From Olivier Verhage – Kennet Partners (@olivierverhage)

With most headlines being either about Trump, Snap’s IPO or Europe’s political calendar, I thought why not throw in my very own and latest headline: some of you might know I recently moved to San Francisco to join our US team, so after spending my first month in the Valley here I thought let’s share an update on what the buzz is all about – or more importantly – what’s really the difference being an investor in Europe vs. the US-OF-A?

Assuming you are a close follower of CB Insights (yes – thanks Anand), Datafox, Mattermark or any of the other data plays out there, I’m not going to bore you with endless graphs and fancy charts that show the differences in US and European funding but instead I will try to give you a glimpse of what it really feels like to be out here.

One of the things that Silicon Valley is very good at is PR or self-promotion. Every day Europeans read US-based websites that discuss the next $10+ MM Series A or the announcement of a new VC fund, $1Bln+ IPO or exit, making it look like it’s everyday business in the Valley. Well, let me start with an interesting anecdote of my first week in San Francisco when I was invited to a house party that was organised by a couple of friends I recently met here. In London, I used to be pretty good at getting crowds together and so work-related week events or weekend house parties were a common thing. In the US, however, bigger is better and so when I walked through the door there was a 150 techies-crowd dancing to the tunes of some deep house DJ – then suddenly a guy grabs the mic and starts telling a story that as employee No5 of tech play XYZ he just made some $$$ on their IPO and that he was now starting his own fund. Oh, and not to forget that he just got his Green Card, not bad for an immigrant that only just spent a few years out here. The crowd was cheering and maybe Trump also played a role here, but at that point I thought, right: this dude is hustler, a hustler and a fantastic self-promotor. I think that hustlers do make the best entrepreneurs and whereas Europeans tend to be conservative and prefer the safety net of a corporate career and a well-planned out CV (i.e. no drop outs), the US is all about “go figure it out, get stuff done”. Here are some of my first hand thoughts:

Why rounds are larger and valuations are higher

Opportunity cost, opportunity cost, opportunity cost. You might argue that even a $1-2M difference in funding is worth a fundraising trip to the US. Yes, it is most likely true that the median investment size in the US is somewhat higher. But there is an objective reason why US businesses raise more than Europeans do: higher costs. Office space is expensive and so is talent, but if you are a bit creative you can work around that. I live in a high riser in the financial district of San Francisco that has a large communal area and if you are coming in on week days, don’t be surprised if there’s an army of founders and CEOs that invited their teams to work from “home” while Skyping with their engineering teams in India, Poland or Croatia. However, don’t think it’s only Silicon Valley that matters. There are a lot of exciting tech companies that were founded in other hubs such as Austin, Seattle or Salt Lake City and which never raised capital and so those cities typically see bootstrapped companies with attractive valuations. And to be strictly honest, I do think valuations are partly determined by the power of marketing machines, so go ahead, get stuff done and promote yourself!

Why competition is tough and differentiation is important

Yes, it is a known fact that the US is competitive. In a #300M consumer market and with tons of deployable capital available, there is an ever-increasing number of investors chasing entrepreneurs for investment. It happens frequently that entrepreneurs don’t return calls, they are too busy and they could easily fill a complete year with 30-min VC calls. One day I even had a guy asking $100 bucks to cover his precious time, “no problem” he said, “I also take Amazon vouchers”. Well, this is obviously the upper end, but it does explain that targeting and differentiation is important here. However, on the other hand, don’t forget that the US has an almost indefinite number of tech companies… including a lot shitty companies, lots. It’s not just capital chasing products, it’s also founders chasing investors and so it’s key to focus and filter out the stuff that is not relevant. Learn to say no and make efficient use of your time.

 The weak spot: talent

It’s for a reason that many tech CEOs stood up against Trump’s immigration policies, talent is the weakest spot today and finding enough good engineers and designers is extremely tough and expensive. Europe could contribute here, but please don’t aim for a spot at Apple or Facebook. Either work for fast growing smallish US tech play – or make the jump across the point for a small European start-up, be No1 in the US and be part of a success story that many San Franciscans will remember. Trust me, you’d be much cooler not being Apple’s 5000th employee that quit because it became too much of a corporate power play.