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“Startup investors expect businesses and ideas that stand alone in the playground with no opponents”. This is what many people claim and I too find this true with my own experience. The chief issue here is that in today’s world, it is hard to find any such ideas. Many investors these days really don’t bother to invest in the founders even though we’ve been hearing this narrative “investors not invest in companies but founders” for so long.
Until now, I’ve interrogated many investors intensely and turned them down, because what I found missing in them were vision and patience. Any investor who plans quick exits to cash out returns without working towards the scalability of the company is simply not a partner for growth. And startup funding is beyond just numbers.
On the contrary, in the reality shows like Shark Tank and Dragons’ Den, we witness many traditional businesses getting funded, not all investments are made just by carrying the numbers, but assimilating the faith and determination of the founders. A great example of which I can present to you is of Kameese Davis, founder & CEO of Nylah’s Naturals, who received the deal at the Dragons’ Den, Series 18 – Episode 2.
But what if I say this to an investor… that trailblazers of the internet like AOL and Yahoo today are going under turmoil even though these were once really meaningful companies with money garnered from a number of VCs and Conglomerates including Sequoia back in 1995. Look at them today, they had their USPs in the market when they started, but none of their investors could help them build competence against Google and Facebook, even Verizon that acquired them and selling them off today to Apollo Global Management.
So, as a startup working hard on your idea and bringing the same to its existence, why would you be tolerating the arrogance of investors and VCs? You have equal rights of asking questions and assessing whether or not the investor you are pitching to is good or not.
There is always a relevant person available for every right thing, and to find that person, one needs to stay confident with her/his thing, and bootstrap until they find one. Being selective has its very own significance.
I’ve also come across quite many startup founders dealing with various mediators masquerading as investors. In such cases, startups undergo invalid questions – consequently making wrong narratives about the startup investor community without even knowing the person to whom they are pitching their startup for funding. A good investor is always time-bound and you need to ensure that you don’t cut their time off with any unearthed numbers and facts. So, if you have a result in hand prior to going to an investor.
No, I’m not saying that all investors are arrogant. Any startup investor who is not asking tough questions to you and simply being nice to you is not a good analyst at first place, thus not a good investor. On the other hand, an investor asking you stiff questions with an aim to extract crucial information about your business model and the potential growth of your startup should always be welcomed as long as the questions are valid.
Startups that complain about investors are mostly the ones that are on idea-stage and yet to make revenue. One needs to validate an idea with its tangible outcomes not necessarily revenue but the user base, reviews, market size, founders’ very own experience etc. This really helps investors to make quicker decisions – giving a green signal to the startup.
Now the question remains, ‘Arrogant startup investors – are they really worth it?. If you come across any investor with rude behaviour, first analyse whether you are trying to hide something which is pissing off the investor or if the person is generally arrogant and asking invalid questions.
In a nutshell
It is a basic human ethic to be respectful to each other, and when it’s about startup funding, both startups and investors have to follow this route. As a startup, you need to go to the investors with valid pointers such as valid numbers, post-funding goals, and a plan for the deployment of funds.
There is always scope for improvement and learning. The world still needs better investors that can turn out to be good stakeholders – forging growth for startups. An investor that lacks patience and is only concerned about the existing revenues of the startup doesn’t seem like a partner for growth. And when it comes to startups, a wise man says “The missing ingredient in innovation is patience“.
A startup founder or SME should also be selective and should always assess investors for their attitude and potential of scaling the startup.
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