This is the fifth in a series of posts about Apps for Amsterdam: Open for Business, an initiative by Appsterdam, Amsterdam Economic Board and Waag Society to work with three local start-ups to support them in making successful businesses using open data. I’m participating with Bike Like a Local. As I started this series a bit late, over the next week I’ll be posting about events so far.
On March 27, we had a business model workshop with Floris van Alkemade, partner in venture capital fund Solid Ventures. This was a group session, so all teams could also learn from each other.
Floris explained us all the intricacies of startup investment, like valuation, the business model of the VC funds themselves, the difference between informal investment and VC, the return on investment a startup needs to make and why, and much much more. Although I did hear about these topics before, Floris’ explanation made the picture much clearer.
Bike Like a Local is not really an investible product right now: although it may result in a profitable business, it’s unclear how far it can actually scale; and I don’t have a plan on what I would need the money for. However, it was very nice to be able to discuss the issues with our plans with someone as experienced as Floris. For Bike Like a Local, specific points of attention were that I have to make sure it does not make cycling less safe by being a distraction, it has to work without roaming, and I have to make sure I have all my numbers backed up thoroughly.
In preparation, I updated my business model canvas to reflect everything I learned since I wrote it early this year. One of the most interesting new facts I discovered, is the size of the market. Somehow I never properly added up these numbers before. According to the Amsterdam Visitor Survey 2012, which Jasper from AEB gave me earlier, about 22% of all visitors to Amsterdam will cycle at some point during their visit. With around 12 million visitors yearly, that’s about 2.5 million cycling tourists every year. This means that even if I only sell my app to 1% of that market, I still make € 25.000 a year. Not enough to attract investors, but still very nice.