It is not every day you get to corner an expert and ask them the hard questions, but exactly that happened at last months Investor Chat with Movac. Crowded around the kitchen table was everyone from early to mid stage startups, and even a couple of university students. Couldn’t make it? We present five quick thoughts on investment to take away from this session.
Interested in the next event coming up in May? Pop your email in and we will keep you in the loop (don’t worry we promise to not share your email with anyone) .
/BE PREPARED FOR INVESTMENT TO TAKE TIME
You know those moments when no one says anything but you just feel a mood change? Yeah that happened about the time that Movac’s David Beard just casually dropped “the companies we are working with right now we have been talking to for 12, 24 or 36 months.”
“we generally see companies, 12, 24 or 36 months in advance of us investing – for us its all about people” @movac_vc #startup #invest
— @GridAKL (@GridAKL) March 22, 2016
The startup world is often one of agility, quick decisions, chance meetings and frenetic energy – this one little statement was a good reminder that whilst you may be moving a million miles a minute and expecting results, tomorrow, today or heaven forbid – yesterday, some things will take time.
/THINK LIKE AN INVESTOR
Whilst you may be wrangling for cash for more runway, team expansion or a pivot and marketing push – your investor is thinking about how they can make good on their investment. This means buying into your vision yes, but also buying into the business as it stands when they put their money in.
Think like an investor when you are planning your funding rounds, how will this look to future investors? @movac_vc https://t.co/v2YI0HuLA5
— @GridAKL (@GridAKL) March 22, 2016
Having clean books, low debt and a clear market are all things potential investors will look for, alongside the obvious share splits issue (why does that one guy own 20% and literally bring nothing to the table?) because just going for it and grabbing onto that first round can give you runway right now, but possibly impinge on your ability to raise later with the big dogs.
/FOCUS ON PROFIT
I remember sitting in CMAKL listening to Simon Pound (Vend|Ingrid Starnes) about the need for creatives to build profit into their model from the very beginning. For some of those listening this was a shock, it is an industry that gets by with a lot of back slapping and “work for exposure” after-all. But this idea of profit being at the core of what you do is something that is just as important to keep in mind for startups. Whilst an idea is great, an idea where you have a clear go-to-market is better. Even better? Paying customers.
What does an investment firm want a #startup to show for #SeriesA? Customers, good sales, product market & clear differentiators. @movac_vc
— @GridAKL (@GridAKL) March 22, 2016
The Movac crew were quick to remind people that in high growth focus can shift to shipping new features before a layer of profitability is there to begin with. Keeping your eye on the ball seems simple, but its harder when you are in the flow of business building.
/YOU ARE BOTH DANCING THE DANCE
Think about the process of taking on an investor. You CV check, you interview them (not once but twice) and check their references. You do this to not only find out if they are all that they say they are, but also to make sure they are a good fit for what you are doing. Your investors will in many cases be a very visible and active part of your team, keeping an eye on what you are doing and weighing in with advice on the what/why and how of your business. Why would you blindly bring them on board simply because they are fronting cash?
What does an investment firm want a #startup to show for #SeriesA? Customers, good sales, product market & clear differentiators. @movac_vc
— @GridAKL (@GridAKL) March 22, 2016
Dig into your investors background, how have they treated past exits? How smoothly has international expansion gone? How deep are there international contacts in the market you are seeking to enter? Remember this is not all about you courting investment, it is about them courting you to be part of what you are building too.
/BE PICKY ABOUT ADVICE
The Movac crew were quick to remind people that not all advice is created equal. When taking on advisors you want to make sure those people have growth experience that is relevant to your needs. Perhaps a market segment you are working in, rich with contacts that you can work with. Or someone that has had growth experience in the country you are looking to expand in. This came with the very good reminder that “Growing a business in New Zealand is very different to growing a business overseas”. The same goes for the rate of growth, experience in traditional business models may bring the contacts you want but also may make them less inclined to be as agile as you need.
Anya is the brand and communications wrangler at GridAKL, with a passion for sharing knowledge. Follow her on twitter here.
