She has loads of experience both in entrepreneurship and in supporting entrepreneurial organizations. As the president and CEO of the Slovak-American Foundation, she is more than happy to share them in an effort to support our startup ecosystem. Usually visiting Slovakia around four times a year, you may have had a chance to meet her at the final Startup Awards event in December. Mrs. Mary MacPherson.
Mary, you are the president of the Slovak-American Foundation. Can we start with the history of the foundation?
The Slovak-American Foundation is the successor of Slovak-American Enterprise Fund. A series of enterprise funds were set up in 1990s by the US government. The idea was that the US could support countries as they developed their capital markets if they had access to venture capital. Over the period of about 11 years, we invested around 35 million USD in Slovakia, mostly in small businesses as that´s what was around at that time. One of the best known companies to come out of the fund is Profesia.
The Slovak–American Foundation was formed in 2010, and I got involved in it as my background is in entrepreneurship and entrepreneurial support organizations. We started an exchange program and over the course of four years, we brought 38 young people and research scholars to the US for a year. They were placed in companies, in research universities – something that was relevant to their work. Today, we work to keep the alumni of our program connected.
Later on, we saw the emergence of entrepreneurs and began searching for ways to support Slovak startups. In 2015, we launched a program called US Connections which is our flagship activity now. As partners in building the ecosystem, we also support the Startup Weekend and Startup Awards.
What does the US Connections program cover? How does it work?
We started the US Connections program with an intention of finding companies that have an existing product or service, and we require that they are majority Slovak owned. We are looking for companies that may be seed stage or beyond but already operating and the team has quit their day jobs to work on the startup full time. They are in the market and their product or service has a chance to grow and gain traction in the US. With targeted support of the Slovak-American Foundation and an award of 35.000 USD, it can really help them to do something they could not or would not otherwise do.
What support you can provide besides the money prize?
Our support is narrowly tailored to what the company needs. We might help them develop a highly targeted prospect list. If they want to go to the US market or even if not, there is some expertise they could gain if they spend some time in the US.
The support could be around marketing as well. There is one company that started in Slovakia and has a good penetration here in Central and Eastern Europe. Now it is moving into English speaking markets. Some of their English marketing and messaging could be tightened up and tailored to English speaking market. And that is something that we can help with.
If companies with the technical products want come into the US, they need certifications from government agencies, here we provide support as well. Or we can help them to get into some kind of tailored incubator or accelerated program.
How does the process work?
We have a period of about six weeks when applications can be sent. Then we review them. We have a group of advisors in Slovakia, including such names as Simon Sicko, Simona Bubanova, Vlado Buzek or Pavol Luka who understand the environment. They screen all the applications and end up with several teams that get the opportunity to pitch their ideas. The first time we did this was Spring 2016 selecting StreamStar and Photoneo.
Have already the next rounds taken place?
In the second round we chose only one company, and that was Anima Technika with their Drone n Base product. Their interest is in bringing the product into the US market, to the Computer Electronics Show in Las Vegas in January 2017. In the latest round, we selected Kickresume in October.
Winter 2016 US Connections Round closed in mid-December and the selection will be made the end of January. We’ll open the Spring 2017 Round on March 1st. If you are an innovative Slovak company with product that has US market potential and you are at a development stage where you can enter the US market in the next 12 months, do not hesitate to apply.
You have the experience from both corporate world and startups. What do you think can startups learn from the corporations, and vice-versa?
Corporates typically don’t want to take risk that startups represent, and startups often represent innovation that the corporates are too big to deal with or to see.
I’ll take as an example the Slovak-American Business and Innovation Counsel (SABIC) that has just been stood up by Slovak Ambassador Peter Kmec and the former US Ambassador Theodore Sedgwick. Its aim is to bring the US companies that have large operations in Slovakia together around an innovation agenda. So the founding members are AT&T, Honeywell, VRM and ESET. And AT&T, for example, has an accelerator system in the US, called AT&T Foundry with different focuses. In Atlanta, they have an AT&T Foundry for IoT. So when we see a company here that has, for instance, a camera that can be used on an autonomous vehicle, we can make that connection to the respective corporation.
There is something that is being done with some success in the US that I think could be tried here. It’s called Switch-Pitch. The corporates who have funded development projects pitch to a group of entrepreneurs saying “I need to develop this and I’ve got money to do it but I don’t have the people to do it.” Then the entrepreneurs can make a proposal and assuming they win that business, it could be a joint-venture, a licensing deal, or something else.
If you compare Slovak startup ecosystem with the US one, what differences do you see and what similarities are there?
Any startup ecosystem has one similarity – in the heart of it are the entrepreneurs and they have the same needs, passions, ups and downs. We see the Slovak ecosystem is developing as there is a critical mass of entrepreneurs that need to connect with each other; there are service providers like accounting or law firms which want to be a part of the system. Then there are the “money” people. Venture capitalists and angels come in and the layers of the ecosystem get built.
I can also see the so-called sector ecosystem where incubators and accelerators do a sector-specific work. Entrepreneurs need access to networks, to markets and to money. So if you are in the health space, you want to be in a health network to find costumers and smart people that know that space and money, as well as people that want to invest in that space. I think you haven’t seen that segmentation happen here yet.
What are one, two, three, hints you would give to a startup trying to expand to the US market?
The entrepreneurs we see here in Slovakia have incredible technical skills, in a variety of sectors – advanced manufacturing, biometrics, drones, automotive, etc. But they lack the knowledge of distribution channels and market strategies. So don’t just stay in the lab making the product perfect; get out there, begin to build your market while you’re still building the product.
We also might say there is such an envy of Silicon Valley and this idea of venture capital and angel investing. The reality is that only a tiny percent of companies will ever get angel investment and even less will ever get venture capital. Looking for alternative ways to finance your companies is a good thing, as well as understanding the implications of giving equity away at an early stage. Because there are too many examples here of companies that did that and then found themselves in a place where it was impossible to raise additional money because they were so diluted.
What do you think are the challenges Slovak startups and entrepreneurs need to face to grow and expand?
A lot of it is understanding the product you have and the market it fits in and how to get to that market. It’s a challenge that all entrepreneurs have but here, perhaps starting to look at sales, marketing and distribution strategies earlier, while products are being built.
The other thing I’d say is don’t feel like you have to go to the US right away. There are some companies that want to bypass Europe and just go right from here to the US but you can learn a lot in-between here and the US.
You don’t consider it to be always the best approach to move to the US right away?
It all depends upon the product and the ability of the company to have sufficient resources – and the right resources. If you want to sell in the US, you might look to find somebody that is going to sell it for you. Streamstar is a good example with their distribution strategy. They found a reseller in the US, which is a dealer with a lot of locations. They have a sales team and that sales team then directs leads to the reseller. Imagine a company with no presence on the ground trying to sell into the US market without partners.
If you don’t have either the resources or the strategy to find channel partners, if you think you are just going to get a couple of sales people, it’s really hard to be successful. Developing your channel strategy for coming into the US market I think is the key.
You are based in Washington, DC. What does the startup ecosystem look like in there? Almost everybody knows the Silicon Valley. What about you?
The Silicon Valley seems to be more oriented towards consumer products, the Washington area not that much. Anybody that starts a company in that field, will go to the Valley. But we have different pockets of expertise. There is a lot of biotech and health, part of that is because the National Institutes of Health and government labs are in Washington DC; a lot of cyber security for obvious reasons as well as general ICT and software development. The 1776 Accelerator is in Washington, focusing on seven different industry sectors.
How do you see the startups and technology entrepreneurship in, let’s say, ten years’ time? There are opinions about startups being just a bubble about to burst.
We know that happened once, we were there and saw that happen and a lot of that did have to do with valuations and with the availability of money. The internet was really new at that time. Now the internet is just like the wallpaper. It’s obviously a core to everything but it was the thing at that time.
The growth in any economy comes from these small, innovative companies, it doesn’t come from the big companies.
I don’t see it slowing down, people will be smarter. When I read your website, a lot of your stories are about mentors and people that have been abroad, have a great experience. So I see in Slovakia a great interest of people who are experienced entrepreneurs wanting to work with others, and that will make them smarter. The whole ecosystem will be smarter.
What about some future challenges and opportunities of the Foundation?
We are a small foundation, we would like to remain in business and continue to do work here in Slovakia. And to do that, we also need to raise money. Therefore we are looking for grant opportunities in the US. In addition, we want to get beyond Bratislava and cover all the regions. That means building our networks with the Eastcubator, IT Valley, and others.
In terms of opportunities, our tagline is “Partners in Building the Slovak Startup Ecosystem.” We have supported the STARTUP Awards for three years, and this year’s program was amazing. We were proud to be the Platinum Partner and to present an overall US Connections prize to MultiplexDX. We also sponsored Startup Weekend Bratislava and will continue to selectively support targeted activities.
As our “portfolio” of US Connections companies grows and they achieve success, we hope the program will attract more companies and that entrepreneurs in Slovakia will continue to be inspired, take risks and build sustainable businesses.
Photos: Mary MacPherson / Startup Awards.sk