When can you expect investment returns? Insights from a seasoned entrepreneur in digital entertainment.
“It turned out that in my life, I have participated in 22 investment rounds from entrepreneurs.
In the current project, this has already happened five times. Here are the conclusions I came to:
1. An investment is materialized faith. No one knows the future, no matter how experienced they are. An investor either believes or does not.
For me, the most crucial thing became my own belief in what I do; that alone may be enough. However, a lack of coherence in one’s vision will not lead to a deal.
2. Early-stage investments are investments in people: the founders and the team. The idea and the market are reasons to think about the attractiveness of the niche. But the trigger to give or not give money is the human qualities of the founder and the team.
Essentially, at this stage, an investor answers the question, ‘Do I believe these people will do something cool or not?’ Yes, the market is also important, but a growing market reinforces belief, it does not create it.
3. A professional investor is a role in which they manage other people’s money and must return 50%+ annually in the venture market. I don’t do well with these guys; for them, numbers are more important than meanings, and they often can’t afford a big interesting game. For me, realizing this was key to answering the question, ‘Who is my investor?’ — with whom I am ready to go into a big story.
By the way, almost all current investors are past and present successful entrepreneurs who have built unicorns themselves.
It’s easy to be on the same wavelength with them and achieve maximum results.
4. When talking to an investor, keep in mind the picture of ‘marriage.’ No matter how charming and courteous the investor is, remember that you are entering into a long-term relationship.
There is more money in the world than worthy ideas. There are more worthy ideas than people capable of realizing them.
If you are such a person, then you choose whom to take money from. If not… then you will have an unhappy marriage of convenience.
5. The qualities of a founder, I repeat, are more important than the idea, but the idea is also important, of course. Because a strong idea generates a strong challenge. And without a challenge, you won’t gather strong people around you. And without strong people, there is no belief in you.
6. If during the ‘candy-bouquet’ period with an investor, something scratches you — run. Investments are a marriage of convenience. It won’t be easy to run away. You will have to communicate with this person/people for many years during tough times. And if you don’t like something about them at the beginning, it will get worse.
Any deal is good until you can get out of it. Trust your intuition and don’t convince yourself that everything will be fine. Anxiety is your friend.
7. Valuation is an unimportant parameter. I really hate bargaining. I resonate most with the moment in the movie ‘Who Killed the Blackberry’ when the main character calls and makes an offer to the third founder, offering the final version in his head and immediately gets an agreement.
8. Smart money is a story about your chemistry and synergy with investors as partners. For me, it’s not a locomotive that pulls you forward; it’s more like a set of keys to specific doors that you can use, most often just once.
9. Most investors don’t understand how to build their own businesses. Exactly how many — I don’t know. The exceptions are active or former entrepreneurs, so we choose exactly such ones.”