Guest posts

Delaware has ideas. Now it needs execution (the capital will follow)

Start It Up Delaware has largely succeeded in its goal to “fill the top of the funnel” with ideas. But our failure to embrace risk and take chances is limiting our ability to move the startup scene forward, says Jon Brilliant, in response to John Kirk's letter from Austin.

Two-dozen Delaware tech leaders talk over lunch. (Photo by Mona Parikh)
This is a guest post by Jon Brilliant.

When a bunch of us launched Start It Up Delaware in 2013 off the back of Wes Garnett and Steve Roettger’s coIN Loft, I received strong advice from many who had come before us (and had more gray hair than I do) but failed to build a startup ecosystem: Don’t waste your time.
Of course we didn’t listen and we moved ahead. That is what entrepreneurs do in the face of someone who says it can’t be done. We would say to ourselves, “This time it will be different.” And it has been.

How we got here

My first stint in Delaware came back in the mid-’90s before moving to Tennessee, Florida and London, and then returning to the First State, 13 years ago. I was around for the first days of the Delaware Entrepreneurs Forum, where I first met the late David Freschman as he attempted to build entrepreneurship and early stage investing in Delaware. It languished for many years and for many reasons.
One of the biggest reasons it languished, echoing Cnverg cofounder John Kirk’s perspective in his letter from Austin last week, is that being a VP at a big company and making lots of money off your stock options isn’t the same as starting a company, where every detail is your domain.
Simply put, earning a lot of money through working at someone else’s business doesn’t make you an entrepreneur or an early stage investor. This stuff is hard. Really hard. Read Ben Horowitz’s book, The Hard Thing about Hard Things, if this is lost on you.
We should take pride in what we have done with the growing ecosystem of people and entities supporting entrepreneurs, such as 1313 Innovation, the Horn Program for Entrepreneurship, the Venture Development Center, Million Cups of Coffee, Start It Up Delaware, The Loft, The Star Campus, Delaware Technology Park, New Castle County Chamber of Commerce Incubator and Emerging Enterprise Center, The Mill, Zip Code Wilmington, First State Innovation and perhaps others that I have missed.
We have hosted Startup Weekends and Global Startup Weekends — Mona Parikh just held another engaging hackathon with that spirit in mind that helped result in a new product launch during Delaware Innovation Week. As part of these startup weekends, we have had ideas voted in the top ideas in the world, including ProjectedU. There is a lot of collective effort and energy, and special attention is warranted for people like Paul McConnell, Chris Buccini, Dan Freeman and Mike Bowman, who continue to do everything in their power to help solidify the foundation of our ecosystem.

The goal of Start It Up Delaware

The problem that we set out to solve at Start It Up Delaware was, and is, what Lee Mikles calls “filling the top of the funnel” with good ideas.
I have said repeatedly, in public and in private, that great ideas will always find capital. We just need to create great ideas.
On this front, we have done a fairly decent job. These efforts have resulted in many great ideas, but in many cases nothing more. Whether it is Cnverg, ProjectedU, Aster Center, Carvertise, Kurbi, Go Baby Go, RegDesk or CanSurround (full disclosure, I am a cofounder), great ideas have been germinated here in our small state.
However, as John Kirk notes in his letter, many have had to go elsewhere for capital or for customers, perhaps repeating the past pattern of Finger Works. Carvertise is a great idea that’s been able to find capital and customers locally, but even it took a long time after having good traction on revenue.


Many other ideas, like Cnverg and Kurbi, have had to go elsewhere to find capital.
So, I was right, good ideas will in fact find capital — and plus, it’s not that unusual for young startup scenes to get capital elsewhere. It’s just unfortunate that it appears that most capital is elsewhere. Even RegDesk had to go just up the road to find capital and customers. Our community has matured quicker than any of us thought and our ability to generate ideas is happening much faster than our ability to attract capital.
Here’s another example that highlights John Kirk’s calls to leverage Delaware’s advantages and to keep young Delaware leaders in the state. As you may know, I created something called the Social Impact Fund, whose sole goal was to create for profit solutions to non-profit problems. It was based on the concept I had been socializing called the Nurturator, which recognized the limitations on incubators and accelerators. That is, people, ideas and businesses need to be nurtured, not merely incubated and not accelerated as some ideas take longer than weeks to be established and vetted.
With funding from Discover Bank and the Verizon Foundation, we placed four Health for America fellows at Christiana Care, which graciously opened its doors to us. The fellows spent one year deeply embedded in Christiana Care working on solutions to improve the lives of folks suffering from congestive heart failure. After only nine months, the team came up with a low-cost solution that could solve what are otherwise very expensive problems.
A great idea now had to find capital and even further support from the ecosystem. But that is where we, like Cnverg, ran out of options here in Delaware. Not only was there no capital, but we have struggled to gain broader community support in the face of having a solution that could save millions of dollars. I remain optimistic that we have hints of resurrecting the idea, finding a local customer, finding some capital and bringing the fellows back to Delaware, but it is proving harder to accomplish than I could have ever imagined in the face of an idea that works.
I attribute this to our community’s aversion to taking risk. With risk, there can and will be failure, lots of failure.

Learning to embrace failure is learning to embrace risk recently described some hints that our community is embracing failure, but even the stories described aren’t of the nature and magnitude of true failure in the face of risk taking.
Having run my own venture capital fund (that unfortunately at the time couldn’t find any good ideas to invest in Delaware), I had to make the very hard decision to put a company in bankruptcy after investing $12 million. That is failure. Sitting down to tell your limited partner that you had lost nearly 20 percent of the fund on one deal. That is failure.
We don’t yet have enough capital put to work, or put at risk, to be in a position to truly embrace and experience failure in the truest sense of the word. We haven’t had enough companies find enough capital and flame out, to truly embrace and experience failure. I am not sitting her rooting for failure, but the truth of the matter is lots and lots of good, funded companies fail. We will know we are reaching maturity when our failure rate exceeds our success rate and that will be OK, it will show we have established what we are all seeking to achieve.

Signs of hope

I will close with signs of hope.
I remain hopeful that the ecosystem continues to grow and widen the tent to welcome all who have ideas and want to become entrepreneurs. I remain hopeful that the ideas continue to flourish and that the ecosystem we are building continues to support those ideas. I remain hopeful that we can attract seed capital and true risk taking to fund these ideas. I remain hopeful given all the progress we have made in such a short period of time.
There is much hard work to be done and many difficult discussions to take place. It is only through this open dialogue that we can hope to collectively solve the problems that you have raised, and others that lurk below the surface. I remain hopeful that others will join this discussion.

Companies: Carvertise / 1313 Innovation / Cnverg (formerly MUNI-Tech) / The Loft / Kurbi / University of Delaware

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