The best advisors don’t charge for being advisors. Instead, they want to invest in your company.
The best advisors realize that everyone needs to be at equal risk and reward. They are entrepreneurs who want to show real commitment by becoming part of the cap table with their own cash. In their own minds, this justifies the time commitment. From the entrepreneur’s point of view, it ensures the needed mindshare. If you only get attracted by the army of consultants, “with experience you need to help you strategically”, it is a signal that something is not correct with your company.
This is what I have seen at Lifeline Ventures with the companies we work with. The better the company and the advisor, the more likely the advisor is to propose an investment. The worse the advisor and the company, the more likely the proposal is for cash compensation and free-of-charge options. In my opinion, cash and free options are fair for real work, responsibility and quantified deliverables – but not for advice. The best advice is free.
We have also seen that the best CEOs we hire to our companies come with cash. They typically invest from EUR 100,000 to EUR 300,000 at the latest round’s valuation, for two reasons: they want to put themselves at risk, and want to have an opportunity to earn from the value creation. They believe in the company they join, it is not just another job. Again, based on what I have seen, the better the CEO, the more likely there is a significant investment attached.
People taking care of themselves – and being proud of it and wanting to show it to others – is a megatrend. This megatrend is good, it creates a healthier world.
Before our current jobs at Lifeline Ventures, we were set to found a “Casual Medtech” company with Petteri. Now at Lifeline Ventures we are looking for casual medtech teams – among other disruptive technology and service segments – that we can work with and put our money into.
Casual Medtech is part of the megatrend where people take care of themselves and are proud of it. In technology, we believe that this will be a next big thing. The signs are up already: Nike comes up with Nike Fuelband, Jawbone diverges into a connected health tool, and even the 120-old electronics giant Philips re-brands itself into consumer health technology. Technology bloggers have not been silent either: TechCrunch realizes that mobile and consumer electronics will change healthcare. I wrote about the same topic earlier at ArcticStartup, and do believe that health is a massive opportunity for technology and design entrepreneurs.
Casual medtech is defined as health apps and devices that:
- focus first on people and outcomes rather than convincing the medical system,
- people are excited to use and want to be associated with,
- has medically validated efficacy and scientific proof, and
- could pass regulatory scrutiny while not necessarily gone throught the process, as it is not essential for the user and commercialization.
Do you agree? Have anything to add?
Last week, after being angel investors for two years, we announced a new EUR 20 million early stage venture fund. It allows us to serve entrepreneurs even better.
We got our heads together to figure out a new health 2.0 startup – but instead of founding one, we ended up investing in many. This investing got more and more serious, and suddenly we found ourselves with 19 early stage companies ranging from biotechnology to social games.
So, how did we get into this? Why to become an investor while you can start and run your own company?
Well, we realized the following:
- As investors we can do most things we could do as startup founders: While the adrenalin rush and the unique feeling of closing the very first sale (on the edge of an empty bank account and too much unpaid due invoices) cannot be fully experienced, working with multiple startups at the same time is rewarding. Working with many extremely high-quality teams at the same time makes life exciting: instead of having one empty bank account, you have a portfolio of empty bank accounts.
- An investor can be – and optimally is – an entrepreneur: Putting money in equals to having the skin in the game. An investor is not a consultant. As an investor, you can and need to be passionate about the company as an entrepreneur is. Whenever I engage with a company, I feel the “startup urge” of everything needing to happen faster and better than in reality is possible.
- Having a fund is the best we can do for the entrepreneurs: In addition to doing angel rounds and trying to be of help where we can, we can now speed-up seed and series A rounds. It is quite handy for the teams and us to start fund raising by saying that we already have million euros secured.
Ending note: We truly believe that the Reneissance of the Technology Entrepreneurship in Finland happens now. If you have been thinking of becoming an entrepreneur or investor, now is the right time. Healthy returns will be generated for the best entrepreneurs, investors and the society.
* Other instrumental people at Lifeline’s history and today’s operations include Jarkko Joki-Tokola and Ilkka Paananen, whose efforts are both comparable of being founders of the new Lifeline Ventures fund.
Every language has untranslatable expressions that are in the cultural core.
In Finland we have one: Sisu.
We are very proud of it, it pulls everyone together and powers up individuals. It makes us unbeatable. We believe that it will save us, magically, always. And it will definitely save Nokia.
The best description that I have read is In Other Words, a book by Christopher Moore. Enjoy!
It is 1939 and two Finnish foot soldiers are pinned down in a battle.
“We are outnumbered,” one soldier says. “There must be over 40 of them, and only two of us.”
“Dear God, it’ll take us all day to bury them!” exclaims the other.
Sisu means a proud refusal to lie down and be beaten.
Yleensä en osallistu yhteiskunnalliseen keskusteluun, mutta jotenkin minun oli pakko kommentoida osaltani Tekesin roolista käytyä julkista keskustelua. Olen kokenut, että oma aikani on yleensä paremmassa käytössä, kun teen kädet savessa hommia alkavissa yrityksissä.
Ottamatta kantaa onko nykyinen rahoitusjärjestelmä tehokas ja tarpeenmukainen tai vaatiiko se uudistusta, minun pitää hiukan kehua: Tekesillä on ollut tärkeä rooli hankkeissa, joissa itse olen saanut olla mukana. Ilman Tekesiä moni asia olisi jäänyt syntymättä.
Tekesin rooli on ollut hyvin keskeinen rahoittamassa yrityksiä, joissa olen ollut mukana. Rooli on ollut kriittinen menestyksen kannalta. Lisäksi Tekesin virkamiehet, joiden kanssa olen asioinut, ovat tehneet vain ne tarvittavat selvitykset ja kyseenalaistamisen, jolla veronmaksajien rahoja voidaan perustellusti yksityisiin hankkeisiin kanavoida. Oman kokemuspiirini ulkopuolella en osaa tietenkään kommentoida, mutta oma kokemukseni on positiivinen ja prosessit sujuvia.
Tässä neljä hanketta, joissa Tekesin rooli on ollut ratkaiseva:
- CRF Health. Yritys, jonka perustin Jaakko Ollilan ja Jarkko Joki-Tokolan kanssa vuonna 2000 on tällä hetkellä yksi harvoista suomalaisista ohjelmistoyrityksistä, joka on #1 globaalisti omalla alueellaan ja etenkin Yhdysvalloissa. Liikevaihto on suomalaiseksi globaaliksi kasvufirmaksi hyvät yli 30 miljoonaa euroa ja jopa listautuminen voi olla mahdollista. Yrityksestä voisi tulla yksi sellainen, jota “ei myydä liian aikaisin ulkomaille”. Tekes oli mukana rahoittamassa TrialMax tuotteen kehitystä: ilman Tekesiä silloisilta rahoittajilta ei olisi löytynyt uskoa haastavassa tilanteessa panostaa hyvin merkittävää määrää uuteen tuotteeseen. Tuotteen pohjalta on rakennettu iso osa CRF Healthin liiketoimintaa. Hyvä Tekes, ja suuret kiitokset uskosta hankkeeseen.
- Oncos Therapeutics. HealthCap sijoitti alkuvuonna 2010 ensimmäisen ulkomaisen sijoituksen suomalaiseen pre-kliinisen vaiheen biotekniikkayritykseen yli kymmeneen vuoteen. Kohta käynnistyvää kliinistä tutkimusohjelmaa ei olisi voitu toteuttaa pelkällä HealthCapin sijoituksella, ja koko sijoituksen synnyssä Tekesin lisärahoituksella oli todella suuri merkitys. Oman arvioni mukaan Oncosin tiede on kovatasoisinta, mitä suomalaisessa biotechissä on nähty, ja jos Oncos onnistuu, on siitä iso osa Tekesin uskon ansiota. Vaikka monesta suusta on todettu, että biotekniikka ei voi onnistua Suomessa, uskoivat Tekesin virkamiehet Pasilassa niin paljon, että olivat jopa valmiita toteamaan, että Oncos voi siltikin onnistua.
- ZenRobotics. Rohkeiden mukanaolevien suomalaisten enkelisijoittajien ja Veraventuren lisäksi kukaan sijoittaja ei olisi uskonut, että Jufo, Tuomas ja Harri saavat jätteenkäsittelyrobotin toimimaan kalvosetillä, johon perustuen Tekes aikoinaan rahoituspäätöksen teki. Ajatus oli vaan liian hullu. Viime viikolla Suomessa oli kansainvälisen jätealan huippukonferenssi, jossa yli sata CxO-tason henkilöä suurimmista jätealan konserneista näki nyt kolme vuotta myöhemmin Viikin testijärjestelmän ja ihmetteli, miten robottikäsivarsi poimii kiveä, puuta ja metallia liukuhihnalta siten, että toiminnan ROI on todella korkea. Gaalaillallisen juhlapuheissakin oli vielä mainittu: ”We have seen today the future of recycling.”
- Valkee. Kirkasvalokuuloke, joka hoitaa ja ennalta ehkäisee kaamosmasennusta. Juuso ja Antti päättivät selvittää, ovatko ihmisen aivot suoraan valovasteelliset kuten useilla eläimillä, ja miten mahdollinen valovasteellisuus voitaisiin tuotteistaa. Laitteessa on kaksi korvanappia, joista led-valo johtuu korvakäytävän kautta aivojen valovasteellisille alueille vaikuttaen mialialaan pimeänä vuodenaikana. Nyt kaamosajan suklaanhimon ja väsymyksen poistoon lähtee kuukausittain tuhansia laitteita Suomen rajojen ulkopuolelle – jo ennen tuotteen varsinaista lanseerausta – ja kasvunäkymät ovat vahvoja. “Those crazy Finns have now tackled depression”, kommentoi moni maailmalla kuullessaan tästä. Tekesin rooli tuotekehityksen rahoittajana on ollut ratkaiseva. Kuka muu olisi voinut keksiä, että valoa voi kuunnella?
Tässä on neljä esimerkkiä. Ilman Tekesiä näistä ei olisi olemassa nykymuodossa yhtäkään.
When you ask, startups usually are “just about to complete” something big. A new product, a new sale, a new partner.
However, most never complete or finish anything well. There are no end products, just things in progress.
This is deadly.
The end product each day –mentality focuses your team to deliver. It has two parts:
- First, “end product” means that you always deliver something tangible and complete. As an example, you don’t create ideas how your next product will be like, but you present the full product spec. End products take company forward, while half-made drafts only create unnecessary internal meetings and debates.
- Second, “each day” means that progress is constant and delivery cycles are short. I personally believe on daily deliverables. Working in a startup means enjoying the brain dash to get things completed at a constant pace.
Having the End product each day –mentality installed into your startup is very powerful. The entire team will have a culture that focuses on accomplishing, not doing. This is a bigger thing than personal effectiveness alone.
This is the third part of Startup Management Series based on my experiences and the culture we institutionalized at CRF Health. The earlier parts discussed “Deliver or die” and “There is no place to hide” principles that are inevitable for every successful startup to follow.
There is no place to hide
Tons of strategy books have been written about measuring performance and making people accountable. I propose that startups need to take this to the extreme: everyone’s performance is fully visible to all, with no place to hide.
This creates high performance culture: the ones not performing drop out without needing to fire them, while high performers enjoy the continuous learning and an environment that moves on. Also, if executed well, the ones leaving will get a good reference: they were part of the high-performing team and in any event are well above the standard.
In this culture, it is ok to fail. Failing is different to low performance. Consequence management needs to be clear and quick. If you allow people (and especially yourself as a manager) to hide, it will spread.
Any downsides? It is difficult to implement in a sophisticated manner, and can easily kill creativity – and even create fear. Performance means different things by environment, and that needs to be taken into account carefully. You run Navy SEALs different to a symphony orchestra.
My experience is that the most competent and creative people will love this – and ultimately demand it to stay and be happy.
When we started CRF Health in 2000 – currently the global eDiary leader (yes, really, “global” and “leader” are not the traditional marketing jargon here) – we set three management principles.
Deliver or die is the first one.
In 2000 there were 200-300 eDiary startups in the world, and today there are three left who share the market: At least our princples did not prevent us from becoming #1.
The deliver of die -mentality is in the heart of every successful startup. Strategy and unique ideas are important, but ultimately, they are only the platform to deliver. One should consider all strategies, slides and spreadsheets being invented. You should also consider at least two or three teams doing exactly the same thing as you are, somewhere in the world at the same time – and as excited, as competent and as advanced as you are.
Strategies and slides do not win in the startup market. It is about being two to three times faster, better and more agile in execution, never accepting compromises. This hard-sounding mentality needs to be become the DNA of everyone in the team.
When a startup has the deliver or die -mentality, it is difficult not to succeed.
We are happy to announce today that Ilkka Paananen, the Nordic games industry pioneer and entrepreneur, is part of Lifeline Ventures.
We have been already working together for few months with three companies – – to be announced soon. It has worked well for all, and especially for the entrepreneurs.
Lifeline Ventures is a different start-up accelerator. Ilkka adds games and entertainment to our Web and digital media experience, and lives and breathes the Lifeline model.
The official release is below. Welcome to Lifeline, Ilkka!
November 10, 2010. Helsinki, Finland – Ilkka Paananen joins Lifeline Ventures, the early-stage investor in health and Web, as Entrepreneur-in-Residence and Partner.
“Ilkka is one of the most successful and experienced entrepreneurs in the Nordic games industry. He has successfully built large teams from scratch and managed companies through rapid international growth. Ilkka is the perfect match for Lifeline Ventures, experienced in working hands-on with entrepreneurs and adding to our digital entertainment competence”, comment Lifeline’s co-founders Timo Ahopelto, Jarkko Joki-Tokola and Petteri Koponen.
“Lifeline has developed a new model for early-stage venture capital. I am impressed with the quality of the portfolio, and look forward to building the games and entertainment sector further. I believe we can make Lifeline the preferred partner for the best entrepreneurs in this space”, comments Ilkka Paananen.
Lifeline Ventures was founded twelve months ago and has made ten investments to date. Its portfolio includes such category-leading health and Web companies as Applifier, the World’s largest cross-promotion network for Facebook games and Valkee, the maker of the bright light headset that effectively relieves seasonal affective disorder symptoms.
Ilkka Paananen was the CEO and co-founder of Sumea, the mobile games pioneer that was acquired by Digital Chocolate in 2004. At Digital Chocolate, Ilkka held various management team positions from Managing Director of Europe to President of Digital Chocolate. In the latter role, he oversaw the publishing and development of the company’s product portfolio, managing Studios in Helsinki, Barcelona and Silicon Valley.
About Lifeline Ventures
Lifeline Ventures is an early-stage investor that co-creates growth companies in health and Web. The company invests in revolutionary ideas and driven entrepreneurs, often before the product launch. The Lifeline team works hands-on with the entrepreneurs to build their startup into a global category leader. More information: http://www.lifelineventures.com
When iAd launched, I wrote a blog post at ArcticStartup. Since then, Steve Jobs has told us that 2010 iAd revenues will be exceeding $ 60 million. That’s well done for a new mobile ad format for its first year.
For your convenience, my original post is below. I am almost obliged to re-visit this later this year, as I am sure there will be something coming.
Steve Jobs did it again – first content, then device and now ads
(April 13, 2010) Apple will be the talk of the town in mobile advertising this year. Last week at Apple’s OS 4 event, Jobs presented what advertising industry has been asking from mobile: iAd – the engagement media with scale and quality.
For brands, mobile advertising has had a big promise but no breakthrough: digital media and technology companies trying to fit the traditional online advertising model – mainly display and search – into mobile have not taken off. Mobile media is different to online: being based on communications and quick tasks one performs, not browsing, mobile requires different user experience. Running banners on mobile is like running radio ads on tv.
Most importantly, every new media property needs to add to what existing media already have. In mobile, this has not been the case and despite all the hype, the market is still very small. Planners and buyers already have tons of ‘eyeballs’ they can buy elsewhere in the six mass media channels. During my time at Blyk, the feedback from London’s media industry was clear: “Mobile does not add value to what we already have.” It is understandable – why to bother with complex mobile screen when I get richer experience in traditional web, and reach more people elsewhere? Blyk is the first media company to have formats that engage a qualified audience in mobile, but initially lacked audience scale with the MVNO model.
At the same time, advertising industry has been very clear on what they would need from mobile: engagement. Traditional reach and frequency –based media planning does not work anymore. Media landscape is cluttered with titles and channels, and media consumption is more scattered than ever. When built properly, mobile could become the engagement channel with massive reach. Unfortunately mobile operators who could play a role have lost in this game already.
More specifically, agencies have for long thought that mobile media opportunity is in engaging applications. Mobile needs to provide engagement, and in mobile engagement equals to applications that are fun, valuable and something you like. Whenever an agency showcase mobile, it is applications like Lynx Effect by BBH London. Thought leaders like Ogilvy UK’s vice chairman Rory Sutherland voiced already in 2007 that mobile advertising opportunity is in smart phones and ads that become indistinguishable from being a service.
Now, what Apple and Jobs are up to with iAd? In the OS 4 event Jobs addressed everything that the advertising industry has been waiting for. Apple has now an opportunity to combine mobile media user experience needed to engage people with creative opportunities that will inspire the industry – and most importantly, that has a mass media scale immediately:
– You know the ads on the web… They’re eye catching and interactive, but they don’t deliver emotion. What we want to do with iAds is deliver interaction and emotion [to create real engagement between your brand and our Apple users].
– This is a pretty serious opportunity [with 1 billion impressions per day in our AppStore ecosystem], and it’s an incredible demographic [as there is no more attractive technology brand for advertisers today than Apple, qualifying its users as the audience you want to talk to]. But we want to do more than that. We want to change the quality of the ads too [as mobile is a different media to online].
– These ads are looking a lot more like apps. Almost totally separate apps that live inside apps. Is your mind blown yet?
I believe that Apple will be the talk of the town in mobile advertising for 2010.