Silicon Valley: Start-ups and Financing
This is an interview of Andrey Kunov, President of Silicon Valley Innovation Center, published by Magazin für Touristik und Business Travel in the special report about Silicon Valley.
Where It’s Going:
It’s not just employees of established corporations, but those of start-ups, too, who visit the Valley on a rotational basis. It’s common for one of the founders to travel to Silicon Valley or send individual employees to the USA over a longer period. Until recently, MyFavorito founder Schlenzig lived on a boat in Mountain View, not far from Google, to save costs. Now, he pays 4,000 dollars a month to rent an apartment for his firm in a glass-paneled skyscraper at the heart of San Francisco.
“Anyone in Silicon Valley who’s merely reaching break-even is out of the game,” says Antonio Vega, Founder in “pitch mode”, who already employs ten members of staff in Frankfurt and is continuously investing in new technology. At the end, investors aren’t interested in profits and continuous increases in turnover.” For them, it’s all about investing in growth – and about sustaining losses for as long as possible in pursuit of this aim. The only approach that yields returns is ousting competitors from the market. “If the market is ripe – that is, if competitors have been squeezed out – that’s when the switch is flipped to profit”– so describes Andrey Kunov, President of Silicon Valley Innovation Center, the Venture Capital system.
“A relationship with a venture capital investor is often like a marriage: at the beginning, you have to have trust, and at the end, there is often divorce. But anyone with a genuinely promising technology is required to enter this partnership.”
Financing in Silicon Valley:
Company Foundation: No need for high investments or lots of bureaucracy – companies can be founded in California within a week and with 300 US dollars of capital
Accelerators: In the early stages of company foundation, accelerators help with initial funding, mentoring for business model development and access to contacts and investors. There are around 50 of these funds in Silicon Valley.
Incubators: These provide rooms – so-called “co-working spaces” – in which founders can meet, work and exchange ideas. Accelerators and incubators are increasingly merging into single organizations.
Venture Capital Investors: These come into play once companies are past the initial funding stage and the business model is demonstrating the first signs of success. A venture capital firm will continue to fund a start-up for an average period of five to ten years. They will then push the startup to sell, dispose of their share in it or support its flotation on the stock market.