“Italy worships Genius, but has not yet figured out how to create a culture of entrepreneurship”. This was an interesting statement made by the Executive Director of the Italian Angels for Growth, Lorenzo Fanchini at last week’s semi-final of the European Venture Contest (EEVC) held in Turin. Italy is a country filled with brilliant scientists and engineers. There is a huge supply of new technology, brilliant engineering and mechanical precision but unfortunately a shortage of businessmen – those boring guys in business suits that focus on cash flow instead of electron flow. Don’t get me wrong. There are good businessmen in Italy, but as an outsider, I am struck by the inequality in the number of engineers.
At the event I listened to 12 startup entrepreneurs pitch their companies to a panel of judges representing venture companies. Most of the entrepreneurs were heavy-duty techies but lightweight money-guys. Why is it that technology is so sexy while a moderate but healthy cash-flow draws only yawns? I watched one biotech company presentation where the entrepreneur race through 26 disorganized slides in just 8 minutes. 25 were about technology and only 1 was about business. It stayed on the screen exactly 1.8 seconds because it painted such a dismal picture. These were scientists that live off government funding, not businessmen who produce quality customer-driven products in return for a solid profits. There was no business plan, only a lot of fancy technology. There was a second company that presented a solid business model based on already-developed products that will reach breakeven quickly and continue to generate new patents and also a healthy cash-flow. The first company got an award. The second company was sent home and told to find bigger and more sexy markets. Should investors worship genius or invest in good, solid performance companies?
At the University of Colorado School of Business I studied with two other buddies. Two of us left school and went to work in the computer industry. We have spent our careers chasing hot and fancy new technologies. The third buddy started selling coffee machines to business customers. We mocked him. We laughed and felt so superior as we worshiped our marvelous technology advances. Today, he is the one that is outrageously wealthy while we others are perhaps still chasing.
If we worship “Genius” but fail to provide seed funding for sound businessmen, then we will never create a sustainable culture of enturepreneurship.
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