Investors and entrepreneurs, today's heroes

On one side, the idea. On the other, the market, the world. In the middle, the crossing of the desert, undercapitalization, poor entrepreneurs. These are expressions frequently used by founders of technology companies in Spain to describe their boldness. Creating a company is not an easy task. And even less in times of crisis.

Many try it. Quite a few fall by the wayside. During 2008, 600 technology companies were created in Spain with less than 10 employees. Internet, software and telecommunications are the star sectors. However, an average of 25% do not make it past the third year of life. Lack of financing, mistakes or the mere vagaries of the market take their toll. Despite the considerable risk, this group in the photo, investors and entrepreneurs, are determined to insist. They are today's heroes. If the Internet has one advantage, it is that it allows you to launch an idea very quickly and validate it. That's what I did." Ignasi Capdevilla, 35 years old, industrial engineer, had been thinking about a possible business for years: languages ​​remotely on the Internet, connecting teachers and students anywhere in the world through web conferencing. After working in Germany and studying a master, he couldn't take it anymore. He left everything and in October 2007 he launched Linkua.com. Initial budget, 50.000 euros. Employees, one, him.

Almost a year and a half later, his bet is on its way to becoming a stable business. It has 5.000 teachers and 2.000 students from more than 20 countries who actively use the service and hopes to start billing this summer.

It has gone from one employee to five and they will soon translate the website into 41 languages. Although the road has been thorny. "Breaking the entrepreneur's loneliness is the most difficult thing in the first year. You need guidance, receiving opinions from experienced people, validating your strategy."

Their search led to SeedRocket, an event born in mid-2008 where heavyweights such as Jesús Encinar, creator of Idealista.com and Nacho González-Barros, founder of InfoJobs.net, help newcomers successfully achieve the First objective: materialize an idea.

"It is not even an investment fund, it is a project accelerator." This is how Jesús Monleón, head of SeedRocket together with Vicente Arias, defines it. In its first edition in 2008, 72 start-ups competed for one of the three prizes of 20.000 euros in financing and half a year of training. Development of the marketing plan, commercial strategy, financial bases, advertising, business model... all by recognized mentors. Then, it's time to face the world.

Hundreds of entrepreneurs in Spain are now in that phase, in the midst of the economic storm. Projects that have just been born, such as Trendtation, Woices and GeoMe, see it as still far away. But founders of more experienced companies, such as Kinamik, Linqia, Shopall or Tractis, have already faced the vicissitudes of the market. Fabio Núñez, 29 years old, is one of them.

He founded Escapada Rural in 2007, an online portal for buying, selling and renting rural houses. Months later he left his job as a web designer at InfoJobs to dedicate himself fully. Today it is the third portal of this type in Spain, with 150.000 unique visitors per month and more than 10.000 properties listed between Spain and Italy.

The trick, "learn to present your project in front of investors. At the beginning we did not have a large-scale, aggressive, ambitious vision, and that is essential."
YCombinator Model

In Spain, SeedRocket has replicated a model that was born successfully in the US: mixing young talents with experienced gurus in the same room to come up with businesses. YCombinator, created by three hackers and an investment banker, sets the pace. "We work a lot on the initial idea, we prepare them so that they can raise financing in later stages," explains its co-founder, Paul Graham, from California.

Along with Robert Morris, a professor at MIT, and Trevor Blackwell, Graham founded Viaweb, which was sold to Yahoo. In 2005 they launched YCombinator to work closely with Silicon Valley entrepreneurs to refine their ideas. "Start-ups in the end are always the evolution of an initial concept." They have invested in 118 companies, including up-and-comers like Loopt, Reddit and Xobni. Graham's keys: "Spend little, avoid distractions and don't throw in the towel."

The success of YCombinator has spread to Europe. London-based SeedCamp is the benchmark. It finances the first steps of companies and connects their founders for three months with a network of 300 experienced managers, from small firms to engineers from Microsoft, Google and Cisco. "Ideal teams are three or four people, all inexperienced, but with powerful ideas," explains Reshma Sohoni, co-founder of Seedcamp.

Richard Moross is one of the 300 mentors. He hosts Seedcamp entrepreneurs in his office for free. In 2004 he created Moo.com, a website to design and print any type of card. Today it sells millions of units to more than 180 countries. "In Europe we suffer from a lack of trust in the US. That is why it is so important to have a network of people to support you in the development of the project."
Undercapitalization

If successfully launching an idea to the market is not easy, consolidating it is even more complex. "What good is 50.000 euros to set up a global company? Events like YCombinator are essential in the initial phase, but the problem in Spain arises later, to close investments of 500.000 euros," says Carlos González-Cadenas, founder of ExperienceOn, a natural language search start-up. "Finding capital and hiring top-level talent are the big obstacles in our country."

When the idea matures, the financing battle arrives. Many turn to networks of investors attached to business schools, universities and independent groups such as Keiretsu Forum and BCN Business Angels, with 40 partners and an investment of four million since the end of 2003. Others opt for public financing. The most daring go to venture capital and banks.

Debaeque, ACP and Nauta Capital have consecrated projects such as Strands, BuyVip and Agnitio. And Caixa Capital Risc and Caja Navarra have become strong investors. The latter has financed 20 technology companies in 2008 with four million euros.

Last year, 33.696 companies with less than 10 employees were created in Spain, of which 600 were technological (1,8%). In total, 85.582 companies were born, 2,7% technological.

Despite the difficulties, new ideas in Spain boil. 32% more projects were submitted to the second edition of SeedRocket than last year. Habitissimo and DebugModeOn were two of those selected. The founder of the first, Jordi Ber, a civil engineer and Fulbright at MIT, has the formula. "To get ahead you need to talk to a lot of people, have a good team and be profitable as soon as possible."

Alberto Gimeno, 24 years old, creator of DebugModeOn, misses more support. "It's still frowned upon to be an entrepreneur, you leave your job and your family doesn't understand you." Ber agrees: "starting a business is in itself an irrational decision." For both of them, the real idea begins now.