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One of the privileges of being a Venture Capitalist in Silicon Valley is that we see deals from around the world. Entrepreneurs from all over come to the Valley to showcase their startups, look for capital and enter the US market.
What I have noticed over the past years, having invested around the world,is that entrepreneurs from other countries, regions and continents are trying to either solve the same problems or are copying successful startups. I saw this again in the latest batch of hundreds of companies presented by an Incubator in the Valley. Companies presenting came from around the world but every 2nd company presented the same idea. This phenomenon is mostly coincidental but at the end of the day, it does not make much sense, wasting a lot of capital and talent.
As we know, the average Venture Capital Fund loses or writes off at least 50% of their Portfolio. All that capital and ownership in those companies goes to waste. Many dreams are broken and great technologies goes to waste.
On the other hand, this phenomenon provides a huge opportunity to create champions “of the same or similar” from around the world. That’s the idea behind the investment thesis of our new Venture Capital Fund idea Digital Twins Capital www.digitaltwinscapital.com . Why not convince startups solving the same problem or maybe with complimentary technology to MERGEin order to create champions and take advantage of talent, capital and traction. Think about it, startups in Peru, Indonesia or even in Austria, are solving similar problems to companies in the USA or other Western European countries. Most of these companies in less developed countries have Angel and some VC investments. They may be even have better technology and good traction. But how will they conquer the world? How will these companies attract Venture Capital from Silicon Valley?How will they find the experienced Talent to bring the company to the next level?
I recently lost a portfolio company in Switzerland that had over 5 million downloads, amazing technology, great customers and partners. All investors lost their ownership. It would have been much better for the founders and investors to merge the company with one of their competitors or a complimentary company and allowing the investors to keep some equity, allowing the founders to keep working on their dream and make the combined company much stronger, more valuable and attractive to investors. Obviously, these thesis sounds easier than in actuality, but we have thought about the entire process.
In summary, this investment thesis is a win-win for Angel and VC investors, the entrepreneurs and the local ecosystems. It creates champions and attractive growth investments for late-stage VCs. Contact me if interested to discuss this idea further.