Seedcamp: incubating start-ups on a bigger scale
I attended at London Business School, a lecture by Reshma Sohoni, founder of Seedcamp “the first European incubator”. The business model of this innovative incubator is quite simple: VCs usually spend a lot of time looking for opportunities, interacting for weeks with a couple of entrepreneurs, before making a final (and very risky) investment. Seedcamp suggests to scale and rationalize this process: screening hundred of applications from European countries, bringing them to a training/pitching camp, selecting the best ones, leveraging a network of local mentors and investing a seed capital amount of $50000,(for 8-10% of total equity) in the finalists, to end up with a portfolio of more than 30 start-ups, and it is still going. Hopefully, the law of large numbers would lead to a superstar company among them.
There is neither “customized” due diligence nor close and regular follow-ups, so that the transaction cost is close to zero. Moreover, most of the events and trainings are sponsored by partners interested in helping find the next Facebook. It is all about running the right systems and securing the right partnerships, to bring value for both investors and entrepreneurs, at a very low cost.
Seedcamp is too young to evaluate its sucess, but the process seems to work and to have attracted regular partners and investors so far.
I was wondering whether we can adapt this model to the Maghreb ecosystem…any comment?