This article is written by Jeremiah Uke, a Contributor Author at Startup Istanbul.
Vitaly M. Golomb is a tech investment banker and angel investor who started as a serial entrepreneur in the Silicon Valley trenches as a teenager. He is the Co-founder and Managing Partner of GS Capital, mid-market M&A boutique and advisory firm. He is the author of “Accelerated Startup: Everything You Need to Know to Make Your Startup Dreams Come True from Idea to Product to Company”, speaking at Startup Istanbul 2014, Vitaly talks about why it is important to startup here and startup now.
Mr. Golomb is one of the most dynamic and in-demand speakers and trainers in the world of startups, venture capital, and corporate innovation. He is a contributing writer to TechCrunch and a top-ranked mentor by accelerators and business schools in the US, Europe, and Asia. His experience in various countries allows him the experience to talk about how startups can start from anywhere and thrive.
At his session at Startup Istanbul 2014, he talks about “why here?” and “why now?”, a lot of people want to move to Silicon Valley and they think that is the only place where it is possible to grow their businesses.
From the standpoint of investors, Europe is actually a very interesting place to start a new fund, there are a lot of advantages so Europe produces higher venture exit multiples than the United States, meaning that for every dollar you invest in Europe, you can get more back. The European exits are smaller, but the entrance valuations re 3-4 times lower.
The big reason for this is because it is a lot cheaper to start a company here. An apartment in San Francisco costs at least about $3500 per month to rent, there are parking spots in San Francisco that are more expensive than houses in Istanbul. So, everything is more expensive, junior engineers cost $120,000 per year on average.
Europe produces half as many exits as the United States, one-third of them hit $100M+ exits, and they do this with only 20% of U.S venture capital, that’s very interesting and attractive. If you look at these big exits, the cash in cash multiples are about 4.5x, which is lower than what funds promise their investors when they are raising money which is 6x, in Europe, that number is 7.2x, this is why you see new funds announced every other week in Europe. The truth is you are going to have more access to funds as a founder in Europe.
A lot of people don’t know what a good startup is, what is a startup? it is an experiment in a search of a business model, it is not a little version of a big company, most experiments fail and when they work it’s a breakthrough, so as an entrepreneur, you need to get comfortable with failing, a lot of cultures have a stigma towards failure, but it’s not the same type of failure when you are doing something very risky, because the reward is bigger.