This article was published in Forbes.hr
To me, writing this text is a bit of a venture – it is the first time I’m doing it and I hope at least some of you will find it interesting or at least informative. I wouldn’t say I’m exactly afraid of new and unknown things, which is partially why I ended up being a venture investor. Not only I am one, I actually like it. I first worked for the research center at the university, then moved to the ministry of economy where I worked on competitiveness and entrepreneurship support programs, and then went on to become a consultant. While I learned a lot in all the positions I held, being an investor is something I enjoy and what gives me the feeling I can really adding value.
So, why do I think it might be good to have an investor?
Except for the obvious reason, of course, which is to have more funds available. Fundraising is stressful – it normally takes a lot of time and keeps you away from other things you need to take care of in your company. Investors tend to ask you things you think are totally unimportant and they challenge your vision in every way possible… Not to mention frustration if the investor you‘re pitching to tells you to come back once you’ve done exactly what you would like to do, but to do that, you need that investment you seek from him (or her). Kind of Catch 22, isn’t it? Is it even worth trying if you need to go through all of this? Being a venture investor myself, I clearly see a few reasons why (some of) you should give it a try.
First of all, the funds. If you didn’t need the money, you probably wouldn’t consider getting an investment in a first place. An investment can help you attract more people to your team, speed up the development of your product, enable you to expand to new geographies and what is probably the most important result – it allows you to get there much faster than you would organically. And time really is a luxury you can’t really buy. The only thing you can do is get an investment, then get more people to help you get things done and get to market fast.
One thing you should never, ever do…
Never ever consider the investment to be a goal on its own. It isn’t. Getting an investment means you’ve managed to convince someone that you have a vision and goals, and the team to help you achieve them. But it also means that you’ve set the expectations to a higher level, so focus on your business and get things done.
This leads me to another reason I think it is good to have an investor. If you’re focused and deeply involved in developing your product, you inevitably become somewhat biased. It is your “baby” after all, and it is extremely hard to admit that you may have made a mistake or two in putting it together. Having an investor that acts as a “devil’s advocate” can make you re-think your assumptions, look at the market needs from a different angle and you may end up with a completely different product than the one you started with. I’m not saying you couldn’t do the same thing without an investor, but it would likely take a bit longer, which means your competitors may have some advantage in getting to the market sooner, plus you’d spend more money on development of something that would never get to market.
Make sure you get to know your investor
However, challenging one’s ideas and plans may also turn out to be counterproductive if it happens too often and in particular if it makes you feel underestimated. So one piece of advice when you’re looking for an investor: make sure you get to know him/her before you decide to take the investment. It may be better not to get funded than to be funded by the wrong people that don’t share your vision. Unfortunately, there are quite a few cases of getting in business with the “wrong” investor also in our region (or particularly here, as we are no mature region when it comes to venture capital investing).
While having a good investor can help you to develop better products, grow faster and avoid some of the traps of being an entrepreneur, it cannot protect you from the darker side of being an entrepreneur, especially in these fast changing society. As one CEO from a company in the portfolio of our fund said – it’s a roller coaster. Full of successes and excitement about the achievements of your team, but also disappointments, difficult decisions and mistakes. With the later ones, being a CEO is a lonely place to be and having a person you can talk to about the challenges and choices you are facing, makes a great deal of a difference. That someone can be your investor – that is, if you chose the right one.
Don’t expect your investor to help you with the code or engineering or designing the most complex part of your technology – at least not as a rule – but what we usually can do, is help you consider the options you have, think out of the box and share our experience. Perhaps the experience we had personally, or the experience of people and companies we worked with. Making hard decisions is usually easier (maybe I should say less hard) when you have someone supporting you.
I’m pretty sure there are other reasons for which having an investor should be a good thing, but let this be enough for this time. After all, we’re all individuals, and there are different things that work for each one of us. Whatever works for you – getting an investment should never be a goal “per se” – if you go look for it, make sure you now why and what you want to achieve with it.