Why we write on this topic:
Failures are as much a part of entrepreneurship as successes. That’s why we are sharing stories from entrepreneurs who zoom in on things they could have done better.
It’s almost time for the LEVEL UP start-up event in the Dutch city of Eindhoven. Inspiring tech start-ups will be taking the spotlight there this Thursday (Sept. 22). The day features company presentations, networking opportunities and interactive workshops. One workshop in particular stands out. At “Start-up fuckups,” entrepreneurs will discuss their worst moments of failure. Friso Schmid is one of them and talks about the bankruptcy of his former company Keezel. His advice: “Make it a full-time job to attract investors.”
The event will be largely devoted to celebrating entrepreneurial successes. As such, the day will kick off with a presentation by keynote speaker Johan Feenstra, CEO of SMART Photonics. He will, among other things, zoom in on the path the chip company took in order to grow into a mature company.
However, along with the milestones, failures are also part and parcel of entrepreneurship. The ‘Start-up fuckups’ workshop will delve into more detail into these. “We don’t just want to paint a pretty picture. On the contrary, it is really informative to hear about how others have gone wrong in the past,” says Johan van Erp, Start-up Officer for the Municipality of Eindhoven and also organizer of the event.
Problems with funding
Schmid covers the bankruptcy case of his former company Keezel. Through his company, he sold a small, streamlined hardware device that was designed to encrypt data by using VPN technology with unsecured connections, as is often the case at airports or hotels.
“In 2015, our company was still doing really well. We had managed to raise more than a million euros. Also, we had a very successful campaign underway,” he begins. But money soon became an issue when the company faced delays in delivering the product to its first customers. “We burnt through the money faster than expected. Our employees and the factory simply had to still get paid during that period. And there’s a big time gap between making payments on time and when we finally started getting revenue in from the products we were selling. In the end, we couldn’t complete that circle and so we went bankrupt.”
The bottom line: “We underestimated the funding story, and that is a lesson I will pass on during Startup fuckups. We approached more than 300 investors during that period and ultimately only five investors partnered up with us. It’s not a crazy idea at all to temporarily make it a full-time job to talk to potential investors. This isn’t something you should ‘just do’ for half a day per week on top of everything else. So that was also the case with us. We had a successful product that customers were looking for, but if you don’t have your finances in order, you just won’t make it.”
Schmid hopes to impart to start-ups that mistakes are all part of the game. “By no means all start-ups manage to hit the market with a successful product, whereas you only ever read on social media about those companies that do manage to pull it off. In that respect, LinkedIn is essentially a kind of Instagram for the self-image of entrepreneurs. Everyone seems to be doing great, but that’s not true, of course. That’s why I think it’s so important to share my story during LEVEL UP.”
A come back
Meanwhile, business-wise, things are once again moving in the right direction for Schmid. He has rejoined the entrepreneurial world with his new company Startup Fountain. “With this community, I am connecting start-ups to potential investors. Here, start-ups can showcase themselves in the shop window, so to speak.”
His company has only been in operation for a year, but the new venture is on a roll. More than 200 Dutch start-ups and 500 investors have already joined the community. And with success. “A good number of start-ups have already secured funding. By doing this, I try to make the route to finding investors smoother for budding business owners. This is how I help prevent them from making the same mistakes I made back then,” he says in conclusion.
Click here to register to attend LEVEL UP and for more info.