Hackathon + "DEVELOPNEUR" = Best Seed-Stage Investment Opportunities?

In my mind, as a seed-stage investor, there is one much more straightforward way to source potentially great developneurs able to create seed-stage investment opportunities: joining a Hackathon.
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Life's tragedy is that we get old too soon and wise too late - Benjamin Franklin

It's true to say (unfortunately) that I am old enough to have seen a few changes happening in the tech industry over the past 2 decades or so. My gipsy kind of life-style has also allowed me to see such changes happening in many different places throughout the world; and I happen to have kept a fairly good memory... That is why I could not help noticing half amused and half amazed that History in seed stage tech-investment is repeating itself.

Indeed, in the late 90s, a new kind of business models started to gain momentum called incubators where most of the time self-proclaimed tech-gurus were trying to lure entrepreneurs' wannabes to join their structure and become new Bill Gates! Such a proposal based on the insanity climate that was ruling the late 90s as far as Internet investing was concerned, coupled with the always-vivid naiveté that we all keep inside our heart, raised a lot of attention, a lot of money and ended up most of the time leaving both for these pseudo entrepreneurs and investors in dire failures and disillusions.

In recent years, in many ways, the same phenomenon has been fast developing and is likely to produce the same kinds of disappointments.

Of course, anybody would love to be the first investor in Facebook, Groupon or Twitter and therefore anybody would love to be part of a structure promising to incubate at some point such companies (by the way, you may find interesting to watch the talk I had at the last CHINICT conference with Facebook's first investor & co-founder Eduardo Saverin).

Unfortunately such miraculous structures have never existed and still do not exist - although there has never been a time - even in the late 90s at the very climax of the Internet bubble - with more "incubators" than now - promising shy entrepreneurs wannabes to turn them into the next Zuckerberg and investors into the next Peter Thiel.

The emergence of a new breed of software entrepreneurs

Yet, if such a miraculous structure does not exist, in recent years a new kind of highly successful entrepreneurs - still vastly ignored by most of seed-stage investors - has emerged. This new type of incredibly successful entrepreneurs is what I call, if you allow me this neologism - a "developneur" - in other words an entrepreneur-minded software developer.

Some people may argue that software developers who are also entrepreneur-minded are nothing new. Larry Ellison was a software developer, so were Bill Gates, Steve Wozniak, Mark Zuckerberg... These gentlemen have been however unable at the time to build within 18 months or so a billion dollar company with hardly any significant financial or human resources - like Kevin Systrom, for example, has been able to do with Instagram. Indeed, Kevin Systrom is one of the representatives of developneurs - who are building multi-million dollar companies with almost no financial or human resources - by leveraging on the new ecosystem of software business in which product's development through open source is free, product's marketing through social media is free, and product's distribution through major platforms is free.

Therefore, with extremely low burn-rate, these types of endeavors just require outstanding talented developneurs and just low seed investment to actually not only take off but also prosper and reach an investment exit within a short period of time. Some investors like Dave McClure are leveraging on this trend by investing very low amount of money in as many lean startups as they can - hoping to get a return on a few of them. As a matter of facts, Dave McClure has even called his investment company 500Startups. (by the way, during the last CHINICT Conference in May 2012 in Beijing, while I was talking with Dave on-stage, I remember asking him if he was planning to change his company name once he reached investment in 500 companies and his witty answer was surprising as you can see here).

Hackathons for developneurs

Yet, in my mind, as a seed-stage investor, there is one much more straightforward way to source potentially great developneurs able to create seed-stage investment opportunities: joining a Hackathon, such as the CHINICT Hackathon we organize last May 2012 and that we will have next May 18th & 19th 2013 in Beijing at Tsinghua University.

A Hackathon (a word mixing hacking and marathon) is an event gathering developers who, organized into small teams, join forces and race to develop a hack / application / product prototype within a short period of time (usually 24h or 48 hours). However there are almost as many hackathons' formats as there are hackathons - and not all types of hackathons are not suitable to identify the best developneurs.

As I said, last year in Beijing at Tsinghua University, we did organize a hackathon aimed at discovering developneurs. The results went well beyond our own expectations and the ones of our partners as you can see here. Indeed, we basically carefully pre-selected 200 individuals with features of developneurs, organize them into teams of 4 people, and propose them to develop a killer app of their choice within 48 hours. After 48 hours, we invite the most capable teams to pitch their app to some world-class investors including people such as Charles Rivers Ventures' GP Bill Tai, 500Startups' founder Dave McClure, IW's partner Chris Evdemon, Tencent's VP Richard Peng, Bertelsmann's MD Urs Cete. The results were outstanding as most of the teams found seed funding to keep on developing their products (I personally invested in 2 teams whose products will soon be launched).

This type of Hackathons allows to not only identify potential developneurs, but also to test their creativity as well as their capacity to work as a team and deliver a prototype within a very short time-frame - not to mention their ability to pitch and convince world-class investors.
Next May 18th and 19th 2013 in Beijing, at Tsinghua University, like last year, we will have a new CHINICT Hackathon - open to talented developneurs from all over the world - and I am impatient to see which developneurs will emerge this year...

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