Investment Is a Two-Way Choice: Do Not Let Fundraising Become a Trap

Robin: ‘Be patient and choose investors carefully. Investment is a two-way selection process. Rushing to choose an investor or a portfolio company can cause major problems for both sides over a long period. Taking time to observe is actually the best way to avoid longer-term trouble. Entrepreneurship also requires creating value, delivering value, and earning reasonable profits over the long term.’ An important prerequisite for entrepreneurship is following market logic and the principles of value creation: selling customers the products and services they actually need, and thereby making a profit. The same applies to fundraising. Investor money does not come free. Some founders discover that taking certain investors’ money can change the company’s goals, even erasing its original purpose so that every activity serves only to satisfy investors. Fundraising can therefore become an enormous trap. Founders must be careful. (Of course, with the many startup teams that are neither ‘2B’ nor ‘2C’ but ‘2VC’—oriented toward venture capitalists—VC professionals must also be careful not to be blinded by packaging and sales talk.) Founders must hold to their original purpose when choosing investors. Some large funds support the team, model, and product but need a relatively lengthy process, such as a three-to-six-month wait. When ready cash is offered elsewhere, however, many founders cannot resist the temptation and make a major impulsive mistake. The temptations of quick money can easily lure an unwary founder into a deep pit. Learn from others’ failures rather than realizing the danger only after a painful fall. Entrepreneurs who truly grow strong companies do not take this supposed shortcut to quick money: they may lose everything along the way.