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Zombie Startups in Europe

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Re: Zombie Startups in Europe

#11

Post by charlesdm »

lifeisstillgood wrote: post #10
HugoDaniel wrote: post #7

I got to pt4 with my solo startup/project `The first step is inevitably to raise money from dumb/ignorant investors who couldn't care less about your startup: that would be the government / unemployment benefits in France / tax-incentivized angel investors in the UK. It buys you 12-18 months of runway.` After it I realised it has no market and no interest from anyone. Now I am in a mixed bag of thinking that I did we…

Who are these tax incentivised angels in the UK??

Basically anyone with high income, making more than (a few) £100k per year.

I have a friend who has done a couple of SEIS investment deals that turned out ok-ish (only breakeven, but profitable considering the tax rebate mechanism).

Re: Zombie Startups in Europe

#12

Post by tumetab1 »

dvfjsdhgfv wrote: post #8

It's not just in Europe, it's mostly the same everywhere, with very minor modifications. I'd even risk saying that most startups are like this, i.e. at one of the stages described in the article - only a small minority are actually successful.

Unsuccessful startups, for me, are not the problem. The problem is:

a) venture capital coming from government which have very low incentives to not waste money (their goal is usually only to have X amount of start ups) - which leads that capital and talent is diverted to this bad startups

b) since they are zombies, they don't die quickly enough, the resources waste keeps going on (capital, talent, office space, bandwidth, etc.)

Re: Zombie Startups in Europe

#13

Post by Nicolas_Colin »

tumetab1 wrote: post #12
dvfjsdhgfv wrote: post #8

It's not just in Europe, it's mostly the same everywhere, with very minor modifications. I'd even risk saying that most startups are like this, i.e. at one of the stages described in the article - only a small minority are actually successful.

Unsuccessful startups, for me, are not the problem. The problem is: a) venture capital coming from government which have very low incentives to not waste money (their goal is usually only to have X amount of start ups) - which leads that capital and talent is diverted to this bad startups b) since they are zombies, they don't die quickly enough, the resources waste keeps going on (capital, talent, office space, bandw…

Yes that is the proper way to frame it :-) Being unsuccessful is part of the startup life. Being a Zombie is not!

Re: Zombie Startups in Europe

#14

Post by charlesdm »

tumetab1 wrote: post #12
dvfjsdhgfv wrote: post #8

It's not just in Europe, it's mostly the same everywhere, with very minor modifications. I'd even risk saying that most startups are like this, i.e. at one of the stages described in the article - only a small minority are actually successful.

Unsuccessful startups, for me, are not the problem. The problem is: a) venture capital coming from government which have very low incentives to not waste money (their goal is usually only to have X amount of start ups) - which leads that capital and talent is diverted to this bad startups b) since they are zombies, they don't die quickly enough, the resources waste keeps going on (capital, talent, office space, bandw…

Governments have secondary returns -- VC coming from government generally has restrictions (i.e. the money has to be spent on employees). Employees pay taxes. Those people spend their money mostly locally. Even if every euro invested is lost, it'll still be profitable in most cases (because everything eventually flows back into the local economy).

Re: Zombie Startups in Europe

#15

Post by jacquesm »

k__ wrote: post #5
tw1010 wrote: post #3

So glad people are talking about the deceptive strategies EU companies uses to mimic those in the US. It's as if there's a deep cultural force against acting like US startups here in the EU, which I frankly don't like and would like to see some push against, and I think all parties will be happier once we've gone through the phase shift.

I don't think this is a special EU force. Only the fact that most people can't deliver. Sometimes it's the dev and you end up with crap instead of a product. Sometimes it's the CEO and you end up with a consultancy instead of a product business.

And sometimes it works.

Re: Zombie Startups in Europe

#16

Post by beejiu »

lifeisstillgood wrote: post #10
HugoDaniel wrote: post #7

I got to pt4 with my solo startup/project `The first step is inevitably to raise money from dumb/ignorant investors who couldn't care less about your startup: that would be the government / unemployment benefits in France / tax-incentivized angel investors in the UK. It buys you 12-18 months of runway.` After it I realised it has no market and no interest from anyone. Now I am in a mixed bag of thinking that I did we…

Who are these tax incentivised angels in the UK??

The UK has two tax-efficient schemes for investing in startups: SEIS and EIS. For some perspective, if an 'additional rate taxpayer' invested £10,000 into your startup, they are only actually risking £2,750 due to tax relief (source: https://www.crowdcube.com/pg/seis-tax-relief-42). They get additional relief on capital gains tax.

Re: Zombie Startups in Europe

#17

Post by kome »

ttoinou wrote: post #2

Nicolas Colin : everyone knows them in town because they're spending their time speaking about entrepreneurship to ignorant people gathered in salons Well isn't that what TheFamily is ? https://www.thefamily.co/about/nicolas-colin

basically, yes. but it's fine, it's an economy model based on waste. A redistribution from the rich to the rich.

Re: Zombie Startups in Europe

#19

Post by DoreenMichele »

[Note that nobody has paid for a product yet.]

If you don't have "paying customers" in some fashion, you aren't really in business. The rest is just window dressing, basically.

An even longer runway!

There's your "Universal Basic Income" right there: Money for nothing (and your chicks for free, no doubt). See, also, Duke Nukem Forever, where they basically didn't ship until they had to because they were running out of money.

I think an essential source of friction in the world of business is there are two ways to make money:

1. Add real value such that if someone pays for your product, you both walk away better off. The world is enhanced by the existence of your company/product.

2. Milk people for money in some social/commercial variation of strip mining where you extract resources for yourself and don't really make the world a better place. There are externalized costs of some sort where the world is, in the aggregate, worse off because you got your needs met in the short term.

Real startups are the first thing. Zombie startups are the second thing. And friction over "Yes, but am I paying for something that genuinely makes life, the universe and everything better or am I paying for some blood-sucking piece of shit?" is the essence of a lot of criticisms of business, capitalism, etc.

Re: Zombie Startups in Europe

#20

Post by mmjaa »

This is so true of the Austrian startup scene, I had to double-check that it wasn't written by someone I know.

IMHO, the worst thing a startup can do in Austria is get involved with AWS funding .. state funding of tech. Its just so deflating, it removes the incentive to actually be productive and work on the needs of the end-user; the customer. This is not something Austrians, at least the startup generation, get right .. and I feel very strongly that its a consequence of the welfare generation, who equate "got free money from the government" with 'success'.

I'd love to see the funding dry up in the scene. There are so many innovative groups here in Austria, but they're just not hungry enough. They don't have the drive, or the motivation, to launch in their markets and do what needs to be done to service people. Service is not a part of Austrian culture. But, I feel, it never will be for as long as state welfare is the first handout expected by founders.

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