Introducing the Amsterdam Startup Index: the ‘AEX for startups’

This post originally ran on StartupJuncture (with interactive chart), so go check it out there.

For the last year or so, I have been on a quest to find a way to measure and monitor the performance of startups. One of my trials resulted in the Amsterdam Startup Index; an index with the 25 ‘hottest’ startups of Amsterdam. In this blog post, I’d like to introduce you to this ‘AEX for startups’.

Just like the AEX, I selected 25 companies that together make up the index. Obviously, the selection for the Amsterdam Startup Index was not based on the market capitalization of the startups, but instead I chose Amsterdam-based startups that were founded in or after 2008 and raised at least €500,000 in or after 2013. From the remainder, I took the startups with the highest growth scores (see later on). This resulted in the 25 startups below (in alphabetical order).

The 25 startups included in the Amsterdam Startup Index

  • Adcrowd Retargeting
  • Afrimax
  • Cloakroom
  • Collaborne
  • Cupenya
  • Fairphone
  • Freenom
  • Hatch (Iceleads)
  • LookLive
  • Matchhamster
  • myTomorrows
  • Peerby
  • Pyramid Analytics
  • SkinVision
  • SocialSensr
  • StudyTube
  • Tiqets
  • Travelbird
  • Ubideo
  • VirtuaGym
  • Wercker
  • WeTransfer
  • Windcentrale
  • Yieldr
  • ZEEF

How we calculated the growth scores
It’s really hard to measure the progress of startups, especially from an external point of view, as most companies do not disclose information such as revenues (if any). We use the Growth Score that is developed by data company Mattermark as a proxy for the momentum of the 25 startups. Mattermark introduces the Growth Score as follows: “The Growth Score is a measure of how quickly a company is gaining traction at a given point in time. It incorporates the “[Mattermark] mindshare score” (web traffic, social traction) as well as business growth metrics (e.g. employee count over time, funding). The underlying assumption is that companies who see growth across these signals are shipping products and talking to customers, and are more likely to grow as a result.” You can check the data for yourself by downloading the (free) Mattermark iOS app.

Introducing: Amsterdam Startup Index
Since the beginning of this year I’ve been tracking the Growth Scores of the 25 selected Amsterdam startups. The result is presented in the chart below (interactive version here).

283.1 ↓4.7 (-1.6%)Schermafbeelding 2016-06-06 om 08.47.08.png

The chart is less real-time (a delay of 1 or 2 weeks) and less volatile than the AEX, because the scores are calculated on a weekly basis. The huge increase in the first two weeks of March is probably due to the $4 million funding that Tiqets raised attracted 7 March, which captured some (international) media attention.

The top five startups of last month are:

  1. LookLive (+12.1%)
  2. Afrimax (+10.6%)
  3. Peerby (+6.0%)
  4. WeTransfer (+1.7%)
  5. StudyTube (+1.6%)

Cool. Now what?
Wouldn’t it be cool if we could see how the Amsterdam or Dutch startup ecosystem evolves over time? If we could see if our startups are raising capital, if they are creating a fan base of customers, if they are gaining momentum?

There are several applications for a Startup Index like this that I have in mind. I can try to take the Amsterdam Startup Index to the next level, make a cool website and update the scores on a weekly basis. Maybe I can add startup analytics insights like RTL Z does for AEX companies (“the Amsterdam Startup Index is now below the psychological barrier of 300 points, because XYZ”), maybe I’ll try to convince BUX to incorporate the Amsterdam Startup Index in their app, maybe I can make the Utrecht or High Tech or Dutch Startup Index. Or I can quit this experiment and continue with my other startup analytics projects. I decided that all of this depends on if you, the reader, like this concept enough to justify putting more effort into this.

Startup analytics: no silver bullets
I’ve spent quite some time assessing tools that could help me to have better insights in the (Dutch) startup ecosystem. When it comes to startup analytics there are no silver bullets, but a combination of datasets and methodologies can result in valuable insights.

What I like about Mattermark’s Growth Score is that it includes most startups and makes it easy to monitor and compare them, and does so in a minimal invasive way, i.e. without bothering the startups. At the same time, there are some inherent limitations, such as only taking into account external signals (no internal metrics like revenue, no. of customers, gross margin, churn) and making no distinction between for example B2B and B2C companies (B2C companies are more likely to have a bigger ‘fan base’).

Furthermore, the weak point of the Growth Score is that, although Mattermark mentions the input factors, the actual calculation to get to the score is one big black box. Also, some past scores tend to change over time, which is strange and obviously an error. I wouldn’t attach too much value to the concrete numbers for that reason, but as an indicator (and especially on aggregated level like in the Amsterdam Startup Index) it has value in my perspective. I think the Growth Score is still a powerful indicator of growth and performance from an external point of view.

And that’s exactly how I designed this Amsterdam Startup Index; as an indicator of the startup ecosystem at best.

If you are curious about my other startup analytics projects, like the performance scores that we developed at Golden Egg Check based on internal key metrics, follow this blog or send me a message.

Leestip: hoe bepaal je als startup de prijs van jouw product?

Je kunt dezelfde fles water verkopen voor €1 of voor €3. Voor beide prijzen is een markt te vinden, hoewel de klantsegmenten waarschijnlijk anders zijn. Maar hoe bepaal je de optimale prijs van je product of dienst? In het boek Lean Pricing – pricing strategies for startups, geeft Omar Mohout waardevolle methoden en strategieën die helpen om de juiste prijsstelling te bepalen.

Dit is erg nuttig omdat een prijsstrategie een van de meest onderschatte en tevens bepalende succesfactoren is van een startup. Jouw prijsstrategie (o.a. hoeveel geld er binnenkomt en wanneer) heeft direct invloed op je cash flows, en dus op je overlevingskansen en waardering van jouw startup.

Lean Pricing

Mohout, professor ondernemerschap in Antwerpen Management School en growth engineer, staat stil bij verschillende methoden en strategieën die helpen om de juiste prijsstelling te bepalen voor (SaaS) startups. O.a. ankerpunten (waaraan kun je je prijs refereren), value-based pricing, freemium en multi-axis pricing passeren de revue.

Het boek beschrijft de technieken, maar geeft ook praktische voorbeelden en vuistregels. Een voorbeeld van iets dat ik in de praktijk vaak tegenkom: stel jouw startup doet aan value-based pricing, wat inhoudt dat je een prijs voor jouw product kiest als deel van de waarde die jouw product voor de klant levert. Wat is dan een goed ‘deel’? Pak je 10% van de waarde die je creëert? 20%? 50% zelfs? Het boek stelt startups in staat om hier een antwoord op te vinden in plaats van het betere nattevingerwerk.

Alvast één gouden tip: als de enige negatieve feedback van (potentiële) klanten is dat ze jouw product of dienst te duur vinden, dan weet je dat je goed op weg bent met de juiste prijs!

Lean Pricing geeft een mooie mix tussen de meer economische, rationele benadering en de psychologische aspecten en perceptie die om de hoek komen kijken bij het bepalen van de optimale prijs. Want waarom denk je dat een startup vaak 3 typen pakket verkoopt (zo ook wijzelf)? En waarom denk je dat prijzen vaak het getal ‘9’ bevatten?

Hoeveel je ook leert over prijsstrategieën uit dit boek, de belangrijkste les blijft:

“Don’t over-engineer your pricing strategy and make it difficult to understand. It is important to understand that pricing is also a function of marketing, not something figured out with an Excel spreadsheet.”

Een mooie samenvatting staat inmiddels ook online (zie onder) maar ik kan startups, incubators en onderwijsinstellingen ook aanraden om de hard copy aan te schaffen. Hierin staan meer uitgewerkte case studies en concrete tips. Het boek is hier te bestellen.

Crowdfunding Valuations in the Netherlands: Are We Crazy? Part 2

This post originally ran on StartupJuncture. Check out the lively discussion there, too.

How foolish are the friends, family and fools?
In the first post on crowdfunding valuations, I found that the average project on the Dutch crowdfunding platform Symbid raises €104k for a total company value of €1.4M, which represents an average equity stake of 7.5%. Moreover I described that it seems that the valuation is not a critical success criterion for raising crowdfunding money, concluding that maybe crowd investors don’t look at the valuation or don’t bother about it. The personal connection to a project might be a better reason to invest than investing to actually make money.

So, the average post-money valuation of all projects on Symbid is €1.4M (pre-money: €1.3M). How does this number compare to other valuations? Angellist, a website where ‘angels investors’ and startups can meet, says that in the Netherlands the average pre-money valuation is $2.9M (~€2.3M). This valuation is based on done deals but includes companies that raised second, third or even fourth rounds. In that sense, the sample of Angellist is not really comparable to the one of Symbid, as most projects on Symbid raise their first round.

Within the Symbid sample, I made a distinction between pre-revenue companies (N = 39) and companies that generate revenues already (N = 19). This ‘monetization status’ was not always explicitly provided by the company, so I made a rough estimate based on the description of the project and, if available, financial statements. The result is presented in the figure below.

Monetizing Status

As expected, the companies that generate revenue have a higher valuation than pre-revenue companies (€2.0M and €1.3M respectively). Interestingly, the investment amount is approximately the same for pre-revenue and revenue companies (around €100k).

Nota bene: the average valuation of pre-revenue companies that raise money via Symbid is €1.3M. €1.3 million! These companies barely made any money yet and still think they’re worth more than a million euros. Wow, that sounds almost like a bubble, doesn’t it?

Continue reading “Crowdfunding Valuations in the Netherlands: Are We Crazy? Part 2”

Crowdfunding Valuations in the Netherlands: Are We Crazy?

This post originally ran on StartupJuncture (with a lot of discussion).

How foolish are the friends, family and fools?

Friends, family and fools. That’s how we refer to the group of investors that is willing to put money in your startup business when the risks are high. How foolish are they? I analyzed the equity crowdfunding deals in the Netherlands to see if the valuations people are willing to pay are rationally explainable or emotionally nuts.

My hypothesis was that crowd investors are less sophisticated (i.e. less rational, calculated and in for the profit) and more willing to pay a premium price if they like the product or the vision of the entrepreneur, than professional investors. In other words, valuations of crowdfunding projects are expected to be higher compared to valuations of startups that are engaged with professional equity investors (such as business angels and venture capitalists).

To find out what the crowdfunding valuation are, I looked at publicly accessible data from Symbid, an equity crowdfunding platform in the Netherlands. (CrowdAboutNow, another platform that provides crowdfunding for equity, is not really transparent about the (implied) valuations of the projects so I didn’t include them in my research sample). I collected Symbid data manually, by browsing their website and searching their newsletter emails with upcoming crowdfunding campaigns. I excluded pledge and one-off projects such as the movie ‘Wiplala‘ from our sample. This resulted a total research sample of 70 projects.

Crowdfunding valuations are high
The post-money valuation is already provided by Symbid but the calculations are simple: post-money valuation = investment amount/ % of equity. The average investment amount and valuation of all Symbid projects are presented in the figure below.

Symbid Valuations

Concluding: the average project on Symbid (excluding one-off projects) raises €104k for a total company value of €1.4M, which represents an average equity stake of 7.5%.

Continue reading “Crowdfunding Valuations in the Netherlands: Are We Crazy?”

How Startupbootcamp and Rockstart Accelerator Compare – 2014 edition

Last week, both Startupbootcamp (SBC) and Rockstart announced their new ‘classes’ of startups for their Amsterdam based acceleration program. Just like I did last year, I made an analysis of the startups in order to find out how Rockstart and SBC would distinguish themselves from each other. Last year, my conclusion was:

Rockstart has more early stage startups, which have more of a B2C orientation. Compared to SBC, more Rockstart startups want to address or create new markets. The challenge for these startups lies in marketing and creativity, competences Rockstart is good at. Zazzy is the only startup that is in the new technology and new market quadrant, which could offer both risks and, at the same time, large upside potential.

The startups of SBC more often already have a product which generates revenue, and more frequently aim for B2B (sometimes in combination with B2C), which matches well with the corporate network of SBC. The startups make more use of existing technology and have less of an aim for new markets. Therefore, it seems that the risk profile of the SBC startups  is smaller than that of Rockstart.

I was curious if the same analysis would yield the same conclusion this year. Hence I present:

The 11 of Startupbootcamp: The 10 of Rockstart:
Formtaste innovations Auxen (MatchHamster)
Giaura Bomberbot
Iristrace CoffeeStrap
Leapfunder CrowdyHouse
Proctor2Me (ProctorExam) LeadBoxer
SendCloud Songvice Social Honey
Triprebel TechnoRides
Ukky TOP Research
UndaGrid Wonderflow

A short description of every startup is given here: Startupbootcamp, Rockstart.

What stands out?

  • In terms of origin, SBC has six startups from the Netherlands, Rockstart only three;
  • With regard to sector, it stands out that the Rockstart startups are all active in software only, while three SBC startup combine hardware with software and one (Giaura) produces hardware only;
  • Last year, SBC startups were more focused on B2B and Rockstart startups on B2C. This year, however, the business model breakdown is comparable:

Continue reading “How Startupbootcamp and Rockstart Accelerator Compare – 2014 edition”

Het verschil tussen Startupbootcamp en Rockstart startups

This post also ran in English on StartupJuncture.

Rockstart en Startupbootcamp hebben afgelopen week hun nieuwe lichting startups gepresenteerd. De accelerators, die vorig jaar hun eerste lichting hadden, zijn eigenlijk zelf ook een soort startups waarbij hun positionering en profilering wellicht nog aan verandering onderhevig is. Wij analyseren beide lichtingen en kijken hoe de accelerators zich onderscheiden van elkaar.

De negen van Startupbootcamp: De tien van Rockstart:
iLost Zazzy
3D Hubs
Aliveshoes VanChefs
Presentain Limk
Swogo Amiquo
Twoodo iClinic
EasySchool Liscount
7write Gibbon
Fuel Parking Defenders

Continue reading “Het verschil tussen Startupbootcamp en Rockstart startups”