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When a start-up does not attract investment then the first question is why? It’s not easy, but it’s possible to get an understanding why an investor is not investing into a company. And usually most of the answers can be ‘we are not investing now because we want to see that and that.’ You can encounter investors that would to say ‘that’s not the area you would like to invest or your company is too early or too small.’
Then that’s okay, then these people are just not the right investors for you. But if you approach the investors who would potentially invest into your company, then it would be good to understand what is the background of your decision. And finding that out can be very helpful because you can learn from that. And usually people like to say ‘we want to see this and that.’ And then you have to think; okay, is this what they want to see?
Maybe a partner or growth or that you enter this and this market? Is it really something you think is really the way you want to go? Then you say, okay, it’s along our vision. We will be there and maybe talk to you again. If not, you need to ask yourself, why do they think that? Why do they think we should have this and this? Maybe they have a totally different idea about how to grow your business.
And then you don’t need to adopt that because investor are people, they have experience, but it’s not like they know everything. You know, especially in the high tech early stage startups, you change a market or the market is at a very early stage. Then nobody might know what kind of business model will be the best in the end. So they are together with you in this kind of learning curve.
So my first advice would be try to find out why you get a no, because there can be some really basic things. You know where you say, okay, maybe in a year when we have more attraction, they might find it interesting, but it can be really groundbreaking information for you to understand, okay, maybe there are things out there, I don’t know, I should understand. Maybe we should think about changing this and this in our business model. I don’t know. The other thing is, maybe your startup is not a growth startup. Maybe your startup is has not this high growth potential, and then the question is, do you want to set up a startup with a high growth potential, which needs investors to make this happen? This is, again, a question for the founders.
Not every company which has been founded successfully and is now a very big company, was founded with investors. Usually there are companies who are bootstrapped, they don’t have investors. This is where the founders and the team live on very small salary and they are able to have revenue from day one and maybe they take a public funding loan or grant or whatever and they want to stay independent. If this potential is in the business model from your company, then you can go can go along this way as well.
And some companies who have the potential to really generate revenues from day one and have not such a high upfront cost that they can from the revenue start and grow their business, they are in more independent and can decide: do we want to have an investor? For which reason? And at which point of time?
So having a startup and having an investor it sounds so cool I would say for a lot of people. But that is not always the way, what is best for your business vision? That’s why I think it’s so important to understand why the investors say no. And then if you have some answers, then you need to ask yourself. Do I think that is true? And do I think I have to go along these lines to attract investors, or do I think or do we think that we actually have a pretty good plan and maybe we can start it with not such a high growth curve, which means high spending. Maybe we can start it slower, and can get funding from other sources, and then my company will grow not so exponential, but will grow anyhow. And maybe later I might take an investor in, too.
So, the first question would be, why do they not invest? The second question, what do I need their money for? Can I start my company or my company can grow or maybe slower but still grow without this investor’s money. So it’s not the end of the world if an investor says no. He might have reasons you cannot understand. He might reasons you will say yes to. But it’s not like a startup can only be successful if there is an investor involved, that’s not true
