usa and silicon valley / tampere nov 28

02/05/2023 1

Starting Up in USAThuong “Tonxu” Tan & Hartti Suomela, Team FinlandNovember 28, 2016

Finpro

02/05/2023 2Footer text


CASE: BedditInternational Success Years in the Making

• Founded in 2006, McKinsey business competition win in 2007• U.S. was target market early on

• Initial focus: Patient bed monitoring through licensing deal -> pivot 1 at the end of 2008

• Consumer beds through licensing model -> pivot 2• Take 3: Own products, started with prosumer model• Indiegogo campaign 2013

• Not only sales but great visibility• Bed Bath & Beyond deal through distributor• Partnership deal with Misfit

• Direction has changed after Misfit got acquired• Available at Apple Store from fall 2015• CEO moved to U.S. in 2015


Vincit


Doing Business in U.S.

• From breadth to focus (product & customer)

• Takes time, resources, money and commitment

• From product to solving a real customer problem

• Finnish references are worth nothing

• Business model tweaking (especially in education and health)

• Agility, communication, semi-independence,

• Understand the role of marketing

• Understand that the opportunities are of different shape


Are States Different?

• In short: yes!

• California would be the 6th largest economy if it were an independent state

• Taxation: corporate tax levels, income tax levels, VAT, etc.• Fun fact: U.S. corporate tax rate is 30%

• Incentives: https://www.selectusa.gov/programs-and-incentives

• Cost levels: Salary differences, rents, cost of living, population

• Politics, culture

• Corporate law: E.g. Delaware has corporate-friendly legislation

https://www.selectusa.gov/programs-and-incentives


Incorporation

• Use standard deal (= Delaware C Corp)

• Fast, but getting certain paperwork, like certificate and FEIN might take some time

• Use lawyer – any mistakes will cost you later• Whole package: $2,000 to $5,000, or equity or payment schedule

possible as well

• State you incorporate in and state you do business in can be (and usually are) different• You need business license

• At one point you might need to flip, start preparing that in advance


Immigration

• Get a real visa, do not gamble with ESTA

• B1 is a lightweight way to start• “Salesperson” visa, your family stays in Finland

• Reserve time for non-immigrant visa application (likely L1, E1, O)• Average 4 months• Use lawyer• Use premium processing

• Green card / Diversity Visa Lottery• Free to participate in lottery, 2-year timeframe• https://www.dvlottery.state.gov

https://www.dvlottery.state.gov/

https://www.dvlottery.state.gov/


Family

• For the first 6 months your productivity is well below 100%• New environment, new customs, new everything

• New place is a new place for the whole family!• From working spouse to “stay at home” spouse

• Remember your responsibilities at home, share of chores

• Not all visas work the same way for the spouse• Does the spouse get it at all, can the spouse apply for a work permit,

etc.?

• Schools, school districts, hobbies

• Some families decide to move back because of family reasons


Setting up an Office

• Where?• Most importantly: Close to first customers or partners• Forget the state incentives in the beginning• Consider time differences to Finland• Silicon Valley, NYC are really expensive• Clusters?

• http://www.clustermapping.us

• Start with virtual office – you need an address!• Silicon Valley: GSV Labs, Nordic Innovation House, WeWork, etc.

http://www.clustermapping.us/

http://www.clustermapping.us/


Office practicalities

• Bank account• Use national bank or some startup friendly Silicon Valley bank (for

example SVB)• You need U.S. Inc., address, FEIN, paperwork, and open the bank

account in person

• Accounting• Quickbooks is de facto standard, you can save by keeping the books up-

to-date yourself and use accountant only for annual closing of accounts

• Payroll – needed immediately when you start hiring

• Insurance (liability, property, etc.)• If you work with retailers, they have their own requirements


Lawyers

• Lawyers are not only for legal issues but also resources for example for networking

• Use different lawyer for different tasks• If some lawyer promises to handle wide variety of tasks -> RUN!• Referrals

• Smaller firms and individual lawyers are less expensive

• Bigger and well-known firms have their benefits• Name recognition for example in fundraising• More aggressive in litigation

• Being sued is more common than in Finland but not THAT common• Validation: You have arrived!


Accelerators

• Too widely used term, does not mean anything anymore

• 500 Startups Accelerator -> 500 Startups Seed Program

• Accelerator or launchpad?• 500 Startups/Ycombinator/Techstars or Blackbox/TINC/LandInChicago• Investment or payment?• 3 months+ or 1-4 weeks


Branded Accelerators

Accelerators with funds (Verticals & General ones)

Launchpad programs for international startups

Innovation tourism

Examples Salesforce, Microsoft, Nike, etc

500 Startups, YCombinator, Hax, Alchemist

Blackbox.vc, TINC, ScaleIT

Tech focus Narrow Varies: Broad or Narrow

Broad Broad

Duration Typically 3-5 months

Typically 3-5 months

2-4 weeks 1-4 weeks

Price Equity Typically equity (6-8% for 100k-150k)

Company pays 10k-20k + travel & housing

Company pays 2-5k + travel & housing

Additional Benefits

Can have sponsors like AWS, Google

Can have sponsors, like AWS, Google

Useful to who?

Companies with ties to certain ecosystems

Company with product, looking for market entry / expansion

Company with product, looking for market understanding

Company looking for inspiration

Cohort? Yes Yes Yes Yes

Selection Competitive Very competitive Varies No


Thoughts about VCs

• VCs and Angels are looking for higher returns than in Europe

• Foreign HQ limits your options• LP agreements, VC attitudes, etc.• Flipping is a transaction and could generate tax consequences

• European-style cap table might limit your options

• Team & being close is important

• What you need?• Short intro (you need to be introduced!), one-pager, pitch deck• Forget business plans but do business planning (like business model

canvas)• Intelligence work on partners


VC process

• Prepare for a huge number of meetings• Cold calling / cold emailing does not generate results

• You need a good and trustworthy introduction• Initial meetings with junior associates / junior partners

• Immediate and future value!• Meeting with the partner responsible for your industry• Meeting with partners

• Mondays are usually partner meeting days• Every VC firm works slightly differently, so ask early on how they

make decisions; what is the process• Understand what is a “VC no”

02/05/2023 21Footer textSource: PWC Moneytree


Pitch decks

• Everyone has a different opinion on optimal pitchdeck• 10-20-30 –rule (Guy Kawasaki)• 13 slides (Bill Joos)• Etc.

• Find your own voice, evaluate feedback and choose the parts which make sense

• Avoid sharing pitch deck to VCs before meetings as the deck only part of the whole package (slides + speech)

• Pictures are worth a lot• Allows discussion on multiple levels


Pitching skills

• Presentation skills• Prepare• Practice• No, really, practice!• Improve based on feedback

• Debating & conversations skills• Listen• Handling conflict• Use “and” not “but”

• Medium is the message

• Visuals


Product Crowdfunding

• Nowadays maybe too crowded market

• Really hard process, requires lots of work before, during & after

• Best for tangible products

• Do not use this as a last resort if everything else fails!

• Kickstarter still requires U.S. bank account (basically U.S. corporation) and U.S. SSN of a person• Also certain types of projects are blocked from Kickstarter

• Indiegogo is more flexible but possibly also more unreliable (from the customer perspective)


What’s Hot and What’s Not in Silicon Valley

• First off, check http://www.kpcb.com/internet-trends (only 213 slides :-)

• Data science, Machine learning, deep learning

• Blockchain (Fintech and other uses), VR/AR, “IoT”

• Going, going, gone• Food delivery services, on-demand transportation

• IFTF in 2017• Who is controlling the data, Future of media, The workers of the future

http://www.kpcb.com/internet-trends

http://www.kpcb.com/internet-trends


Reading


Thanks!Thuong Tan, Tekes, [email protected], Twitter: @tonxuHartti Suomela, Finpro, [email protected]

Follow also@TekesStartup

mailto:[email protected]

mailto:[email protected]