Diplomatic Council launches Startup Initiative

An analysis of the global start-up scene

by Aman Khan, Diplomatic Council Startup Advisor*

“A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.” Says Eric Ries the creator of the Lean Startup methodology:

While Wil Schroter Co-Founder and CEO of Startups.co believes: “A startup is the living embodiment of a founder’s dream,” Wil says. “It represents the journey from concept to reality. It is one of the few times when you can take something that is only a dream and make it a reality, not just for yourself, but for the entire world.”

Diplomatic Council has three key programs: Global Think Tank, Social Good and Global Business Network. Now within the framework of Global Business Network, we are launching Start-up Program. The objective of this program is to advice and support the Start-ups of different maturity levels in achieving their objectives – quickly and effectively. Diplomatic Council will announce soon the details of this program however in summary this will include providing expertise, and possible capital resources to accredited start-ups via Diplomatic Council members.

Speaking about start-ups, the only two perceptions that seem to be shared across the globe are their importance for economic growth and their ability to deliver innovative ideas, products, services and jobs. Thus Start-ups have become important for the national economies as well as for promotion of innovation in our societies.

Bill Gates (Microsoft) Larry Ellison (Oracle), Jeff Bezoz (Amazon), Larry Page (Google), Michel Dell (Dell), Steve Ballmar (Microsoft), Mark Zuckerberg (Facebook), Steve Jobs (Apple), Jefferey Skoll (Ebay), Reid Hoffmann (Linkedin) are just some of the startups billionaires who we all know. However, we also know that the list who unfortunately did not make the list is much longer!

New start-ups pop up every day all around the world, each of them hoping to get acquired by a larger company or make it big in their own right. However, for every wildly successful start-ups, there are thousands which fall into obscurity, which is why start-ups valued at a billion dollars or more are facetiously referred to as “unicorns”, a reference to their elusiveness. According to EuroMonito  As of June 2018, the most valuable start-up worldwide was the ride-sharing app Uber, which was valued at 68 billion U.S. dollars. 

Not surprisingly, the highest activity in Start-up scene is in the USA. However Europe and Asia markets are picking up. Let us look at the Startup activities in Top 50 cities worldwide:

• Cities with the Highest Activity: 29 cities are from the North America (1 from Canada); San Francisco being on the top; 11 Cities in Europe; three cities from Ireland, two from the UK, Switzerland and Finland, 1 from Germany and Sweden, and four cities from Asia; 3 from China, and 1 from Israel.
• Cities receiving most of the VC capital, picture is slightly different: USA: 20 cities; Asia: 9 cities in China and 2 from India, Europe: 7 Cities;  2 in Germany, 3 in the UK, 1 in France and Sweden

• When it comes to latest technologies such Blockchain, similar trend is reflected: The top emerging companies are spread as: 28 top companies come from the USA, 13 from Europe and 5 from Asia

Let us however do not be too impressed by the top cities. There was so much start-ups activity going on in the small towns of Oulu, Oss, Montpellier and Sandwich (Kent UK) That’s the takeaway of Sifted’s data-dive this week, thanks to some data from the research company PitchBook.

Seed and Early Stage VC deals closed 2013-2018

• Barcelona: 474, Munich 331, Milan 238, Edinburg 188, Hamburg 159, Frankfurt 58.

Interesting is also the number number of exits and by the value of those exits from 2013 to 2018

• Barcelona 58 Exits of value €1206m,
• Munich 56 Exits of value €2528m.

On the other hand, Southeast Asia's tech startup scene is getting hotter by the year. Money is pouring in and valuations are soaring as investors have high hope for the region's rapid growth, huge markets of mobile-savvy consumers.

Singapore being on the top with 4000 startups leads the scene followed up by Vietnam (3000) Malaysia (900), Thailand (750), and Indonesia (500).

According to data compiled by Fundable, only 0.91 percent of startups are funded by angel investors, while a measly 0.05 percent are funded by VCs. In contrast, 57 percent of startups are funded by personal loans and credit, while 38 percent receive funding from FFF (called as family, friends and fools)

137000 businesses give birth every day or 5 million per year. If we agree that 90% of them fail – 123000 fail every day. In the time you were reading up to here, 85 businesses were probably shut down.

Forbes claims that Nine out of ten start-ups fail. This is a hard and bleak truth, but one that you’d do well to meditate on. Entrepreneurs may even want to write their failure post-mortem before they launch their business.

Why? Because very optimistic entrepreneur needs a dose of reality now and then. Cold statistics like these are not intended to discourage entrepreneurs, but to encourage them to work smarter and harder.

A stud by EarlyPad claims that the top three reasons for Start-ups failing are no market Need (42%) followed by Ran out of Cash (29%) followed up Not the right Team (23%).

There is so much material available about Do and Don’ts, Rules and Musts, and Things to Watch for Start-up Entrepreneurs.

Situation in each Startup, Market, Product, Idea, Team can be unique however below are some common observations - what some people call AVOIDANCE TO THE HELL TRAP! – regards less of the phases; SEED, GROWTH or EXPANSION.

* Aman Khan has been nominated Diplomatic Council Start-up Coach. He has led, during his 25+ years professional experience, businesses of start-ups as well as legacy enterprises at European and international level while he worked for companies such as General Electric, Star Alliance, Deutsche Telekom as well as for several start-up enterprises that were built, acquired or sold. Recently he is engaged with Business Angels in Frankfurt, Germany and also provides support and mentorship to start-ups requests coming from all across Europe to CMRWorld based in London, UK.