The Investor’s Perspective: All About the Money?
The relationship between startups and investors can be tricky and sometimes full of unrealistic expectations from both sides. One side is betting on the highest growth potential, the other is promising fast growth. While people say investors only screw startups to make profit from them, startups are said to oversell their business when in fact they are just smoke and mirrors.
However, these are stereotypes, and don’t have to be true: Five successful Swiss investors shared their experience in a panel discussion at this year’s Swiss Startup Day. Daniel Gutenberg, Ravi Kurani, Thomas Dübendorfer, Marc Bernegger and Daniel Keiper-Knorr talked about the importance of passion and enthusiasm, why they take their time to talk to startups and clear No-Go’s.
What investors are looking for
Teams, not products Daniel Gutenberg, General Partner of VI Partner and former Business Angel of the year, is looking for scalable startups that are likely to be the next unicorns. He adds that it has always been the team that has convinced him at first, even before he was convinced of the product and the market the team is operating in: „I am investing in the team, not the product“.
Passion Investing is just all about the money? Daniel Keiper-Knorr, CEO of Speedinvest, disagrees: I look at the people behind their projects, and the enthusiasm that they put into it.“ Marc Bernegger, Ambassador Switzerland at FinLeap, agrees on that: „A key success factor for me is passion. I need to see people that want to bring about change because they have an internal passion for what they are doing – not just because there is a promising market.“
What is important to them
Take time to talk to startups Investors have busy schedules and sometimes don’t even give the startups enough time to pitch their business properly before they reject offers is a general opinion. This is certainly not true for Ravi Kurani, associate at Earlybird: „My personal approach is that I talk to rather more than less people, even if at first I don’t get what the startups are doing. I take the time to talk to the team and let them explain it properly. It’s really important to talk to people and let them explain their idea rather than just read about them.
All or nothing Thomas Dübendorfer, president of Swiss ICT investors Club, emphasizes, how important it is for startups to really reach for the stars: „Successful startups must be extremely ambitious and put all their efforts into their idea. There are lots of part-time startups out there. In my opinion, that’s not working. Either you do something properly or you don’t do it at all. “
Take risks and go for it Go for it, even if people tell you it’s not going to work out: That slogan is not only true for startups but also for investors, as Bernegger states. He was one of the first investors in Fintech, and at that time, finance was a comparably small market and people were sceptic: „We had one of the first fintech funds, and people told us that we will be disrupted by institutions, high entry barriers and banks. Today, if you look at the fintech market, this sounds ridiculous. We were ahead of our time, and we just went for it.“
Desperate startups Startups are sometimes desperately looking for investments that their businesses depend on, fair enough. But they better don’t show their desperation, says Keiper-Knorr: „If a startup sends me its pitch deck on Monday morning and calls me in the afternoon of the same day asking for feedback, I ask myself: Am I the only investor? It speaks against the quality of the startup“.
Lack of plan One would think that a startup that is trying to attract an investor would do research in advance to exactly know which deal to propose to the investor. However, Keiper-Knorr experienced the opposite: Startups that send their pitch decks without an offer: „I am an investor, I can give you money. But you, as a startup, need to know what exactly you want that money for and what you offer me in exchange. I need an investment case.“
Lack of marketing skills A very commonly known criticism is the lack of marketing/selling skills among startups. Dübendorfer states: „Quite often I see very talented teams, but they’re all techies, not business or marketing experts. They never talk to customers, they talk to machines, but talking to customers is crucial.“