I felt the urge to share some thoughts. With who ever might be interested in the chronicles of an entrepreneur on a quest for improvement. A few months ago we launched a new initiative for investors, called ‘the Herd’. If you have a minute, here’s how we did it, the things we learned and the people that provided us the essential help and guidance.
The beginning
As some of you know, David van der Meulen and I set up a community (closed network) called BrownCow, which — after a lot of trial and errors, pivoting, and slamming our heads against walls, itself worth a story; maybe some other time — connects serious entrepreneurs to former captains of industry. Startup founders like Daan Donders (Sofiwi), Jord Cuyper (Fanly) and Bas Lemmens (Roomlr) with seasoned mentors like Mienke Schaberg (Founder Metaplan executive search), Anthony Ruys (ex-CEO Heineken) and Coen de Bruin (Founder DPDB). The latter turned out to gladly share their experience and open doors. As it stands we now have over 130 promising and successful (post)startups and around 100 ‘senior experts’. It’s great to see how the calm and objectiveness of grey blends effortlessly with the eagerness and drive of green. A win-win for Dutch entrepreneurship, of which I’m quite proud.
Cash is king
But every entrepreneur needs cash. To invest, to survive, to expand. All of our members have successfully realized their share of funding. But the second time round — to grow and optimize their company and teams — turns out to be different. Results count, instead of promises. And the bigger the amount, the heavier the ‘due diligence’ and thicker the shareholder agreements… Plus family, friends and fools are no longer sufficient: the big fish need to be convinced. Besides an experienced business coach, market insights or a contact in Berlin, a lot of our entrepreneurs approached us for their B- or C-round funding. “You guys know a senior expert that wants to invest in our business?“.
On the other side, some of our senior experts have experience investing in young companies. Quite successfully as well. And these days, with stocks jumping up and down, interest rates at an all-time low, investing in startups seems more interesting than ever. Especially if your involvement, experience and network will increase their chance of success. Furthermore, many of our experts wanted to do something back and help Dutch entrepreneurship. But promising startups are no longer part of their network. And how to filter or compare businesses in different phases, markets, with each a different ‘slide deck’ (“..and a lot of accelerated valuations!”).
Walking into the fence (lesson in humility)
Considering these obvious needs from both our entrepreneurs and our senior coaches, we decided to have a beer with esteemed BrownCow entrepreneurs Koen and David (Pluggo), who always critisized the ridiculously inefficient startup funding market in the Netherlands. And quickly came to our conclusion: let’s create our own Venture Capitalist fund. Dick Weiss, a valued BrownCow advisor whith refreshing ideas helped structure the fund. We invited our senior-expert-investors for a dinner, to discuss the idea. Our own fund! Brilliant right? Wrong. Within minutes our plan was demolished. We didn’t have any experience managing a fund, no cash to bring along and no idea how to structure a fund that needs at least 10+ million to start with. I was staring at my shoes..
First grazing
But fortunately the dinner turned out to be constructive. Why not start simple and risk free? Why not just mediate between entrepreneurs and investors? The Herd was born: BrownCow entrepreneurs with a serious track record, in need of 200k — 1 mn growth funding, can apply. We select the most promising post startups (100% credit to my colleague Willem Rens). Two of our best funding experts, Grimbert Rost van Tonningen and Chris van der Haagen, help them sharpen their pitch, mould their decks in a fixed format and prepare them for term sheets, due diligence and deal making. When ready, we send a simple e-mail to the informal investors — and then obviously call them ‘bulls’. The e-mail contains, per company: description in 5 words, website, most impressive milestone, most important promise, funding needs, equity indication, a 1-min-founder-video. With their investment decks attached. If a bull sees an opportunity he likes, we’ll link him to the founders. Or organize a small pitch if more bulls are interested. The entrepreneurs pay a bit for the two prep-sessions and ‘bulls’ pay to receive monthly investment opportunities. And of course to join the yearly bull-diner…
Cow see, cow do
After we set up the basic idea and started communicating it, things went fast: the FD and Sprout interviewed us, we could finally reach out to all the promising entrepreneurs that had approached us for funding. And within no time over 20 investors joined as bulls, amongst them prominent BrownCows Loek Winter (healthcare entrepreneur), Abel Slippens (ex-CEO Sligro), Aldebert Wiersinga (Founder and managing partner of Value Creation Capital) and Bart Jan van Genderen (founder CMI). BrownCow partner Rabobank — thanks to the expeditious Stefan Lohuis — is in. They consider this an opportunity to back informal investments with loans. Some VC’s even contacted us to see if we could collaborate if ‘our’ companies need future funding.
Finding green meadows
Who knows what will happen next. These are exciting times. We sent our first mailing this November (Jelte de Jongh, Leeruniek). Three mailings later we connected six of our top entrepreneurs to Herd investors. Many thanks and good luck to Michel Willems (BimBimBikes), Pieter Klinkert (Indica), Joep van Straalen (Graaggedaan), Rutger Bruining (Story Terrace) and Tonnis de Boer (Tradecloud). All of them are currently talking with our investors and most of them with Rabobank as well. But whatever happens from here, the journey was already worthwhile. I hope to bring you some good news this summer. To be continued..
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Herd participants (growth entrepreneurs)
