreneur in Europe is a huge deal. Unlike in Silicon Valley, where being an entrepreneur is lauded, being an entrepreneur in Europe is viewed as a big risk – especially if you fail. It’s harder to re-integrate after a business fails, so learn how to structure a deal with that in mind. You have to learn how to “de-risk” an endeavor that is likely to be the riskiest deal in someone’s life. Entrepreneurs in Europe who don’t have that confidence, may not take the risk, so you have to occasionally structure a deal to encourage them.

Seek out the entrepreneurs who are going for the biggest possible play. European entrepreneurs are far less likely to go for a doubling down. For instance with Skype, we had to create a safe environment for entrepreneurs who were concerned about entering the U.S. borders.

I don’t disagree, and it’s a point that should be made more often: You can de-risk entrepreneurship somewhat without killing people’s motivation. There is a deep-seated hostility in the venture community to doing anything remotely entrepreneur-friendly in a financing — What is they lose the hunger! — and I think it’s dangerous, short-sighted, and just plain wrong in many circumstances.

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An aside: What the hell does Neil mean by saying Index helped “create a safe environment” for Skype entrepreneurs who couldn’t enter the U.S.? I knew Niklas had post-Kazaa issues with the U.S. law, so did Rimer et al., sneak Niklas in under a pseudonym? Hide the Swede in a steamer trunk? Inquiring minds want to know.

Related posts:

  1. Will the Real Niklas Zennstrom Please Stand Up
  2. Parsing the Word Entrepreneur
  3. The Myth of the Entrepreneur and the Garage
  4. Law, Entrepreneurship, and Flogging
  5. Doing the Demo Dance

Comments

  1. The lack of safety net for European entrepreneurs makes them risk averse when in comes to VC funding. If his venture folds an entrepreneur can be looking at some hard times. Much more so than in the US.
    Possible investments with strong growth potential often choose to remain life-style companies with stagnant but stable revenues, rather than play russian roulette with the founders’ life.
    “More money and riches” is sometimes not enough to tempt them into expansion. Witness the huge number of small conservative family businesses across Europe.
    The same applies for employees. Recruiting for a VC backed startup is a frustrating exercise.
    So de-risking is sometimes the only way

  2. Tollef Fog Heen says:

    Regarding the “concerned about entering the US” part, it’s not uncommon for Europeans, particularly engineers to not want to enter the US due to the US laws forcing you to be fingerprinted on entry and the Dmitry Sklyarov case.

  3. Guillaume says:

    Tollef,
    About the “entering the US” thing, I think it refers to the fact that Skype founders were having trouble with the US government and the music majors for their past as Kazaa founders.
    Paul,
    I think that in that case, that meant creating a situation where the VCs either lobbyed the administration or guaranteed Zennstrom he didn’t have to travel to the US? Let us know if you find out. That’s a funny and interesting story (selling a company for 4bn but not being able to go to the US).
    As an aside, can you say “lobbyed”?

  4. anonymous says:

    It’s an interesting intellectual exercise to make entrepreneurship less “risky” in Europe. Alternatively, you can facilitate what Europeans (and now the rest of the world) have been doing for the last ~400 years: Move to the Americas (and specifically the United States) to pursue economic freedom.