Startup Weekend Participants Get Valuable Advice on Financing
This post originally appeared on blog.up.co
The seminar was part of Stavanger Impact Week, with representatives from DNB and KPMG taking part and presenting at the Breakfast Seminar hosted from 9:00 AM to 10:00 AM at the event venue, Mess and Order.
The first guest speaker was Terje R. Fanebust , Senior Vice President of DNB Sør-Rogaland, who currently represents the division responsible for startups and growth companies.
DNB is a leading global player in banking in selected industries in Norway and is present in fish and oil sectors including North America and Baltics. According to Terje, DNB currently has 2.1 million retail customers and 220,000 corporate customers. DNB is also one of the largest companies on the Oslo stock exchange.
The Gap between Expectation and Reality
Terje started his presentation with a series of statements and facts about the performance and potential of startups that included the reality that “1 in 3 startups will fail.” Terje then asked the audience, which predominantly consisted of Startup Weekend participants, “How does that make you feel?”
[caption id="attachment_20568" align="alignnone" width="960"] Terje from DNB presents to participants during Startup Weekend Stavanger. [Photo: Andrea Rocha][/caption]There was a silence around the room as the event participants contemplated the reality of this fact and the relevance it had to every one of them, who were at Startup Weekend to try and establish the framework of their own startup business ideas. Terje then offered the participants some light and hope by saying, “I believe there is a gap between expectation and reality and banks can build that bridge to make it happen.”
With the participants now fully focused on the valuable advice that might just turn that opening fact into a more hopeful statistic, Terje proceeded to outline the importance of startups for industry but emphasised the challenge that this attractive but risky segment presents for banks.
“Startups represent the same segment as the corporate eco-system”, said Terje. “However, startups also challenge us every day. They are new inventors of technology and they have good ideas. If we listen, we can move forward as a bank. The probability of remaining as a market leader is harder now. We need to listen and keep moving forward.”
Terje explained to the participants that the role of banks is often misunderstood by startups and suggested that startups would have more successful partnerships with banks if they approached the banks differently.
“I have worked with startups for some time now. The expectations of banks and our role are often misunderstood. I hear great ideas of good concepts that I’m positive about but often we can’t do anything”, said Terje. “The Banks commodity is money but this is based on grandparents, family, people like you….We need to trust the risk involved. The main role of a bank is to manage the risk of the money being invested.”
Avoiding the “Valley of Death”
Terje encouraged the participants to be engaged to succeed and told them - “You need to have passion but you also need to have stamina.” He highlighted how easy it can be in Norway to have opportunities to work and do well in life with Norway being one of the richest countries in the world. This inferred that startups may sometimes give up too soon, as it is often too easy to do something else in an economically stable country like Norway.
“In terms of financing your startup, you need to be willing to use private assets”, advised Terje. “You can’t start a business with 30,000 kroners and believe you can avoid the ‘valley of death’. Be prepared, have stamina, and ask yourself if it is a run or a marathon.”
Trust and Relationships Are Key for Startups
During his presentation at the Startup Weekend Stavanger Breakfast Seminar, Terje highlighted the four key areas that banks like DNB look for in a business - “positive, stable, predictable, cash flows.” Terje then outlined some of the most frequent questions that startups ask a bank like DNB.
“Startups always ask ‘how much can I borrow?’, but the answer depends on cash flow and security. You need to have cash flow”, said Terje. “Startups also ask ‘how much equity?’, but this also depends on cash flow and also the industry. Equity is a buffer for you not the bank. It is important to pay people and prepare for the ups and downs of your business.”
“Our slogan is “We will be here for you every day when it matters the most” and we aim to be known as the best bank in Norway for startups”, said Terje. “However, communicate with a bank as early as possible. The gap between concept and idea is big so you need to gain trust early and then get a relationship established to increase the chance of financing later on”, advised Terje.
To support the new generation of startups that were about to be discovered at Startup Weekend Stavanger, DNB provided a free book for every participant – “Opp-Start”.
“We do this book in Norwegian but we also have it in English on a great website. We also have 9 people dedicated to startups in DNB and one day a week we will have a person dedicated to startups at Mess and Order [Startup Weekend Stavanger’s event venue], so there is already a great community here.”
DNB is the Platinum Sponsor for Startup Weekend Stavanger Autumn 2014 and was present at the event over the event weekend to provide support and knowledge to the event participants who took part in the weekend event over 10 to 12 October 2014.