The Nobel lecture by the Economics Prize winner, Richard Thaler was held on 8th of December, 2017 at Stockholm University. When I decided to attend this lecture, I had mentally prepared myself to queue outside to get a seat and listen to a talk filled with scientific jargon that I may not understand. But I was pleasantly surprised when Professor Thaler delivered a presentation with relatable stories to explain 30 years of his research and even included a funny picture of Homer Simpson in his slides!

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He started his talk with a story about cashew nuts in a dinner party when he had invited his friends over. The bowl of cashews on the table was being consumed quickly and as a responsible friend, he hid the bowl in the kitchen like most of us usually do with a packet of chips or a huge piece of chocolate cake in a party. Taking it away makes us feel relieved but he pointed out that from an economics point of view, taking away a choice shouldn’t make us feel good. This story and several other thought experiments led to Professor Thaler to research on ‘supposedly irrelevant factors’ (SIFs). There are a lot of these supposedly irrelevant factors that are in fact, not irrelevant. As humans with bounded rationality, unless we are influenced by nudges (like cashews being taken away), we tend to stick to the known and have an aversion for giving up what we already have.

At this point, you might be wondering how this fits into the topic of open and user innovation. During this talk, I realised that when we brainstorm for new ideas in our courses, we always assume that the potential users and partners will make a rational choice like downloading a new app which is better than all the existing apps, buying a new product with better features instead of using a poorly designed product that they already own. But we rarely pay attention to creating ‘nudges’ that can influence these potential users to change their existing behaviour without forcing them to do anything.

An example of a nudge mentioned in the talk was by the Swedish government which encouraged people through an advertising campaign to choose their own pension portfolio in 2000.  One of the ads even have Harrison Ford recommending a portfolio. 75% of people enrolled themselves to a custom plan that year rather than using the default plan and the nudge has lasted for 17 years for these people.

Another interesting point related to open innovation was the use of open public data from Sweden and Denmark. The research by Professor Thaler on Swedish pension plan was using open data provided by the National Social Insurance Board of Sweden and the Premium Pension Authority. Another research paper mentioned in the talk was by Raj Chetty and colleagues using open data from the Danish government to prove that the impacts of retirement savings policies on wealth accumulation of people depended on whether they changed their savings rates by active or passive choice. This was done using 41 million observations on savings for the population of Denmark from 1995-2009.

If you curious, you can watch the entire recorded Nobel lecture here. There are lots of other great insights in the talk that I might have missed out in this post.

This event was conducted by Founder Institute and held in SUP46 to give some practical advice on raising funding; how to pitch to investors, when to pitch for funding and what is equity.

As one of the speakers, Mikael Wintzell said, “Noone owes you funding. You need to earn it.

The evening started with a talk by Michael Lantz, CEO of Accedo. Accedo is a cloud platform which provides video experiences and it’s clients include Netflix, NBC, Spotify, Fox and Disney. Michael talked about the funding journey of Accedo. In 2004, he started working with his co-founder Fredrik based on the insight that emerging technology will transform how people consume video, but the stakeholders will struggle to keep up. They spent 3 years in their homes building the solution and went for series A round funding in 2007. On a reflective note, he said, “It would been a better strategy if we had continued to build and focus on getting the product to the market rather than seek funding at that stage“. In 2016, they received 10 million funding by SEB in another funding round. This allowed the early investors of Accedo, including Industrifonden and Acacia, to exit as part of their investment strategy. This was an interesting talk because I learnt how it is important to seek funding at the right time and view the funding effort as a tradeoff for the time spent on product development, especially when there are fewer employees. I also learnt that several seed round or series A investors exit after the next round of funding.

The second speaker was Mikael Wintzell, Partner & CEO at Wellstreet. He said, “If you are in Stockholm and you don’t receive funding, either your idea has no potential or your communication skills are not good because there isn’t a lack of investors in Stockholm”. When an audience member asked him what is the most important thing that investors look for, he jokingly said, “I’ll let you know if you Swish me 10k kronor”. His company, Wellstreet helps entrepreneurs grow and they also invest in these companies (mainly B2C and online-based) if they believe in their vision. He talked about how it is important for the founders to choose the right investor who can guide them in the right direction, just as how it is important for the investor to pick the right startup.

Michael was followed by a corporate lawyer from Lindahl, a business law firm. He emphasised the importance of preserving all the documents (contracts, receipts, sales proofs) and paying attention to the fine line in contracts.  He mentioned the importance of honesty from the founder’s side in their business and financial reports since investors usually hire corporate lawyers to verify all the documents before they fund the company. He also introduced the concept of a shelf company (a registered company that has no activity) which can be bought by founders who don’t want to waste time registering a company or are not Swedish citizens. This was quite interesting since it seemed unethical but legal.

Arno Smit, co-founder of FundedByMe talked about his company, a crowdfunding platform for entrepreneurs who want to raise funds through a crowdfunding campaign. In 2010, Arno (coder from Africa) along with his co-founder Daniel Daboczy (with an Art major from Romania) wanted to launch a Kickstarter campaign for a video-site for sharing ideas. Kickstarter turned them down saying their idea was not valuable for the American community. So, they started their own Nordic platform for crowdfunding. Because of their backgrounds, it was hard for them to seek funding. But they succeeded in building the platform and raised equity crowdfunding for their own company.

Finally, the last speaker, Anette Nordvall, an angel investor talked about her funding experiences in California and the US. She, along with a group on 50 angel investors in STOAF, fund fast growing ventures and also guide them based on their experience and expertise. They invest in early ventures, help the companies grow and exit in the series A funding 2-3 years later. She had a valuable advice to potential founders in the audience – “If you can fund yourself, do it. That’s the best option. Funding is not easy or fun, either for the founder or the investor. It involves many steps and a lot of effort from both parties.

Overall, I felt very educated about the different investment terms after listening to the founder, investor and corporate lawyer’s perspectives on startup funding. I also met a budding startup founder from Stockholm and shared some perspectives on the different startup cultures in Singapore, Stockholm and India. I would highly recommend future events by SUP46 since they have good speakers and the sessions are usually held in the evening at a convenient time. It’s a great opportunity to learn and meet like minded people.